India tops ranking in BPO sweepstakes: AT Kearney

New Delhi, Nov 23 | Updated: Nov 24 2005, 05:30am hrs
While India and China continue to be the most attractive offshoring locations for IT and BPO, the US, despite its high cost, ranks surprisingly well, said global consulting firm AT Kearney in a ranking of 40 countries released on Wednesday.

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.

The Buzz
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
Bell added: So we collected the necessary data and, as we suspected, the US in particular scored very well in the index. The standard index gives cost factors a 40% weighting, versus 30% each for people skills and business environment.

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.