India leads by a wide margin, although wage inflation and the emergence of lower-cost countries (Ghana, Vietnam) decreased its overall lead. Still, the gap between India and China is larger than the gap among the next nine countries combined.
Surprisingly, the Middle East and Africa appear to be the next frontier in offshoring as Egypt, Jordan, UAE and Ghana performed well. For instance, companies like Dell, GE, IBM, Alcatel and Microsoft already have built a strong presence in Tunisia and Morocco.
South East Asian countries make up for four of the top six locations. Thailand jumped from 13th to 6th place in this years index.
In Malaysia and Singapore, better intellectual property protection and data privacy continue to pay off. While Vietnam ranks low (as a result of its weak infrastructure and business environment), it is still attracting US firms as a low-cost alternate to China.
Offshore attractiveness in Europe continues to migrate eastward as Bulgaria, Slovakia and Romania all enter the index for the first time. For 2005, AT Kearney added four lower-cost cities in the US, UK, Germany and France to determine how they compare with more traditional offshore locations across the 40 countries. The US, represented by San Antonio, ranked 11th out of the 40 countries evaluated.
Said AT Kearneys director global business policy council, Simon Bell: In previous years, clients kept asking us where lower-cost cities and regions in the US and Europe would stand if they were included in the Index.
| Mid-East and Africa emerge as strong contenders. For instance Dell, GE and IBM have centres in Tunisia, Morocco |
India leads by a wide margin, with
the gap between India and China
being the highest
BPO is making countries take a hard look at their infrastructure as to why they are not attractive
According to Bell, the good news is that competition is encouraging many countries to take a hard look at their education systems and infrastructure. That ultimately raises productivity and prosperity in all locations.