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Destination Compendium 2010


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One-stop resource bringing together myriad dynamics of outsourcing locations in one place complete with research, data, profiles, and expert opinions

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Destination Compendium 2010

  1. 1. Global ServiceS A CYBERMEDIA PuBlICAtIonAn integrated media platform which connects thevarious constituents of the global technology and Pradeep Gupta Chairman & Managing Director business processing services industry ecosystem. Cyber Media (India) Ltd. E. Abraham MathewDirectory of ServiceS President Ed nairNewSletter EditorA regular digest of key industry happenings. Satish GuptaDiGital MaGaziNe Associate Vice PresidentThe fortnightly digital magazine features research, articles and experts’ views. Available on Smriti Sruthi RamakrishnanwebiNarS Services’ web-based seminars aim to impart niketa Chauhanuseful information related to outsourcing indus- in the form of presentations and discussions Virendra Kumarby industry specialists. offICESWe deliver indepth analysis and research reports Global Services Media llC.on sourcing subjects. 806 Green Hollow Drive, Iselin, NJ 08830 T: 678-665-6005MicroSiteS Global ServicesOnline resource center designed to provide Cyber Media (India) Ltd.focused content on special subjects to the out- CyberHouse, B- 35, Sector 32sourcing community. Gurgaon-122001, India Tel: +911 24 4822222eveNtS Fax: +911 24 2380694 Contact:From multi-day, high-level, resort conferences to breakfast discussions we offer a numberof opportunities that connects the outsourcing Disclaimercommunity. All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publisher.cUStoM ProGraMCustomized services rendered through different letterS to the eDitormedia platforms. Send letters to, or to any of our writers. We reserve the right to editoSoUrce booK all letters. Postings submitted to our blogs andA directory of global outsourcing service providers. letters to the editor may be published in digital magazine or Website.
  2. 2. Global Services LIVE! is a quarterly compendium that features success stories in the globalsourcing and delivery of IT and BPO services to businesses worldwide. The compendiumfeatures live cases that offer live lessons to the sourcing world. Service providers thatparticipate in the program stand to benefit in terms of being able to showcase their bestcapabilities, leverage and reuse existing marketing assets, and reach their target marketeffectively. The program helps buyers of services identify service providers with demon-strated capabilities, skills, delivery profiles and industry domain knowledge. 2010 – Q4 Edition 2011 – Q1 Edition 2011 – Q2 Edition 2011 – Q3 EditionThe program is delivered in multiple formats such as Digital Magazine, PDF, Microsite, Onlinerepository, e-newsletter, social media to name a few. Power Of Customer Advocacy! For more details Click Here To be a part of this program, write to
  3. 3. EDitor’s NotE The Business of Places B usiness is all about ideas, money, and people. And places. This is specifically true in the global services industry. As we end this decade that marked the maturing of global sourcing of services, the role of outsourcing locations has really played out very well for all of us to see. For one, global sourcing was always about the Ed Nair ‘place’. In the beginning, it meant India and now it means much more. The journey from thereon has been fascinating. Editor Remarkably, the journey also coincided with many other con- comitant trends like rapid globalization, liberalization of economies, growth in emerging economies, and technology refresh cycles. These trends spurred the growth of global locations from where services IT and BPO are could be delivered. both global business The other point is that services in the form of IT and BPO are both global business opportunities and tools for economic development for opportunities and countries. The breadth of economic impact of pursuing global services tools for economic is wide: it includes increase in FDI, growth in exports, increase in development for domestic employment, rise in purchasing power, infrastructure devel- opment, and overall GDP growth. Every country including India is countries. This year’s witness to these effects. research and ranking The Global Services Destinations Compendium is an attempt to feature 100 cities bring together the myriad dynamics of outsourcing locations in one place— complete with research, data, profiles, and expert opinions. At from 49 countries. the most granular level, we look at cities and how they compare with each other. More importantly, we look at how upwardly dynamic the cities are compared to previous years. The research and ranking from Tholons feature 100 cities from 49 countries. It is indicative of the phenomenal spread of the global services business. GS6 GS Destinations Compendium 2010
  4. 4. A T R U E P U B L I C P R I V AT E PA R T N E R S H I P W o r l d ’s # 9 Fa vo ra b l e Outsourcing Destination “A.T. Kearney Report 2009”Reliable Infrastructure Educated Technical Human ResourcesYour Gateway to the Middle East Fast Growing Economy
  5. 5. coNteNtS11 49 ExPERT SPEAkThe Top 100 CiTies � Choosing the Rightby Avinash Vashistha &Manuel Ravago, TholonsThe list of Top 100 Outsourcing Cities will set the outlook for the Off-Shoring Destination 50industry in coming years. by Atul Vashistha, Founder & Chairman, Neo Advisory � Compete or Cooperate? Bridging the Nearshore- Offshore Divide 53 by Anupam Govil, Founder and CEO, Global Equations � Rise of IT-BPO Outsourcing Frontiers Regional Analysis 56 by Viral Thakker and Nishant Mathur, KPMG Advisory Services, India � Latin America: The Next Sourcing Frontier or an Afterthought? 59 by Esteban Herrera, Senior Vice President, HfS Research � Africa: The emerging frontier for services21 JORDAN offshoring 63COUNTRy IN by H.Karthik and Nikhil Rajpal, Everest GroupFOCUS: JORDAN � Location Selection Best Practices 65 by Jehil Thakkar and Shailesh Narwaiye, KPMG27 Advisory Services, IndiaREGIONAL DyNAMICS � Global Sourcing for FAO: Strong, Successful andby Sruthi Ramakrishnan Growing 68 by Stan Lepeak, Managing Director, EquaTerra Global� Location Assessment: Perception and ResearchReality for Global Businesses 28 � Why Latin America is Still a BUy 71� Europe: Showcasing the by Mario Tucci, Senior Global Business ConsultantChallenges and Opportunities 32 � Africa- The Next Outsourcing Frontier 72� Perspectives and by Dr. P.K.Mukherji, President & Managing Partner,Potential of Asia’s Avasant AsiaHotspots 36 � Latin America Emerges as a key Outsourcing� Middle East & Africa: Destination for 2011 74Leveraging Africa & by Don Jones, Partner, Technology & Life SciencesMiddle East 41 Practice, BDO USA� Latin America: The � Africa as an Outsourcing Destination 76Enduring Promise of by Pumela Salela, BPO/ITeS expert Consultant, World BankLatin America 44 � Offshoring in the Latin American Region 82 by Pradeep Udhas, Executive Director, IT/ITeS Sector, KPMG8 GS Destinations Compendium 2010
  6. 6. � India’s Global Expansion: Eyeing LatinAmerica 83by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ� Legatum Prosperity Index 8487 � Dalian 104 � Guangzhou 106 � Santiago 128 � Shenzhen 130CITy PROFILES � Hanoi 107 � Singapore 132� Beijing 88 � Ho Chi Minh 109 � St. Petersburg 133� Belfast 90 � Johannesburg 111 � Toronto 134� Brno 91 � kolkata 113 � Warsaw 136� Budapest 92 � krakow 115 � Ahmedabad,� Buenos Aires 96 � kuala Lumpur 117 Bangkok, Bhubaneswar, Brasília 137� Cairo 98 � Mexico City 119 � Bucharest, Cape Town, Dubai, Glasgow City 138� Chandigarh 98 � Prague 120 � Guadalajara, Istanbul, Jakarta, kyiv 139� Coimbatore 100 � Rio de Janeiro 122 � Montevideo, Moscow, Mysore, Nizhniy� Colombo 101 Novgorod 140 � San José 124� Curitiba 103 � Penang, Perth, Seoul, Taipei 141 � Sao Paolo 126 Destinations Compendium 2011 One Stop Resource On Global Outsourcing Destinations RELEASING NOVEMBER 2011 Inviting countries, cities, associations to take part in this initiative For more details, write to GS Destinations Compendium 2010
  7. 7. � Ranking fluctuation 12� Methodology and Scope of Study 15 by� Point of Scale Resistance 15 Avinash Vashistha� The top 100 Cities 16 Chairman and CEo, Tholons� top 10 Emerged Cities 18 Manuel Ravago� top 10 Emerging Cities 19 Research Director, Tholons
  8. 8. the top 100 citiesRanking Fluctuationsthe 2010 List of top 100 outsourcing Cities is a deliberate attempt toencapsulate trends in the new era of services globalization.Boon or Bane? likewise provides insight to the future potential of locationsChange has been the best descriptive word for the out- in addressing emerging trends and demands in servicessourcing industry in 2009, and this year, Tholons has globalization.encompassed the world’s Top 100 Outsourcing cities -twice the number of previous Lists. The expansion of the Location Assessment Frameworklist has created an avenue for a more concise understand- These recent events in the global economy certainly high-ing of industry movements – across 49 countries from 10 lighted the importance of more accurately assessing a loca-defined regions. tion and the corresponding outsourced services that can be Industry experts noted that the outsourcing activities potentially delivered. Given this, the Location Assessmentfrom 2009 to this year have become sluggish. Countries Framework has been applied in generating this report. Thetried their best to prove resiliency in the crisis and opted Framework covers six broad categories with fifteen subcat-for strategies that could mitigate the effects. Indeed, some egories, with each category and subcategory having theirof the countries that had been resilient experienced smaller own respective weight. These weights are then utilized toGDP growth, below expected growth targets; on the other generate a corresponding ‘City Score.’ These categories arehand, countries which were greatly affected by the global “Scale and Quality of Workforce”, “Business Catalyst”,recession posted negative growth, which often deterred “Cost”, “Infrastructure”, “Risk Profile” and “Quality oftheir development as service delivery locations. Life”. Likewise, the repercussions of the global economic The parameters above are the essential components incrisis postponed many large outsourcing deals across geog- differentiating cities from each other. Consequently, theraphies, while forcing service buyers and providers alike to parameters serve as guide in determining the capabilitiesstretch operational budgets. The mantra of ‘doing more for of each city to deliver services in the wider spectrum of theless’ has never been more relevant to the service providers outsourcing industry. Aside from presenting the inherentas it was this past year. The effects of the downturn also strengths, the parameters are also an effective base for iden-spurred apprehension among clients in renewing outsourc- tifying the inhibitors or areas for improvement which maying contracts. This cautionary stance was felt by most if undermine the development of the industry in the loca-not all horizontal and vertical segments of the industry. tion. The framework also reveals additional factors which On a positive note, many have viewed these challenges may spur a location’s service delivery opportunities, treating the economic downturn simply The combination of these parameters results in a specif-as a transitionary (or even evolutionary) phase for the ic correlation of the cities to their respective service niche.industry. There is now a greater call for delivering complex For example, considerations in the workforce extend fromservices than maintaining cost advantages, which leads to scalability to employability of workforce. Cities with ana more widespread transformation of outsourcing models abundance of Spanish-proficient speakers will have ato fit the requirements of an ever-changing buyer market. greater value proposition for catering voice-based BPOFurther, there is a stronger focus on business transforma- services to the US Hispanic market. Likewise, cities withtions among service providers, which will foster enhanced high percentage of engineering graduates may be bettercustomer satisfaction. In the end, stronger buyer-provider equipped to venture into the ESO space.relationship will be seen. Cost still plays a significant factor in locating. Coupled The 2010 List of Top 100 Outsourcing Cities is a with the capacity to deliver specialized services, low costdeliberate attempt to encapsulate such trends in this new cities can have a definitive advantage in attracting inves-era of services globalization. Thus, this year’s List is not tors or service providers. Along with this, developed andonly a reflection of the current competitiveness (and stat- supportive ITeS infrastructure is needed in order to fulfillure) of cities in the global outsourcing landscape, the List the requirements of the industry. In order to support the12 GS Destinations Compendium 2010
  9. 9. the top 100 cities Scale & Quality Cost Businee Catalyst Infrastructure Risk Profile Quality of Life • Labor Pool • Cost of Operations • Government • Connectivity • Social infrastructure • Commerical Risk • Skills Availability • Cost of Training Benfits/Incentives • Bandwidth Availability (Hospitals, Educations • Political Risk • Graduate Output • Cost of Real Estate • Competitive • Transportation Institutions, etc.) • Natural Risk • Complexity • cost of Bandwidth Landscape • Non-work Culture • Social Risk • Cost of Living • Untapped Labor Pool • Availability of • Cost of other • Employement Profile Recreation/Leisure Infrastucture facilities Skills and Savings Business operational Business non-Business Scalability Environment Environment Risk Environmentgrowing ITeS industry, kuala Lumpur for example, has improvement in perceived risk in the country by the cli-shown concerted effort in improving infrastructure, which ent nations. The city of kuala Lumpur moves up 4 placescontributes to its overall attractiveness as an outsourcing highlighting the city’s robust and continuously developingdestination. infrastructure and maturity of service delivery capabilities Factors such as Risk Profile and the Quality of Life in for high-value ITO and FAO.the cities are also included to assess the viability of the On the other hand, the major drops were seen in Tierlocation. Political violence and social unrest may greatly II locations: Nizhny Novgorod, Thiruvananthapuram,affect the conduciveness of business operations in the city. Cordoba, Chandigarh, Belfast, Accra, and Jaipur. OneOne recent example is the increasing crime rate in Mexico, possible reason is the inability of Tier II locations towhich has definitively affected the decisions of service pro- improve on service delivery maturity, in relation to its Tierviders in locating and expanding in the country. I competitors in their respective countries. The two-old The Framework also considers various regional dynam- factors can be attributed to this: quality of scalable laborics which also have a direct influence on the positioning of pool and infrastructure concerns.the cities in the global outsourcing space. Latin America Many Tier II locations likewise have struggled tois reputed for its nearshore advantages to the US; on the develop labor pools, or to at least reach the same labor poolother hand Eastern Europe is known for its cultural affinity quality of Tier I locations. Many Tier II locations haveand geographic proximity to the Western European client also experienced labor migrations of their highly-skilledmarket. resources, and as induced by rising unemployment rates. The Tholons Location Assessment Framework thus Challenges pertaining to employability have also been anbecomes more relevant in critically identifying, monitor- occurring problem in many Tier II cities – especially whening, and evaluating the competencies of emerging global considering English proficiency and technical skills. Foroutsourcing destinations. example, the city of Jaipur in India has lost some of its appeal as a destination of choice due to the perception ofCity Movements: Losers and Gainers low employability of its technical and managerial talentThe top gainers this year were mostly Tier I destinations pool. In contrast, and in St. Petersburg in Russia, the high– Colombo, kuala Lumpur, Singapore, Brasilia, and technical graduate output is one of the major contributingMontevideo. A clear factor for the movement is attributed factors which moved its ranking up, albeit having highto the global effects of the economic crisis. With most labor costs.economies recovering and rebuilding their competencies, Weak infrastructure support also remains a deterrentservice providers have been more keen on strategically for service providers from locating in Tier II cities. Forplacing their investments in (safer) Tier I cities and in instance, India’s ITeS-related infrastructure is nearing peaklocations with established service delivery capabilities. capacities, which makes it less efficient in fulfilling theFor instance, the city of Colombo moves up 5 places this requirements of the industry. This is noticeable amongyear, in recognition of its capabilities in FAO, producing Tier-I locations in India and is further observed amongaccountants that meet Uk standards and the significant Tier II locations.13 GS Destinations Compendium 2010
  10. 10. the top 100 cities Movement Major Gainers Movement Major Losers Education, or Application Development Management +6 St. Petersburg -4 Nizhniy Novgorod services from its cities. Thus, the country value proposition +5 Colombo -4 Thiruvananthapuram is merely a rough summation of the service capabilities of +5 Singapore -4 Belfast its key outsourcing cities. +5 Brasilia -5 Cordoba City-centric assessments also receive greater traction from large service providers, and as city’s can better +5 Montevideo -5 Chandigarh decouple themselves from the broad or oftentimes ‘generic +4 Kuala Lumpur -5 Jaipur proposition’ of the country. Value propositions of the cities +4 Brno -5 Accra are oftentimes overshadowed by the generic country value +4 Tianjin proposition. Cebu City for example has high potential to become a global kPO player but the city’s image isThe downturn has proven the importance of location often overshadowed by the Philippines’ voice-based BPOassessment for investigating the service delivery maturities reputation.of outsourcing destinations. Factors for locating may not For Tier II cities, decoupling will become an increas-entirely rest on the cost advantages but on the quality and ingly necessary process, especially among emerging citiescomplexity of services being delivered. Service providers with very specific skill set propositions. Decoupling fromhave been keen in evaluating the best-fit city which will the country image will entail an efficient highlighting ofdeliver their processes. the local value propositions and a more focused marketing Thus, the challenge now lies for the emerging countries and promotions increase its overall competitiveness to gain traction in The underlying premise for decoupling still lies on thethe outsourcing landscape. This will require more effective coordination among key stakeholders in the particularand creative initiatives that will position better position location. More responsive decision and implementationtheir countries in the market and highlight their inherent will be required as the city-centric approach is significantlyservice delivery advantages. smaller compared to country-level approach. Successful concerted effort will also be a crucial factor in identifyingCity-centric Approach – The Continuation of and building the outsourcing industry in the city.the Paradigm Shift The revamp of the global economy marks the emer-City-level analysis has always been the best approach in gence of key trends in outsourcing – a paradigm shiftidentifying corresponding service delivery strengths. As encompassing the types of services and the geographies ofcompared to country-wide analysis, a city-centric approach ideal locations. In the near-term, we should experience aallows a more granular investigation of the inherent capa- more granular approach to location assessment - focusingbilities of and the opportunities for each potential city. on cities rather than countries and as a city-centricFor example, a country having specialization in IT services approach fosters better identification of specific nichemay encompass Software Development, IT Training and services. GS 27 January, New York “Other outsourcing conferences do not have a good mix of Buyers and Sellers. Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from the buyers prospective which is very important” . -Global Services Conference 2010 Attendee Know More14 GS Destinations Compendium 2010
  11. 11. the top 100 citiesMethodology and Scope of Studyt he Top 100 Emerging Outsourcing Destinations governments, trade bodies, and global institutions, while 2010 report was fulfilled through a combina- government publicly released data were used to present tion of proven methodologies. First, surveys and country macroeconomic data, while market assumptions interviews were conducted with Tier I & II and analyses were grounded by data such as annual reports,service providers and buyers aimed at determining trends industry bulletins, and trade publications. In generatingin delivery and consumption of outsourced services in the rankings in the report, a combination of qualitativespecific destinations as well as determining market and and quantitative analyses, developed and refined by seniorlabor sizes, identifying the expansion strategies of Tier I & consultants, considering numerous variables in providingII service providers. Second, secondary research was con- the rankings and evaluating the impact of non-numericalducted in support of primary means. Country economic data on the assessment of outsourcing locations wereinformation were gathered from historical data from employed. GSPoint of Scale ResistanceSMt he current global outsourcing landscape is amount of investments flowing into the sector. It can marked with by heightened competition with also be seen in aspirations (or intent) of students to service delivery locations aiming at securing take education related to specific outsourcing service their respective shares of the global outsourc- market. One major challenge for these locations is ❑ low Employability: Employability is a factor of qual-how to better integrate their respective labor pools in the ity of education, quality of institutions and availabilityoutsourcing sector as service providers most often choose of industry-relevant skill sets of a given labor pool.locations on the basis of accessibility of qualified talent ❑ High Competition: Competition is a significant fac-in the long-term. With this shift of paradigm from basic tor for scalability as it can come from not only theavailability to sustainable and employable talent supply, services outsourcing industry but also from otherthe concept of Point of Scale Resistance (POSR) has been industries hiring from the same pool.introduced in analyzing service delivery locations. This ❑ High Risk: The perception of risk can vary across theconcept refers to the point beyond which organizations stakeholders in the industry, and hence high risk loca-will encounter challenges in ramping up operations in a tions (at times with excellent talent pool availability)specific location – highlighting sustainable employability fail to provide scalable solutions.of talent. For instance, if Country A has a POSR of 850, ❑ financial feasibility: While focus has remained onthis means that service providers would theoretically cost and operational benefits, high salary inflationencounter difficulties in ramping-up headcount beyond inhibits scalability.850 employees. This clearly suggests that scalability is afunction of multiple parameters and not just population, The POSR concept will become an increasingly importantand the inhibitors have been classified into the following consideration for emerging delivery locations to promotesegments: their capabilities as it assists in identifying what a location❑ low Demand: Demand can be seen not just in the can/cannot or should not do when assessing its service deliv- number of MNCs present in the country to the ery capabilities. GS15 GS Destinations Compendium 2010
  12. 12. the top 100 cities The Top 100 CiTies 2007 2008 2009 2010 City 2007 2008 2009 2010 City Top5 Top8 Top8 1 Bangalore 25 20 19 28 Johannesburg Top5 Top8 Top8 2 Mumbai - 22 23 29 Toronto Top5 Top8 Top8 3 Delhi (NCR) - 26 21 30 Rio de Janeiro Top5 Top8 Top8 4 Manila (NCR) 32 33 27 31 Kuala Lumpur 1 Top8 Top8 5 Chennai 21 17 18 32 Coimbatore 2 Top8 Top8 6 Hyderabad 33 32 31 33 St. Petersburg Top5 Top8 Top8 7 Dublin 27 29 30 34 Brno 3 Top8 Top8 8 Pune 22 23 24 35 Guangzhou (Canton) 4 1 1 9 Cebu City - 30 26 36 Mexico City 8 2 2 10 Shanghai 24 24 25 37 Belfast 16 5 4 11 Kraków 26 28 28 38 Warsaw 10 3 3 12 Beijing - 36 36 39 Singapore 14 9 6 13 Buenos Aires - 37 33 40 Chengdu 11 7 7 14 Cairo - 31 29 41 Jaipur 15 8 8 15 São Paulo 46 41 37 42 Monterrey 6 4 5 16 Ho Chi Minh City 43 38 34 43 Bucharest 18 16 12 17 Dalian (Dairen) 44 43 41 44 Brasília 13 10 9 18 Shenzhen 34 34 32 45 Accra 17 13 11 19 Curitiba 42 39 38 46 Moscow 7 19 17 20 Colombo - - 43 47 Tianjin 12 11 10 21 Hanoi - 44 39 48 Guadalajara 20 14 14 22 Prague 40 35 35 49 Bratislava 5 6 15 23 Kolkata - - 47 50 Montevideo 19 18 16 24 Santiago 41 40 40 51 Sofia 29 27 20 25 San José 47 46 46 52 Tallinn 9 12 13 26 Chandigarh 35 48 45 53 Halifax 28 25 22 27 Budapest 49 50 49 54 Ljubljana16 GS Destinations Compendium 2010
  13. 13. the top 100 cities 2007 2008 2009 2010 City 2007 2008 2009 2010 City Casablanca - - - 79 Penang - - 44 55 (Dar-el-Beida) - - - 80 Seoul 48 49 50 56 Kyiv 31 - - 81 Perth - - 48 57 Alexandria - - - 82 Bucaramanga - - - 58 Bhubaneswar - - - 83 Asunción 30 42 42 59 Glasgow City - - - 84 Wroclaw - - - 60 Istanbul - - - 85 Amman - - - 61 Cork Birmingham, 38 - - 86 - - - 62 Jakarta Alabama - - - 63 Nizhniy Novgorod - - - 87 St. Louis, Missouri - - - 64 Bogotá Santa Rosa, - - - 88 Laguna (or Metro - - - 65 San Juan Laguna) - - - 66 Lima - - - 89 Valparaíso - - - 67 Thiruvananthapuram - - - 90 Port Louis - - - 68 Medellin - - - 91 Mysore - - - 69 Davao City Indianapolis, - - - 92 - - - 70 Xi’an Indiana - - - 71 Córdoba - - - 93 Dubai - - - 72 Ahmedabad Oklahoma City, 45 - - 94 Oklahoma - - - 73 Cape Town - - - 95 Belgrade - - - 74 Taipei - - - 96 Campinas - - - 75 Recife - - - 97 Novosibirsk 39 47 - 76 San Antonio, Texas - - - 98 Iloilo City - - - 77 Bangkok - - - 99 Tunis Leeds (Yorkshire & 37 - - 78 Humber) - - - 100 Bacolod CityStatuS 2010 ESTABLISHED EMERGING ASPIRING17 GS Destinations Compendium 2010
  14. 14. the top 100 citiesTop 10emergedCiTiest his year’s list of Top Emerged Outsourcing Pune, considered as the educational hub producing Cities has expanded, identifying ten global quality labor pool in ESO and ADM remains at 8th place delivery locations. Two new cities join the this year as it faces stiff competition from other emerged eight previously acclaimed outsourcing cities. Indian cities.Cebu City and Shanghai have significantly developed their Cebu City has been successful in further developingrespective outsourcing industries which have allowed these its outsourcing capabilities. An established English voice-cities to join the Top 10 Emerged List. based processes sector supports its 9th place rank. Bangalore retains first place for the 4th year running, Shanghai has developed complex IT and R&D services,setting an example through its high talent output, and optimizing its labor pool, cost advantages, and transportestablished and expanding service delivery capabilities. linkages, rounding of the Top 10 list this year. GS Mumbai moves up to 2nd place this year, with its hugelabor pool consistently displaying enhanced service deliv- Rank 2010 Rank 2009 City Countryery in complex and high-value FAO services. Delhi NCR moves down to 3rd place this year, owing 1 1 Bangalore Indiato rising real estate costs and infrastructure stress on Delhi 2 3 Mumbai IndiaCity, and despite its established FAO sector. Manila NCR stays at 4th place as it encounters chal- 3 2 Delhi (NCR) Indialenges in moving up the value chain towards kPO services, 4 4 Manila (NCR) Philippinesgiven its mature service delivery in voice Contact Support& FAO. 5 6 Chennai India Chennai moves up to 5th place due to its access to the 6 7 Hyderabad Indialarge technical talent pool from Southern India and itsmaturing service delivery capabilities. 7 5 Dublin Ireland known as the IT hub of India, Hyderabad moves up to 8 8 Pune India6th place owing to its mature service delivery capability andlarge pool of engineering and technical graduates. 9 - Cebu City Philippines Despite its mature delivery capability in R&D and IT 10 - Shanghai Chinaservices, Dublin constantly faces high costs and limitedscalable labor – the city slips to 7th place this year.18 GS Destinations Compendium 2010
  15. 15. the top 100 cities Top 10 emerging CiTiest he list of Top 10 Emerging Cities will set the Vietnam’s Ho Chi Minh, an ITO-centric city, has outlook for the industry in the coming years. significantly dropped three places due to scalability and With cities coming from South America and employability of its labor pool and as service providers in MENA regions, it is compelling to see stiffer the city have begun to experience scale-up issues.competition arising from these locations in order to cap- Leaping 3 places, Dalian is one of the impressiveture a significant share of the global outsourcing market. emerging outsourcing cities this year. The city experiencedEach city in the list has been positioning itself and their an estimated 30 percent increase in software and servicesrespective niche services and specific target markets - lead- outsourcing exports last year. Dalian has remained success-ing to more defined value propositions per city. ful in targeting the Japanese and South korean markets for The only Eastern European city, krakow leads the Top ITO and kPO services.10 Emerging Outsourcing Cities List. The city has been Shenzhen moved one rank lower this year due to lowerconstantly moving up the ranks since 2008. The city has annual graduate output coupled with challenges in creat-built expertise in delivering FAO services with improving ing conducive business environment for investors.service delivery maturity for ITO and HRO services. Large Curitiba takes ninth place this year. The city gov-multinational companies have established their presence in ernment has embarked various initiatives like Curitibathe city, like Capgemini, Google, IBM and Microsoft. Offshore Center to promote the city as a prime ITO hub Beijing is second in the list of Emerging Cities. The in’s primary strength is its enormous scale and talented Sri Lanka’s chief outsourcing city, Colombo, closes thelabor for ITO services. In fact, the ITO sector has already Top 10 Emerging Cities List. A significant factor for itscaptured 80 percent of the total outsourcing revenues of inclusion is th e recognition of its capabilities for deliveringthe city. However, Beijing continually faces challenges FAO services, together with the improvement of the per-improving its business climate as it remains affected by ceived business and political risk. GSstrict government regulations. Buenos Aires, the primary outsourcing city of Argentina, Rank 2010 Rank 2009 City Countryalso moved one place higher in this year’s rankings. Thecity has been harnessing its capabilities in delivering mul- 1 4 Krakow Polandtilingual Contact Support Services to key markets. This 2 3 Beijing Chinaspecialization contributes to the improving service deliverymaturity of the city. 3 6 Buenos Aires Argentina A notable outsourcing city of the MENA region, Cairo 4 7 Cairo Egyptmoved to fourth place this year. The fusion of nearshoreadvantage to Europe and multilingual skills of the people, 5 8 Sao Paolo Brazilpositions the city in delivering quality voice-based services 6 5 Ho Chi Minh City Vietnamto European and Arabic markets. Sao Paulo continues to move up the rankings, being the 7 12 Dalian Chinabanner high-value ITO city of Brazil. With still an under- 8 9 Shenzhen Chinautilized pool capable of fulfilling R&D and Engineeringservices, Sao Paulo is poised for better positioning in high- 9 11 Curitiba Brazilvalue services in the coming years. 10 17 Colombo Sri Lanka19 GS Destinations Compendium 2010
  16. 16. COUNTRY-IN-FOCUS Ensuring Global Visibility A special feature for countries to showcase their uniqueness There are numerous outsourcing destinations that exist as great alternatives to India and China. Inviting Countries to showcase capabilities that accentuate their uniqueness.Examples of Country-in-focus feature Egypt Philippines Jordan JORDAN For more information write to
  17. 17. JORDAN
  18. 18. Advertorial Interview of Country Representative Stable Costs and High Quality of Talent Pool is Jordan’s Primary Value PropositionHow is the Jordan economy growingpresently, and what are the projections forthe immediate future?Jordan has focused on creating a globallyintegrated economy that is knowledge-centric. Over the past two decades, prudentfiscal and monetary policies have helped inmaintaining low inflation rates in the range of3-5 percent and a stable currency. Exports inthe country increased from USD 4.3 billion in2005 to nearly USD 6.3 billion in 2009. His Excellency Marwan Juma Mr. Aiman Mazahreh Minister of Information & Chairman-Int@j Communications TechnologyExternal debt during the period decreased Jordan is fast emerging as a destination offrom 56 to 21.7 percent. Gross official reservesat the end of 2009 stood at USD 10.8 billion.Jordan has adopted aggressive and choice for outsourcing.comprehensive development processes withactive participation from the private sector to the economy, and produce14,928 direct Together with attractive incentives,which are targeted at creating an investment- jobs. Exports have increased with an average investor-friendly policies and excellentfriendly climate in the country. Many of 343 percent in comparison to 2007, while infrastructure, Jordan has everythingbusinesses are finding Jordan to be one of the investments increased by 164 percent. The required for a smart outsourcingmost liberal and business-friendly economies industry is expected to grow to USD 250 destination. Jordan’s progressivein the region. million over the next three years, creating government has also recently launched a over 10,000 jobs. The outsourcing sector is new Development Zone strategy, further supported by Jordan being one of encompassing multiple specialized zonesHow did the outsourcing industry evolve in the initial countries in the region to establish at specific industries such as outsourcing.Jordan and what is the expected growth in a chapter of the International Association of These development zones offer aggressivethe industry? Outsourcing Professionals (IAOP). This financial incentives to complement existingJordan, as an outsourcing destination, started reflects on the growth of the country as an economic advantages of operating ingaining prominence a decade ago. Key outsourcing destination and provides an Jordan.potentials for the growth of the industry such extremely conducive environment foras a qualified workforce, competitive cost service providers and shared services What are the infrastructurestructures, a near-shore location and a organizations. requirements of the industry and howconvenient time zone were identified early well does the country meet theseon. Strong government backing was provided What are the key factors that contribute requirements?with world-class infrastructure, dedicated into making the country an outsourcingbusiness parks and a liberal economic Jordan has one of the most open destination of choice?environment. Today Information and telecommunication markets in the MiddleCommunication Technology (ICT) and Jordan’s primary value proposition lies in its East which is overseen by an independentInformation Technology Enabled Services stable costs, and the high quality of its talent regulator. Jordan is connected to the(ITES) industry both contribute 14.3 percent pool that is sustainable in the long-term. international network through various fiber ...continued
  19. 19. Advertorial Interview of Country Representative...continued from previous pageoptic links, in addition to satellite connectivity government taking to ensure quality of by integrating technology in theand terrestrial links with neighboring talent and how are you ensuring classrooms. Intel Teach Initiative has beencountries using modern fiber optic cable scalability of the available talent? introduced as a worldwide program thatnetworks. Jordan has three main submarine focuses on using computer technology as acables that provide reliable international Jordan has a young population with nearly powerful teaching tool and enhances theconnectivity. In addition, Damamax is part of 70 percent under the age of 30. Jordan has creativity levels of both teachers andthe Hong Kong Telecom Group PCCW’s Global one of the most successful education students. An MoU was signed betweenNetwork, providing MPLS connectivity to systems in the region with a literacy rate of Microsoft and the Ministry of Education inmore than 1,000 cities worldwide at very 92 percent. The country is ranked first in the 2003 that focuses on creating ancompetitive prices. Middle East by the World Bank in terms of Innovative Teachers Network (ITN), a educational reforms. The government School Technology Innovation CenterThe country has developed dedicated spends 20.6 percent of its public (STIC) and an Education Support parks within the Development expenditure on the educational system.Zones to nurture the growth of its priority English is being taught at an early age in all The government is providing computersectors, such as ICT and BPO. These business schools, and modern technologies and labs in all public schools and universities asparks offer plug-and-play office space, methods have been introduced in the part of its comprehensive e-learningconnectivity and services to local and educational system to ensure technology program. A country-wide broadbandinternational firms and a streamlined process proficiency. network connecting all public schools,of setting up operations. universities, community access centers and There are a number of public-private community colleges is also being initiatives that are focused on creating a deployed.People are a key asset in this industry. knowledge-based economy in the countryWhat measures are the industry and the
  20. 20. Outsourcing Oasis of the Middle East Advertorial The Jordan FactfileJordan, located where Africa, Asia and Europe converge, is ideally positioned asan investment gateway to the Middle East.The country’s robust economy, huge talent pool of human capital, temperate climate, convenienttime-zone, state-of-the-art infrastructure and the ongoing economic liberalization proceduresmake it one of the most preferred destinations for outsourcing firms. Jordan’s immense humancapital is one of the main drivers of growth in the region. A workforce, widely regarded as one ofthe most competitive and qualified in the region, has contributed to Jordan being ranked ninth inthe 2009 Global Service Location Index (GSLI) by analyst firm AT Kearney. Strong work ethics andlow attrition rates work in Jordan’s favor. Jordan invests more than 20.4 percent of its GDP oneducation and has more than 200,000 upcoming graduates to meet the demands of the fastgrowing outsourcing industry.Jordan possesses world-class infrastructure in terms of Internet connectivity, telecommunicationsnetwork as well as transport accessibility within the country and to international destinations.Dedicated business parks which boast of international standards of connectivity and services havebeen set up in Amman and Irbid to nurture the growth of the BPO industry in the country. Theseparks offer a streamlined regulatory environment and various tax benefits, coupled with high-endhousing and associated facilities to attract and retain further investment in the outsourcing sector.Jordan enjoys strong government support and reliable telecom connectivity through variousinternational submarine cables for its ICT sector. This has made it the fastest growing sector in theJordanian economy with an annual average growth rate of 25 percent. The ideal location of thecountry, investment-friendly economic climate and competitive rates contribute to the steady riseof Jordan as a preferred outsourcing a glanceCurrency: Jordanian Dinar Countries that outsource business to Jordan: Gulf Cooperation Council (GCC) countries, US, UK, Middle EastMain industries: Tourism, Banking & Financial Services, and North Africa (MENA) regionEngineering Services, Healthcare & Pharmaceuticals, Energy &Renewable Energy, Information & Communications Technology Key verticals: Healthcare, Banking, Insurance, Telecom, Hospitality, TechnologyLiteracy rate: 92% Key services: Business Process Outsourcing,Languages spoken: Arabic (official), English, French, German, Information Technology Outsourcing, Knowledge ProcessArmenian, Spanish Outsourcing, Shared Service Centers and contact centersInternational airport: Amman (2), Aqaba Some big players: Hewlett-Packard (HP), Dell Perot Systems, CISCO TAC, CrysTelCall, Extensya, Aspire Services, Microsoft, OracleGDP growth (World Bank): 2.8% (2009) Key competitive advantages: Robust Economy, Strategic Location thGlobal ranking: 9 in the 2009 Global Service Location and Convenient Time Zone, Immense Human Capital Resources,Index by analyst firm AT Kearney Investor-friendly Economic EnvironmentQuick look at the IT-BPO sector growth Main cities: Amman, IrbidTotal number of employees: 14,928 Emerging locations: AqabaAnnual growth rate of IT/BPO sector: 25 percent
  21. 21. Advertorial Opportunities and Future Potentials The Face of Jordan Now and BeyondJordan’s commitment to economic liberalization and its privatization program have been recognized by theWorld Bank. The World Bank lauded the privatization program as one of the most successful programs inthe Middle East and North Africa (MENA) region.Jordan has created a competitive, free market Jordan’s strength lies in the ICT, health and Jordan is also taking necessary steps tothough a multi-pronged privatization financial sectors. The growth of the enhance the existing infrastructure base inapproach. Today, the private sector plays a outsourcing industry is expected to the country. In 2010, VTEL Jordan andmajor role in spearheading growth and concentrate on these sectors by building Reliance Globalcom are establishing a linkdevelopment in the country. Jordan is now vertical specialization in financial services, to the FALCON undersea cable throughseen as one of the most business-friendly medical services, IT outsourcing, Aqaba which would triple the currenteconomies in the region. The government has telecommunications and tourism services. bandwidth. It will be the first Terabit cablealso taken significant steps to streamline landing in Jordan. The future of the ICT sector looks rosy withregulations and decrease red tape. the sector continuing its exponential The future of outsourcing in JordanEstablishing business ventures in Jordan now growth. Jordans National ICT Strategy for promises to be bright with an industrytakes less time than the average number of the next three years identifies the sub- poised for growth in all sectors. KPO anddays in the MENA region. sectors that are conducive for growth in the BPO operations are expected to head the current economic situation in the country. growth ably supported by concertedThe Development Zones established across Government initiatives to facilitate this efforts put in by the government and thethe country in key business areas offer growth are also laid out. The plans include private sector. An attractive businessreliable infrastructure, specialized services, developing a USD 3 billion ICT sector, environment, combined with supportivelabor and resources to access major regional provision of 35,000 jobs and increasing government policies and world-classand global markets. At present, there are six Internet penetration to 50 percent. Other ICT infrastructure, will continue to make Jordanzones that are operational throughout the initiatives include provision of laptops to one of the most sought after outsourcingcountry offering various investment university students, encouraging women in locations in the MENA region.opportunities. Jordan’s ICT sector today is the technology programs and graduate Contact info:fastest growing sector offering more than Int@j internship programs.80,000 jobs with an annual average growth Tel: +962 6 5152322rate of 25 percent. e-mail:
  22. 22. Quotes from Reports Advertorial TestimonialsJordan at the ninth place is another top multi-lingual agents with university designed to make Jordan more accessibleperformer as it has solid capabilities in IT and education, coupled with excellent language to the rest of the home to numerous successful outsourcing skills has been a compelling reason for thiscompanies that compete internationally. It growth. Jordanian telecom has invested over USDhas also one of the region’s most favorable 400 million in recent years in a number ofbusiness environments. It is clear that from the standpoint of technology solutions designed to make telecommunications, Jordan has made Jordan more accessible to the rest of the~ A.T Kearney Report 2009 significant strides over the past decade. In world. addition to the efficiencies still being realized by the deregulation of the telco ~ DatamonitorCurrently, there are several contact center sector in 2005, Jordanian telecom hasoperations in Jordan serving clients invested over USD 400 million in recentdomestically and offshore, across a variety of years in a number of technology solutionsvertical markets. In addition, the availability ofPublicationsIt looks like another little oasis of IT delivery is As to the cultural milieu, Jordan has an open have rendered it definitive advantages,building up as the vast sands of the Middle and welcoming arm. On the infrastructure including a favorable time zone, proximityEast blow winds of new market opportunity; side, areas like powers, roads and buildings to continental Europe and the countrysnow Jordan joins the club, as it gets all set to are positive. It has already been recognized perception as a stable oasis in a stormy, butwoo the outsourcing industry. on the eco-friendly distinction, where the vital, region. example of Amman, a building zone, is citedAt the Nasscom Summit 2009, foreign as an example, and an award-winning case Enthusiasts also point out that Jordaniansdelegations of many hues and shades were in masterful city planning. can offer relatively low compensation costs,seen exploring and selling business as well as exposure to English languages byopportunities in the new world order that is ~ Global Services Magazine virtue of its strong focus on education,shaping up for a post-recession scenario. We especially at the tertiary level.could see delegates from Jordan too. Theywere not only prepared for a strong ~ Jordan Business: Jordanian Magazinecompetitive pitch, but also had large To highlight the benefits, Jordan’sspoonfuls of the pudding’s proof up their geographic and geopolitical positioningsleeve.TestimonialsJordan is open for business with a very dedication has paid off, and businesses Development Zones.capable and sought after workforce, continue to succeed. Thanks to all thecompetitive cost structure, political stability, partners involved, the country continues to His Excellency Dr. Bilal Bashir Chief Commissioner, Development Zonesease of access, robust ICT infrastructure, as gain visibility as an outsourcing destination. Commissionwell as a government that is fully committedto creating the right investment environment. Som Mittal President, National Association of SoftwareThese are only some of the factors that and Services Companies (Nasscom)position Jordan as a great global destination Jordan has enabled the ITO/BPO servicesof choice as well as the ideal access point and industry and we run our operation supportedgateway to the Arab world. by a strong legislative base, a sound telecom infrastructure and skilful human capital whichHis Excellency Mr. Marwan Juma BPO investors will find in Jordan a highly really makes our business succeed. TheMinister of Information and Communications advanced legislative and infrastructure government is involved in updating the skillsTechnology platform that supports their work and of IT trainees to qualify them for our line of business endeavors. The Development Zones business. Commission (DZC) facilitates all necessaryComing to Jordan opened our eyes to the procedures and arrangements for the Kaushal Shahcountry’s potential. The country’s will and industry to operate and prosper in the Managing Director, Aspire
  23. 23. by Sruthi Ramakrishnan� location Assessment: Perception and Reality for Global Businesses 28� Europe: Showcasing the Challenges and opportunities 32� Perspectives and Potential of Asia’s Hotspots 36� Middle East & Africa: leveraging Africa & Middle East 41� latin America: The Enduring Promise of latin America 44
  24. 24. regional DynamicsLocation Assessment: Perception andReality for Global BusinessesGlobal Outsourcing Locations Evolution of Services Driven Economy 15 years ago, there were very limited options in terms of outsourcing. India was the predominant answer for IT outsourcing. 10 years ago, BPO started coming up as well. At that point, 2 primary locations emerged: India and Philippines. Predominant clients for them were the US and Uk, basically the English speaking countries. When Europe started showing interest, people were very finicky about the data Acts and data privacy as they started having Eastern Europe come into prominence. Some of the South American countries began coming into prominence through nearshoring from the US and their Spanish language capability. What is it that makes a location emerge as a preferred location? Perceptions about a country and the reality can be very far (illustrated in table 1). Why are clients seeking new geographies? Clients are beginning to look outside India, Canada, Philippines and Eastern Europe and Latin American countries, because of: • Localization- More so if you have a product and have to localize that for a given country. Every product cannot be built to meet the local conditions of every country, but a regional center can help facilitate localization of products. Also, a client in the US outsourcing his call center functions would rather have his service provider provide services out of a center in the US rather than offshore. • Evolving and Developing Processes- Some locations are reaching talent saturation, leading clients to look for other locations where they can get talent at better qual- ity and at a better price.Figure 1 the GlobalOffshoring Landscape Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global Businesses’28 GS Destinations Compendium 2010
  25. 25. regional Dynamics City Perception Reality table 1 Global Delivery Locations - Perception vs. Colombo, Sri A war-torn nation One of the fastest emerging FAO destinations with Lanka more than 50,000 people employed in the IT/BPO Reality industry in Colombo and growing at over 20 percent year-on-year. Sri Lankan IT BPO industry grew at 23 percent even during the war time. accra, Ghana Cocoa Producer Nation Destination for Back Office processes with presence of companies such as ACS and 3G (Contact Support) and the development of initiatives such as the Kofi Annan ICT Center of Excellence for Human Capital and Infrastructure Development. Companies like 3G are looking to expand workforce in the next few years in this commercial gateway to Western Africa. Bhubaneswar, Crowded Tier-II City One of the fastest growing IT regions in India with India ample labor force in IT and Engineering (with 60 Engineering colleges producing 25,000 graduates per year). Bhubaneswar is a location of choice for big industry players in India with the presence of companies such as Wipro, Infosys, Mahindra Satyam, and Tata Consultancy Services. Santiago, Chile considered as a Foreign investor-friendly business environment and Chile small LatAm country with technical industry capabilities strongly support high- a limited population and value services in KPO-ESO. Chile’s IT-ITES workforce not known traditionally produces $38,095 per FTE in the industry which is for outsourced services 41 percent more than India. This is due to higher value services being performed out of Chile compared to India (on an average).Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for GlobalBusinesses’ Figure 2 Key Question: Where should we locate?Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for GlobalBusinesses’29 GS Destinations Compendium 2010
  26. 26. regional DynamicsFigure 3 Parametersinfluencing selection:Process Requirements andGeographical & OperationalDelivery Models. Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global Businesses’ Outsourcing • Integration of new countries into the Global Economy (Example: Brazil, South to the Right Africa, China) Location vs. • New Customer Segments are emerging- For example, customers are looking at Brazil because it is a significant economy growing at a fast pace. So while certain Offshoring? things can be outsourced to Brazil, at the same time clients are looking at address- The change in terminology ing the available market there. The same can be applied to China. is a sign of maturing of the • Customer Demand is becoming more sophisticated industry and its players. The right solution at this point to Why will existing solutions not be enough in the new decade? the outsourcing/ offshoring/ • Closer to Customer nearshoring debate is global • New Generation of Services sourcing. It is more offshor- • Specialized Skill Requirement ing than outsourcing. • Established Locations inhibited by Talent Saturation Why global sourcing? Firstly, if something is not Moving from Emerged to Emerging outsourced to a third- party There is a move, where clients are feeling that emerged destinations are saturated in vendor, it is insourcing. terms of the labor pool, and have salary inflations year over year. There is a churn in Outsourcing does not neces- the people which leads to lower quality. So clients are looking for emerging destina- sarily cover that. Secondly, a tions which probably have a higher talent pool available, lower costs and governments significant number of clients more eager to attract investments. Clients who have been in outsourcing for around are willing to have everything 10 years are moving from established locations. sourced and not keep any- Main factors in play in this shift: thing within the physical   Emerging destinations being viewed as opportunities: confines of their office. This • merging Locations will hold the key in the near future for Global corporations E does not mean it is going as they will provide as host of new opportunities. They are looking at such loca- off the shore or out of the tions to bring high quality and scale together with low costs. country. • merging Economies, opportunities to tap the domestic talent and market, and E So the only term today evolving customer demands are driving client and service provider migration to which covers all of this is new international geographies global sourcing.  Perception marketing: • erception Marketing: Effectiveness of conveying concrete information, strategic P30 GS Destinations Compendium 2010
  27. 27. regional Dynamics Figure 4 Emerging Destinations – What to Look ForSource: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for GlobalBusinesses’ marketing, and promotions to combat negative external perceptions will be crucial in attracting potential clients and competing in the global services industry • Employability” and “Scalability” are now more critical to “Productivity” and “ “Sustainability” with exceedingly lower emphasis on “Cost Advantage” alone Importance of distinct Value Propositions: • ompetitive and shareholder pressures are driving demand, creating more nim- C ble, efficient market players • ue to the rapid maturity of the services outsourcing industry, locations are D struggling to create and sustain their competitive advantage – making it even more important for “value propositions” to be brought out using the “Centers of Excellence” model31 GS Destinations Compendium 2010
  28. 28. regional DynamicsEurope: Showcasing the Challengesand OpportunitiesThe Emerging Nearshore Western Europe has done a significant amount of nearshoring to Eastern Europe. Over the years, the gap in GDP between Western Europe and Eastern Europe has widened instead of declining, which has helped in attracting clients from the former to the latter. This has helped in making nearshoring to Eastern Europe an attractiveProminent nearshore options: opportunity.Eastern Europe It has been a destination of choice for Western Europe for more than a decade and6 poland: kraków, Warsaw, this attractiveness has become stronger over the years. Gdansk, Wroclaw6 Czech Republic: Prague, Brno CHALLENGES6 hungary: Budapest  Clients face dilemma- No single country can take care of all languages. But6 Russia: St. Petersburg, Estonia can take care of the 5 major languages. Moscow, Nizhniy Novgorod,  Most smaller countries do not offer scale Rostov-on-Don, Novosibirsk6 Romania: Bucharest, ADVANTAGES Cluj-Napoca  Europeans are conservative businessmen compared to their American counterparts6 Ukraine: kyiv, Lviv and are more comfortable keeping work closer to home. Thus nearshoring is a favored option.6 Belarus: Minsk  Considering a cut off population of 10 million, only Russia, Ukraine, Poland,6 slovakia: Bratislava Romania, Belarus, Czech Republic, and Hungary have the advantage of a sizableBulgaria: Sofia talent pool6 slovenia: Ljubljana  Multiple factors enable to be perfect nearshore options for Western Europe like: 1. Financial Attractiveness 3. Trade laws (European Union)6 serbia: Belgrade 2. Cultural compatibility 4. Excellent Education6 estonia: Tallinn6 Croatia: Zagreb Major clients nations in the region are:6 Latvia: Riga  United kingdom  Denmark6 Lithuania: Vilnius  Spain  Finland6 Malta: Valletta  France  Germany  Italy  NorwaySource: Global Shore 2010 webinar  Sweden‘Europe: Showcasing the Challenges andOpportunities’ REGIONAL DYNAMICS  European Union member countries in Eastern Europe have significant advantages, providing them the edge to become “nearshore locations of choice”  A recent trend is of clients preferring to send work onshore or to nearshore loca- tions. This is true for US itself. This is not necessarily because of a language pref- erence. This is being preferred even at a higher cost than offshore locations. This trend is favoring Eastern Europe.  Being a part of the EU makes the smaller countries offering cost arbitrage very attractive nearshore destinations, some other benefits for Eastern European32 GS Destinations Compendium 2010
  29. 29. regional Dynamics countries becoming members are: • Political stability and greater integration • Increased trade • Increased inward investment • Social policies and subsidies Eastern Europe has attracted a lot of investments from service providers and cli- ents (captive operations) in the last 3-5 years making it a strong “offshore cluster” and a “skills cluster”Global Clientèle With 63 percentage of all developed countries in Western Europe, it is the largest cluster of buyers across the world. This attracts large business firms from across the world to have centers in the region to cater to the domestic markets in these developed economies. Eastern Europe hence caters to the global clientele indirectly, this has successfully built a strong brand for “Nearshore to Eastern Europe”, offering cost differential of 15-20 percentage compared to Western Europe. Clients say productivity per employee higher in Eastern Europe than offshore loca- tions like India, Philippines and China. High skill sets available for processes like Product Development (Turkey, Ukraine, Russia), Regional Multilingual Skills (top 5–6 locations of previous list), and R&D (Russia and across the region). Europe: Centers of Excellence Region/ Country/ City Core Specialization Companies Established Figure 1 Europe: Centers of Excellence. • Specializes in R&D, Infrastructure SAP, Quest Software, IBM, Microsoft, Western Europe Ireland Dublin Accenture, Marino Software, PMI Services and Custom Development Application Software, Infosys, Deloitte, Amazon • High value processes in Financial Barclays, Accenture, InfoTech, HCL, U.K. Belfast Analytics, R&D and Applications Capgemini, HP-EDS, KPMG, Xerox, Development Management ECOM, First Data • Business Analytics, Finance and Google, IBM, Motorola, Fujitsu, HCL, Poland Kraków Accounting Outsourcing, multilingual Capgemini, ACS, Hewitt, Quantum, Contact Support, HR Outsourcing Sabre • Focused on HR Outsourcing, R&D Sun Microsystems, Accenture, GE, Czech Eastern Europe Prague processes and emerging destination for SAP, Google, Intel, Capgemini, Republic Engineering design services Mahindra Satyam, IBM • Focused on HR Outsourcing, R&D in SAP, Microsoft, Sun Microsystems, Hungary Budapest Software Development and Testing TCS, Genpact, Cognizant, Canon, Mahindra Satyam, SCA • Specializes in Engineering Design and Intel, Motorola, Sun Microsystems, Russia St. Petersburg R&D services. Boeing, HP, Auriga, Google, Luxoft, EPAM, Arcadia Page 10Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’PRIMARY VALUE PROPOSITIONIt is a viable nearshore destination for Western European clients for several reasons:  Western Europeans prefer outsourcing to Eastern Europe than to traditional offshore destinations like India or Philippines due to the unique service delivery profile of Eastern Europe.  Factors such as cultural affinity, skills expertise, labor pool availability which includes engineers and scientists who are not abundantly found in offshore loca- tions, contribute to this appeal.33 GS Destinations Compendium 2010