Workforce shortage will return in Asia Pacific in the second half of this year despite recent market downturn, layoffs and unemployment filings. Furthermore, the productivity of those employed will suffer as they spend more time on social networking sites like Facebook and Twitter, according to XMG Global, a leading ICT research and advisory firm based in Canada.

Still, XMG forecasts the job market will keep getting better as the financial, banking, utilities and service sectors perk up. XMG believes other industries will follow shortly since it is not a uniform recovery. Intelligent insights, unique recruitment and retention strategies will be required to address the skills shortage in the face of rapidly changing labor market conditions starting 1st quarter 2010.

Interestingly, XMG studies showed that the number of hours which employees spend on social networking sites, such as Facebook and Twitter, in the workplace is increasing at an alarming rate and interfering with productivity.

“Many organizations are underestimating the impact of these sites to total productivity,” according to XMG. “Behavioral indicators in the study points that social networking will become a primary means of personal and business communication through various channels, from office workstations to laptops and mobile phones.

Therefore, social networking will not go away nor could it be barred without affecting corporate morale. “Hence, forward looking organizations should introduce new policies mindful of different cultural expectations to address the problem.”

As the decade comes to close, system integration firms still focusing on “integration” and “implementation,” instead of “operations excellence” and “transformation,” will find themselves extinct, XMG warned. The global economic crisis has caused a significant decline in overall ICT revenue, but XMG market indicators show growth in user preference for process outsourcing to fix problems. This trend will continue well beyond 2010 as organizational objectives look beyond cost savings to include continuous improvements and transformations.

Once more, outsourcing will present its full potential in 2010.

However, this time it will not just be more than a cost saving measure but also a genuine business model to increase efficiency and improve profitability. In the face of global competition, governments of major outsourcing destinations will formulate new rounds of resolutions to improve business environments and promote new investment locations.

XMG also considers significant increase in nearshore outsourcing as some companies exercise more vigilance on their investments.

XMG forecasts the global outsourcing industry to corner US$412 billion in 2010 with India and China still leading the offshoring segment.

By contrast, offshore captive centers will be a waning option. In the past two years, startups had been declining while existing offshore centers had been stagnating due to high operating costs. The need for management focus and involvement for enhanced business integration also adds up to the pressure of sustaining quality services in captive operations.

XMG expects a lot of transformation among captive players this year. With the scaling up of BPOs in the midst of economic downturn, more captives will venture on divestitures to recover losses and deficits.