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Bangladesh, Sri Lanka, are new regional challengers to India's offshored services position: Gartner

Tech watcher Gartner,  has identified the Top 30 countries for globally sourced activities in 2010-11, each one rated according to 10 criteria, and found that eight new countries have made their debut in the Top 30. 
The leading emerging offshore locations evaluated by Gartner in the Asia/Pacific region are (in alphabetical order): Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam.
“Clients continue to seek a portfolio of offshore countries, and with India again experiencing increasing labor costs and attrition, this is creating opportunities for other offshore locations to target the services needs of more-mature Asian clients,” said Ian Marriott research vice president at Gartner.
Gartner elected to focus on emerging countries this year due to the dynamic changes taking place as they move towards developed country status. Gartner excluded the mature countries of Australia, New Zealand and Singapore this year because their maturity has led to little year on year change to their rating. Gartner also included two new countries to this year's analysis - Bangladesh and Sri Lanka. Sri Lanka was last assessed in 2007-2008, while Gartner assessed Bangladesh's offshore rating for the first time.
During the past 12 months, there has been significant activity in many countries to consolidate or grow their positions as leading locations for offshore services. Gartner has seen interest and steps taken by governments to improve their attractiveness to foreign companies setting up offshore operations in their countries. These measures include initiatives to improve the English language capability in the education system, setting up policies to better protect data, intellectual property (IP) and privacy, and improving the country's infrastructure.
“Enforcement of laws with regard to data/IP and privacy protection, and legal maturity continues to be an adoption barrier for using a number of low cost countries despite country governments taking action to improve the policies and regulations in these areas, “said Marriott.
Ratings of various countries as an offshore location:
Bangladesh:
It rated “very good” in "costs".
China: Improved its scores for "political and economic environment" from “good” to “very good”, and "culture compatibility" from “fair” to “good”. Contributing to the increased rating for China is its rising global political and economic leverage, especially during the recent global economic crisis. China held a steady positive growth rate spurred by the $583.9 billion stimulus package in 2009. The Shanghai 2010 World Expo has helped to increase cultural awareness within China.
India: India is already the most successful country amongst the offshore locations. It continues to score very well across all 10 criteria. With the rising Rupee, its cost competitiveness is being challenged, but this is compensated by its strength in other areas.
Indonesia: Improved "costs" from “very good” to “excellent”, and "labor pool" from “poor” to “fair”. Based on several surveys that Gartner analyzed, Indonesia continues to offer amongst the cheapest labor costs for IT and business process skills in the region. Indonesia has consistently increased its global competitiveness in its IT skills, lowered its unemployment rate and increased the number of qualified engineers. As a result, it is also attracting an increasing number of vendors providing offshore services out of Indonesia.
Malaysia: Improved its "government support" and "infrastructure" from “good” to “very good”. In Malaysia's 2010 budget, the government introduced green IT initiatives to encourage green technology adoption. The Malaysian government is also investing in high speed broadband (HSBB), and 1.3 million homes and premises are expected to access HSBB services by 2012. It is becoming a regional center of excellence for service desk, remote infrastructure monitoring and support as well as shared services center for logistics.
Philippines: Gartner's scores for the Philippines remain largely unchanged, although “global and legal maturity” slipped back from “good” to “fair”. Gartner continues to see foreign companies being attracted to the country's young, experienced labor pool specialising in contact centers and finance and accounting (F&A) business process outsourcing (BPO), complemented by good language and cultural compatibility with western economies.
Sri Lanka: Gartner previously rated Sri Lanka in the Top 30 locations in 2007. It has improved its scoring for "government support", "infrastructure" and "political and economic environment”.
Thailand: Thailand’s rating has not significantly changed across the 10 criteria, although Gartner has seen Thailand's desire to improve its policies around the areas of 'data/IP/security and privacy" and "education".
Vietnam: Improved its "labor pool" and "Culture compatibility" ratings from “fair” to “good”, but the “cost” rating slipped back from “excellent” to “very good”. Vietnam's labor pool continues to be attractive due to the size of its young workforce. The Vietnamese government has created a priority list in 2010 to train 40 percent of its workforce in selected fields including IT. From a culture compatibility improvement perspective, Vietnam now has a sizeable expatriate community from Japan, South Korea, Taiwan, Malaysia, Singapore, Thailand and France.

The report idenfied the following  destinations in other regions: Americas: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru.
Europe, the Middle East and Africa (EMEA): Bulgaria, the Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Romania, Russia, Slovakia, South Africa, Turkey and Ukraine.

Gartner's "30 Leading Locations for Offshore Services, 2010-2011." The report is available at http://www.gartner.com/resId=1491316  

See  our related report: based on Tholons 100: http://www.indiatechonline.com/global-top-100-outsourcing-destinations-tholons-373.php

Dec 22 2010




    


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Bangladesh, Sri Lanka, are new regional challengers to India's offshored services position: Gartner
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