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A recent survey by A T Kearney reads that India tops in offshore destination; low costs, better technical know how, language skills, mature vendors and supportive government policies have taken India to the top for offshoring services. And this is despite all the concern raised about overheating, wage inflation and service levels.
In the overall ranking, dominated by the developing countries from Asia, India is followed by China, Malaysia, Thailand and Brazil, the survey, christened Global Services Location Index 2007 said.
To arrive at the this conclusion, A T Kearney surveyed over 50 countries for different aspects related to offshoring services, like people skills, financial attractiveness and business environment. India maintains a wide, although slightly shrinking, lead over China, confirming what industry surveys and visiting executives have found, the survey said. While compensation costs in India have increased because of the recent high economic growth, "these cost rise have been matched by corresponding increases in skill supply and quality indicators," the global consultancy major said.
Indias success is also prompting developing countries to replicate its model. While in Asia, two of its neighbours, Pakistan and Sri Lanka, have begun to recognise the potential of the export services sector, a host of Latin American countries too are taking the same route, the survey said.
Sri Lanka and Pakistan, which entered A T Kearneys latest index for the first time, offer many of the same advantages as India, with similar labour costs, widespread use of English, strong education systems and increasingly open and well-regulated business environments. However, both countries have only recently woken up to the enormous opportunity of the offshore services sector and therefore lack Indias breadth and depth of experience.
The survey said "These two countries are also disadvantaged by their relatively smaller population-base and obvious concerns over internal security".
Although India ranks high mainly because of its skilled and technically superior pool of manpower, it suffers on the two other parameters - financial attractiveness and business environment rankings. In terms of people skills India ranks second, behind the US (tier II cities) but ahead of China and Germany. As per business environment rankings, India is placed a distant 34th. The AT Kearney survey also says when it comes to the question of cost effectiveness, Vietnam, with one of the lowest telecom costs in the world, comes out on top while India is ranked sixth.
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