India continues to hold its position as the best outsourcing destination across the globe, despite the emergence of new rivals, according to the latest report from management consultancy firm AT Kearney.
The top three slots in AT Kearney's 2011 Global Services Location Index (GSLI) are occupied by three Asian countries - India, China and Malaysia.
"With its first-mover advantage and deep skill base , India remains the unquestioned leader in the index, a half-point ahead of China and a full point in front of Malaysia. India is the all-around standout, able to provide manpower for any type of offshoring activity and still maintains the lion's share of the IT services market," the report said.
It also states that "India's IT services stalwarts are moving up the value chain." Companies such as Infosys and Wipro are developing their research and development (R&D) capabilities and expanding well beyond their traditional vendor roles.
Interesting, before the political unrest, Egypt had emerged as the fourth best outsourcing destination.
The report said that it was before the political turmoil broke out and the ranking may change later.
"The political uncertainty and country risk associated with Egypt have dramatically increased and the situation needs to be closely monitored to gauge whether the long-term risk profile will change," the report said.
It added that China may not make a great impact in the call centre business as its most attractive avenues are high-end analytics and advanced IT, where it is an alternative to Russia and Eastern Europe.
Nevertheless, it can be a strong competitor to India in the BPO sector.
US remains the top customer for outsourcing services, accounting for 63 per cent of global IT outsourcing spending.
The GSLI analyses and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centers and back-office support.
Each country's score is made of a weighted combination of relative scores on 39 measurements, which are grouped into three categories - financial attractiveness, people and skills availability and business environment.
Asia is ranked highly among the rest of the top 10, which features Indonesia (5), Thailand (7), Vietnam (8) and the Philippines (9). The report said Indonesia, Vietnam and Thailand have not yet fully devoted their resources in promoting information and communications technology but they score highly in the index because of their vast talent pools and competitive wages.
The report also said that in addition to economic changes, the nature of outsourcing itself is in transition.
"The old model involving multi-year contracts, custom code, and on-site systems integration workers is beginning to give way to a new model in which outsourcers provide standardised software solutions on a per-use basis," the report said.
"The past two years have seen a number of outsourcers building and/ or acquiring the capabilities required to survive this shift, in the opening salvo of a coming revolution in outsourcing," the report said.
Erik Peterson, managing director (MD) of A. T. Kearney's Global Business Policy Council said that "regardless of changes in the outsourcing industry business model and other temporary setbacks, we believe the era of globalisation of services production has only just begun".
Courtesy: Mail Today