India and China Most Lucrative Outsourcing Destinations: AT Kearney

AT Kearney, a US-based management consultancy, has released an Annual Global Services Location Index, assessing 40 outsourcing locations across the world. The index places India and China followed by South-East Asian countries as the top outsourcing destinations.

India and China lead the index. India’s lead over China is still very large but has slightly reduced as compared to 2004. The wage inflation in India and increased competition are cited as the reasons for the reduction of the lead. China, with its improved infrastructure is well placed to target IT and back-office support market for East Asian countries namely Japan, Korea, Taiwan, Hong Kong and Singapore. The Southeast Asian countries continued to be lucrative destinations. Malaysia, Philippines, Singapore and Thailand are placed between third and sixth positions successively. Thailand grossed a considerable leap from thirteenth position in 2004 to sixth in 2005. Indonesia entered the index at thirteenth.

For the first time, the annual AT Kearney index has also assessed low-cost cities in four developed countries as probable outsourcing locations. The US city of San Antonio was ranked at eleventh whereas Belfast in the UK was ranked twenty-eighth in a list of 40 destinations. Leipzig and Marseille representing Germany and France respectively were placed at thirty-first and thirty-fifth position.

The status of traditional Central and East European outsourcing destinations namely, the Czech Republic, Hungary and Poland witnessed slight decline, according to the index. The new entrants, belonging to the region, are Bulgaria, Slovakia and Romania. Russia remained the least attractive destination placed at the bottom of the Index.

In Latin America, Chile improved its ranking slightly whereas Brazil, Mexico, Costa Rica and Argentina have fallen. The main reason for this fall is attraction of South Eastern countries. Mexico and Costa Rica have improved their standing by two index positions each.
Finally, the index also reflected a strong performance by several countries of the Middle East and Africa. Egypt is ranked twelfth, Jordan at fourteenth and the United Arab Emirates at twentieth. Tunisia, Morocco and Egypt have emerged with their stress on their Spanish and French language skills combined technical proficiency as a unique selling point. Turkey and South Africa have not performed as well as the rest of the region because of the relatively high costs.