India still the global offshore market leader

By SiliconIndia   |   Thursday, 22 March 2007, 05:00 Hrs
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Chennai: The Indian outsourcing companies have reason to cheer. According to a study by global consultants A.T. Kearney, India continues to be best global offshore destination for software offshore services while China is a close second. Sri Lanka and Pakistan are emerging as alternative destinations in Asia. The Hindu reported this today.

The study identified the top 40 global outsourcing destinations for 2007, and India was on top of the list in the 2005 version, followed by China.

Though both Sri Lanka and Pakistan offer many of the same advantages as India, they have only recently woken up to the ‘enormous' opportunity of the offshore services sector and hence lack India's breadth and depth of experience. The said countries are also disadvantaged by their relatively smaller population-base and obvious concerns over internal security, says the study.

The report states that India maintains a wide, although slightly shrinking, lead over China, confirming what industry surveys and visiting executives repeatedly find. India still offers ‘an unbeatable mix of low costs, deep technical and language skills, mature vendors and supportive government policies’, the study noted.

The double-digit growth rates in India and China have fuelled wage inflation, with average compensation costs for ‘sample functions’ rising by around 20 per cent in India and 30 per cent in China. But these cost escalations have been matched by corresponding increases in skill supply and quality indicators, the study said.

While Philippines remains one of the lowest wage locations and now offers the lowest telecom costs of any country in the Index, Latin American countries - Brazil, Chile and Mexico - are collectively the biggest gainers in this year's index. Spurred on by India's success, governments in the region have begun to recognize the potential of the export services sector, particularly in the context of providing near-shore support to North America and Iberia.

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