India still number 1 outsourcing destination, China others posing competition

According to a recent Gartner study, India is still the world's favourite destination for offshore outsourcing, but attractive cost structures in the Philippines, Vietnam and Indonesia and the rapid growth of the business in China are posing tough competition.

India came first among 30 countries around the world which Gartner studied for globally sourced activities in 2010-11. In the study, Gartner conducted an analysis of these countries to assess their capabilities and potential(how they will fare in future) as offshore services locations.

Gartner underlines that choosing an outsourcing destination, in cases where an organization chooses to move IT services to lower-cost countries, is still a difficult task. Pointing to the fact that businesses don’t have to look at cost attactiveness alone before outsourcing their work.

Gartner found that India scores well across all 10 criteria, that the research firm studied except for its cost-competitiveness is being challenged due to the rising rupee. But in totality, cost comptetivenessis taken care of by its strength in other areas. Other not so bright aspect remains the high attrition in Indian BPO sector.

Rise of China as a favourable BPO destination:

According to the study, China improved its scores for "political and economic environment" from "good" to "very good", and "culture compatibility" from "fair" to "good".This is essense is also due to China’s rising global political and economic leverage, post recent global economic crisis.China experienced a steady positive growth rate, spurred by a USD 583.9 billion stimulus package, in 2009.

Report Card for Philippines: The study found Phillipines remaining largely unchanged, although its rating for "global and legal maturity" fell from "good" to "fair".

The factors going in favour of Philippines are young, experienced labour pool specialising in contact centres and finance and accounting (F&A) business process outsourcing (BPO), complemented by its good language and cultural compatibility with western economies. --------

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