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India, China, Malaysia top job outsourcing survey
By siliconindia staff writer
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Thursday, 01 April 2004, 20:30 IST
KUALA LUMPUR: India, China and Malaysia are the top three destinations for global employers looking to move white-collar jobs offshore, management consultancy AT Kearney said on Wednesday.
Industry analysts say the global outsourcing market, a political hot potato in election year in the United States, is worth $300 million to $350 million, and could grow to $500 million by 2007.
About six million jobs, mainly in the high-tech sector, are expected to be transferred from the United States and Europe over the next 10 years as firms continue cost-cutting drives and the baby boomer generation retires.
The Czech Republic, Singapore and Philippines took the next three slots in Kearney's 2004 Offshore Location Attractiveness Index that analyses 25 destinations by three categories: people skills and availability, business environment and financial structure.
The index was released in the Malaysian capital to coincide with an international sales and customer relationship conference.
Kearney ranked India first for its low-cost labour and its "depth and breadth of offshoring experience and people skills".
China, which trailed in language skills and experience, placed second thanks to a combination of low-cost, high-volume skills.
"But both China and India scored quite poorly on political and economic risk as well as in other areas like infrastructure," managing director of AT Kearney's Malaysian unit Ooi Joon Leong, told a news conference.
"China scores pretty poorly on intellectual property, piracy and bureaucratic red tape. Most importantly, it needs to build its English language skills if it wishes to challenge India."
Ooi said Malaysia was a "natural choice" for foreign relocation but, with a population of just 25 million, it may not be able to match the scale advantages offered by India and China.
"But effective government promotion of the IT and services sector will likely make Malaysia one of the strongest competitors to India's business process outsourcing dominance in the next five years," he said.
Eastern Europe, led by the Czech Republic, is making more of an impact in the global outsourcing market. Poland and Hungary came 10th and 11th in the Kearney list.
Higher-income locations Canada and New Zealand continued to perform well, with high education levels, infrastructure quality and business-friendly environments, while Brazil and Chile led the pack in Latin America, placing seventh and ninth overall.
"Offshoring today is about much more than labour arbitrage," said Andrea Bierce, the study's co-leader.
"Companies considering where to relocate must weigh a complex balance of factors having to do with the availability and quality of the workforce and the business environment."