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India remains No.1 outsourcing destination

May 19, 2009 16:15 IST
India continues to be the most favoured back-office of the world, but the Middle East and North Africa region is slowly emerging as a promising offshoring destination, global management consulting firm A T Kearney says.

According to A T Kearney's Global Services Location Index (GSLI), India, China and Malaysia have retained the top three spots since the last five years.

"India, China and Malaysia continue to lead the index by a wide margin through a unique combination of high people skills, favorable business environment and low cost," the report said.

In particular, India has remained at the forefront of the outsourcing industry and actually has become an enabler for industry growth through expansion of Indian offshoring firms into other countries, it added.

The survey further said that the Middle East and North Africa is emerging as a key offshoring region because of its large, well educated population and proximity to Europe.

"The Middle East and Africa area has the potential to redraw the offshoring map and in the process bring much needed opportunities for its large, underemployed educated class," GSLI project manager Johan Gott said.

These finding comes amid US President Barack Obama's recent comment that "It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York".

The survey further said the global financial crisis has slowed recent offshoring moves, the percentage of companies' staff offshore may very well increase as a result of the crisis. Layoffs at home are not translating to layoffs among offshore workers as companies seek to reduce costs.

"While cost remains a major driver in decisions about where to outsource, the quality of the labor pool is gaining importance as companies view the labor market through a global lens driven by talent shortages at home, particularly in higher, value-added functions," said Norbert Jorek, a partner with A T Kearney and managing director of the firm's Global Business Policy Council.

In addition to Egypt and Jordan, ranked at sixth and ninth, respectively, some other emerging offshoring destinations were Tunisia (17th), United Arab Emirates (29th) and Morocco (30th).

Saharan Africa also showed strength. Ghana ranked 15th, Mauritius 25th, Senegal 26th and South Africa 39th.

"The dynamics of global offshoring are clearly shifting as companies re-evaluate the political risks, labor arbitrage and skill requirements in the context of the likely aftermath of the global economic crisis," A T Kearney chairman and managing officer Paul A Laudicina said.

GSLI analyses and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centers and back-office support.

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