Destination Compendium 2010

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Ed NairEditor

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IT and BPO are both global business

opportunities and tools for economic development for

countries. This year’s research and ranking

feature 100 cities from 49 countries.

The Business of Places Business 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 ‘place’. In the beginning, it meant India and now it means much more. The journey from thereon has been fascinating.

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 could be delivered.

The other point is that services in the form of IT and BPO are both global business opportunities and tools for economic development for countries. The breadth of economic impact of pursuing global services is wide: it includes increase in FDI, growth in exports, increase in domestic employment, rise in purchasing power, infrastructure devel-opment, and overall GDP growth. Every country including India is witness to these effects.

The Global Services Destinations Compendium is an attempt to bring together the myriad dynamics of outsourcing locations in one place— complete with research, data, profiles, and expert opinions. At 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. GS

Educated Technical Human Resources

Your Gateway to the Middle East

Reliable Infrastructure

Fast Growing Economy

W o r l d ’s #9 F a v o r a b l eO u t s o u r c i n g D e s t i n a t i o n

“A.T. Kearney Report 2009”

W o r l d ’s #9 F a v o r a b l eO u t s o u r c i n g D e s t i n a t i o n

“A.T. Kearney Report 2009”

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


coNteNtS

JORDAN

The Top 100 CiTiesby Avinash Vashistha &Manuel Ravago, TholonsThe list of Top 100 Outsourcing Cities will set the outlook for the industry in coming years.

11

27

49

REGIONAL DyNAMICSby 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

ExPERT SPEAk

� Choosing the Right Off-Shoring Destination 50by Atul Vashistha, Founder & Chairman, Neo Advisory� Compete or Cooperate? Bridging the Nearshore-Offshore Divide 53by Anupam Govil, Founder and CEO, Global Equations� Rise of IT-BPO Outsourcing Frontiers Regional Analysis 56by Viral Thakker and Nishant Mathur, KPMG Advisory Services, India� Latin America: The Next Sourcing Frontier or an Afterthought? 59by Esteban Herrera, Senior Vice President, HfS Research� Africa: The emerging frontier for services offshoring 63by H.Karthik and Nikhil Rajpal, Everest Group� Location Selection Best Practices 65by Jehil Thakkar and Shailesh Narwaiye, KPMG Advisory Services, India� Global Sourcing for FAO: Strong, Successful and Growing 68by Stan Lepeak, Managing Director, EquaTerra Global Research� Why Latin America is Still a BUy 71by Mario Tucci, Senior Global Business Consultant� Africa- The Next Outsourcing Frontier 72by Dr. P.K.Mukherji, President & Managing Partner, Avasant Asia� Latin America Emerges as a key Outsourcing Destination for 2011 74by Don Jones, Partner, Technology & Life Sciences Practice, BDO USA� Africa as an Outsourcing Destination 76by Pumela Salela, BPO/ITeS expert Consultant, World Bank� Offshoring in the Latin American Region 82 by Pradeep Udhas, Executive Director, IT/ITeS Sector, KPMG

21COUNTRy IN FOCUS: JORDAN


� India’s Global Expansion: Eyeing Latin America 83by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ

� Legatum Prosperity Index 84

87CITy PROFILES

� Beijing 88

� Belfast 90

� Brno 91

� Budapest 92

� Buenos Aires 96

� Cairo 98

� Chandigarh 98

� Coimbatore 100

� Colombo 101

� Curitiba 103

� Dalian 104

� Guangzhou 106

� Hanoi 107

� Ho Chi Minh 109

� Johannesburg 111

� kolkata 113

� krakow 115

� kuala Lumpur 117

� Mexico City 119

� Prague 120

� Rio de Janeiro 122

� San José 124

� Sao Paolo 126

� Santiago 128

� Shenzhen 130

� Singapore 132

� St. Petersburg 133

� Toronto 134

� Warsaw 136

� Ahmedabad, Bangkok, Bhubaneswar, Brasília 137

� Bucharest, Cape Town, Dubai, Glasgow City 138

� Guadalajara, Istanbul, Jakarta, kyiv 139

� Montevideo, Moscow, Mysore, Nizhniy Novgorod 140

� Penang, Perth, Seoul, Taipei 141

Destinations Compendium 2011

One Stop Resource On Global Outsourcing Destinations

RELEASING NOVEMBER 2011Inviting countries, cities, associations

to take part in this initiative

For more details, write to [email protected]

byAvinash Vashistha Chairman and CEo, Tholons

Manuel RavagoResearch Director, Tholons

� Ranking fluctuation 12

� Methodology and Scope of Study 15

� Point of Scale Resistance 15

� The top 100 Cities 16

� top 10 Emerged Cities 18

� top 10 Emerging Cities 19


the top 100 cities

Boon or Bane?Change has been the best descriptive word for the out-sourcing industry in 2009, and this year, Tholons has encompassed the world’s Top 100 Outsourcing cities - twice the number of previous Lists. The expansion of the list has created an avenue for a more concise understand-ing of industry movements – across 49 countries from 10 defined regions.

Industry experts noted that the outsourcing activities from 2009 to this year have become sluggish. Countries tried their best to prove resiliency in the crisis and opted for strategies that could mitigate the effects. Indeed, some of the countries that had been resilient experienced smaller GDP growth, below expected growth targets; on the other hand, countries which were greatly affected by the global recession posted negative growth, which often deterred their development as service delivery locations.

Likewise, the repercussions of the global economic crisis postponed many large outsourcing deals across geog-raphies, while forcing service buyers and providers alike to stretch operational budgets. The mantra of ‘doing more for less’ has never been more relevant to the service providers as it was this past year. The effects of the downturn also spurred apprehension among clients in renewing outsourc-ing contracts. This cautionary stance was felt by most if not all horizontal and vertical segments of the industry.

On a positive note, many have viewed these challenges as opportunities, treating the economic downturn simply as a transitionary (or even evolutionary) phase for the industry. There is now a greater call for delivering complex services than maintaining cost advantages, which leads to a more widespread transformation of outsourcing models to fit the requirements of an ever-changing buyer market. Further, there is a stronger focus on business transforma-tions among service providers, which will foster enhanced customer satisfaction. In the end, stronger buyer-provider relationship will be seen.

The 2010 List of Top 100 Outsourcing Cities is a deliberate attempt to encapsulate such trends in this new era of services globalization. Thus, this year’s List is not only a reflection of the current competitiveness (and stat-ure) of cities in the global outsourcing landscape, the List

likewise provides insight to the future potential of locations in addressing emerging trends and demands in services globalization.

Location Assessment FrameworkThese recent events in the global economy certainly high-lighted the importance of more accurately assessing a loca-tion and the corresponding outsourced services that can be potentially delivered. Given this, the Location Assessment Framework has been applied in generating this report. The Framework covers six broad categories with fifteen subcat-egories, with each category and subcategory having their own respective weight. These weights are then utilized to generate a corresponding ‘City Score.’ These categories are “Scale and Quality of Workforce”, “Business Catalyst”, “Cost”, “Infrastructure”, “Risk Profile” and “Quality of Life”.

The parameters above are the essential components in differentiating cities from each other. Consequently, the parameters serve as guide in determining the capabilities of each city to deliver services in the wider spectrum of the outsourcing industry. Aside from presenting the inherent strengths, the parameters are also an effective base for iden-tifying the inhibitors or areas for improvement which may undermine the development of the industry in the loca-tion. The framework also reveals additional factors which may spur a location’s service delivery maturity.

The combination of these parameters results in a specif-ic correlation of the cities to their respective service niche. For example, considerations in the workforce extend from scalability to employability of workforce. Cities with an abundance of Spanish-proficient speakers will have a greater value proposition for catering voice-based BPO services to the US Hispanic market. Likewise, cities with high percentage of engineering graduates may be better equipped to venture into the ESO space.

Cost still plays a significant factor in locating. Coupled with the capacity to deliver specialized services, low cost cities can have a definitive advantage in attracting inves-tors or service providers. Along with this, developed and supportive ITeS infrastructure is needed in order to fulfill the requirements of the industry. In order to support the

the 2010 List of top 100 outsourcing Cities is a deliberate attempt to encapsulate trends in the new era of services globalization.

Ranking Fluctuations


the top 100 cities

growing ITeS industry, kuala Lumpur for example, has shown concerted effort in improving infrastructure, which contributes to its overall attractiveness as an outsourcing destination.

Factors such as Risk Profile and the Quality of Life in the cities are also included to assess the viability of the location. Political violence and social unrest may greatly affect the conduciveness of business operations in the city. One recent example is the increasing crime rate in Mexico, which has definitively affected the decisions of service pro-viders in locating and expanding in the country.

The Framework also considers various regional dynam-ics which also have a direct influence on the positioning of the cities in the global outsourcing space. Latin America is reputed for its nearshore advantages to the US; on the other hand Eastern Europe is known for its cultural affinity and geographic proximity to the Western European client market.

The Tholons Location Assessment Framework thus becomes more relevant in critically identifying, monitor-ing, and evaluating the competencies of emerging global outsourcing destinations.

City Movements: Losers and GainersThe top gainers this year were mostly Tier I destinations – Colombo, kuala Lumpur, Singapore, Brasilia, and Montevideo. A clear factor for the movement is attributed to the global effects of the economic crisis. With most economies recovering and rebuilding their competencies, service providers have been more keen on strategically placing their investments in (safer) Tier I cities and in locations with established service delivery capabilities. For instance, the city of Colombo moves up 5 places this year, in recognition of its capabilities in FAO, producing accountants that meet Uk standards and the significant

improvement in perceived risk in the country by the cli-ent nations. The city of kuala Lumpur moves up 4 places highlighting the city’s robust and continuously developing infrastructure and maturity of service delivery capabilities for high-value ITO and FAO.

On the other hand, the major drops were seen in Tier II locations: Nizhny Novgorod, Thiruvananthapuram, Cordoba, Chandigarh, Belfast, Accra, and Jaipur. One possible reason is the inability of Tier II locations to improve on service delivery maturity, in relation to its Tier I competitors in their respective countries. The two-old factors can be attributed to this: quality of scalable labor pool and infrastructure concerns.

Many Tier II locations likewise have struggled to develop labor pools, or to at least reach the same labor pool quality of Tier I locations. Many Tier II locations have also experienced labor migrations of their highly-skilled resources, and as induced by rising unemployment rates. Challenges pertaining to employability have also been an occurring problem in many Tier II cities – especially when considering English proficiency and technical skills. For example, the city of Jaipur in India has lost some of its appeal as a destination of choice due to the perception of low employability of its technical and managerial talent pool. In contrast, and in St. Petersburg in Russia, the high technical graduate output is one of the major contributing factors which moved its ranking up, albeit having high labor costs.

Weak infrastructure support also remains a deterrent for service providers from locating in Tier II cities. For instance, India’s ITeS-related infrastructure is nearing peak capacities, which makes it less efficient in fulfilling the requirements of the industry. This is noticeable among Tier-I locations in India and is further observed among Tier II locations.

Scale & Quality

• Labor Pool• Skills Availability• Graduate Output• Complexity

Skills and Scalability

Savings Business Environment

operational Environment

Business Risk

non-Business Environment

• Cost of Operations• Cost of Training• Cost of Real Estate• cost of Bandwidth• Cost of Living• Cost of other

Infrastucture

• Government Benfits/Incentives

• Competitive Landscape

• Untapped Labor Pool• Employement Profile

• Connectivity• Bandwidth Availability• Transportation

• Social infrastructure (Hospitals, Educations Institutions, etc.)

• Non-work Culture• Availability of

Recreation/Leisure facilities

• Commerical Risk• Political Risk• Natural Risk• Social Risk

Cost Businee Catalyst Infrastructure Risk Profile Quality of Life


the top 100 cities

Movement Major Gainers Movement Major Losers

+6 St. Petersburg -4 Nizhniy Novgorod

+5 Colombo -4 Thiruvananthapuram

+5 Singapore -4 Belfast

+5 Brasilia -5 Cordoba

+5 Montevideo -5 Chandigarh

+4 Kuala Lumpur -5 Jaipur

+4 Brno -5 Accra

+4 Tianjin

The downturn has proven the importance of location assessment for investigating the service delivery maturities of outsourcing destinations. Factors for locating may not entirely rest on the cost advantages but on the quality and complexity of services being delivered. Service providers have been keen in evaluating the best-fit city which will deliver their processes.

Thus, the challenge now lies for the emerging countries to increase its overall competitiveness to gain traction in the outsourcing landscape. This will require more effective and creative initiatives that will position better position their countries in the market and highlight their inherent service delivery advantages.

City-centric Approach – The Continuation of the Paradigm ShiftCity-level analysis has always been the best approach in identifying corresponding service delivery strengths. As compared to country-wide analysis, a city-centric approach allows a more granular investigation of the inherent capa-bilities of and the opportunities for each potential city. For example, a country having specialization in IT services may encompass Software Development, IT Training and

Education, or Application Development Management services from its cities. Thus, the country value proposition is merely a rough summation of the service capabilities of its key outsourcing cities.

City-centric assessments also receive greater traction from large service providers, and as city’s can better decouple themselves from the broad or oftentimes ‘generic proposition’ of the country. Value propositions of the cities are oftentimes overshadowed by the generic country value proposition. Cebu City for example has high potential to become a global kPO player but the city’s image is often overshadowed by the Philippines’ voice-based BPO reputation.

For Tier II cities, decoupling will become an increas-ingly necessary process, especially among emerging cities with very specific skill set propositions. Decoupling from the country image will entail an efficient highlighting of the local value propositions and a more focused marketing and promotions strategy.

The underlying premise for decoupling still lies on the coordination among key stakeholders in the particular location. More responsive decision and implementation will be required as the city-centric approach is significantly smaller compared to country-level approach. Successful concerted effort will also be a crucial factor in identifying and building the outsourcing industry in the city.

The revamp of the global economy marks the emer-gence of key trends in outsourcing – a paradigm shift encompassing the types of services and the geographies of ideal locations. In the near-term, we should experience a more granular approach to location assessment - focusing on cities rather than countries and as a city-centric approach fosters better identification of specific niche services. GS

27 January, New York

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the top 100 cities

the Top 100 Emerging Outsourcing Destinations 2010 report was fulfilled through a combina-tion of proven methodologies. First, surveys and interviews were conducted with Tier I & II

service providers and buyers aimed at determining trends in delivery and consumption of outsourced services in specific destinations as well as determining market and labor sizes, identifying the expansion strategies of Tier I & II service providers. Second, secondary research was con-ducted in support of primary means. Country economic information were gathered from historical data from

governments, trade bodies, and global institutions, while government publicly released data were used to present country macroeconomic data, while market assumptions and analyses were grounded by data such as annual reports, industry bulletins, and trade publications. In generating the rankings in the report, a combination of qualitative and quantitative analyses, developed and refined by senior consultants, considering numerous variables in providing the rankings and evaluating the impact of non-numerical data on the assessment of outsourcing locations were employed. GS

the current global outsourcing landscape is marked with by heightened competition with service delivery locations aiming at securing their respective shares of the global outsourc-

ing market. One major challenge for these locations is how to better integrate their respective labor pools in the outsourcing sector as service providers most often choose locations on the basis of accessibility of qualified talent in the long-term. With this shift of paradigm from basic availability to sustainable and employable talent supply, the concept of Point of Scale Resistance (POSR) has been introduced in analyzing service delivery locations. This concept refers to the point beyond which organizations will encounter challenges in ramping up operations in a specific location – highlighting sustainable employability of talent. For instance, if Country A has a POSR of 850, this means that service providers would theoretically encounter difficulties in ramping-up headcount beyond 850 employees. This clearly suggests that scalability is a function of multiple parameters and not just population, and the inhibitors have been classified into the following segments:❑ low Demand: Demand can be seen not just in the

number of MNCs present in the country to the

amount of investments flowing into the sector. It can also be seen in aspirations (or intent) of students to take education related to specific outsourcing service lines.

❑ low Employability: Employability is a factor of qual-ity of education, quality of institutions and availability of industry-relevant skill sets of a given labor pool.

❑ High Competition: Competition is a significant fac-tor for scalability as it can come from not only the services outsourcing industry but also from other industries hiring from the same pool.

❑ High Risk: The perception of risk can vary across the stakeholders in the industry, and hence high risk loca-tions (at times with excellent talent pool availability) fail to provide scalable solutions.

❑ financial feasibility: While focus has remained on cost and operational benefits, high salary inflation inhibits scalability.

The POSR concept will become an increasingly important consideration for emerging delivery locations to promote their capabilities as it assists in identifying what a location can/cannot or should not do when assessing its service deliv-ery capabilities. GS

Methodology and Scope of Study

Point of Scale ResistanceSM


the top 100 cities

2007 2008 2009 2010 City

Top5 Top8 Top8 1 Bangalore

Top5 Top8 Top8 2 Mumbai

Top5 Top8 Top8 3 Delhi (NCR)

Top5 Top8 Top8 4 Manila (NCR)

1 Top8 Top8 5 Chennai

2 Top8 Top8 6 Hyderabad

Top5 Top8 Top8 7 Dublin

3 Top8 Top8 8 Pune

4 1 1 9 Cebu City

8 2 2 10 Shanghai

16 5 4 11 Kraków

10 3 3 12 Beijing

14 9 6 13 Buenos Aires

11 7 7 14 Cairo

15 8 8 15 São Paulo

6 4 5 16 Ho Chi Minh City

18 16 12 17 Dalian (Dairen)

13 10 9 18 Shenzhen

17 13 11 19 Curitiba

7 19 17 20 Colombo

12 11 10 21 Hanoi

20 14 14 22 Prague

5 6 15 23 Kolkata

19 18 16 24 Santiago

29 27 20 25 San José

9 12 13 26 Chandigarh

28 25 22 27 Budapest

2007 2008 2009 2010 City

25 20 19 28 Johannesburg

- 22 23 29 Toronto

- 26 21 30 Rio de Janeiro

32 33 27 31 Kuala Lumpur

21 17 18 32 Coimbatore

33 32 31 33 St. Petersburg

27 29 30 34 Brno

22 23 24 35 Guangzhou (Canton)

- 30 26 36 Mexico City

24 24 25 37 Belfast

26 28 28 38 Warsaw

- 36 36 39 Singapore

- 37 33 40 Chengdu

- 31 29 41 Jaipur

46 41 37 42 Monterrey

43 38 34 43 Bucharest

44 43 41 44 Brasília

34 34 32 45 Accra

42 39 38 46 Moscow

- - 43 47 Tianjin

- 44 39 48 Guadalajara

40 35 35 49 Bratislava

- - 47 50 Montevideo

41 40 40 51 Sofia

47 46 46 52 Tallinn

35 48 45 53 Halifax

49 50 49 54 Ljubljana

The Top 100 CiTies


the top 100 cities

2007 2008 2009 2010 City

- - 44 55 Casablanca (Dar-el-Beida)

48 49 50 56 Kyiv

- - 48 57 Alexandria

- - - 58 Bhubaneswar

30 42 42 59 Glasgow City

- - - 60 Istanbul

- - - 61 Cork

- - - 62 Jakarta

- - - 63 Nizhniy Novgorod

- - - 64 Bogotá

- - - 65 San Juan

- - - 66 Lima

- - - 67 Thiruvananthapuram

- - - 68 Medellin

- - - 69 Davao City

- - - 70 Xi’an

- - - 71 Córdoba

- - - 72 Ahmedabad

- - - 73 Cape Town

- - - 74 Taipei

- - - 75 Recife

39 47 - 76 San Antonio, Texas

- - - 77 Bangkok

37 - - 78 Leeds (Yorkshire & Humber)

2007 2008 2009 2010 City

- - - 79 Penang

- - - 80 Seoul

31 - - 81 Perth

- - - 82 Bucaramanga

- - - 83 Asunción

- - - 84 Wroclaw

- - - 85 Amman

38 - - 86 Birmingham, Alabama

- - - 87 St. Louis, Missouri

- - - 88Santa Rosa, Laguna (or Metro Laguna)

- - - 89 Valparaíso

- - - 90 Port Louis

- - - 91 Mysore

- - - 92 Indianapolis, Indiana

- - - 93 Dubai

45 - - 94 Oklahoma City, Oklahoma

- - - 95 Belgrade

- - - 96 Campinas

- - - 97 Novosibirsk

- - - 98 Iloilo City

- - - 99 Tunis

- - - 100 Bacolod City

StatuS 2010 ESTABLISHED EMERGING ASPIRING


the top 100 cities

t his year’s list of Top Emerged Outsourcing Cities has expanded, identifying ten global delivery locations. Two new cities join the eight previously acclaimed outsourcing cities.

Cebu City and Shanghai have significantly developed their respective outsourcing industries which have allowed these cities to join the Top 10 Emerged List.

Bangalore retains first place for the 4th year running, setting an example through its high talent output, and established and expanding service delivery capabilities.

Mumbai moves up to 2nd place this year, with its huge labor pool consistently displaying enhanced service deliv-ery in complex and high-value FAO services.

Delhi NCR moves down to 3rd place this year, owing to rising real estate costs and infrastructure stress on Delhi City, and despite its established FAO sector.

Manila NCR stays at 4th place as it encounters chal-lenges in moving up the value chain towards kPO services, given its mature service delivery in voice Contact Support & FAO.

Chennai moves up to 5th place due to its access to the large technical talent pool from Southern India and its maturing service delivery capabilities.

known as the IT hub of India, Hyderabad moves up to 6th place owing to its mature service delivery capability and large pool of engineering and technical graduates.

Despite its mature delivery capability in R&D and IT services, Dublin constantly faces high costs and limited scalable labor – the city slips to 7th place this year.

Pune, considered as the educational hub producing quality labor pool in ESO and ADM remains at 8th place this year as it faces stiff competition from other emerged Indian cities.

Cebu City has been successful in further developing its outsourcing capabilities. An established English voice-based processes sector supports its 9th place rank.

Shanghai has developed complex IT and R&D services, optimizing its labor pool, cost advantages, and transport linkages, rounding of the Top 10 list this year. GS

Rank 2010 Rank 2009 City Country

1 1 Bangalore India

2 3 Mumbai India

3 2 Delhi (NCR) India

4 4 Manila (NCR) Philippines

5 6 Chennai India

6 7 Hyderabad India

7 5 Dublin Ireland

8 8 Pune India

9 - Cebu City Philippines

10 - Shanghai China

Top 10 emerged CiTies


the top 100 cities

t he list of Top 10 Emerging Cities will set the outlook for the industry in the coming years. With cities coming from South America and MENA regions, it is compelling to see stiffer

competition arising from these locations in order to cap-ture a significant share of the global outsourcing market. Each city in the list has been positioning itself and their respective niche services and specific target markets - lead-ing to more defined value propositions per city.

The only Eastern European city, krakow leads the Top 10 Emerging Outsourcing Cities List. The city has been constantly moving up the ranks since 2008. The city has built expertise in delivering FAO services with improving service delivery maturity for ITO and HRO services. Large multinational companies have established their presence in the city, like Capgemini, Google, IBM and Microsoft.

Beijing is second in the list of Emerging Cities. The city’s primary strength is its enormous scale and talented labor for ITO services. In fact, the ITO sector has already captured 80 percent of the total outsourcing revenues of the city. However, Beijing continually faces challenges improving its business climate as it remains affected by strict government regulations.

Buenos Aires, the primary outsourcing city of Argentina, also moved one place higher in this year’s rankings. The city has been harnessing its capabilities in delivering mul-tilingual Contact Support Services to key markets. This specialization contributes to the improving service delivery maturity of the city.

A notable outsourcing city of the MENA region, Cairo moved to fourth place this year. The fusion of nearshore advantage to Europe and multilingual skills of the people, positions the city in delivering quality voice-based services to European and Arabic markets.

Sao Paulo continues to move up the rankings, being the banner high-value ITO city of Brazil. With still an under-utilized pool capable of fulfilling R&D and Engineering services, Sao Paulo is poised for better positioning in high-value services in the coming years.

Vietnam’s Ho Chi Minh, an ITO-centric city, has significantly dropped three places due to scalability and employability of its labor pool and as service providers in the city have begun to experience scale-up issues.

Leaping 3 places, Dalian is one of the impressive emerging outsourcing cities this year. The city experienced an estimated 30 percent increase in software and services outsourcing exports last year. Dalian has remained success-ful in targeting the Japanese and South korean markets for ITO and kPO services.

Shenzhen moved one rank lower this year due to lower annual graduate output coupled with challenges in creat-ing conducive business environment for investors.

Curitiba takes ninth place this year. The city gov-ernment has embarked various initiatives like Curitiba Offshore Center to promote the city as a prime ITO hub in Brazil.

Sri Lanka’s chief outsourcing city, Colombo, closes the Top 10 Emerging Cities List. A significant factor for its inclusion is th e recognition of its capabilities for delivering FAO services, together with the improvement of the per-ceived business and political risk. GS

Rank 2010 Rank 2009 City Country

1 4 Krakow Poland

2 3 Beijing China

3 6 Buenos Aires Argentina

4 7 Cairo Egypt

5 8 Sao Paolo Brazil

6 5 Ho Chi Minh City Vietnam

7 12 Dalian China

8 9 Shenzhen China

9 11 Curitiba Brazil

10 17 Colombo Sri Lanka

Top 10 emerging CiTies

COUNTRY-IN-FOCUSEnsuring Global VisibilityA 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.

For more information write to [email protected]

Examples of Country-in-focus featureEgypt Philippines Jordan

JORDAN

JORDAN

How is the Jordan economy growing presently, and what are the projections for the immediate future?

How did the outsourcing industry evolve in Jordan and what is the expected growth in the industry?

Jordan has focused on creating a globally integrated economy that is knowledge-centric. Over the past two decades, prudent fiscal and monetary policies have helped in maintaining low inflation rates in the range of 3-5 percent and a stable currency. Exports in the country increased from USD 4.3 billion in 2005 to nearly USD 6.3 billion in 2009.

External debt during the period decreased from 56 to 21.7 percent. Gross official reserves at the end of 2009 stood at USD 10.8 billion.

Jordan has adopted aggressive and comprehensive development processes with active participation from the private sector which are targeted at creating an investment-friendly climate in the country. Many businesses are finding Jordan to be one of the most liberal and business-friendly economies in the region.

Jordan, as an outsourcing destination, started gaining prominence a decade ago. Key potentials for the growth of the industry such as a qualified workforce, competitive cost structures, a near-shore location and a convenient time zone were identified early on. Strong government backing was provided with world-class infrastructure, dedicated business parks and a liberal economic environment. Today Information and Communication Technology (ICT) and Information Technology Enabled Services (ITES) industry both contribute 14.3 percent

to the economy, and produce14,928 direct jobs. Exports have increased with an average of 343 percent in comparison to 2007, while investments increased by 164 percent. The industry is expected to grow to USD 250 million over the next three years, creating over 10,000 jobs. The outsourcing sector is further supported by Jordan being one of the initial countries in the region to establish a chapter of the International Association of Outsourcing Professionals (IAOP). This reflects on the growth of the country as an outsourcing destination and provides an extremely conducive environment for service providers and shared services organizations.

Jordan’s primary value proposition lies in its stable costs, and the high quality of its talent pool that is sustainable in the long-term.

What are the key factors that contribute into making the country an outsourcing destination of choice?

Together with attractive incentives, investor-friendly policies and excellent infrastructure, Jordan has everything required for a smart outsourcing destination. Jordan’s progressive government has also recently launched a new Development Zone strategy, encompassing multiple specialized zones at specific industries such as outsourcing. These development zones offer aggressive financial incentives to complement existing economic advantages of operating in Jordan.

Jordan has one of the most open telecommunication markets in the Middle East which is overseen by an independent regulator. Jordan is connected to the international network through various fiber

What are the infrastructure requirements of the industry and how well does the country meet these requirements?

Stable Costs and High Quality of Talent Pool is Jordan’s Primary Value Proposition

Interview of Country RepresentativeAdvertorial

Jordan is fast emerging as a destination of choice for outsourcing.

His Excellency Marwan Juma Minister of Information & Communications Technology

Mr. Aiman Mazahreh Chairman-Int@j

http://www.intaj.net/outsourcing...continued

optic links, in addition to satellite connectivity and terrestrial links with neighboring countries using modern fiber optic cable networks. Jordan has three main submarine cables that provide reliable international connectivity. In addition, Damamax is part of the Hong Kong Telecom Group PCCW’s Global Network, providing MPLS connectivity to more than 1,000 cities worldwide at very competitive prices.

The country has developed dedicated business parks within the Development Zones to nurture the growth of its priority sectors, such as ICT and BPO. These business parks offer plug-and-play office space, connectivity and services to local and international firms and a streamlined process of setting up operations.

People are a key asset in this industry. What measures are the industry and the

government taking to ensure quality of talent and how are you ensuring scalability of the available talent?

Jordan has a young population with nearly 70 percent under the age of 30. Jordan has one of the most successful education systems in the region with a literacy rate of 92 percent. The country is ranked first in the Middle East by the World Bank in terms of educational reforms. The government spends 20.6 percent of its public expenditure on the educational system. English is being taught at an early age in all schools, and modern technologies and methods have been introduced in the educational system to ensure technology proficiency.

There are a number of public-private initiatives that are focused on creating a knowledge-based economy in the country

by integrating technology in the classrooms. Intel Teach Initiative has been introduced as a worldwide program that focuses on using computer technology as a powerful teaching tool and enhances the creativity levels of both teachers and students. An MoU was signed between Microsoft and the Ministry of Education in 2003 that focuses on creating an Innovative Teachers Network (ITN), a School Technology Innovation Center (STIC) and an Education Support Center.

The government is providing computer labs in all public schools and universities as part of its comprehensive e-learning program. A country-wide broadband network connecting all public schools, universities, community access centers and community colleges is also being deployed.

Interview of Country RepresentativeAdvertorial

http://www.intaj.net/outsourcing

...continued from previous page

Outsourcing Oasis of the Middle East Jordan, located where Africa, Asia and Europe converge, is ideally positioned as

an investment gateway to the Middle East.

The country’s robust economy, huge talent pool of human capital, temperate climate, convenient time-zone, state-of-the-art infrastructure and the ongoing economic liberalization procedures make it one of the most preferred destinations for outsourcing firms. Jordan’s immense human capital is one of the main drivers of growth in the region. A workforce, widely regarded as one of the most competitive and qualified in the region, has contributed to Jordan being ranked ninth in the 2009 Global Service Location Index (GSLI) by analyst firm AT Kearney. Strong work ethics and low attrition rates work in Jordan’s favor. Jordan invests more than 20.4 percent of its GDP on education and has more than 200,000 upcoming graduates to meet the demands of the fast growing outsourcing industry.

Jordan possesses world-class infrastructure in terms of Internet connectivity, telecommunications network as well as transport accessibility within the country and to international destinations. Dedicated business parks which boast of international standards of connectivity and services have been set up in Amman and Irbid to nurture the growth of the BPO industry in the country. These parks offer a streamlined regulatory environment and various tax benefits, coupled with high-end housing and associated facilities to attract and retain further investment in the outsourcing sector.

Jordan enjoys strong government support and reliable telecom connectivity through various international submarine cables for its ICT sector. This has made it the fastest growing sector in the Jordanian economy with an annual average growth rate of 25 percent. The ideal location of the country, investment-friendly economic climate and competitive rates contribute to the steady rise of Jordan as a preferred outsourcing location.

Currency: Jordanian Dinar

Main industries: Tourism, Banking & Financial Services, Engineering Services, Healthcare & Pharmaceuticals, Energy & Renewable Energy, Information & Communications Technology

Literacy rate: 92%

Languages spoken: Arabic (official), English, French, German,Armenian, Spanish

International airport: Amman (2), Aqaba

GDP growth (World Bank): 2.8% (2009)

thGlobal ranking: 9 in the 2009 Global Service Location Index by analyst firm AT Kearney

Quick look at the IT-BPO sector growth Total number of employees: 14,928Annual growth rate of IT/BPO sector: 25 percent

at a glance

Countries that outsource business to Jordan: Gulf Cooperation Council (GCC) countries, US, UK, Middle East and North Africa (MENA) region

Key verticals: Healthcare, Banking, Insurance, Telecom, Hospitality, Technology

Key services: Business Process Outsourcing, Information Technology Outsourcing, Knowledge Process Outsourcing, Shared Service Centers and contact centers

Some big players: Hewlett-Packard (HP), Dell Perot Systems, CISCO TAC, CrysTelCall, Extensya, Aspire Services, Microsoft, Oracle

Key competitive advantages: Robust Economy, Strategic Location and Convenient Time Zone, Immense Human Capital Resources, Investor-friendly Economic Environment

Main cities: Amman, Irbid

Emerging locations: Aqaba

Advertorial The Jordan Factfile


Now and Beyond

Jordan’s commitment to economic liberalization and its privatization program have been recognized by the World Bank. The World Bank lauded the privatization program as one of the most successful programs in the Middle East and North Africa (MENA) region.

Advertorial Opportunities and Future Potentials

Jordan has created a competitive, free market though a multi-pronged privatization approach. Today, the private sector plays a major role in spearheading growth and development in the country. Jordan is now seen as one of the most business-friendly economies in the region. The government has also taken significant steps to streamline regulations and decrease red tape.

Establishing business ventures in Jordan now takes less time than the average number of days in the MENA region.

The Development Zones established across the country in key business areas offer reliable infrastructure, specialized services, labor and resources to access major regional and global markets. At present, there are six zones that are operational throughout the country offering various investment opportunities. Jordan’s ICT sector today is the fastest growing sector offering more than 80,000 jobs with an annual average growth rate of 25 percent.

Jordan’s strength lies in the ICT, health and financial sectors. The growth of the outsourcing industry is expected to concentrate on these sectors by building vertical specialization in financial services, medical services, IT outsourcing, telecommunications and tourism services.

The future of the ICT sector looks rosy with the sector continuing its exponential growth. Jordan's National ICT Strategy for the next three years identifies the sub-sectors that are conducive for growth in the current economic situation in the country. Government initiatives to facilitate this growth are also laid out. The plans include developing a USD 3 billion ICT sector, provision of 35,000 jobs and increasing Internet penetration to 50 percent. Other ICT initiatives include provision of laptops to university students, encouraging women in technology programs and graduate internship programs.

Jordan is also taking necessary steps to enhance the existing infrastructure base in the country. In 2010, VTEL Jordan and Reliance Globalcom are establishing a link to the FALCON undersea cable through Aqaba which would triple the current bandwidth. It will be the first 'Terabit' cable landing in Jordan.

The future of outsourcing in Jordan promises to be bright with an industry poised for growth in all sectors. KPO and BPO operations are expected to head the growth ably supported by concerted efforts put in by the government and the private sector. An attractive business environment, combined with supportive government policies and world-class infrastructure, will continue to make Jordan one of the most sought after outsourcing locations in the MENA region.

The Face of Jordan


Contact info:Int@jTel: +962 6 5152322e-mail: [email protected]

Advertorial Testimonials

TestimonialsJordan is open for business with a very capable and sought after workforce, competitive cost structure, political stability, ease of access, robust ICT infrastructure, as well as a government that is fully committed to creating the right investment environment. These are only some of the factors that position Jordan as a great global destination of choice as well as the ideal access point and gateway to the Arab world.

His Excellency Mr. Marwan JumaMinister of Information and Communications Technology

Coming to Jordan opened our eyes to the country’s potential. The country’s will and

dedication has paid off, and businesses continue to succeed. Thanks to all the partners involved, the country continues to gain visibility as an outsourcing destination.

Som MittalPresident, National Association of Software and Services Companies (Nasscom)

BPO investors will find in Jordan a highly advanced legislative and infrastructure platform that supports their work and business endeavors. The Development Zones Commission (DZC) facilitates all necessary procedures and arrangements for the industry to operate and prosper in the

Development Zones.

His Excellency Dr. Bilal BashirChief Commissioner, Development Zones Commission

Jordan has enabled the ITO/BPO services industry and we run our operation supported by a strong legislative base, a sound telecom infrastructure and skilful human capital which really makes our business succeed. The government is involved in updating the skills of IT trainees to qualify them for our line of business.

Kaushal ShahManaging Director, Aspire

PublicationsIt looks like another little oasis of IT delivery is building up as the vast sands of the Middle East blow winds of new market opportunity; now Jordan joins the club, as it gets all set to woo the outsourcing industry.

At the Nasscom Summit 2009, foreign delegations of many hues and shades were seen exploring and selling business opportunities in the new world order that is shaping up for a post-recession scenario. We could see delegates from Jordan too. They were not only prepared for a strong competitive pitch, but also had large spoonfuls of the pudding’s proof up their sleeve.

As to the cultural milieu, Jordan has an open and welcoming arm. On the infrastructure side, areas like powers, roads and buildings are positive. It has already been recognized on the eco-friendly distinction, where the example of Amman, a building zone, is cited as an example, and an award-winning case in masterful city planning.

~ Global Services Magazine

To highlight the benefits, Jordan’s geographic and geopolitical positioning

have rendered it definitive advantages, including a favorable time zone, proximity to continental Europe and the country's perception as a stable oasis in a stormy, but vital, region.

Enthusiasts also point out that Jordanians can offer relatively low compensation costs, as well as exposure to English languages by virtue of its strong focus on education, especially at the tertiary level.

~ Jordan Business: Jordanian Magazine

Quotes from ReportsJordan at the ninth place is another top performer as it has solid capabilities in IT and is home to numerous successful outsourcing companies that compete internationally. It has also one of the region’s most favorable business environments.

~ A.T Kearney Report 2009

Currently, there are several contact center operations in Jordan serving clients domestically and offshore, across a variety of vertical markets. In addition, the availability of

multi-lingual agents with university education, coupled with excellent language skills has been a compelling reason for this growth.

It is clear that from the standpoint of telecommunications, Jordan has made significant strides over the past decade. In addition to the efficiencies still being realized by the deregulation of the telco sector in 2005, Jordanian telecom has invested over USD 400 million in recent years in a number of technology solutions

designed to make Jordan more accessible to the rest of the world.

Jordanian telecom has invested over USD 400 million in recent years in a number of technology solutions designed to make Jordan more accessible to the rest of the world.

~ Datamonitor


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


regional Dynamics

Evolution of Services Driven Economy15 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-Moresoifyouhaveaproductandhavetolocalizethatforagiven

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.

• EvolvingandDevelopingProcesses-Somelocationsarereachingtalentsaturation,leading clients to look for other locations where they can get talent at better qual-ity and at a better price.

Location Assessment: Perception and Reality for Global BusinessesGlobal Outsourcing Locations

Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global Businesses’

Figure 1 the Global Offshoring Landscape


regional Dynamics

City Perception Reality

Colombo, Sri Lanka

A war-torn nation One of the fastest emerging FAO destinations with more than 50,000 people employed in the IT/BPO 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, India

Crowded Tier-II City One of the fastest growing IT regions in India with 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

Chile considered as a small LatAm country with a limited population and not known traditionally for outsourced services

Foreign investor-friendly business environment and technical industry capabilities strongly support high-value services in KPO-ESO. Chile’s IT-ITES workforce produces $38,095 per FTE in the industry which is 41 percent more than India. This is due to higher value services being performed out of Chile compared to India (on an average).


table 1 Global Delivery Locations - Perception vs. Reality

Figure 2 Key Question: Where should we locate?



regional Dynamics

• Integrationofnewcountries into theGlobalEconomy(Example:Brazil,SouthAfrica, China)

• NewCustomer Segments are emerging- For example, customers are looking atBrazil because it is a significant economy growing at a fast pace. So while certain things can be outsourced to Brazil, at the same time clients are looking at address-ing the available market there. The same can be applied to China.

• CustomerDemandisbecomingmoresophisticated

Why will existing solutions not be enough in the new decade? • ClosertoCustomer• NewGenerationofServices• SpecializedSkillRequirement• EstablishedLocationsinhibitedbyTalentSaturation

Moving from Emerged to EmergingThere is a move, where clients are feeling that emerged destinations are saturated in terms of the labor pool, and have salary inflations year over year. There is a churn in the people which leads to lower quality. So clients are looking for emerging destina-tions which probably have a higher talent pool available, lower costs and governments more eager to attract investments. Clients who have been in outsourcing for around 10 years are moving from established locations.

Main factors in play in this shift: Emerging destinations being viewed as opportunities: • EmergingLocationswillholdthekeyinthenearfutureforGlobalcorporations

as they will provide as host of new opportunities. They are looking at such loca-tions to bring high quality and scale together with low costs.

• EmergingEconomies,opportunitiestotapthedomestictalentandmarket,andevolving customer demands are driving client and service provider migration to new international geographies

Perception marketing: • PerceptionMarketing:Effectivenessofconveyingconcreteinformation,strategic

Outsourcing to the Right Location vs. Offshoring?

The change in terminology

is a sign of maturing of the

industry and its players. The

right solution at this point to

the outsourcing/ offshoring/

nearshoring debate is global

sourcing. It is more offshor-

ing than outsourcing.

Why global sourcing?

Firstly, if something is not

outsourced to a third- party

vendor, it is insourcing.

Outsourcing does not neces-

sarily cover that. Secondly, a

significant number of clients

are willing to have everything

sourced and not keep any-

thing within the physical

confines of their office. This

does not mean it is going

off the shore or out of the

country.

So the only term today

which covers all of this is

global sourcing.


Figure 3 Parameters influencing selection: Process Requirements and Geographical & Operational Delivery Models.


regional Dynamics

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”arenowmorecritical to“Productivity”and“Sustainability” with exceedingly lower emphasis on “Cost Advantage” alone

Importance of distinct Value Propositions: • Competitiveandshareholderpressuresaredrivingdemand,creatingmorenim-

ble, efficient market players • Due to the rapidmaturity of the services outsourcing industry, locations are

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” model

Figure 4 Emerging Destinations – What to Look For



regional Dynamics

United kingdom Spain France Italy Sweden

Denmark Finland Germany Norway

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 attractive opportunity.

It has been a destination of choice for Western Europe for more than a decade and this attractiveness has become stronger over the years.

CHALLENGES Clients face dilemma- No single country can take care of all languages. But

Estonia can take care of the 5 major languages. Most smaller countries do not offer scale

ADVANTAGES Europeans are conservative businessmen compared to their American counterparts

and are more comfortable keeping work closer to home. Thus nearshoring is a favored option.

Considering a cut off population of 10 million, only Russia, Ukraine, Poland, Romania, Belarus, Czech Republic, and Hungary have the advantage of a sizable talent pool

Multiple factors enable to be perfect nearshore options for Western Europe like: 1. Financial Attractiveness 3. Trade laws (European Union) 2. Cultural compatibility 4. Excellent Education

Major clients nations in the region are:

Europe: Showcasing the Challenges and OpportunitiesThe Emerging Nearshore

Prominent nearshore options: Eastern Europe

poland: 6 kraków, Warsaw, Gdansk, Wroclaw Czech Republic: 6 Prague, Brnohungary: 6 Budapest Russia: 6 St. Petersburg, Moscow, Nizhniy Novgorod, Rostov-on-Don, Novosibirsk Romania: 6 Bucharest, Cluj-Napoca Ukraine: 6 kyiv, Lviv Belarus: 6 Minskslovakia: 6 Bratislava

Bulgaria: Sofia

slovenia: 6 Ljubljanaserbia: 6 Belgradeestonia: 6 Tallinn Croatia: 6 ZagrebLatvia: 6 RigaLithuania: 6 VilniusMalta: 6 Valletta

Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’ 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 European


regional Dynamics

countries becoming members are: •Politicalstabilityandgreaterintegration •Increasedtrade •Increasedinwardinvestment •Socialpoliciesandsubsidies 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

Belfast

Dublin

Kraków

• High value processes in Financial

Analytics, R&D and Applications

Development Management

• Specializes in R&D, Infrastructure

Services and Custom Development

Application

• Business Analytics, Finance and Accounting Outsourcing, multilingual

Weste

rn E

uro

pe

Ireland

U.K.

Poland

SAP, Quest Software, IBM, Microsoft,

Accenture, Marino Software, PMI

Software, Infosys, Deloitte, Amazon

Barclays, Accenture, InfoTech, HCL,

Capgemini, HP-EDS, KPMG, Xerox,

ECOM, First Data

Region/ Country/ City Core Specialization Companies Established

Google, IBM, Motorola, Fujitsu, HCL,

Capgemini, ACS, Hewitt, Quantum,

Page 10

Kraków

Prague

Budapest

St. Petersburg

Accounting Outsourcing, multilingual

Contact Support, HR Outsourcing

• Focused on HR Outsourcing, R&D

processes and emerging destination for

Engineering design services

• Focused on HR Outsourcing, R&D in

Software Development and TestingEaste

rn E

uro

pe

Poland

Czech Republic

Hungary

Russia• Specializes in Engineering Design and

R&D services.

Capgemini, ACS, Hewitt, Quantum,

Sabre

Sun Microsystems, Accenture, GE,

SAP, Google, Intel, Capgemini,

Mahindra Satyam, IBM

SAP, Microsoft, Sun Microsystems, TCS, Genpact, Cognizant, Canon,

Mahindra Satyam, SCA

Intel, Motorola, Sun Microsystems,

Boeing, HP, Auriga, Google, Luxoft,

EPAM, Arcadia

Figure 1 Europe: Centers of Excellence.

Source: 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.


regional Dynamics

Bottomline- Eastern Europe would continue to maintain this advantage at least in the near term.

Challenges and Opportunities.


Q/A

Has macro-economic situation diluted the key value proposition of any of these coun-tries?

The income coming from outsourcing is export- oriented. There is very little emphasis in terms of domestic currency. There is significantly more impact in terms of currency of the source geogra-phy rather than your own. If the currency valuation of a country goes down, it may not be good for the country itself but it increases its attractiveness

Russia does not seem to have performed according to the potential it is believed to pos-sess. What can Russian industry do to have a bigger stake?

There is some challenge in terms of promoting what can be serviced out of Russia. They need to do more focussed pormotion of what they can really do, especially cities like Moscow and St. Petersburg. Outsourcing history in Russia goes back a long time, but there have been only a few companies which have been able to take the glag and move forward. And most of them are focussed on R&D, in telecom, wireless, security. One of the main issues related to outsourcing here is that the process discipline in Russia is not as strong as in rest of Eastern Europe, or like in India and Philippines. Also, the infrastructure, as compared to other Eastern European countries is not as robust. So, experts feel Russia will continue to lag as compared to other Eastern European countries.

Q

Q

Conclusion: Challenges and Opportunities

• Key Accelerators:

Strong combined “value proposition” for locating in Europe

Nearshore advantage with Western Europe as client

Excellent education system with high rate of employability

Excellent cultural/linguistic compatibility

Part of European Union (same trade laws, incentives, currency etc.)

Time zone affinity

Page 11

High quality and reliable infrastructure and connectivity

• Key Inhibitors:

Bureaucracy: Communism has left its legacy in excessive bureaucracy and processing delays

which often leads to ineffective business execution

Corruption: The high levels of corruption in certain Eastern European nations often leads to

additional costs. Although this trend has decreased with the implementation and enforcement of

more stringent standards and policies by EU

Labor/Talent Migration: Countries in the region have experienced a migration of talent

towards Western European countries where the pay is higher. This constitutes one of the

shortcomings of nearshoring to Eastern Europe, and is a result of the relatively short distances

between provider and client locations


regional Dynamics

Are there any IPR issues in Eastern Europe? This has been one of the boons of being part of EU. As countries adopt the principle and cover of EU, they are able to care of such issues.because of standardization of IPR in the European Union. They also possess the capability to manage outsourcing from countries outside this par-ticular block.

Which would be the best European market for SME IT outsourcing companies? That depends on the exact area the IT outsourcing company is in. From a smaller perspec-tive, for basic IT, the best destinations would be Poland, Czech Republic.But if a company is in telecom or product development, then places like Russia can be considered.

What is the breakup of IT Services, IT Infrastructure Services and BPO services curently provided from Eastern Europe?

Eastern Europe follows a different trend from other regions. Eastern Europe as a group of con-tries has a very different profile from India or Philippines. IT services is probably 40 percent of this. BPO would be another 40 percent, and about 20 percent would be infrastructure services.

What should be the strategy for a small country like Moldova which does not have the scale, but has a location that is proximate to the EU? What is the potential for partnering with players in India and the Philippines to kickstart the industry?

For a smaller country it is very essential that they differentiate themselves through a niche capa-bility. Any partnership with India or Philippines would depend on what that niche is. Niche is more in BPO and KPO. One of the things that a smaller country can do is to focus on analytics. There is a significant amount of employability in that country, considering the demand for ana-lytics. So from a BPO/ KPO perspective, that would be the right direction for that country.For them to go into F&A would be absolutely wrong. Even from an IT perspective, there seems little scope for a country like that to partner with India. A niche capability would be fine, at the same time some of the ERP, SAP- based IT stuff or looking at doing something in business intelligence would be good areas in IT.

Q

Q

Q

Q


Europe: Showcasing the Challenges and Opportunities

Global Shore 2010 Webinar Series

View Webcast

Perspectives and Potential of Asia’s Hotspots: China and Philippines in Focus


View Webcast

The Enduring Promise of Latin America


View Webcast

Leveraging Africa & Middle East


View Webcast


regional Dynamics

Global IT spend is expected to increase at a faster rate post 2009 as several service buyer markets unentangle themselves from recession. Growth may still be tepid but nonetheless more significant than the previous 3 years.

Post recession clients are more aligned towards offshore benefits.

Drivers for Technology Spend: Cost reduction as clients look for demand recovery Growth in competition leading to need for scalable, optimized and effective

operations Diversification of business and expansion into new markets is pushing clients for

innovation and faster time to market Growing SMB participation as service buyer (currently at 33 percent of total

spend) globally

How suppliers can exploit growth in IT spend?There remain opportunities for outsourcers, as offshoring spend remains relatively small Identification of new delivery and engagement models Overhauling of existing resources/ network to offer higher value Foster innovation/ IP/ assets- must for gaining edge over competition Develop ready to deploy platforms / frameworks for multiple geographies in order

to enable faster time to market

The demand side is still composed of two regions of the globe- North America and Western Europe, which together contribute about 55 percentage of global IT/ BPO spend. Offshore revenue share is 75 percentage. But domestic markets from BRIC nations will also become increasingly important players in the near term.

The supply side will stretch across geographies and begin accelerating the pace of competition. Countries in S. America such as Argentina, Chile, Colombia, Uruguay, etc. are some which will be vying to supply clients, particularly the Hispanic popula-tion in US.

The incumbent Indian providers will continue to build delivery centers in key delivery regions such as Latin America, Eastern Europe and China.

Game changing strategies on supply side : Vendors positioning themselves as End to End service providers rather than cost

saviors to increase wallet share Increased vendor consolidation and diversification (eg. Dell acquired Perot

Systems, Product vendors expanding services portfolio etc) Building capabilities around RIM/ IO* and platform based BPO services (Service

Perspectives and Potential of Asia’s HotspotsChina and Philippines in Focus


regional Dynamics

lines witnessing traction from client side) Vendors entering new regions to support existing client’s localization needs (deep-

ens client reach and wallet share)

Strong Domestic and Regional MarketsThere is strong market potential in Asia Pacific region as evidenced by robust growth rates of regional domestic economies. Apart from India and China, smaller countries like Philippines and Vietnam, which are seen as supply side components, have strong domestic consumption potential, as evidenced by their strong growth rates on the back of increased domestic consumption. Healthy growth in IT spend provides tremendous scale for growth in these

markets Current outsourced market for the region is over US$22 Billion - primarily served

by local & regional vendors Technology spend by government, BFSI, telecommunication and manufacturing

will drive the growth International and regional vendors serving these markets have witnessed double

digit growthAsia: Strongly Positioned to Facilitate Growth of Suppliers…

Innovation & Time to Market

Cost Optimization &

Growth

Value for ClientsEstablished Cities

• Bangalore Delhi NCR, Mumbai, Manila

NCR, Chennai, Hyderabad, Pune,

Cebu City, Shanghai, Beijing and

others

• Dalian, Chandigarh, Kolkata,

Colombo, Coimbatore, Guangzhou

(Canton), Kuala Lumpur, Jaipur,

Emerging Cities

• Most prominent centers of offshoring (lowest risk)• Access to huge employable pool with niche and

diversified skill sets. • Hosts strong lines for innovation due to well established

processes and delivery capabilities. • House client’s commercial operations and BFSI

captives/ R&D centers of global clients and vendors

• Lower salary inflation when compared to established centers

• Proximity to education institutes/ universities provides stable supply of talent

Key Characteristics

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Growth

Niche Skills

Expansion

(Canton), Kuala Lumpur, Jaipur,

Chengdu etc

• Bhubaneswar, Iloilo City,

Thiruvananthapuram, Santa Rosa etc

Emerging Tier II / III Cities

• Xian, Taipei, Seoul, Ahmedabad,

Mysore, Jakarta, Bangkok, Davao,

Bacolod, Penang etc

New Cities

stable supply of talent • Attractive infrastructure and government policies provide

long term confidence to investors

• Locations with high potential to compete head on with emerging cities

• Apart from providing cost and talent advantages these cities are leveraged to service domestic market and verticals such as government

• Low cost of operations is major selling point

• Proximity to established/ emerging locations would

strengthened their visibility to clients

Figure 1 asia: Strongly Positioned to Facilitate Growth of Suppliers…

Source: Global Shore webinar 2010 ‘Perspectives and Potential of Asia’s Hotspots: China and Philippines in Focus’

Service Delivery Cluster-In the past 10 years, the service delivery cluster in Asia (earlier composed primarily of India, Sri Lanka and Philippines) has evolved to a circle of multiple nations providing a multitude of services and catering to a diverse group of markets and verticals.

For this cluster to further expand, and further clusters will emerge across the globe. Each service cluster will develop its own niche and market development segment. These clusters will lead to growth of the region as a whole.

Top Cities in Asia Continuous demand has led to proliferation of outsourcing locations in Asia. Indian cities continue to lead the pack, followed by Philippines and China cater-

ing to both global and domestic requirements. Many, particularly in China are


regional Dynamics

looking at catering to the domestic market instead of the global requirements. Manila NCR, after Indian cities like Bangalore and Delhi, has been consistently

making it to the top of the outsourcing cities lists. China follows India in terms of most number of cities on the lists. Dalian has been

consistently moving up rankings. Several cities moving down the rankings are also an indication of strong competi-

tion among the cities. This also indicates the aggressiveness of cities in promoting themselves as locations of choice.

Most of the emerging Tier II/III cities are from Southeast Asia- from Philippines, Indonesia, Thailand and Malaysia. This could be mostly due to initiatives under-taken like by the Business Processing Association of Philippines (BPAC)

Centers of Excellence: Established Centers

Hyderabad

Delhi NCR

Mumbai

• Application Development , Engineering Services, Product Development, Software Testing, Contact Support

• Contact Support, Business Analytics, Software Development, Product Development, Engineering Services

• FAO , Financial Analytics, Contact

Oracle, Accenture, HP, Amdocs, Capgemini, SAP, Wipro, Infosys, Siemens, Motorola

Accenture, Capgemini, TCS, Wipro, Infosys, Symphony, KPMG, Delloite, Dell, Hewitt, Karvy, Mahindra Satyam

Country/ City Core Specialization Companies Established

Accenture, Capgemini, TCS, Wipro, Infosys, KPMG, Deloitte, Morgan

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Mumbai

Bangalore

Pune

• FAO , Financial Analytics, Contact Support Services

• Software Development, R&D, Contact Support Services

• Contact Support Services , Software Development, Testing

Infosys, KPMG, Deloitte, Morgan Stanley, JP Morgan, IBM Daksh

Sun Microsystems, Accenture, GE, SAP, Google, Intel, Capgemini, Mahindra Satyam, IBM

SAP, Microsoft, Sun Microsystems, TCS, Genpact, Cognizant, Canon, Mahindra Satyam, SCA

Manila NCR• Contact support services, FAO, Medical

Transcription

Accenture, Convergys, People Support, IBM, HSBC, JP Morgan Chase & Co., Sykes, Telus

India

Philippines

Figure 2 Centers of Excellence: Established Centers


Centers of Excellence: Emerging Destinations

Cebu City

Beijing

• High value processes in Financial Analytics, R&D and Applications Development Management

• Software Development, ADM, R&D, FAO

Accenture, AWS, NCR, Lexysoft, Alliance Software, Sykes Asia, Aegis, Stream, Convergys, ePerformax

Country/ City Core Specialization Companies Established

SAP, Tumbleweed Communications, IBM, BTC International Contatct

Philippines

Shanghai • Software Development, ADM, R&D, FAO

IBM, World Software Services, Neoris, softtek, Infosys, Accenture, Sitel, ACS

China

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Beijing • Software Development, ADM, R&D, FAO IBM, BTC International Contatct Center, OPI Global, HP

Shenzhen • Software Development, ADM, R&D, FAO IBA Group, Honeywell, SGI, Accenture, IBM, CSC, Deloitte, Ernst & Young, Genpact

China

Hanoi

Ho Chi Minh City

• ESO Software Development, Contact Support Services

• ESO; Software Development, Contact Support Services

FPT, HPT, HiPT, IBM, VTCOMTECH Co. Ltd, Equant, Contact Centre Vietnam

Teledata, VPT, Jupiter Systems, FPT

Vietnam

Figure 3 Centers of Excellence: Emerging Destinations



regional Dynamics

Q/A

What is keeping back cities like Dhaka from being among the list of outsourcing destina-tions?

Numerous factors are taken into account for an outsourcing destination. Primarily scale and quality of labor pool, costs, business capital aspect which mostly involves government benefits and incentives, the competitive landscape within a particular location. Infrastructure is the fourth major aspect considered. Risk profile is also very important. Quality of life aspect involves the social infrastructure, education, hospitals, availability of facilities, etc.

Why is Kuala Lumpur, which is otherwise commercially rated high in terms of business volume, not part of Asia’s top outsourcing destinations?

For Kuala Lumpur the cost component has to be considered. That holds it back from moving up. But it is a feasible location for higher value services. A lot more shared services operators are locating there, instead of outsourcers, and that is how the value proposition is being considered there. The same set of reasons could also hold for Singapore, aside from the scalability of talent.

Is the IP issue with China a continued concern or is it subsiding? It is a perception-to-reality question. Perception is there are security risks in China and reality is there are such risks. But often times, it is a cost vs. value consideration that many locators look at when considering China. Are the cost benefits worth managing the security and IP risks? It also depends on the sliver of services being discussed. As more mature Indian or American providers moving there infuse global best practice stand-ard, the risk will be mitigated or lessened. This makes the value proposition for China even more appealing. Introducing legislation for IP protection will also improve matters.

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Globally the strongest cluster of countries for outsourcing (India, Philippines, China, Vietnam, Singapore, Malaysia, Sri Lanka)

Most mature incentives for outsourcing industry at offer in the region

Key region to global outsourcing strategy for all organizations

Huge employable pool as a result of quality education conducive for IT at affordable salary cost

Cultural affinity to client market supported by linguistic compatibility

Page 16

World class infrastructure to house delivery centers, R&D and Innovation labs

• Key Inhibitors:

Quality of Life: Although the infrastructure has developed by leaps and bounds in these countries, it

is still difficult to retain the top level management professionals from client nations if they have to

reside in the region

Sociopolitical Risk: Risk of terrorism, higher crime rates, and political instability in the region

Corruption: High levels of corruption in Asia often leads to additional costs. The trend is expected to

subside as governments are becoming aware of export contribution from offshore services


regional Dynamics

What is the best location in Asia in terms of local management professionals and local talent?

All of the outsourcing locations have a mid-management crunch. That is a weak spot in terms of structure. Most of the top cities in this list have been active for more than a decade. So there is a pool of management talent which will be available there. So selection is the key there. There are a large number of Indian managers in the Philippines. Cost will not be a considera-tion here, but that is not a solution for the long term. Holding on to talent is a problem in loca-tions like Philippines.

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regional Dynamics

Lower per capita GDP in the region provides significant cost advantage in all the cities located in Africa and Middle East

Nearshore opportunity for Europe: Time zones similar to Europe offer immense near-shoring opportunity for the

region. Mauritius has the greatest time difference in the region with London, and that is of four hours.

The cornerstone of value proposition of any location is availability of talent, its employability and scalability. Improving higher education & multilingual lan-guage skills are key accelerators. Major countries of the region come in the top 100 of the global higher education index.

Buyers are looking at a wider range of language skills. The language capability (English, German, French, Arabic, Spanish) available here is not easily available in other locations.

There are several areas of improvement needed, yet there is improvement in the top outsourcing cities of the region. The improved infrastructure provides better broadband connectivity and electricity supply – this is essential for operational continuity and reducing downtime

Various government agencies have been formed to smoothen the procedures to start the business, protect the investor and reduce the corruption. Political Risk scores must be further improved in the region

Global ClienteleWith 63 percent of all developed countries in Western Europe, it is the largest cluster of buyers across the world. This fact has not escaped the attention of large business firms from across the world that have set up centers in the region to cater to the domestic markets in these developed economies.

Thus Africa and Middle East cater to the global clientele indirectly - this has suc-cessfully built a strong brand for “Nearshore to Middle East & Africa”. What Latin America is to the US, experts say Africa and Middle East will emerge for Europe.

Centers of Excellence in Middle East & Africa- Cairo: best-in-class promotion strategy followed by the government of Egypt Johannesburg: does not have geographical proximity but does have the advantage

of time and cultural proximity to Uk and other clients in Western Europe Casablanca: Expected to emerge as a strong player in coming years with its excellent French capabilities

South Africa has identified and adopted the following five strategic pillars for strength-ening and enabling its IT and BPO structure: Talent Development

Middle East & Africa: Leveraging Africa & Middle East

Sub-Saharan Africa (Southern, West, East, Central)

6 English, French, Portuguese, 6 Banking, Financial Services,

Insurance (BFSI)6 Telecommunications6 Voice6 Back Office6 kPOnorth Africa 6 Arabic, German, Spanish6 IT Services6 Software development6 Computer programming6 Back Office6 R&D

offerings of the two main regional hubs of Africa

Source: Global Shore webinar 2010 ‘ Middle East & Africa: Leveraging Africa & Middle East’


regional Dynamics

Strategic Marketing Quality Standards Incentives Telecoms

Africa: an Alternative to India and Philippines Africa lies in between the US and India and thus provides an evening shift for US

offshorers versus India’s night shift. This further enhances the low attrition value proposition for Africa

Setting up an African operation can costs 10–20 percent than India Despite the Economic Recession, African markets have grown at a rate of 5–6 percent The Services Sector contributes to over 60 percent of the GDP of some African countries African Nations are formulating policies that encourage the development of the IT

and BPO Services Free trade zones, tax exemptions, providing incentives for technology business

operations, relocation and development are some of the support measures offered Governments have steadily reduced the regulatory overhead and timeline required

to start a business. Africa is a risk-diversification option for India and the Phillipines

Comparative snapshots of African Outsourcing Destinations

Source : Avasant

Note : the list is not exhaustive

African Countries BPO & IT Services

South Africa : BFSI, Telecoms,Retail, ITO,KPO, LPO Ghana : Customer Care, Data Entry,English Malawi : Customer Care, English Nigeria : Financial Services, Back Office Mauritius : Financial Services, French, IT Kenya : IT Services, Financial Services Egypt : Software Development, Back Office Morocco : IT Services Tunisia : IT Services

Figure 1 Comparative snapshots of african Outsourcing Destinations

Figure 2 african Countries BPO & It Services

Note : the list is not exhaustive



Q/A

What are the political risks in South Africa?Experts feel that the entire region is still reeling from certain events of the past, which has pre-vented the outsourcing industry from going to the region as fast as it should have. But now varied requirements are coming from different source geographies.

What is the effect of China’s influence in Africa as China continues to use its economic power to buy natural resources in the region?

China has been focused on natural resources and commodities. There have been a lot of influ-ences as far as services economy is concerned. But one issue where China’s influence is having a spillover effect is the infrastructure. China has been helping build infrastructure in several African cities in return for commodities.

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regional Dynamics

What is the role of World Bank in promoting IT/ITeS or BPO activities in the region? World Bank is taking a keen interest and supports various projects across the continent. Individual countries approach the World Bank with their needs. Kenya has projects funded by the World Bank. In Rwanda, it is funding an initiative called eRwanda, which is about developing ITC in the country. In such projects, the World Bank funds developing human skills, infrastructure particularly in the BPO sector. They help develop SMEs in the sector. It promotes uptake and usage of IT by the government, so that at the end of the day, the government can itself kickstart the outsourcing sector by outsourcing its own activities. The World Bank also helps countries attract FDI to the BPO/ITeS sector. Helping ranges from assisting the formation of implementing agencies to help building capacity in a particular sector.

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Multilingual capabilities can extend market reach to European markets

Local Governments have been encouraging service industry by forming varioussupporting organizations

Better time-zone affinity to Europe compared to Asian destinations

Other than Israel, most countries have low per capita GDP making them costeffective

Due to proficiency in Arabic - Middle East region is also a service buyer market

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Due to proficiency in Arabic - Middle East region is also a service buyer market

• Key Inhibitors:

Currency Risk: Highly volatile currencies and risk of inflation makes investorscautious

IP Risk: some of the countries in the region lead the world piracy and cyber crimelists

Diluted Value Proposition: Most countries in the region offer similar valueproposition - a unique positioning is critical for individual countries



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regional Dynamics

In recent years, clients have been preferring this region as a nearshore destination even at higher costs than some of the farshore destinations.

Emerging destinations from the region are now competing with the more mature Asian offshore destinations. South America has the maximum number of emerg-ing outsourcing cities – buoyed by growing US demand for nearshore services and regional economies tapping the under-utilized Services markets.

Top Cities in the Region Buenos Aires, Argentina has moved up in recent times. Santiago, Chile- one of the most promising locations for kPO and ITO, and has

very good skilled people to deliver on that. But Chile, with a population of 60 million, cannot afford the same scale as

Argentina does. The question for Santiago is- can they train and make available enough skilled people to compete with Chile, to take certain scalable work for BPO?

Brazil has largest scale in the region and Sao Paolo is a very favorite destination for clients for domestic market. Just behind Buenos Aires in preference.

San Jose, Costa Rica is a significant destination for ITO. Lima, Peru is a favorite as a lowcost nearshore destination Challenge- Perception of Colombia as a high risk destination has undergone sig-

nificant change, though clients are still apprehensive

Regional Outsourcing Dynamics Latin America has not caught up with inflation with regard to total cost, so is still

costeffective. But cost is not the only factor. Countries are looking at reducing total cost of operation:

• Mexicopromisestolowercosts,andoffersincentives • Uruguayhasfreetradezoneswhichoffer0percenttax • Colombiagivesexemptionsintaxes • Mostgovtshaveveryaggressivepromotionagencies. Total cost of doing service in Latin America is going to fall. The dollar has been an

issue in Latin America. The dollar is losing ground here, as in many other parts of the world. Last year was especially complicated in this respect. This year is a little more stable.

Markets the Region can Address With established regional markets, Latin America as a region has a very strong

value proposition of having the ability to cater to multiple markets • NearshoretoUSEnglishandHispanicMarket-20percentofconsumersinUS

are Hispanic

Latin America: The Enduring Promise of Latin AmericaUnique Regional Dynamics


regional Dynamics

• EuropeanMarketsinSpain(Spanish)andPortugal(Portuguese) Time zone issue- Latin America is very well positioned, is in more or less same

time zone as in US and Europe. Analysts say that with the world talking about ‘agile development’, it is very dif-

ficult to have agile development if you are farshore. Latin America can be part of a dual strategy for companies- whatever has to be

done in customer interface, do that with your Latin America team, and connect with your Asia-based team for the rest of the process.

Analysts advise looking beyond outsourcing traditional works to Latin America, and thinking in terms of innovation. Latin America has leadership and partnership capability

Clients find vendors ready to answer questions, and approachable as compared to other countries

Area offers not just cost-effectiveness but is ideally located for testing innovations, to set up R&D facilities there.

Challenge- Reaching the global market is a challenge for Latin America out-sourcing players more particularly small and medium enterprises. Primary client remains the regional market. The full potential of the region in catering to external markets is yet to be optimized.

Value PropositionUnique Value Proposition for individual countries is often weak, as a result many coun-try positions revolve around being part of a ‘Multilingual Nearshore Destination’.

The region has to make effort to identify the niche value proposition that it has, i.e., competitive advantage in niches within ITO, BPO and kPO industry. This will also provide opportunity for individual countries to differentiate themselves from the pack Colombia - 33 percent graduation students here are studying engineering. Colombia

is in fact, a country of engineers. yet it is not exporting engineering services. Uruguay- Medical industry can prosper here. A very renowned French medical

institute has opened office here. Has more doctors per capita than any country in the region.

Chile building its competitive advantage from natural resources. There are services

Value PropositionStrong Regional : Diluted Individual

• With established regional markets, LatAm as a region has a very strong value

proposition of having the ability to cater to multiple markets

Nearshore to US English and Hispanic Market

European Markets in Spain (Spanish) and Portugal (Portuguese)

• However, reaching the global market is a challenge for LatAm outsourcing

players more particularly small and medium enterprises

• Unique Value Proposition for individual countries is often weak, as a result

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• Unique Value Proposition for individual countries is often weak, as a result

many country positions revolve around - MULTILINGUAL NEARSHORE

DESTINATION

Leads to commoditization of service delivery profiles for region

Opportunity for individual countries to differentiate themselves from the pack

Primary client remains the regional market. The

Full Potential of the region in catering to external

markets is yet to be optimized.

Figure 1 Value PropositionStrong Regional: Diluted Individual

RealizationCourse of Action

Realizing Potential

Human Capital• Comprehensive English training and proficiency

programs have been implemented• Technical/Finishing schools are now in place

Marketing and Promotion

Developmental Areas

• Increase focused Promotion activities through partnerships between private and multilateral agencies to attract large captive operators

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Business Climate

Market Expansion

Reality vs. Perception

• Government and Institutional support through funding and policy building has been accelerating

with focus on developing Service Industry

• Expand market in US by enticing large Indian Providers to utilize region as a Delivery Hub

• Transition from Regional to Global Market

• Continue to transform image of South America,

particularly in areas related to Security and Infrastructure. Global image needs to be enhanced.

• Increasing ITeS SEZ /technopark build ups across region

• Crime rate decreasing across South America

Country specific

associations

Figure 2 Realizing Potential

Source: Global Shore 2010 webinar ‘LatAm: The Enduring Promise of Latin America’


regional Dynamics

around the natural resources. It has copper, it also has copper engineers. In a study of engineering market in the US to help export engineering services from Chile, it’s a very huge untapped market.

Brazil – leader in the world in certain agri-business processes. Challenges- • Howtoselltheregionasawhole? • Wheretherearenaturalresources,thereisaserviceassociatedwithit.Butthis

potential has been left largely untapped. • CentralAmericaneedstomoveawayfrommanufacturingtoservices

Destinations of Choice

• Argentina

• Brazil

• Chile

• Costa Rica

• Mexico

• Colombia

• Paraguay

Good scalability and capacity to provide multiple Service Segments

Large domestic market, while having the best profile for scale in Latin America

Mature and proven destination for high-value ITO and KPO processes

ITO remains a strong point, and has capitalized on Intel as an anchor client

Large labor pool, but currently experiencing domestic security issues

Robust infrastructure and talent pool for BPO & ESO. Risk perception is fast improving.

Strategically located with potential to provide niche services. Scale is a concern.

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On Tholons Radar as future Offshore Nations:

• Venezuela

• Guatemala

• Panama

• El Salvador

• Nicaragua

• Uruguay

• Puerto Rico

• Peru

• Paraguay

One of the safest destinations, with rich and talented labor pool for ITO/KPO Services

Affinity to US political/business environment. Relatively untapped destination.

Rapidly evolving economy, offers capable talent at lower cost than competition

Strategically located with potential to provide niche services. Scale is a concern.

Figure 3 Destinations of Choice

Source: Global Shore 2010 webinar ‘LatAm: The Enduring Promise of Latin America’




• Key Accelerators

Potential to become Regional Service Cluster that can corner large US Hispanic market

Large, developing economies like Brazil, Mexico, Argentina will provide lucrative regional market for Outsourced Services

Multilingual capabilities can extend market reach to European markets

MERCOSUR and other trade agreements will be significant enablers

Better time-zone affinity to US and Europe compared to Asian destinations

Rapidly improving infrastructure and connectivity

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Diminishing advantage in manufacturing (due to China and India) has led governments to focus on Services Industry

‘Coopetition’ - Creating healthy competition with India through cooperation. Entry of large Indian and American Service Providers in the Region will accelerate Services Industry across Latin America

• Key Inhibitors

Diluted Value Proposition: Most countries in the region offer similar value proposition - a unique

positioning is critical for sustainable growth

Service Delivery Maturity: Needs to be improved to expand its high-value services portfolio.

Political & Economic Stability: Overly dynamic political landscape and fluctuating currency in

specific countries are reasons of concern for many large providers.


regional Dynamics

Q/A

The cost of telecom and taxes in countries in LatinAmerica are sometimes restrictive, restrict moving projects from say, Chile to Colombia. Things to remember for intra- regional movement of projects like call center work?

According to experts this is true if traditional modes of negotiating are followed.The way negotia-tion is done in Latin America is a little different. It is unfortunate to see tax retentions among countries. Brazil is withholding a lot of taxes. Even within MERCOSUR (Uruguay, Paraguay, etc.), its not very easy to do business. However, hope should not be given up, as the infrastructure, the vendors are still growing and they are looking at the long term. So if you are large, if you are serious, you’ll get the deal you need.

Is there a country in Latin America which is setting itself apart in terms of specializing in help desk services?

This is probably there in Central America. For mainframes and large systems its probably Brazil. Its difficult to pinpoint one which excels. Colombia is providing a lot of call(?) services but its still growing. So in the future, Colombia would be a good place to start as prices are still low.

There is a school of thought that locales within a continent or a large nation ought to focus and offer differentiated advantages for specific verticals, e.g, Financial Services, Semi-con work, to really attract the meaningful global anchor players. Is anything like that happening in Latin Am? Are clusters like Silicon Valley, Bangalore, HongKong-Shenzen, Shanghai-Hangzhou-Suzhou developing?

There are clusters emerging even in places like Mexico. Brazil, Uruguay and Buenos Aires is a very important cluster here. Paragauy, with Brazil and Argentina around it can provide services in Spanish. The advantage is that such clusters are not consolidated, and are developing. That’s why there is a first mover advantage in Latin America right now.

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Global Shore 2010 Webinar Series!

GlobalShore 2010 is a webinar series on the dynamics of outsourcing locations meant for sourcing practioners and service providers to be able to make right decisions in choosing service delivery locations.

The webinars are jointly produced by Tholons, the globalization and sourcing advisory com-pany, and Global Services Media, the global media platform on the outsourcing industry.

WEBINAR SERIES

Rightshoring Strategies: Deriving Value, Defining Success

Webinar Topic


Perspectives and Potential of Asia’s Hot-spots: China and Philippines in Focus



The Top 100 Outsourcing Cities-2010

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Avinash VashisthaChairman & CEOTholons Inc.

Ed NairEditorGlobal Services

Jonathan De LuzuriagaManaging Director,SE AsiaTholons Inc.

Brian TumpowskyDirector, Sourcing and GovernancePublicis

Fabrizio OperttiSenior Integration and Trade SpecialistInter-American Development Bank (IDB)

Mario TucciSenior Global Business Consultant and Entrepreneur

Manuel RavagoResearch DirectorTholons Inc.

Pumela SalelaITeS ConsultantWorld Bank

WEBINAR SERIES:

� Choosing the Right Off-Shoring Destination 50by Atul Vashistha, Founder & Chairman, Neo Advisory

� Compete or Cooperate? Bridging the Nearshore-Offshore Divide 53by Anupam Govil, Founder and CEO, Global Equations

� Rise of IT-BPO Outsourcing Frontiers Regional Analysis 56by Viral Thakker and Nishant Mathur, KPMG Advisory Services, India

� Latin America: The Next Sourcing Frontier or an Afterthought? 59by Esteban Herrera, Senior Vice President, HfS Research

� Africa: The emerging frontier for services offshoring 63by H.Karthik and Nikhil Rajpal, Everest Group

� Location Selection Best Practices 65by Jehil Thakkar and Shailesh Narwaiye, KPMG Advisory Services, India

� Global Sourcing for FAO: Strong, Successful and Growing 68by Stan Lepeak, Managing Director, EquaTerra Global Research

� Why Latin America is Still a BUy 71by Mario Tucci, Senior Global Business Consultant

� Africa- The Next Outsourcing Frontier 72by Dr. P.K.Mukherji, President & Managing Partner, Avasant Asia

� Latin America Emerges as a key Outsourcing Destination for 2011 74by Don Jones, Partner, Technology & Life Sciences Practice, BDO USA

� Africa as an Outsourcing Destination 76by Pumela Salela, BPO/ITeS expert Consultant, World Bank

� Offshoring in the Latin American Region 82 by Pradeep Udhas, Executive Director, IT/ITeS Sector, KPMG

� India’s Global Expansion: Eyeing Latin America 83by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ

� Legatum Prosperity Index 84


xpertsexpert Speak

by Atul Vashistha, Founder & Chairman, Neo Advisory

Choosing the Right Off-Shoring Destination

The global outlook for out-sourcing remains optimistic despite the recent economic crisis. Organizations continue

to adopt outsourcing as a business strategy and an effective optimization and transformation lever, to help them mitigate the current financial and com-petitive challenges. As a consequence of increased adoption of outsourc-ing, the global sourcing landscape has undergone significant changes. Many global locations are now evolving to serve specific needs of organizations embarking on their globalization jour-ney or evolving as mature globalizers.

Global sourcing is now main-stream. While cost containment will continue to be an important factor in the global sourcing decisions of

classified as personnel cost and opera-tions cost. Personnel cost in terms of wages, administration cost, related HR cost accounts for approximately 40-50 percent of the total globalization cost. Operations cost is also another critical factor to be considered while setting-up operations. Operations cost include office real estate rent, telecommunica-tion cost, tax incentives, corporate tax, travel cost, cost of electricity, and cost to set-up a business.

2. Service Maturity Service maturity typically gauges the relative capability of a location in the global sourcing landscape. The pres-ence and type of services delivered by large IT and BPO companies is a leading indicator to gauge the maturi-ty of a location. The market size of the outsourcing industry, multi-lingual capability, established and emerging services, industry specific focus are few factors that help provide a holistic view of service maturity of a location.

3 Human Capital Global competitiveness is driving market growth across domains, and as organizations expand, the need to focus on core or anchor service capa-bilities becomes increasingly critical. Human capital is the most critical success factor to retain and grow core competence in the global services mar-ket. The availability of a well-educated,

organizations, other factors such as access to a global talent pool, new market entry, and geographic risk diversification have become increas-ingly important. New destinations are constantly emerging in the global marketplace. Organizations need to be aware of the changing landscape across the more established as well as emerging destinations.

Methodology & Work ProcessSix categories are critical to be ana-lyzed while choosing a location.

1. Financial Attractiveness Cost saving has been one of the tradi-tional business drivers for globalization and continues to remain a critical decision criteria. Cost, broadly can be

S. No Location Factors Key Parameters

1Financial Attractiveness

Real estate rent, support cost, corporate tax rates, labor cost, HR cost, cost to start business, tax incentives

2 Service MaturitySize of industry, presence of major IT & BPO companies, multilingual capability, key services, industry specific services and focus

3 Human CapitalSize of workforce, university graduates output, attrition rate, scalability, sustainability, wage inflation

4 InfrastructureNumber of ISPs, personnel computers, number of IT parks and SEZs, airline connectivity, road infrastructure

5 RisksCrime rate, financial risk, labor risk, infrastructure risk, geo-political and socials risk

6 Business EnvironmentGovernment support and incentives, social environment, quality of living, bureaucracy, cost and time to set up business, cost of living

While cost containment will continue to be an important factor in the global sourcing decisions of organizations, other factors such as access to a global talent pool, new market entry, and geographic risk diversification have become increasingly important.


expert Speak

Location Assessment Framework Examples Example 1: Critical assessment metrics analyzed while choosing a location from a current & future standpoint:

Example 2: Cost Component Analysis – Location A

inflation and high productivity in the labor market in a particular location. Numbers of university and technical graduates, attrition rates, size of IT & BPO workforce are some of the factors to be considered.

a futuristic evaluation parameter to be considered would be the educational system that supplies appropriate qual-ity labor force to meet the forecasted demand of the industry. Large num-bers of fresh graduates lead to low wage

qualified labor pool, its scalability, and sustainability in a competitive envi-ronment are few key parameters to be considered while evaluating this factor. While the above stated factors are specific to the current labor pool,


expert Speak

Example 3: SWOT Analysis – Location A

0

20000

40000

60000

80000

100000

FY02 FY03 FY04 FY05E FY06E

Cap Gemini E&YACSEDSHP Services

Example 4: Growth of Employees in Location A

pool, a critical success factor for loca-tions is the business environment and the support system that it can provide. Business culture, quality of life, govern-ment support, procedures, cost of liv-ing, and cost and time to commence business in a particular location are key aspects to be studied. Understanding the business environment is a necessary step for organizations setting up a busi-ness operation within its own country or outside. GS

Founder & Chairman, Neo Advisory (Formerly neoIT), Neo Group

5 Risk A robust and pro-active risk moni-toring system for global locations is proving to be a key success factor for sustainable business operations. Risks such as labor risk, financial risk, secu-rity risk, geo-political risk, and social risk are the different types of risks to be cognizant of while setting up new business in low cost locations.

6 Business Environment While a location could be financially attractive, and mature in terms of serv-ice capabilities with a sizeable labor

4 Infrastructure With demand for sourcing of services surging globally, there is a definite need for a well established infra-structure adhering to global stand-ards. Infrastructure would encompass physical infrastructure like air, land, and sea connectivity and related sup-port system, industry infrastructure like development of technology parks, presence of Special Economic Zones (SEZs), and business infrastructure like availability of office space, tel-ecommunication, and other related business support systems.


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by Anupam Govil, Founder and CEO, Global Equations

Nearshoring is here to stay and the Americas region is brimming with cost competitive and compe-

tent destinations, each vying to be the next big thing. But the loom-ing question is, will these contenders co-exist with the larger and more mature offshore destinations or is this a zero sum game? While many had initially dismissed Nearshoring as a niche trend unlikely to compete with well entrenched offshore desti-nations, the success of many destina-tions in Central and Latin America in attracting investments, providing quality services and developing the desired mix of skills have proven them wrong. More importantly, the need for de-risking and diversification has propelled Nearshoring as a critical component of global sourcing.

Service providers are adopting a global strategy by developing new locations that mirror client needs as well as address the saturation of some offshore locations. Access to capabilities not found offshore such as Spanish skills and cultural affin-ity are making Nearshore Americas an attractive choice. Most top tier global ITO and BPO providers are expanding their Nearshore footprint either through greenfield options or through acquisitions. But the pure play offshore BPO providers have

such as Brazil, Chile, Costa Rica and Dominican Republic have rapidly expanded their share of the outsourc-ing pie. Brazil exported IT-BPO serv-ices worth $2.2B in 2008 and is likely to touch $3.5B by the end of 2010, while Costa Rica exported around $600M and Dominican Republic over $450M. In fact nearshore out-sourcing is expected to continue to grow annually at double digits to over $20B by 2013. The business and service delivery infrastructure in these countries has improved significantly and is almost comparable to major outsourcing destinations such as India and Philippines. However, apart from Brazil, none of the other nearshore countries have large locally owned vendors that can go head to head with the global or India based serv-ice providers. There is a distinct lack of transformational or multi-tower outsourcing deals in the nearshore region due to relative nascency of the providers and a narrower set of skills. But the potential is certainly there, as is evident in the recent Cap Gemini-CPM Braxis deal which is seen as a bold move by the French firm to pen-etrate the lucrative Brazilian and Latin American market. Aegis’ acquisition of Argentina based Actionline and the recent acquisition spree by ACS (xerox) and Teleperformance across the Caribbean and Latin America

been slower at adopting this approach. They have either been unable to find suitable mid-size acquisition candi-dates or have been reluctant to set up a grounds-up operation due to lack of familiarity with the region. It is increasingly becoming apparent that for offshore BPO providers to succeed in this market they have to tackle the Nearshoring challenge.

Offshore to GlobalThe offshore provider landscape is rapidly morphing with the matur-ing of global sourcing. While serv-ice providers are now expected to offer seamless delivery of services across diverse geographies, it has also become important to shake off the tag of an ‘Offshore’ provider to mitigate the political backlash. They can bridge this perception gap by establishing a multi-regional presence, especially with a blend of onshore and near-shore delivery. This is an imperative not only for major providers like HCL, Patni and Genpact but also for the second tier companies wishing to diversify their client base and spread risk away from highly concentrated offshore locations.

Bridging the Offshore-Nearshore DivideCapitalizing on their talent pool and nearshore advantage, nations

Compete or Cooperate? Bridging the Nearshore-Offshore Divide

For offshore BPO providers to succeed, they will have to tackle the Nearshoring challenge.


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don’t always portray the right picture. Many of the cities in Top 20 list also happen to be rated high in the Most Dangerous cities list. Countries like Jamaica, South Africa and Colombia are considered high crime, yet have a flourishing outsourcing sector. Create your own decision matrix weighing factors more important to you (and your clients) and then look for the right combination of skills availabil-ity, process maturity, risks and costs.

localization through Partnerships: the Americas (Latin and Central America) offers a siz-able regional market for corporations and service providers. Countries in this region have a healthy growth

rate and mushrooming middle class. However, tapping into this market requires considerable local expertise and a long term approach. Local partnerships can prove critical in the success of nearshore operations, espe-cially during the initial stages. A Local partner can not only ensure faster ramp up and access to infrastructure and manpower, but they can also be the beach-head to penetrate the local and/or regional market. This is espe-cially true in countries such as Brazil and Colombia where very

little English is spoken and business customs can be quite different from North America. A good example is the recent JV between Datamatics of India and Genti Teleservices of Brazil. Genti benefits from Datamatics’ expertise in non-voice BPO while Datamatics gains access to Genti’s expertise in voice services, allowing the JV to offer a broader suite of serv-ices to their client base in Brazil.

The Right Business Model: For small to mid-sized providers, near-shoring should be approached with caution as the market is still maturing and a substantial amount of time and resource investment is required. At the same time not having a nearshore

becoming an integral component of a global services portfolio. Its impor-tant to plan a Nearshore strategy with long term objectives and a sustainable growth plan.

Balanced Approach to location Selection – Its more than just the numbers: While Latin America offers many nearshore choices, zeroing in on the exact country or location is not as simple. There is a surprisingly high variance in cost and performance fac-tors between various countries in this region. Once a company has short-listed a few locations based on broad parameters such as the nature of serv-ices to be provided, client require-ments and cost considerations, there

has to be a more detailed drill down to identify the final location. Often factors that are not reflected in an Evaluation matrix may play a larger role. For example, Worker produc-tivity and work ethics are not easily captured in Location reports and can only be judged through site visits and interviews with management from various groups (HR, Ops as well as Sales). Government support is still critical in this region for long term sustenance, however don’t be swayed by over the top incentives. Its more important to gauge the government’s efforts in ensuring skills development and inflation control. Also, statistics such as crime rates or country rankings

are indicators of a market that has reached a critical mass. Such strate-gic transactions are rapidly changing the landscape and accelerating the maturity of services capabilities in the region.

Global corporations are rapidly embracing Nearshoring, leverag-ing it for Comfort while expanding Offshore for Scale. Its easier to test new processes, vendor capabilities and delivery models closer to home. However nearshore vendors still have a long way to go in building com-plex service supply chains in a cost-efficient manner. Hence companies seeking strategic, transformative and long term deals overwhelmingly pre-fer offshore destinations such as India, China or Malaysia. The opportunity for Nearshore ven-dors is to offer a broader suite of capabilities and scale through collaborative partnerships with larger offshore vendors. Hence they can emphasize their core differentiators and strengths rather than build end to end capabilities. The offshore ven-dors on the other hand are seek-ing to establish nearshore deliv-ery centers where client proc-esses can be piloted and initial traction can be attained. Hence a marriage of convenience can bridge the Nearshore-Offshore divide. In this pursuit everybody wins. The clients feel more comfortable with an off-shore provider that has a Nearshore center, without sacrificing the process maturity and cost efficiencies. The nearshore providers can embellish their strengths and close their capa-bility gaps by bundling services with offshore partners.

Integrating Nearshore into the Global Services Supply ChainWith the entry of global firms and growing maturity of local service pro-viders, Nearshoring is increasingly

Aegis’ acquisition of Argentina based Actionline and the recent acquisition spree by ACS (Xerox) and

Teleperformance across the Caribbean and Latin America

are indicators of a market that has reached a critical mass.


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local government and infrastructure providers.

As the boundaries between Nearshore and Offshore continue to blur, it is evident that clients will opt for providers that have a blended portfolio. Eventually providers will be measured by their maturity in leverag-ing the right location for the right skills with the optimum balance between cost savings and perform-ance. Successful players will be the ones who create a scalable network of global delivery by harnessing the com-plementary strengths of Nearshore and Offshore locations. GS

Anupam Govil is Founder and CEO of Global Equations.

seamless business continuity plan. Hot Sites, where the process is split across multiple locations, can be another reason for having a blend of nearshore and offshore locations. Often providers cross-train their employees across mul-tiple locations to take over each other’s functions in the case of an emergency. Alternatively one could sign up with a nearshore partner who can provide excess capacity when desired.

Experts Matter: It is important to seek the help of advisors with sound knowledge of the region. Experienced Advisors will quickly narrow in on the short list of location choices based on their prior experience. They can also help facilitate and negotiate the right incentives and cost package with the

presence can limit a provider’s ability to expand or bid on contracts requir-ing such capabilities. Larger firms have the flexibility to deploy capital and resources and can often secure client commitment for testing the new location but smaller providers have to get the business model right the first time. Most large companies prefer setting up a greenfield opera-tion or acquiring an established local firm, while smaller firms should look at entering into JV’s or Strategic bun-dling partnerships to minimize the risks involved in ramping up or inte-grating nearshore delivery centers.

Widening the breadth of Business Continuity options. For mission crit-ical processes, it is imperative to have a


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Cluster 1: Asia PacificAsia Pacific (ASPAC) is the most dynamic and fastest growing outsourc-ing cluster. The rise of Asia Pacific as an outsourcing destination was led by success stories of India, followed by China. Over the last few years, other Asian locations such as Australia, Malaysia, Sri Lanka, Vietnam and Philippines have gained spotlight on global IT-BPO map.

The main parameters of influenc-ing Asia Pacific as a choice of out-sourcing destination:

Low Costs: Most of the Asian out-sourcing destination’s offer 20 percent to 50 percent cost saving on labor over America and Europe. Availability of vast skilled labor force at lower cost gives Asia a massive advantage. Though wages have increased in India

Emergence of new offshoring destinations, each offering distinct combination of advantages and risks, has given the customer a variety of options to pick from. Though cost arbitrage is a common advantage among all the outsourcing clusters, but parameters such as sustainability and scalability of business, quality of work force, cultural and linguistic affinity, etc. have become differenti-ating factors.

The table below lists out some of the objectives and priorities of the demand side of IT-BPO outsourcing industry and advantages and capabili-ties offered by clusters of supply side.

We can categorize the outsourcing clusters into three major categories – a) Asia Pacific (ASPAC), b) South America and c) Central and East Europe (CEE)

IT-BPO outsourcing phenom-enon caught the imagination of the industry at the turn of this century. The y2k phenomenon

gave necessary impetus to the hiber-nating outsourcing industry. In the initial phase, availability of skilled workforce and cost arbitrage were the primary drivers of outsourcing indus-try. Asia Pacific region, which offered both, took the first movers advantage and emerged as the leading offshoring supplier. Since then, IT outsourcing has become an essential part of every corporate strategy. With experience, the corporate outsourcing strategies of businesses have matured to look beyond mere cost arbitrage. Shift in priorities in outsourcing strategies and exponential growth of outsourcing market has allowed newer offshoring clusters to evolve and flourish.

Objectives & Priorities of Customers

The cost reduction mandateComplexity of processes to be outsourced

Cultural and linguistic alignmentDegree of managerial control

Time-zone alignment

advantages & Capabilities of Locations

ScalabilitySpecific skills and capabilities

Cost of operationsSimilar time-zones

Cultural affinity to buyer

by Viral Thakker and Nishant Mathur, KPMG Advisory Services, India.

Rise of IT-BPO Outsourcing Frontiers

Regional AnalysisShift in priorities in outsourcing strategies and exponential growth of the outsourcing market has allowed newer offshoring clusters to evolve and flourish.

Figure 1: Factors affecting the choice of location for outsourcing (Source: KPMG Analysis)


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alternative as compared to the U.S. and Europe.

Cluster 3: Central and Eastern Europe (CEE)Preference of West European com-panies to near-shoring and cultural and linguistic similarities has made Central and Eastern Europe a viable outsourcing destination. Bulgaria, Hungary, Poland and Russia are all set to compete with Asian and South American counterparts for the West European outsourcing market.

Main parameters influencing CEE as a choice of outsourcing

destination:

Language skills and cultural affinity: Language skills are important, and are often used as a selling point by the near-shore destinations in the CEE, especially to Western European countries like Germany and France.

Wage differential: In the new EU states labor costs are near-

ly 20 percent of those in Germany and France. Wages in countries like Romania are one-tenth of those of their European counterparts. The wage differential, even though it is considerable today, is narrowing as wage growth in the region is rising.

eU regulation: Since most of out-sourcing destinations including Hungary and Poland, have joined EU, European customers find East European outsourcing destination more regulated then their Asian counterparts. It shifts some of the regulatory responsibilities towards the vendors. Schengen visa and adoption of Euro as a common currency has also played its part in strengthening CEE cluster.

standard of education: Most CEE countries have superior educational

Main parameters influencing South America as a choice of outsourcing destination:

Near shore and Time zone align-ment: South American nations have the unique advantage of proximity to the biggest hub of outsourcing supply end – USA. Near-shore opera-tion offers advantages of time-zone alignment, faster implementation and better control over operations.

Language skills: Spanish language requirements in the U.S. and the growing English language capability

of the labor pool in the region are key to the region’s competitiveness. Mexico, Argentina and Costa Rica are capitalizing on their sizeable pool of English speakers by offering bilingual services.

Cultural affinity with the U.s.: USA and Latin America share a number of cultural similarities. These aspects of cultural affinity assist the U.S. and European companies to retain a similar corporate culture in captive centers and facilitate business with outsourcers.

Cost Attractiveness: Latin America has a significant cost advantage over Europe and U.S. Chile and Mexico are relatively more expensive loca-tions as compared to Costa Rica and Argentina, however these regions can still provide a cost-competitive

due to inflation, yet they are consider-ably lower than that in Unites States of America and Europe.

Language skills: India, Philippines and Malaysia have leveraged large English speaking population to attract key US and European markets. Asia Pacific markets – Japan, Taiwan and korea find China, Malaysia and Vietnam lucrative for regional language skills and cultural affinity. The region has struggled to capture Non-English European market due to absence of Spanish, French and German speaking work force.

Large number of service provid-ers: The large number of indige-nous service providers offer wide choice for buyers looking to out-source to Asia Pacific countries. It also makes the region very cost-competitive.

experience and Maturity: Rich experience in outsourcing indus-try has given India the deliv-ery maturity of offering end-to-end solutions. It gives them edge over their counterparts. Malaysia and Philippines have emerged as strong outsourcing destinations because of the availability of workforce with niche skills, whereas China based sup-pliers are also growing rapidly

Cluster 2: South AmericaThough South America has less than 10 percent share in global outsourcing market, yet the region shows prom-ise. With better economic stability, the “near shore” advantage of South America has become more compel-ling for the United States of America. Brazil, Mexico and Chile reaped the benefits of the first mover advantage and business maturity. Newer desti-nations such as Argentina, Uruguay and Costa Rica are becoming viable options due to attractive cost and maturing business sector.

The outsourcing story will become really interesting

when Egypt and some other African countries also actively

join the IT-BPO outsourcing bandwagon


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state-of-art infrastructure and cost effective work force. With the advent of tier two outsourcing cities, custom-ers get several options even within a country.

From y2k to global recessions, outsourcing has come a long way. The spread of outsourcing destinations across three continents has been the biggest leap. But this can prove to be just a beginning; the story will become really interesting when Egypt and few other African countries also actively join the IT-BPO outsourcing band-wagon. GS

Viral Thakker is Executive Director, KPMG Advisory Services, India. Nishant Mathur is Consultant, KPMG Advisory Services, India

outsourced has extended from “voice based” services to insurance under-writing. At the same time, new clus-ters have made the outsourcing market extremely competitive. Suppliers need to continuously evolve and innovate to attract customers. For instance, despite inflation and increase in wages and real estate prices, India is still the most preferred destination because of maturity of industry in India and sup-port extended by the government and promotional agencies.

Regional analysis gives hawk-eye view of outsourcing destinations, but each of the regions also offers large diversity to the customers. For instance, in Asia, India offers mature IT-BPO industry and English speak-ing workforce where as China offers

systems that are almost at par with the EU-15. A study by MGI claims that 50 percent of graduates (engi-neers, mathematicians, statisticians and physicists) from the Czech Republic, Hungary or Poland are suited to working for international service providers.

Emergence of new clusters has resulted into increase in length and breadth of outsourcing. The inhibi-tions and reservations against IT-BPO outsourcing that existed, due to differ-ent priorities of customers, have been diluted considerably by emergence of new destinations. Outsourcing has been embraced by more customers across geographies. With availability of diverse technical and profession-al skills, the breadth of work being

ParameterCluster

asia Pacific Central and Eastern Europe Latin america

Major destinations India, China, Philippines, Malaysia Ukraine, Romania, Czech Republic, Poland

Brazil, Chile, Mexico, Argentina

Upcoming destinations Vietnam, Thailand, Sri Lanka, Pakistan

Slovakia Paraguay, Peru, Columbia, Equador

Closest markets Japan, Korea, Australia, India, China Western Europe US, Canada

Service Focus Global markets European markets North American markets

Reason for emergence as a cluster

• Low costs • English language skills• Relatively mature service providers

• European language skills• Educated workforce• Good infrastructure

• Spanish language skills• Cultural affinity with American

markets

Emerging areas of opportunity

• Vertical BPO• Knowledge services

• Technology services• BPO

• Contact center• BPO

Note: The table contains indicative data and may contain generalizations to enable comparison across regions. However, there are disparities within regions on each of the above parameters, some of which are highlighted in following sections.

Source: KMPG Analysis

Figure 2: Analysis of Outsourcing Clusters


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by Esteban Herrera, Senior Vice President, HfS Research

Latin America: The Next Sourcing Frontier or an Afterthought?

Nearly every provider of IT and Business Process services has wrestled with a Latin American Strategy. The strategic question : Is Latin America a destination of choice, or a destination of convenience?

In Spanish, the word “servicial” is a high compliment. It describes a person who is always ready to lend a hand, who senses what

others need before they even ask. Parents teach the concept to their children, in hopes that they will devel-op this behavior. Providing a service in Latin American culture is noble and prestigious—so how is it that it is not the business services engine of the world?

Nearly every provider of IT and Business Process services has wrestled with a Latin American Strategy. On one hand, it is a large, relatively pros-perous market with a wealth of well-educated professionals. On the other, it is highly fragmented and diversely regulated; as a result, it has been dif-ficult to scale. Another difficult choice for service providers is focus: are we building for the local market or to provide offshore/nearshore services? The two options require very differ-ent approaches, and therefore it is difficult to do both successfully at the same time.

Perhaps the biggest limitation to date has been the inability of the local industry to organize regionally. Individual Latin American countries lack the population to offer the scale that more established Asian offshoring

some of the well-know near-shore advantages of similar time zones, quick, relatively cheap flights, and most importantly, cultural similarities with American and European clients. However, the outsourcing industry here is not as mature, relying on hero-ics and creativity more than process and discipline.

The strategic question for both pro-viders and buyers: Is Latin America a destination of choice, or a destination of convenience?

Latin America as a destination of choiceCompanies on either side of the serv-ices equation that see Latin America as a unique and differentiated propo-sition will seek to leverage the cultural familiarity bred by the outsize influ-ence of the United States and Western Europe on Latin American Society. This has something to do with colo-nial history, economic power, political influence and aid, and shared Judeo-Christian foundations for legal and social structures (though the region is increasing in religious diversity quickly). But it has even more to do with a shared experience and popular culture. Latins who were teenagers in the 80s remember when “Video killed the Radio Star” inaugurated

destinations do. But viewed compre-hensively as a region, it’s a formida-ble services population, with millions of qualified engineers, accountants, HR professionals, MBAs, doctors, lawyers, etc. and Billions of dollars in demand for IT and IT-enabled services ($8 Billion in Brazil alone). Latin America desperately needs, but probably will not get, a NASSCOM-like organizing body that will refocus the industry away from its current nationalistic tendency. It could start with the already commercially friend-ly Mercosul countries and perhaps expand northward as it proves its success.

Possibly the best-kept secret is the abundance of English language skill available in the region. For both voice and non-voice services, Latin America is competitive with, or superior to, most of the usual offshore back-office destinations when it comes to work-ing in English. HfS Research toured a call center facility in Nicaragua not too long ago, and found over 120 representatives placing outbound calls in perfect, nearly unaccented urban American English. Over 80 percent of these young employees had lived in the United States at some point in their lives.

Of course, Latin America boasts


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the companies that can afford to fol-low a “convenience” strategy are the ones that do not have a large com-mercial presence in the region—they lack the language and culture-specific requirements of companies with large footprints in Latin America, and they are not large enough or “outsourced” enough to require the portfolio diver-sification. Service providers of any scale are unlikely to have no cus-tomers with local requirements, be they due to commercial need or geo-graphic diversification. However, if the demand is not large, one or two medium sized delivery centers will suffice.

Latin American service strate-gies that are more opportunistic will probably emphasize the following elements:� Site choices that reflect broad

language and regional capability. Since there are likely to be less sites and a smaller footprint over a large expanse of the map, com-panies are more likely to choose areas like southern Brazil, where it is easier to recruit bi- and tri-lin-gual speakers. Where companies have a specific large market to be served, such as Mexico or Brazil, companies may choose sites or providers with local strength

� Niche activities—certain kinds of application development, bi-lingual contact centers, kPO, and sports books, among others, are all reflected with relative strength in the region

� Customer acquisition, in the case of providers. There are still a number of captive shared service centers in the region that could be sold to providers looking to win a new customer.

� Portfolio diversification/Disaster Recovery. Companies that find themselves too heavily invested in a single region may find it attrac-tive to conduct some business activity in Latin America, taking

Aggressively promote these advan-tages and how they translate into real business value

� Carve out new niches that fit well—Application maintenance is mature and well supported by other regions. But GUI design, for example, has a cultural appeal element to it and is a strong niche for Latin American provid-ers. Focusing on the services that are best provided from the region can only help

� Lobby local governments for less restrictive service export policies and tariffs—and reward the loca-tions that embrace pro-business regulatory environments

� Invest in local leadership� Compete vigorously in the local

market and the global service delivery playing fields to miti-gate risk and enhance economic benefit

Latin America as a destination of convenienceWhile the regional, all-in approach may well be right for many providers and clients, but it isn’t for everyone. For some enterprises and their provid-ers, a more opportunistic approach to Latin America is more appropriate. Simply put, some companies do not have the demand for services delivered from Latin America, because their customers and their business doesn’t require it. These companies will likely take advantage of niche expertise, and the ability to provide “localized” services when their limited presence in the region demands it. A few oth-ers might view Latin America purely as a diversification move, a nearshore minor site wih disaster recovery capa-bilities and a beachhead for potential future expansion should the situation change.

This is probably the more difficult strategy to execute, because it requires making riskier choices about location and focus. Amongst service buyers,

MTV broadcasting, at exactly the same time as in the US. Cable sub-scribers throughout the entire region have more foreign (and mostly American) channel choices than they do Spanish-language and local choic-es. While there is a vibrant inde-pendent film industry in nearly every Latin American country, Hollywood rules the cinemas. For all of Brazil’s compelling music, visit one of Sao Paulo’s famous “boites” and you are most likely to hear Euro-pop mixed by Europe’s top disc jockeys. Bottom line, Buenos Aires looks and feels a lot more like Boston than Bangalore.

Outsourcing is ultimately about providing services in a way that cre-ates economic value for both parties. Cultural understanding can certainly grease the wheels of the relationship, but without an economic incentive, there is little reason to proceed. Latin America still does offer labor arbitrage for desirable skills, but it is fading just as quickly as anywhere else. On a pure labor rate basis, Latin America appears disadvantaged relative to India and the Philippines, for example. But on a total cost of ownership (TCO) basis, that disadvantage shrinks. HfS research estimates the difference in TCO at no more than 10–15percent between most Latin America activ-ity (whether IT or BPO related) and India-originated services.

Companies that see Latin America as a destination of choice will logi-cally invest more heavily, and their strategies should reflect the following elements:� Adopt a regional, networked

approach, rather than a country-by-country approach. Make sure work is easily movable from one location to the other, and get skilled at capturing the right skills in the right cities

� Make the cultural similarities and the physical proximity part of the differentiated advantage.


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parts of the industry but not oth-ers. Most countries, even as they attempt to attract foreign invest-ment, trip over their own bureauc-racy. Fortunately they have all set up government-sponsored devel-opment agencies skilled in help-ing new entrants get established.

Service Provider Landscape: Approaches to the marketDifferent service providers have taken different approaches to Latin America, and even within a category, the strate-gies have differed

Traditional Western outsourcing providers such as Accenture and IBM

have long had a presence serv-ing the local market. Because of their country-specific organiza-tion structures though, it has only recently become possible for them to offer the services of their Latin American delivery centers to non-Latin American clients. CapGemini has perhaps the most aggressive investment program in the region and has backed it up with acquisitions, like the recent CPMBraxis

transaction, and leadership to make it happen. All of these have local lead-ers running the operation, generally reporting to the home office in the US or Europe.

Contact Center Providers were early and heavy in the region, for reasons mentioned earlier. Sykes, for example, operates in Argentina, Brazil, Costa Rica, El Salvador, and Mexico. Sitel is in Brazil, Chile, Colombia, Nicaragua, and Panama. West is a relative laggard with just one large Mexico operation. Call Center management is a highly poached job category in the region, but because of their prevalence and experience, there are plenty of local managers running these contact centers.

The largest Indian ITES provid-ers have all established a presence in Latin America, generally following an

investment away. In truth, the security situation is far better than it has been, not just in Colombia but throughout the region. The concerns over security are, in HfS’ opinion, overblown. Philadelphia, Washington D.C. and Baltimore are just three of the cities in the United States with higher murder rates than Sao Paulo. Buenos Aires is safer than Dallas.

3. population/scale. The main prob-lem with single-country strategies is that no one country in the region, with the possible excep-tions of Brazil and Mexico, has a huge population, therefore limit-

ing the actual and potential edu-cated workforce capable of pro-viding services. Costa Rica, which has the most educated population on the continent, has just four million inhabitants, 300,000 of them already working in the serv-ices-for-export industries. Chile, with a stable democracy, strong infrastructure, and the highest per-capita income in the Americas after the US and Canada, has just 16 million inhabitants. Both of the above have proven difficult places to recruit in for recent cor-porate multi-national arrivals.

4. Regulation. Latin America has not helped itself with a consistent policy for services exports. While Brazil taxes them, Nicaragua offers a 15-year tax holiday. Panama offers similar holidays for some

advantage of its labor arbitrage while managing business risk.

� Marketing and Sales: Ultimately, service companies cannot call themselves global if they ignore 22 million square kilometers of the earth’s surface, with a popula-tion of 600 million. Establishing a presence in Latin America is critical to service providers and consumers that need to compete globally.

The Challenges of the RegionWhile there are many more reasons to invest in Latin America than there are reasons to avoid it, there are some challenges for business service providers and their customers in the region:1. politics. Led and funded

by Hugo Chavez’s regime in Venezuela, leftist, anti-business and anti-American/European governments have been elected in places like Bolivia, Ecuador, Nicaragua, and Argentina. While the threat to foreign businesses is real, it is also overstated. All of these countries require for-eign investment, and still actively pursue it in spite of the politi-cal rhetoric their leaders promote. Brazil has grown economically, grown its middle class, expanded capitalism and foreign investment, and gained more influence in the region and the world in the last eight years, ostensibly under the leftist leadership of the Worker’s Party, which was just re-elected to the presidency for another four-year term.

2. Brand. Colombia has some of the best professional talent in the world, available at reason-able wages and within a short flight from the United States. But Colombia has a terrible repu-tation as a violent, dangerous place that keeps a lot of foreign

Cultural alignment is the strongest calling card for the companies wishing to provide services from the region, but they must resist the tempta-tion to “sell against India.”


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brands mentioned previously. They have had the opposite problem of the India-based firms. They know and serve their home-market very well, but they have struggled with enterprise-level selling in the US and Europe. For obvious reasons, all of these firms have chosen a “destination of choice” strategy. They have a com-pelling near-shore value story to tell, but are far behind in awareness and market share. HfS Research sees the immediate challenge for these firms as sales and marketing, but longer term, they must also establish themselves as true global providers, meaning they too will have to come to places like India, The Philippines and China if they are going to be a full-service provider. They will also have to invest in BPO capabilities, as they are largely IT focused and HfS Research sees a slow but consistent swing towards bundled, end-to-end services over the next few years.

yet another category of provider is the smaller, high-end Latin American software development outfit—compa-nies like Hexcta, Avantica, and PSL, with deep expertise, smaller project based work as their main offering, and more midsize than enterprise-class clients. Their clients find work-ing with them easy, for the nearshore advantages described elsewhere in this report, but they also tend to get a lot of personalized attention that

executives of larger firms could not give them. More than any other con-stituency, this group of providers has an interest in promoting the region as a destination of choice, particularly for high-end software services.

The bottom lineOutsourcing in Latin America will continue to grow, in part because the region can serve many different types of demand. Cultural alignment is the strongest calling card for the compa-nies wishing to provide services from the region, but they must resist the temptation to “sell against India.” The business services industry is, at this stage of globalization, much less a competition amongst countries than it is a competition amongst compa-nies. Consumers of business services have a choice of locations and provid-ers, and as they seek to both diversify risk and integrate services, Latin America will continue to be a key ingredient in the recipe. Whether the region plays a dominant or secondary role in the sourcing strategies of enter-prises and providers, expect to see continued, paced, growth in both the local and export markets. And why not harness the energy of a culture that prides itself on providing a serv-ice? GS

Esteban Herrera is Senior Vice President, HfS Research

either build or buy strategy, but not both. Wipro has made some strate-gic investments in which it acquired both desirable assets and marquee customers. TCS moved early and has mostly built. Infosys has been charac-teristically cautious and opportunis-tic. HCL and Cognizant arrived late and do not have as large a presence as the others. Both WNS and Genpact have built and bought in the region. Those India-based providers that don’t already have a presence are talking about it, with commitment to getting established sooner rather than later. HfS has observed that the India-based firms are having difficulty engaging local clients, perhaps in part because they have largely failed to hire local leaders to run their shows. One senior executive from a large and successful provider recently remarked to HfS Research that “Portuguese/Spanish language skill and cultural under-standing” were not that important to lead the Latin America business. This sounds a lot like the American globalization failures of the 1960s and 70s, in which US corporation dispatched ex-pats to run far-flung operations with little regard for local language, customs, preferences, cul-ture and regulation.

Large local providers, like Softtek, Neoris and Politech, have established businesses in the US, but their pen-etration is small relative to the the


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by H.Karthik and Nikhil Rajpal, Everest Group

Africa: The emerging fron-tier for services offshoring

The offshoring of global servic-es is an established phenom-enon. In 2009, over $90B of services were sourced across

BPO and IT through ~4 M people from offshore locations.

As demand grows, the offshore location landscape is evolving rapidly, with over 150 cities that are potential location options for companies. Africa is a relatively recent entrant to this list of potential destinations. The region has witnessed significant uptick in offshoring activity in the past 24-36 months. Recent investments by lead-ing global companies (e.g., Amazon in South Africa) are likely to favorably influence interest in the region as a global sourcing destination.

Among the African destinations, Egypt, Morocco, South Africa, and Mauritius are the leading countries in terms of scale of direct employment in the offshore services sector. Each of these countries has more than 10,000 offshore jobs in this sector and host delivery centers for a number of lead-ing global suppliers and captives.

Africa’s growth in offshoring has been primarily driven by its low-cost proposition and talent availability in meaningful scale. However, Africa is often perceived as ‘high-risk’ by foreign investors. In this article, we explore key African countries across three key decision drivers in location

constitute the majority of the Francophone offshoring market. Most offshore operations in these countries support clients and cus-tomers in France and pan-Euro-pean multinationals having signif-icant French-language needs. For example, Capgemini has a ~1,500 FTE strong operation in Morocco providing French-centric IT appli-cation development, transactional BPO and contact center services to its customers.

� English language belt in sub-Saharan Africa: Primarily com-prising South Africa with kenya also starting to gain traction, these countries primarily deliver English language BPO services. South Africa is one of the lead-ing destinations to serve the Uk market, given its preferred accent and cultural affinity with the Uk. Five of the top 10 global contact center players are already leverag-ing South Africa to deliver voice work for the Uk market.

� Multi-lingual destinations for Europe: Some countries in Africa can support service deliv-ery across multiple languages. Mauritius offers an attractive bi-lingual proposition for French and English work. Egypt is well positioned to support multiple European languages at moderate

selection, namely talent availability, costs and operating risks.

Meaningful scale of talent available in many countriesEverest analysis suggests that at least four countries in Africa provide talent in meaningful scale to sup-port large operations (in excess of 1,000 FTEs). Egypt, South Africa, Morocco and Tunisia each produce more than 50,000 graduates annually. South Africa, for example, produces 350,000 graduates annually and is among the Top 3 global locations that can provide English language skills at scale. While the size of tal-ent pool in these countries is smaller than the established offshore locations (India, Philippines), it is comparable to that of emerging offshore locations in Central and Eastern Europe, Latin America. Other African countries such as kenya, Ghana and Mauritius can support moderate-scale centers.

Historical influences from the colonial era have provided these coun-tries with a pool of language skills that are a key driver towards growth in offshoring. Given the diverse lan-guage skills in the region, we see three “belts” emerging:� Francophone belt in North-

Africa and Mauritius: Primarily comprising Morocco, Tunisia and Mauritius, these countries

Africa’s growth in offshoring has been primarily driven by its low-cost proposition and talent availability in meaningful scale. However, Africa is often perceived as ‘high-risk’ by foreign investors.Here, the continent is analysed across key decision drivers in location selection.


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violence and unrest in Nigeria and Senegal.

Governments are making concerted efforts and strong commitments to improve the attractiveness of the oper-ating environment. Initiatives include skill development (e.g., ITIDA-led programmes in Egypt, Monyetla pro-gramme in South Africa) and acceler-

ating infrastructure development through technology parks (e.g., Casanearshore parks in Morocco, Ebene Cybercity in Mauritius). Most countries offer incentives for the offshoring sector; howev-er, the nature of these incentives and their financial impact varies across countries.

On the whole, the outlook on the offshoring opportunity for Africa is positive. We expect that growth will continue to acceler-ate as both suppliers and buyers build global delivery networks and diversify into newer loca-

tions. In addition to growth from international markets (e.g., Uk), locations in Africa are also likely to witness growth from regional shared services operations (i.e., leading com-panies consolidating their back-office operations for the African region). Furthermore, the expected improve-ments in infrastructure augur well for the future of this region.

Most of the work delivered from African markets is currently transac-tional in nature. While this is expected to continue, some countries offer opportunities to deliver complex work in certain areas (e.g., South Africa for complex BPO in financial services, Morocco in applications outsourc-ing). The political and security envi-ronment may continue to remain a concern in few countries but investors are finding ways to manage risks as they enter these markets. GS

H.Karthik is Vice President, Global Sourc-ing, Everest Group. Nikhil Rajpal is Partner, Everest Group

infrastructure). Whilst perceptions of risks in some areas are exagger-ated, there are some challenges that investors need to consider and man-age effectively. Also, these risks vary across countries and investors need to make conscious risk-reward trade-offs in making location choices in the region.

From a relative risk standpoint, the region can be segmented into three groups� Egypt, Morocco, Tunisia and

Mauritius are stable locations on account of a favorable geo-political climate, socio-economic regime and investor-friendly busi-ness environment

� South Africa offers a “First-World” environment in terms of its infrastructure and quality of life. Investor confidence in South Africa has grown in recent years and the success of the FIFA 2010 World Cup has further strength-ened the country’s reputation. However, there are some concerns on security that can be managed with appropriate investments

� Instability of the political and macro-economic environment is a concern in some countries such as kenya, Nigeria and Ghana (e.g., unstable coalition and burgeon-ing economic debt in kenya). In addition, there are concerns with

scale and has witnessed credible success to the effect.

Costs significantly lower than source markets; however, costs vary across locationsLocations in Africa offer significant arbitrage potential from source mar-kets. For example, costs in South Africa are 50-60 percent lower than the Uk. Also, most loca-tions in Africa offer lower costs than the Central and Eastern European region.

However, costs vary signifi-cantly across locations. Whilst kenya, Mauritius and Egypt are among the lowest cost destina-tions in the region, Tunisia and Morocco are among the more expensive ones. Some countries offer attractive incentives that make a significant difference to the cost of operations. For example, the recently announced (Nov 2010) incentives in South Africa help reduce costs by 20percent.

Whilst payroll and facility costs in African countries are in general competitive to India and Philippines, telecommunication costs are higher. This is largely driven by historical telecom bandwidth constraints. On an average, the cost of telecommu-nications in African countries is 5-7 times higher than that in India and Philippines. However, telecoms costs have reduced considerably over the past 3-4 years. Going forward, the advent of new cables (e.g., SEACOM) is expected to further reduce telecom costs and strengthen cost competi-tiveness of several countries in the region.

Concerns on risks are a blend of real issues and perceptions; risks can be managed Investors are often concerned with risks in Africa (e.g., stability, security,

While the size of talent pool in these countries is smaller than the established offshore locations (India, Philippines),

it is comparable to that of emerging offshore locations

in Central and Eastern Europe, Latin America


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by Jehil Thakkar and Shailesh Narwaiye, KPMG Advisory Services, India

Location Selection Best Practices

The recent financial crisis gave a big set-back to the world and a lot of companies are still grappling to recover.

One big lesson that companies have learnt is that they can no longer exist in isolation. The world is getting clos-er and every global phenomenon will be impacting companies. Companies which had never considered outsourc-ing are opening up to offshoring / outsourcing to rationalize costs and delivery models. On the whole, access to global opportunities is get-ting easier. Offshoring not only helps in cost rationalization but also gives access to a diversified talent pool. If companies move to a relatively less explored location, they can leverage many additional benefits of being the “first-mover” like acquiring various incentives such as government grants due to a heavier hand at the negotia-tion table.

Globally, several destinations are attracting IT-BPO players to set-up their delivery center. Depending on the strategic priorities, companies can choose between two types of cities, Leading Tier i or emerging Tier ii.

Leading Tier i locations are early bloomers in IT-BPO sector and are quite mature in service offerings. Moreover, due to presence of large number of service providers and cap-tive units in the city, skilled talent pool is large. Infrastructure of these

stakeholders need to ask few impor-tant questions to themselves before finalizing the location to see if they are moving in the right direction.

1. Is a clear Sourcing strategy defined?Organizations that are planning to explore new/alternate destinations need to have a clear sourcing strategy defined. Having a detailed sourcing strategy not only gives a business case and a plan for the next few years for offshoring but also gives a complete idea of the requirement. It also out-lines future plan as to which processes are ideal to offshore, how to offshore and when to offshore them. This is a very important aspect from location selection point of view because it gives a clear idea about the scale and scope of services. It also helps to choose a location by keeping in mind about the future expansion plans.

2. What kind of time-zone proximity and support is expected from the new location? Organizations should also be clear on nature of support they are expecting from the offshore location. Depending on the requirement, the center can be a near-shore or an offshore center. If there is a good amount of time overlap with the parent office then for the work to be carried out smoothly a near-shore center within time differ-ence of 3-4 hours can be ideal. E.g.

cities is well established and quality of life is also better. However, such cities have higher costs of operation and higher attrition rates.

emerging Tier ii locations are cities which started little late after watch-ing the success of some of the leading destinations. These Tier II cities have large talent pool with relatively lower wages. Overall cost of operations is also low in these cities. However, infrastructure in these cities may not be sufficient to cater to the demands of the companies, but attempt is being made to improve the situa-tion. Governments are focusing on development of city infrastructure and providing suitable incentives to set-up IT-BPO companies in these locations.

Considering the gamut of choices in terms of cities that are available, it becomes difficult for organizations to choose the right city. Organizations are increasingly looking at parameters beyond cost arbitrage. Both Tier I and Tier II cities will have their own pros and cons and companies want be sure that they have chosen the best city to fit the bill. Ultimately, location selec-tion is a scientific exercise and should be done with utmost care otherwise one may end up in a place where one gets a few advantages but does not meet overall objective of moving offshore. Location selection should be done with extreme caution and

There is no ‘one-size-fits-all’ strategy for organizations to choose but they need to follow a planned and scientific exercise of location selection


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nearby markets. E.g. Chinese cities like Changsha and Hangzhou can be a natural choice to support Japanese market due to their linguistic and cultural similarities. The Central and East European cities are good to support Western Europe; the Latin American cities are good for North America, etc. However, there are some interesting anomalies. E.g. Buenos Aires (Argentina) can tap both North American and European business due to linguistic similarities with both regions (Spanish, Portuguese and English). Similarly, accent similarities

with the US mean that cities in the Philippines are well suited to serve the US market.

6. Is there a dedicated IT-BPO Infrastructure available within the city?Availability of dedicated zones for IT-BPO companies with ready basic infrastructure and facilities (such as power and telecommunication) can be of good help while deciding on a delivery location. Large number of cities have Free trade zones (FTZs) or special economic zones (SEZs), which can be ideal for IT-BPO companies. Some cities have gone a step further and set up areas for pro-moting specialized services – for

instance, the Gujarat International Finance Tech-City in Ahmedabad (India) and the Tunis Financial Harbor in Tunis (Tunisia) are to be dedicated for financial services. Changsha (China) has a “Cartoon City” to house animation companies. For companies which are looking for niche services, cities with dedicated infrastructure and specific talent avail-able can be of natural choice

7. Are Government incentives being carefully evaluated?Different locations have different incentives for IT-BPO company set-

be executed from the location, one should look for suitable talent pool. For some of the transactional work, overall graduates’ pool can be consid-ered, but for certain high end com-plex processes, looking at specific talent pool becomes essential. E.g. Commerce graduates can be consid-ered for accounting process related work. Apart from the proportion of graduates, other factors which could impact the availability of talent pool are out-migration of talent and com-petition available from other/compet-ing industries. E.g. The call center

industry faces competition from the tourism industry in some cit-ies. Moreover, if there are industry clusters in nearby areas, typically a higher level of professionalism can be expected from the talent pool and can be employable.

5. Does the location have linguistic and cultural proximity?Services which largely require cus-tomer interaction, possessing linguis-tic and cultural proximity really helps. Typically, near-shore emerging cit-ies have strong linguistic similarities and cultural compatibility with the

Mexican and Chilean cities can be a good option for US head-quartered companies. Offshore centers can be considered for large scale operations with minimal/no overlap with par-ent offices. In such cases, Indian and Chinese cities can be a good option for US head-quartered companies. Companies can also go for regional centers under ‘Follow the sun’ strate-gy. In which case regional centers will take support charge during regional office’s ‘office hour’ timings. Other choice can be ‘24*7 offshore support’ model in which the offshore center always supports the required services.

3. Will an unexplored emerging Tier II location be a good choice for operations? Typically, moving to unexplored Tier II cities will have all the advantages of being ‘first-movers’ for large transactional work cent-ers. State and local Governments will be ready to provide incen-tives for new set-ups. Talent pool will also be easily available and at a lowest possible cost in initial years. Although, in those initial years infrastructure may not be adequate but over the period if few good companies set-up in the city, infrastructure would be automatically improved to sus-tain the growth. Hence, if companies are ready to compromise a few aspects of location, their ‘high Risk – high Return’ strategy surely can provide them better benefits in the unexplored tier II location. But if companies are looking at setting-up a center for niche skills, a careful decision needs to be taken between established Tier I city verses unexplored Tier II city.

4. How good is the talent pool availability within the city?Talent pool is one of the most critical aspects of location selec-tion. Depending on the services to

Some cities have set up areas for promoting specialized services – like the Gujarat International Finance Tech-

City in Ahmedabad (India) and the Tunis Financial Harbor in Tunis (Tunisia) are to be

dedicated for financial serv-ices, Changsha (China) has a “Cartoon City” to house ani-

mation companies


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ups these days. Even the govern-ments are taking active interest in marketing their cities to IT-BPO companies. Competitive monetary and non-monetary incentives such as quicker clearances, facilitation with real estate and recruitment are some incentives on offer. For instance, in Guadalajara (Mexico), the time taken to set up business has gone down considerably in recent years. Port Louis (Mauritius) provides easy work permits to encourage expatriates to work in the otherwise small coun-try. Other efforts include encour-aging technical education (such as in Santiago, Chile) or the study of languages (such as English in the Chinese cities) to better prepare the talent pool. Hence, it is very impor-tant for organizations to evaluate these benefits carefully before final-izing the location to get maximum benefits from the location.

8. How is the quality of life in the selected location?Typically, quality of life is an untouched aspect of the city selection process. Cost of living, crime rate, pollution and ease of commuting are few important parameters while analyzing a location for the quality of life it offers. Although pollution and ease of commuting may not have an immediate and direct impact on the quality of life a city offers, but other

issues like cost of living, provisions, etc. may have a direct impact on an employee’s life style. Additionally, rec-reation facilities are also quite impor-tant to judge quality of life within the city.

9. Is site visit done before finalizing the city?Site visit is one of the most important aspects which should not be missed. Even though all the important aspects of a city have been considered, com-panies will gain the planned benefits based on the final site chosen within that particular city. Therefore, once the final two-three cities are decided upon, a visit to the actual sites with these cities is critical before finalizing the offshore destination. One should not underestimate the value of a site visit and conversations with other experienced business groups conduct-ing business in that location. For example, local business groups, pro-fessional associations and chambers of commerce.

A wide range of choices are avail-able today, for companies in many parts of the world with the similar basic advantages offered by these cit-ies (E.g. lower costs, qualified tal-ent and aggressive incentives). But depending on organizations’ strategy and project requirement, each city becomes unique in its own way. There is no ‘one-size-fits-all’ strategy for

organizations to choose but they need to follow a planned and scientific exercise of location selection.

We wish you all the success in this exciting journey! GS

Jehil Thakkar is Executive Director, KPMG Advisory Services, India. Shailesh Narwaiye is Manager, KPMG Advisory Services, India


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by Stan Lepeak, Managing Director, EquaTerra Global Research

Global Sourcing for FAO: Strong, Successful and Growing

Global Sourcing Market OverviewThe use of global or offshore resourc-es to support outsourcing efforts is nothing new. The market has grown and matured over the past 10 years with most medium and large end-user organizations now engaging in some form of global sourcing, and all top service providers possessing diversified global service delivery capabilities.

There is ongoing debate in the market on both the overall merits of offshore or global sourcing and its future growth. Some pundits predict (or hope) that global sourcing, like globalization, has peaked and, due to shifting buyer preferences, more restrictive trade and tax policies, con-verging wage ranges, etc., the growth of global services sourcing will slow or perhaps begin to contract. However, the reality of the market for global services sourcing is much different. While models, preferences and poli-cies are always shifting, overall growth in global services delivery continues unabated.

EquaTerra recently released the result of its 3Q10 global advisor and service provider pulse survey. While the results were mixed to posi-tive relative to the overall growth of business process and IT outsourcing, they were clear on continued strength of the offshore and global servic-es market. Despite the pressure for

one-to-five scale where one represents “strongly disagree” and five means “strongly agree”. The only trend with consensus agreement, and it scored just above the mid-point, was that outsourcing buyers are growing more interested in offshore services deliv-ered from locations other than India. This trend is natural as the number of quality and viable global sourcing locations expands and India-based service providers themselves diver-sify delivery capabilities beyond their home market. Neither advisors nor service providers see buyers pulling back from global sourcing in general or their use of India-based service pro-viders as major trends.

increased service trade protectionism among many in Western governments and general anti-globalization saber rattling, the use of global sourcing and service delivery models remains strong.

The quarterly Pulse surveys poll the top global business and IT service providers and EquaTerra senior advi-sors on what impact various market conditions are having on buyers’ glo-bal sourcing preferences and patterns (see Figure 1 for 3Q10 results).

The advisors and service provid-ers described to what degree they agreed or disagreed with five positions related to trending in global sourc-ing. They ranked their responses on a

Market Conditions: Impact on Global SourcingCoopyright © Equa Terra 2010. All rights reserved

Despite the pressure for increased service trade protectionism among many in Western governments and general anti-globalization saber rattling, the use of global sourcing and service delivery models remains strong.


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the Philippines and China are also popular offshore locations, with 19 percent, 18 percent and 14 percent, respectively, again more heavily uti-lized by buyers in North America. While only eight percent of respond-ents cited South America, it is on a solid growth trajectory from a small base. Location selection and prefer-ences are a function of buyer prefer-ence, language needs and require-ments, and the footprint of leading FAO providers.

Future FAO Global Sourcing PlansAs noted above, nearly three quarters of respondents in this market study plan to increase their overall usage of FAO. Buyers are also bullish on their future use of global sourcing to sup-port their FAO needs (see Figure 4).

Sixty-eight percent of the buyers using offshore resources for Record to Report plan to expand efforts, as do 60 percent of the buyers using off-shore for Order to Cash. For Procure to Pay, 51 percent of the respondents expect to increase offshore efforts, but it is important to note that much of this work is already offshored. While the use of near and offshore service models is common across all FAO process areas, it is most frequent-ly utilized to support transactional activities. More strategic work like

the expansion of global service deliv-ery footprints by multinational and regional FAO providers, and the growth of offshore captive F&A oper-ations, some of which have been spun off into successful FAO providers.

Top Global FAO Service Delivery LocationsNot surprisingly, India is the domi-nant offshore destination (see Figure 3). Seventy-eight percent of market study respondents are using India to fulfill at least some of their global sourcing needs, while 43 percent are using processing centers in Central and Eastern Europe. The usage of Central and Eastern Europe was much stronger for buyer organiza-tions located in Western Europe than in the North America, while India was a top destination for North American buyers as well as those in the United kingdom.

Central America, the Caribbean,

Results were similar in EquaTerra’s 2009 – 2010 european iTo service provider performance and satisfaction study. This market study analyzed over 1,600 IT outsourcing (ITO) contracts across Europe, and found that over 50 percent of all ITO buyers (with a high of more than 70 percent in the U.k.) are currently utilizing near or offshore outsourcing. Among these users of global sourcing services, over one-half plan to increase near and offshore usage going forward and less than 10 percent plan to do less global sourcing.

Global FAO ProvisioningWhile these findings reinforce that the use of global service delivery models is well established for IT its growth also continues in other non-voice busi-ness process areas. EquaTerra client engagement experience and research consistently find that the use of near and offshore resources to deliver finance and accounting (FAO) serv-ices is increasingly prevalent in today’s market as part of a coordinated and comprehensive sourcing strategy. EquaTerra explored this trend in the recently completed, inaugural edition of its Global FAO Service Provider Performance and Satisfaction Study.

This FAO study investigated 110 FAO contracts held by more than 90 of the top finance and accounting (F&A) spending organizations world-wide. The total annual contact value (ACV) of the contracts included in this study exceeds $1 Billion.

Eighty-six percent of the organiza-tions that participated in this research study are currently utilizing near and/or offshore resources (see Figure 2). Forty-eight percent of these are employing both, 34 percent are using only offshore, and four percent are using just nearshore resources. This growth of global FAO provisioning has been facilitated by the increase of service capabilities of India-based service providers with ITO roots,

Global Sourcing Models to Support FAO

Coopyright © Equa Terra 2010. All rights reserved

Top Global FAO Service Deliver Locations

Coopyright © Equa Terra 2010. All rights reserved


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drivers. • For buyers using both offshore

and nearshore FAO service deliv-ery models, 33 percent were significantly positive and 53 percent were moderately positive that FAO has met its original drivers.

• Forbuyersusing just anonshoreFAO service delivery model, 24 percent were significantly positive and 56 percent were moderately positive that FAO has met its original drivers.

While all models overall support-ed the achievement of FAO drivers, the relatively highest levels of suc-cess came via offshore and nearshore delivery models.

Finally, relative to general service provider satisfaction, buyers that are using offshore and nearshore FAO provisioning registered higher scores than buyers just using onshore service delivery. Nineteen percent of buyers using offshore provisioning were very satisfied with their service providers and 38 percent were satisfied. Buyers using both nearshore and offshore scored providers at 22 percent for very satisfied and 53 percent for satisfied. Buyers using just onshore delivery scored providers at just eight percent satisfied and 46 percent satisfied. So while overall all buyers were generally satisfied with their service provider’s performance, those using offshore delivery were the most satisfied.

Global sourcing has become a core means to deliver F&A services. While the nature and mix of buyers’ global F&A service delivery models will con-tinue to evolve over time, global sourcing will continue to play a criti-cal role. And as the bar on the benefits buyers’ seek from FAO is continually raised, so too must their capabilities to design, execute and manage their global service delivery models. GS

Stan Lepeak is Managing Director, Equa-Terra Global Research

of respondents were significantly positive and 46 percent moderately positive. Equally important, 20 percent of respondents were very satisfied and 48 percent satisfied with the performance of their FAO service providers, with zero respondents very unsatisfied with service provider performance. Further reinforcing these positive findings, over 70 percent of respondents plan to increase their usage of FAO going forward.

Several deal attributes, including deal size, age, geographic scope and complexity, affect these satisfaction levels. The strongest direct positive correlation to service provider satis-faction was with buyers’ self-assessed sourcing management capabilities, highlighting the importance of good outsourcing governance to outsourc-ing success. The use of offshore or nearshore FAO service delivery mod-els also contributed positively to FAO results.

Buyers using both offshore and nearshore FAO services were more likely than buyers just using onshore resources to indicate that FAO has achieved the original drivers sought in its usage. • For buyers using offshore FAO

service delivery models, 41 per-cent were significantly positive and 38 percent were moderately positive that FAO has met its original

analytics is increasingly moving off-shore, albeit on a much smaller scale. There are no signs that FAO buyers are pulling back from their global sourcing efforts, and protectionism, quality concerns, language challenges and other issues cited by some market pundits are having no material impact on global FAO demand.

The ongoing, increased use of near and offshore FAO resources is one important means to help buyers achieve the cost reduction and other goals they seek from their FAO efforts. Global FAO can increasingly deliver on drivers such as access to skills, for example, to support more kPO -centric FAO efforts. Global service delivery across a broad spectrum of markets is increasingly the norm for FAO services, whether for global, regional or local buyer organizations.

Global FAO Sourcing = Global FAO Satisfaction?Regardless of the usage levels of global sourcing to support FAO efforts, the most important questions are how satisfied buyers are with their global FAO efforts and how satisfied they are with the performance of their FAO service providers. The answers here are affirmative on both counts.

When asked to what degree FAO had delivered on the original drivers, buyers sought in its usage, 40 percent

Future Global FAO Sourcing Plans

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by Mario Tucci, Senior Global Business Consultant

Why Latin America is Still a BUYIf you combine lower risks, a better cultural fit and an appetite for investments, you will recognize a pattern for a BUY market in Latin America

I recall six years ago when Tata Consultancy Services was expanding from India to open Global Delivery Centers around

the World. Latin America and China began almost at the same time. The latter was promising great opportuni-ties, large amount of people, fantastic costs. Now fast forward to 2010. TCS has around 8500 people in Latin America, but only 1500 in China. It has gained new cus-tomers within Latin America and shows an accelerated growth rate as this region is being “discov-ered” by large US and European countries. So, how come you grow faster in a region with so many different countries, much less people and more distance to your main location? Investors know that the obvious is not always the best deal.

Welcome to cheap Latin America. Or should I say Right Latin America.

Do you need to lower your risks? Even with higher wages than India or China or some parts of Africa and Eastern Europe, incorporating Latin America in your portfolio will signifi-cantly lower your risks. If you are a US or European company, just imagine calling your vendor or team during regular hours. Imagine talking about cultural issues that are much similar. Think in flying over there in less than 5 hours average.

And what if you need to speed things up? Agile development is much easier to execute from similar time

will provide precious feedback that will bring innovation to your proc-esses, balancing the costs with better and faster outcomes. Also, we have welcoming governments. Almost all Latin American countries are luring IT companies (regional and global) to establish centers there. you will come

upon Free Trade Zone regimes, investment promotion activities, tax vacations, research benefits and probably a special perk if you ask for it. you will also find improving abilities with regards to infrastructure (internet, air-ports, security, electricity).

So, if you combine lower risks, a better cultural fit and an appetite for investments, you will recognize a pattern for a BUy market. But move fast.

More and more people are discovering Latin America’s hidden treasures. GS

Mario Tucci is a Senior Global Business Consultant. He is also a principal partner at Hemistion a Globalization Consulting com-pany. He leads several consulting and business activities including support to Government Agencies, Free Trade Zone Parks, BPO start-ups and IT Companies.

zones, as well as functional testing and descriptions. In general, Latin American people live in environ-ments that are very similar to those of the US or Europe. Americans drink Corona. They fly Embraer«s jets. They give Colombian flowers. They drink Chilean wine. They travel to Uruguay.

That means, Latin American peo-ple understand US business, culture and preferences. And in IT projects that means less conflicts, accurate functional aspects and better testing. Please also consider the ‘Follow The Sun’ approach in which projects move from Latin America to Europe to Asia in a round-the-clock, non-stop environment.

But is Latin America ready and available? Firstly, let’s think people. yes, there are some issues (shortages, attrition, language abilities, strong local currencies) in some countries. But in exchange, most Latin America IT people have a lot of working experience as they are graduates from universities. That means they can and

Latin American people under-stand US business, culture

and preferences.In IT projects that means less conflicts,

accurate functional aspects and better testing


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by Dr. P.K.Mukherji, President & Managing Partner, Avasant Asia

Africa- The Next Outsourcing Frontier

Countries across Africa are trying to position themselves as competitive destinations for IT/ BPO by promoting low-cost labor and nurturing conditions for a build-up of world class IT infrastructure.

Following in the footsteps of India and the Philippines, countries across Africa are trying to position themselves

as competitive destinations for IT/BPO by promoting low cost labor and nurturing conditions for a build up of world class IT infrastructure. These nations are leveraging their advaan-tage of younger demographics, popu-lation with good English and Frenchl anguage skills, a high degree of cul-tural alignment to Western countries coupled with a similar timezone to Europe and a shared business culture. The countries are realigning their focus to address the paradigm shift in the outsourcing arena and are devel-oping comprehensive strateggies to rapidly position themselves as attrac-tive destinations for IT/BPO services

elecommunication rates; training funds; and marketing aid.

Vast Talent Availability, Untapped The Next BillionSecond only to Asia, Africa provides access to a large pool of youthful workers. The continent, in its entirety, has a favorable demograpphic wherein majority of the population is in the less than 25 years age group. To illustrate, South Africa and Egypt are the lead-ing nations, each contributing a labor force of over 20 million. Following them are nations like Ghana, kenya and Morocco, each with an available workforce at or around 11 million workers.

However, inspite of the availability of a reasonably large labour pool, a very small percentage of the pool is directly deployable in the industry. Challenge for most of these countries is to provide traiining to the labour pool to increase the level of skill for deployment in the induustry. It is thus imperative for them to bring a larger cross section of the population into the labor force

and transition to a global services-centric model. In this evolution, these countries are investing in skills development and enhancement to enable their vast young population to take up jobs in the growing serv-ices sector.

opportunities and to gain consider-able marketshare.

A number of African nations are regaining traction as emerging IT/BPO destinations. While South Africa leads Africa’s BPO sector; per-forming call center services and all types of backoffice operations, in the continent, other nations across the continent are emerging as favo-rable outsourcing destinations. Countries like kenya, Ghana, Egypt, Mauritiuus, Tunisia and Morocco are using outsourcing as a key tool to alleviate themselves from the cur-rent situations to achieve Economic Proogress and prosperity. Most of the African nations are using their differentiated version of the “fourpronged approach” to attract BPO companies: taxbreaks; competitivet

Rank Country Finan cial People &

SkillsBusiness total Score

1 India 3.13 2.48 1.3 6.91

2 China 2.59 2.33 1.37 6.29

6 Egypt 3.07 1.2 1.37 5.64

7 Philippines 3.19 1.17 1.24 5.6

15 Ghana 3.26 0.7 1.36 5.32

17 Tunisia 2.86 0.91 1.45 5.22

25 Mauritius 2.32 0.95 1.77 5.04

26 Senegal 3.06 0.88 1.08 5.03

30 Morocco 2.62 0.93 1.42 4.97

39 South Africa 2.28 1.02 1.44 4.74

Source: AT Kearney Global Services Location Index 2009


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they become destinations of choice for providing best in class global serv-ices and making them conducive to do business.

A positive case for outsourcing is built not just with labor cost arbitrage but coupled with multiple key drivers such as a nation’s ability to provide and sustain a host of catalysts, such as a sustainable output of industry ready talent pool, availability of qual-ity infrastructure, a risk free macro-econnomic environment, financially attractive incentives and business structures, employment laws, quality of life etc. Investors in Africa today, are finding considerable benefits from leveraging the vast multi lingual talent

pool, competitive cost struc-tures, proximity to European and Middle East markets and the growing domestic markets.

Hence there is a need for a concentrated effort by regional governments to analyze inter-nal strengths and weaknesses to build a specific niche. In paral-lel, countries need to undertake macrolevel development across sectors to enhance available skills, brand and position their

respective countries and put in place necessary incentives to boost further investment in the region. GS

Dr. P.K.Mukherji is President & Managing Partner, Avasant Asia

As per International Monetary Fund (IMF), the gross domestic prod-uct (GDP) of the African region has been growing 5 to 6 percent annually, since 2001. In parallel, foreign direct

investment into the region has shown significant growth since the turn of the century. Governments of a number of countries with support from interna-tional organizations like the World Bank and The Commonwealth Trade Development have been proactively working towards attracting invest-ment into the IT& BPO sectors.

Conclusion While the world still views Africa as a region marred by conflicts, corrup-tion and health issues, governments in many countries are taking the lead on branding their countries, by putting out right positive messages and countering the negative percep-tions. Countries in the region are tak-ing the lead to make the infrastructure in the leading cities world class so that

Vast Continental Market OpportunnityAfrica also has the fastest growing telecommunications industry. The total number of mobile subscribers in Africa is expected to reach500 6600 Million by 2013. Nigeria alone, being the most populous country in Africa, has over 74 million subscribers and is grow-ing at the rate of 23 percent each year.

South Africa and Egypt lead the banking sector in Africa, with both these nations succcessful in attracting foreign banks to oper-ate in the local market. In 2008, Egypt attracted FDI of $13B, out-passing South Africa’s $8.5B. kenya’s 45 commercial banks posted a 14 percent growth, while Nigeria grew at 15 percent in 2009. With a low rural penetration, kenya, has less than 10 percent of its population utilizing banking facilities. This offers a great opportunity for growth in the African banking system. These are expected to further propel the growth of the BPO industry in the region because of the need for better customer service in the growing industries.

total Population

<14 years

51–64 years

Labor Force

Morocco 34,343,220 31% 64% 11.39 million (2007 est.)

South Africa 48,782,756 29% 66% 20.49 million (2007 est.)

Mauritius 1,274,189 23% 70% 574,000 (2007 est.)

Kenya 37,953,840 42% 55% 11.85 million (2005)

Ghana 23,382,848 38% 59% 11.29 million (2007 est.)

Egypt, Arab Rep. 81,713,520 32% 64% 22.1 million (2007 est.)

Tunisia 10,383,577 23% 70% 3.593 million (2007 est.)

Source: CIA Factbook 2008, July 2008 estimates

As per IMF, GDP of the African region has been growing 5 to 6 percent annually, since 2001. In parallel, FDI into the region has shown significant growth since the turn of the century

africa-Outsourcing Market Drivers

• Multi-lingual Delivery Capability• Near Shore advantage for Europe and• proximity to Middle East Markets• Access to local market economies which• is growing at 5–6 percent• Improving infrastructure and connectivity


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by Don Jones, Partner, Technology & Life Sciences Practice, BDO USA

Latin America Emerges as a Key Outsourcing Destination for 2011

As countries in Latin America become more developed they are also becoming more attractive as potential IT outsourcing jurisdictions

Historically, the top four criteria for selecting an IT outsourcing location include cost (both initial

and ongoing), education and skill level of the local workforce, scalability (i.e., the ability of an IT outsourc-ing provider to handle growth), and political stability. The values placed on these criteria may vary based on the need of the company seeking to outsource its IT. As countries in Latin America become more developed they also become more attractive as poten-tial IT outsourcing jurisdictions based on these four criteria.

2010 saw Latin America offi-cially emerge as a new destina-tion for IT outsourcing. Based on recent surveys Latin America is number three overall in jobs outsourced from the U.S. The strategy implemented by U.S. companies that outsource IT functions to Latin America is often referred to as “near-shor-ing.” This near-shoring trend is expected to continue as South and Central American econo-mies have been growing stead-ily over the last decade and are poised to become business and IT outsourcing forces in 2011. We have seen local companies in these emerging markets quickly become

China’s strong IT infrastructure, the language barrier in China and the lack of adequate legal protection for intel-lectual property continue to hinder China when companies are selecting a jurisdiction to place outsourced IT operations. These issues are not as relevant in Latin America as the local workforce is generally proficient in both Spanish and English and a better atmosphere for protecting intellectual property.

Other important factors that may sway U.S. companies to choose Latin America over China or India

include time zone similarities and geographic proximity. Time zone similarities may not affect 24/7 customer support (as these lines will be staffed at all times), but for general research and development outsourcing hav-ing employees that work in the same time zone is a definite benefit both for the main team and outsourced team. Similar to China and India, with the pri-mary exception of Mexico and a few other countries, the politi-cal climate in Latin America is stable for the most part. Finally, although a minor factor, there

are fewer cultural differences between the U.S. and Latin America versus the U.S. and China or India. These

multinationals, such as Politec Global IT Services (based in Brazil) and DBAccess (based in Venezuela). Even Indian outsourcing giant Tata has lev-eraged its presence in fourteen coun-tries in Latin America with offshore centers in Brazil, Uruguay, Mexico and Chile to serve emerging organ-izations with local and global IT resources.

China and India continue to be the major players in the IT outsourc-ing market; however, Latin America is poised to take market share from both of these respective countries.

In 2010, while China was able to gain market share from India in the global IT outsourcing business due to

Indian outsourcing giant Tata has leveraged its presence in fourteen countries in Latin

America with offshore centers in Brazil, Uruguay, Mexico and Chile to serve emerging organ-izations with local and global

IT resources


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When it comes to outsourcing strategy however, company’s set of unique needs should be considered before selecting a country to place outsourced IT operations. In order to maximize the cost benefit of IT out-sourcing, companies may want to consider seeking the help of qualified experts when selecting an IT out-sourcing jurisdiction. These experts can assist the company in navigating regulatory and local customs of which the company may otherwise by una-ware. The cost of good advice is argu-ably much less than the cost of relo-cating IT operations to a more favora-ble jurisdiction. Once a company has determined its IT outsourcing needs, it is crucial to address the possibilities that lie ahead. GS

Don Jones is a Partner in the Technology & Life Sciences Practice of BDO USA, LLP, a national accounting firm providing assur-ance, tax, financial advisory and consulting services.

China is not encountering these issues as costs remain low for IT outsourc-ing purposes and the Chinese yuan has not appreciated against the U.S. dollar (as it is generally fixed to the U.S. dollar). Thus, from a cost per-spective China remains attractive but is still subject to the previously dis-cussed limitations with respect to lan-guage and IP protection. These cost considerations and other factors may push more companies towards Latin America over China and India when companies are looking to relocate their IT infrastructures.

In 2011, we can expect this trend to continue as new firms located throughout Latin America bring innovative, new IT and business-fo-cused solutions to companies looking to outsource IT functions. Moreover, they are expected to do this all with a cheaper price tag than other tra-ditional outsourcing powers such as China or India.

With the increasing cost of doing business in the U.S. from a both a regulatory and an overall tax perspec-tive, more and more U.S .companies will continue to turn to IT outsourc-ing as a means to lower overall IT costs and increase global profitability. We can expect to see U.S. companies look to Latin America in the near future to satiate this demand for low cost and effective IT outsourcing solutions.

factors have paved the way for Latin American IT outsourcing service pro-viders to shine.

In response to China and Latin America’s outsourcing growth, India has sought to establish a stronger infrastructure to facilitate IT con-tracts in Bangalore as well as other parts of the country in order to quell concerns that India may not have the technology or the ability to meet the growing demands of large U.S. com-panies. For some companies operat-ing on a smaller scale, the issue of IT infrastructure may not be a top prior-ity when choosing an IT outsourc-ing service provider. These companies may be uninterested in a stronger Indian IT infrastructure and may choose Latin America over India for other reasons. Regardless, with proper planning, high speed data centers and other IT functions can be moved rapidly to anyplace in the world with little impact on the bottom line.

India continues to be a major player in the IT outsourcing market due to the education and skill of its workforce as well as its politically sta-ble government; however, the overall cost of outsourcing to India has been slowly rising as the country becomes more developed and the U.S. dol-lar continues to weaken against the Indian Rupee (since 2009 the Rupee has appreciated by approximately 9 percent against the U.S. dollar).


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by Pumela Salela, BPO/ITeS expert Consultant, World Bank

In the past Africa, with its 53 coun-tries, was known as a continent of starvation, disease, war, conflict, famine and hunger inhabited by

those which Franz Fanon called “The Wretched of the Earth”. Today, Africa presents a different face to the rest of the world. A face characterized by economic growth, regulatory and political reform. To date, Africa is esti-mated to have one Billion inhabitants, the majority of which are of working age population group. A recent study by Mckinsey Global Institute (MGI) indicates that today, Africa’s collec-tive GDP is $1.6 Billion, roughly equal to Brazil’s or Russia’s. Tomorrow (year 2020) Africa’s collective GDP is estimated to reach $2.6 Trillion. Real GDP rose 4.9 percent per year from 2000 through 2008, more than twice its pace in the 1980’s and ‘90s. Telecom, banking, and retail are flourishing. Construction is booming. Foreign investment is surging. South Africa recently hosted the first FIFA Soccer World Cup to be hosted on the African soil and delivered a spectacular world class event. Africa surprised all in the area of mobile phone subscrip-tions, as its subscribers have increased steadily since year 2000 to reach 316 million to date. Interesting to note that African countries are seen to be equally competing with other emerg-ing markets and are as productive as other countries such as India and China. The MGI study estimates that

strategy are: Talent Development, Infrastructure, Business Environment, Incentives and Marketing. In the dis-cussion that follows, we will illustrate how Africa fares in each of the pillars identified.

TalentAs indicated above, Africa is home to 1 Billion people, the majority of which are of working age. Africa has a highly educated workforce, both with-in the continent and in the Diaspora. African Countries are investing in training and skills development initia-tives, to ensure that a readily available pool of labor is at hand to feed into the global services model. Egypt, for example, has a system of converting graduates from other fields of study, be BPO sector ready and provides subsidies for the training and conver-sion thereof. Nile University, which is housed within Egypt’s Smart Village (A BPO Park) also, trains students in the areas of ICT Enabled Services. Talent development is seen to be relat-ed to job creation, whereby African countries have specific targets to the number of jobs they wish to create in the sector, within stipulated time frames.

InfrastructureAcross Africa, changes in broadband connectivity are underway. A number of undersea cables are scheduled to be completed by 2011 (see before

by 2040 about 1.1 Billion Africans will be of working age. This is signifi-cant, in an era where the working age population amongst other countries is shrinking. Furthermore, 128 mil-lion African households are predicted to be having discretionary income by 2020. Finally, 50 percent of Africans will be living in cities by 2030. What does this mean for the Globalization of Servic es in the form of Business Process Outsourcing & Off shoring?

Hope in BPOPart of Africa’s growth can be attribut-ed to the growth of the Services Sector within Africa. The Services sector contributes to more than 60 percent of the GDP in those African coun-tries wherein it is developed. In these countries, Services sector accounts for the majority of employment creation. Business Process Outsourcing and Off shoring, presents a new hope for Africa, whereby the continent will no longer be seen as a continent for aid, but rather a continent ready for trade in services. If we look at the necessary ingredients of a country strategy for building the BPO&O sector, we will realize that Africa is making significant strides in developing its BPO sector. A summary Gartner’s Top 10 Criteria, AT kearney Global Services Location Index, Mckinsey Location Readiness Index and Hewitt’s International Benchmarking Model reveals that the top five building blocks of a country

Africa as an Outsourcing Destination

Africa has the essential ingredients to be a force to be reckoned with in the global BPO space, and addressing the challenges it faces will enhance its value offerin


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of hardware and software is charged at 2.5 percent. On the other hand Egypt offers a corporate tax of 20 percent and customs duty of 6.2 percent. Countries which do not offer tax breaks, for example South Africa and kenya, offer capex, opex and talent development tailor made incentives

Marketing Increasingly African countries are seen as key exhibitors and participants in the global BPO conferences, summits and seminars. Each country involved

countries involved in the outsourcing sector are doing everything possible to lessen the burden of starting up a business, thus improving the ease of doing business in the respective countries.

IncentivesCountries in Africa have woken up to the need for incentives as “sweeteners” to outsourcing deals. These vary from capex, opex, talent through to tax breaks. Morocco for example offers a tax exemption of 5 years and imports

and after diagrams). On the West side of Africa, in addition to the existing SAT3 cable, there shall be the WACS (Q2 2011), MaIN OnE (Q4 2010), ACE (2011), GLO-1(Q4 2009). On the East side of Africa, in addition to the SAFE cable, the EASSy (Q2 2010), Seacom (2009) and TEAMs (Q3 2009) cables have recently been launched. This signals a positive change from a continent that was only served by the SAT3 cable on the West and the SAFE cable on the East. This will improve not only the quality of telecommunications in the continent but also the costs thereof, as some of these providers promise to slash telecommunications prices by up to 80 percent of the current market price.

African governments are engaging the private sector to develop other critical infrastructure such as ener-gy including electricity, water sup-ply, roads, rail, air connectivity, hotel amongst others. Real Estate is becom-ing a big draw card as governments, together with private sector, are build-ing readily available “plug play” facili-ties for BPO Operators. Examples of these can be found in kenya, South Africa, Mauritius, Egypt, Morocco, and Tunisia.

Business environmentOn a macro-level, the 2009 Africa Competitiveness Report came out amid the most significant financial crisis in generations. In this context, the state of Africa’s financial markets figures was among the main topics analyzed in the Report. The analysis finds that some African countries—namely South Africa, Algeria, Nigeria, and Egypt—are well poised to bounce back from the crisis. This is because these large economies enjoy competi-tive banking systems and have func-tional regulatory systems, the con-sequence of financial-sector reforms adopted since the early 1990s. On a micro-level, the rest of the African

Africa Telecommunications before

Africa Telecommunications after i.e. by 2011.


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makers, potential private sector inves-tors, and development partners.

The note addresses the following questions: what can Nigeria do to take advantage of the benefits of global trade in services; how can the country brand itself as an off shoring destina-tion for international investors; and what government policies are required to ensure that Nigeria plays a role in the growing ICT off shoring sector. In the same paper, Nigeria’s main strengths as a potential off shoring destination are identified to lie in its relatively low-wage and cost structure. The country’s large size and youthful population are also seen as assets for companies wishing to establish large-scale call centers and similar opera-tions. Along the same vein, Nigeria’s good record on contract enforcement and flexible labor market regulations are viewed as having a potential to increase its competitiveness, as do recent steps to streamline business registration.

MauritiusMauritius prides itself for ease of doing business as the country states that a new business can be set up within 3 days. The country indicates that it has 15,000 available bilingual talents (English and French) from knowledge Worker to Cadre level. It cites a low fiscal regime as one of its strengths (15 percent harmonized personal and corporate tax, 0 percent tax on dividends, free repatriation of profits). In terms of Service offerings, Mauritius is strong in the follow-ing CRM (Telemarketing, helpdesk), Application Development ( Software Design and Development, Website development, IT Consulting),IT Services ( Data Centers including hosting, IT Help Desk, Disaster Recovery ), BPO / kPO (Finance & Accounting, HR Outsourcing, Publishing and content development,Procurement,Architectural & Engineering Design, Legal). The

top BPO investors in the form of Genpact, Aegis, Teleperformance, amongst others. Recently (October 2010) a new value proposition was launched which positions the coun-try as a gateway and delivery center for the rest of sub-Saharan Africa, a near shore destination to Europe-particularly the United kingdom and a Dutch language outsourcing hub due to its history and Dutch language capabilities. According to the Global Competitiveness Index, South Africa’s education is ranked higher than that of India and China. A research con-ducted by Everest in 2009 indicated that South Africa has three times (3x) the number of qualified actuarial scientists than India. South Africa has mature service offerings in Banking, Financial Services, Insurance, Retail, Telecommunications, IT Outsourcing, knowledge Process Outsourcing and Legal Process Outsourcing. South Africa prides itself of having an English language whose accent is neutral and augers well with the countries cultural and product affinity with Europe and the United States.

MalawiMalawi is new in the game but is set to make its mark. In September 2010 the country held a workshop facilitat-ed by the Commonwealth Secretariat, with the aim of developing a roadmap for the country to grab a slice of the BPO Global space. In its initial offer-ing, the country will focus in the lower end of the value chain, focusing on English and its Customer service capabilities.

NigeriaThe World Bank has recently (November 2010) published a paper titled: Developing an African Off shoring IndustryThe case for Nigeria. The purpose of the policy note is to raise awareness of Nigeria’s potential as an African off shoring hub, and it is aimed primarily toward policy

in the BPO space is creating aware-ness about its value proposition, dem-onstrating its readiness to take on outsourcing of off shoring work from global clients. Ghana is amongst those countries. Through, the leadership of Avasant, a global sourcing advi-sory firm, Ghana is making strides in showcasing itself as a viable outsourc-ing country, within Africa.

BPO Country DevelopmentsSub-Saharan AfricaGhanaAn industry association called GASSCOM was formed. An arti-cle by Lewis (2010) indicates the Secretariat of Ghana’s Information Technology Enabled Services (ITES) wants to establish e-governance and electronic voting in his country. The Secretariat has even disclosed that BPO would be contributing millions of dollars to the country’s economy. He anticipated that it would help Ghana to become fastest developing nation in the world. It is mentioned that English is the official language in Ghana which means that “the people of Ghana won’t be facing any problem dealing with US or Uk based service buyers”. The country sees itself as having the right kind of resources for attracting all sorts of French BPO jobs including French call centers. In addition to that the country sees huge potential in the areas of graphic design, business enquiry and legal processes outsourc-ing among others.

South AfricaSouth Africa was one of the first movers into the BPO space within Africa. As early as 2006, the country had identified BPO as a priority sec-tor for development. As a result, all the necessary strategic pillars were put in place to position the country globally as a contender in the BPO space. To date, the country has man-aged to attract some of the world’s


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Top 10 Things that Make Africa an Attractive BPO Destination

� Low attrition African countries report low rates of attrition. Explanations given have centerd on the notion that

when an African gets a job, they hold on to it. This is usually attributed to the fact that one work-ing African person may be responsible for ten others, who may be members of a household and/or dependants. Some countries report attrition rates that are as low as 14 percent.

� Multilingual workforce As indicated above both North and sub-Saharan Africa offer multiple languages which could sup-

port the United States, Middle East and the European markets. These range from Spanish, French, Dutch, German, English, Italian and Arabic

� Near shore location for Europe The maximum time difference between the African countries and Europe is four hours. The time

zones similar to Europe offer a near shoring opportunity to Europe, for the region.

� Improved telecommunications infrastructure African Nations are formulating policies that encourage the development of ICT infrastructure and

BPO services. By 2011 the telecommunications infrastructure in the continent will have improved three-fold.

� Cost competitiveness In some parts of Africa, setting up BPO Operations in Africa can cost 10–20 percent less than

India. Other countries are willing to match the prices that potential BPO investors get in India, the Philippines or any other countries competing with Africa.

� Strong Government Support Governments at the national, provincial and local levels are supporting BPO initiatives through

adding their own broadband initiatives to those offered by the continent, supporting marketing initiatives, approving incentive policies, providing infrastructure at reduced rates. Another trend is for the governments to have a BPO ambassador at a high level in government, to represent the respective countries during international marketing awareness engagements. In essence, govern-ments have put pillars in place that provide a solid foundation for the BPO sector in Africa.

� Emerging local market opportunities International BPO operators and other Multinational Corporations who set up shop in Africa can

benefit from penetrating the domestic market in the said countries, arising from an untapped rising consumer market which demands goods and services that can be provide by the companies with the global experience. In some cases, international companies have come up with innovative ways to service the local market as evidenced by Safaricom who cut the boundaries between banking, financial services and telecommunications through a mobile phone.

� Offshore destination for the United States Africa lies in between the United States and India and thus provides an evening shift for US offshor-

ers versus India’s night shift. This further enhances the low attrition value proposition for Africa.

� Availability of Labour Africa has a high population of a young work force, which is talented and educated. This provides

a readily available labor pool for investors to draw from.

� Continued GDP growth Despite the Economic Recession, African markets have grown at a rate of 5–6 percent in some cases

outperforming most global economies.


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penetration and telecommunications networks, foundations which are solid for the BPO sector. Morocco has been included in the Gartner list of the Top 30 Outsourcing des-tinations. The country’s strategy was developed by Mckinsey through the so called Mckinsey 2006 -2012 Impact Plan. Morocco has a number of BPO Parks for example, Morocco Techno park, Casashore, Rabat, and ForeShore. Two additional techno parks are going to be created in the near future. There are strong incen-tives for start ups. The government ensures that it receives a Return on Investment (ROI) on projects. Companies normally pay 40 per-cent salary taxes. If they are BPO operators, they pay 20 percent. This means that it gets cut into half. Morocco has Spanish language capa-bilities which allowed it to attract a bpo service provider Atento and Dell established helpdesks in Morocco to serve its French and Spanish custom-ers, creating about 1,500 jobs. The country currently has about 200 call centers, including 30 of significant size, that employ a total of over 18,000 people.

power, telecoms and internet. According to Datamonitor, Egypt’s Outsourcing sector is expected to grow rapidly due to increased offshore interest from Western Europe as well as the United States and Canada. BPO country studies by A.T. kearney (2009) place Egypt in the 06th position globally, out of the 50 coun-tries surveyed. Itida reports that “Egypt is proving to be an attractive location for world leaders in the ICT industry, surpassing its competitors in the devel-oping world – India and the Philippines – and attracting the attention of major corporations in the developed world, notably Orange, Vodafone and SQS. These corporations are investing heavily in Egypt as a coveted ICT outsourcing location.” Egypt has a number of initia-tives to support the BPO sector, from smme incubation, through eduEgypt (training initiative) to international marketing support for established BPO operators in the country. Egypt has vari-ous language capabilities which include French, German, Arabic, English and Spanish.

MoroccoMorocco is seen as the African coun-try that is leading in broadband

country is positioning itself as the regional hub of Disaster Recovery and Business Continuity planning infra-structure and services for the global service provider community.

KenyaThe country has a world class cap-tive in the form of Safaricom and a well known BPO third party service provider, kenCall. kenya is driving innovation. Safaricom launched the world’s first mobile phone service that allows money transfers by phone: MPESA. According to the kenya ICT Board website(www.ict.go.ke) kenya’s BPO strengths lie in Call Centers ( inbound customer services & support, outbound sales +marketing, market research, event management, print media); Back office processing (online database management, email & forms processing, data entry & conver-sion, corporate communications and graphic design); Software develop-ment (website development and ani-mation).kenya purports that the cost of operating a 1000 seat BPO center in kenya is lower than in competing destinations such as India and the Philippines largely because an average FTE cost is $300 in kenya as opposed to $425 per month in India). One of kenya’s key competitive strengths is that it has a well developed financial services sector, and is developing into a regional (East Africa) hub. As one of the indicators of this strength, ATM numbers in kenya have grown by 41 percent per annum.

North AfricaEgyptitida is the agency responsible for Egypt’s BPO sector. Over the past few years, Egypt has been striving to enhance its ICT infrastructure through national initiatives and projects implemented jointly by the public and private sector. Egypt has extensive availability of high quality and low cost/subsidized sup-port infrastructure and services such as

A new world class BPO Park in South Africa called Coega.It offers readily available infrastructure and ‘plug&play’ facilities.


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that there is outward migration to the European Countries and that the labor pool is tightening sharply. The outsource backlash is seen to be a hindrance together with the concern over lost domes-tic jobs in Western Countries.

� Corruption. Western Business practice is something that is relatively new in North Africa, according to Data Monitor.

Across Africa (North Africa and sub-Saharan Africa), the similarity of value propositions has made it difficult to differentiate one location from anoth-er. The volatility of the currency is also cited as one of the challenges that make investors feel uneasy, however, inter-viewing current BPO investors reveals that they are able to mitigate the risks and make the necessary profits.

ConclusionThe key reasons behind Africa’s growth surge as highlighted in the MGI report are improved political and macroeco-nomic stability and macro economic reforms. African governments increas-ingly adopted policies to energize mar-kets. They privatized state-owned enterprises, reduced trade barriers, cut corporate taxes and strengthened regu-latory and legal systems. As a result, six of the African countries mentioned above ( Egypt, Ghana, Tunisia, Mauritius, Morocco, and South Africa) are in the AT kearney 2009 top 50 Global Services Location Index. This signals that Africa has the essential ingredients to be a force to be reckoned with in the global BPO space. The challenges identified are something that the various African stakeholders are engaging robustly on, ensuring that they are addressed in order to enhance the Africa value offering. GS

Pumela Salela is a BPO/ITeS expert and a Consultant for the World Bank

Challenges� In sub-Saharan Africa the first

challenge worth highlighting is Perception! Perception! Perception! A number of countries in the developed world still see Africa as backward and underdeveloped. My belief has always been that “Seeing is Believing”. I would encourage each Executive that is exploring location options to book a flight to Africa and touch the ground. The reality is defi-nitely different from what Africa has been perceived. Many parts of Africa are on par with west-ern standards from a professional business point of view, to world class infrastructure.

� Education Linkages could be cited as another challenge, in the sense that some school leavers and uni-versity graduates have the qualifi-cations yet at times, these qualifi-cations are not directly suitable to meet the needs of the outsourcing sector. A process of training and skills development is sometimes required before the school leavers and graduates can be absorbed into the workforce.

� Lack of tax breaks is seen as a hin-drance by potential investors. The Tier 1 BPO destinations such as India offer tax breaks. Potential investors usually assume that all other countries follow suit. yet, there are African countries that are vehemently opposed to tax breaks, who would not mind giving other incentives which could take the place of tax breaks and have the same effect on the bottom line.

The inhibitors, in North Africa, according to Data Monitor are the following: � Perceived regional instability. There

are misconceptions revolving around certain locations in North Africa and Eastern Europe.

� Labour Availability. There is belief

TunisiaA website (www.bpovoice.com ) indi-cates that in Tunisia, ICT & out-sourcing of services are the beneficiar-ies of a significant level of investment, amounting to some 3.5 Billion Euros for the period 2007-2011, compared to just 230 million Euros for the peri-od 1992-1996. Tunisia, as a country, is strategically positioned as a gateway to Africa, Europe and the Middle East. Its population has French, Arabic and English speaking capabilities.

Many European companies have set up BPO operations in Tunisia to capi-talize in order for Tunisia to serve their French speaking customers. Tunisian engineers are said to be 80 percent lower than Europe cost wise. Alcatel’s R&D center in Tunisia was first tasked with assisting the company’s Paris and Milan centers in the development of products. It evolved later into an inde-pendent design and implementation center. SR Teleperformance, a multi-national call center, currently employs about 1,000 workers in Tunisia that serve French clients.

With 200 call centers, Tunisia is one of the leading call centers and outsourcing destinations in Africa and in the Arab world. There are proce-dures adopted by the government to strengthen investment in call centers and remote support centers, through the activation of the network structure of the Internet Protocol (MPLS) at the national level in addition to the exten-sion of the El Ghazala (a pool of more than 3900 people: 2000 engineers, 140 teachers & researchers and 1700 students) which specializes in ICT activities and research. Tunisia seeks to attract 2,000 new outsourcing jobs by the end of 2010. It is envisaged that Tunisia could become a regional business hub for companies operating in the space and aeronautic sector as there are already 20 foreign companies that are currently operating in the sector, including major names such as Latecoere, Zodiac and Sogema.


xpertsexpert Speak

by Pradeep Udhas, Executive Director, IT/ITeS Sector, KPMG

Offshoring in the Latin American Region

Some key factors that make Latin America attractive today

Emerging economies across the world are trying to emulate the success India has achieved in providing outsourcing serv-

ices. What started with the millen-nium bug, led to India being one of the top outsourcing destinations in the world. Availability of talented resources, a large pool of people speak-ing English, government support in the form of tax breaks and relatively strong IP/Data security related laws are some of the factors that worked in India’s favor. Countries in the Latin American (LAM) region namely Brazil, Argentina, Chile, Mexico, etc are being increasingly recognized as alternate des-tinations to India and China primarily due to the increasing demand for near shore outsourcing service providers.

The blend of LAM’s geographi-cal proximity to the US and existing cultural similarities between the two has increased the importance of the region. In recent times, leading BPOs/ outsourcing companies like Capgemni, TCS, Aegis BPO etc have expanded in the region not only with an aim to hedge their operations but also to exploit the local market. Some of the key factors that make the Latin American region attractive are as follows:

Domestic MarketThe LAM region is a significantly large market with 20 countries, 550 million people, 4.4 Trillion dollars of GDP, and 8000 dollars per capita income. Brazil alone is expected to account for an estimated USD 128 Billion worth of IT end-user spending in 2013, accord-ing to IT research firm Gartner. Sonda,

only the U.S. but also for markets in Europe. The number of non-indigenous European languages spoken in Brazil, Mexico, Argentina and Chile is very high.These include Spanish, Portuguese, English, French, and even some German (in Argentina). It is also noteoworth that many Japanese and Chinese migrated to Peru in the late nineteenth century as rural labourers, and now form an inte-grated part of Peruvian society.

WagesLatin American countries such as Brazil, Mexico, Chile and Argentina, have competitive wages and a good educa-tional system. A kPMG-NASSCOM study titled “Emerging Destinations for Indian IT / ITES Industry” (2007) revealed that the minimum wage in the region was pretty low and rose from USD 2.8 per hour in 2005 to USD 3.2 per hour in 2006, with Brazil being the highest at USD 5.6 per hour. However, the IT wages were significantly higher at USD 8.7 per hour, with Chile and Mexico paying more than two times the rates paid in India. As wages keep rising in India, they could soon be at par with those in the LAM region, thus making it a much more level playing field.

In conclusion, Mexico, Costa Rica, Brazil and Chile are the main countries to watch for offshoring related activities in the LAM. These countries have large number of investments coming in, a good availability in terms of local talent and enjoy the increasingly important near shore advantage. GS

Pradeep Udhas is Executive Director with KPMG, heading IT/ITeS sector.

a Chiliean IT major is a key exam-ple of consolidation in the domestic market. The company has acquired Telsinc - a Brazilian IT services pro-vider, NextiraOne – a Mexican IT company; and Bogota-based software developer Red Colombia. It plans to further invest USD 500 million in acquisition till year 2012.

Local Talent PoolA Heidrick & Struggles report indi-cates that of the ten LAM countries analyzed, for the report, Brazil, Chile and Costa Rica would be the leaders in terms of availability of local talent pool in 2013. Similarly, a TMC.net report indicates that Colombia’s call center and outsourcing industry is one of the fastest growing industries in the country - a testament to the availability of local talent. A majority of the countries in the region have a good education system in place with the top few countries having a literacy rate of over 90 percent. Currently, Mexico, Chile and Brazil have the best talent pool in the region. Chile is widely regarded as the most attractive environment for talent while Brazil has the best universities in the region.

Language SkillsSpanish and Portugese are the two main languages spoken in the region which abodes well for companies that aim to target non English speaking clien-tele. For e.g.: the US has a fairly large Hispanic community, which can be tar-geted through this near shore alternative. The multilingual workforce in Argentina can also be effectively tapped for not


xpertsexpert Speak

by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ

India-based corporations and entrepreneurs are carrying their economic goals and didactic tal-ents abroad, with an emphasis

in entering other emerging markets. Latin America, which has displayed a steady spirit during the recent eco-nomic crisis and a strong potential for long term growth, has ascended to the top of India’s radar. Thousands of Indian-born companies seeking to expand their global footprint, while obtaining needed commodities to sus-tain India’s one Billion plus popula-tion, recognize the value of Latin America.

India’s total investment into Latin America and the Caribbean reached upwards of $10B in 2009, while imports from the region hinged around $9.2B. Although this figure is minimal compared to Sino-Latin American trade, it illustrates that a bridge has been built between these two emerging regions.

The Indian government is encour-aging movement into Latin America through the signing of multiple regional Trade Agreements. India is currently a member of Mercosur, a trading block including Argentina, Brazil, Paraguay, and Uruguay. As well, India has entered into a PTA with Chile to further trade between the nations. The Indian Government, with a continuing view to promote economic cooperation between the regions, has set up Joint Commissions with other important trading partners in Latin America. For example, India and Mexico signed a ten year Bilateral Investment Promotion and Protection

undeniably benefit from this upsurge of Indo-Latin American trade and investment. As Latin America and India strive to reach their respective potential, businesses within each region will discover golden opportu-nities. GS

Sumeet Chugani is Associate Attorney at Diaz Reus & Targ, LLP, a full-service inter-national law firm focusing on trade, finan-cial, commercial and corporate transactions, tax, immigration, litigation, and arbitration matters.

Agreement in May, 2007. Indian companies continue to set

up operations in Latin America in everything from technology, pharma-ceutical manufacturing, energy and mining. India’s top software service exporter, Tata Consultancy Services Ltd., which currently employs over 7,500 Indian professionals in Uruguay, Argentina, Chile, Ecuador and Mexico, expects its Latin American sales to double to upwards of $1B within the next three years. Jindal Steel & Power Ltd. has already spent more than $3 B to develop more iron-ore mining within South America, with strong interest stemming towards the agricultural front. As well, Tech Mahindra’s Chief Executive Sanjay kalra has repeatedly stated his firm’s strong interest in merging or acquir-ing Latin American companies.

This is just the beginning. India eyes Latin America as the next frontier for growth and expansion. For exam-ple, just this month Ashok Leyland, a leading Indian commercial vehi-cles manufacturer, declared its desire to gain new opportunities in Latin America. Moreover, Tata Consultancy Services Ltd. continued to expand in the region by opening new offices in Lima, Peru to increase its IT, BPO and consulting services in Central and South America.

India’s entrance into Latin America will obviously present challenges. Different languages, local taxation, complex laws, and political dynamics will pose risks to uninformed Indians entering the region. Those players which balance risk and reward will

India’s Global Expansion: Eyeing Latin America


xpertsexpert Speak

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The 2010 Legatum Prosperity Index™ Rankings

Strong ranking countries (Top 30) Average ranking countries (Middle 50) Low ranking countries (Bottom 30)

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The Prosperity Index™ assesses 110 countries, accounting for over 90 percent of the world’s population, and is

based on 89 different variables, each of which has a demonstrated effect on economic growth or on personal wellbeing.

The Index consists of eight sub-indexes, each of which represents a fundamental aspect of prosperity:1. Economy2. Entrepreneurship & Opportunity

(E&O)3. Governance4. Education5. Health6. Safety & Security7. Personal Freedom8. Social CapitalEach of the sub-indexes provides two important analyses: first, an economic assessment, and second, an assessment of a country’s subjective wellbeing, or happiness.

Key Findings from the 2010 Legatum Prosperity Index� entrepreneurship and opportunity

correlate more closely to a nation’s overall prosperity than any other factor. While other foundations such as health and education, are critical, levels of entrepreneurship and access to new opportunities actually provide the best proxy to understanding how prosperous a society can be.

� it pays to be a democracy. Twenty-three out of the top 25 societies in

The 2010 Legatum Prosperity Index™The Scope of the 2010 Legatum Prosperity Index™


expert Speak

emotions. “Soft issues”, such as people’s perceptions of each other’s trustworthiness, have a strong positive correlation with economic performance and simi-larly “hard issues” such as higher levels of GDP per capita, have a strong impact on people’s life satisfaction.

� Choice and opportunity matter more to happiness than making a lot of money quickly. Being free to choose the course of your life and experiencing the satisfaction that comes from pursuing new opportunities matter more than quickly making a lot of money.

� Two europes are emerging. In the overall rankings, the Baltic coun-tries are rapidly falling behind the rest of the EU. Additionally, none of the four original so-called PIGS (Portugal, Italy, Greece, and Spain) score higher in prosper-ity than the remaining Western European nations.

� improved governance is emerging as a key driver of prosperity in sub-saharan Africa. The index shows that the most successful African countries owe their success to radi-cal improvements in the quality of their governance, particularly in establishing confidence in the military and in the judicial system.

� it’s hard to be prosperous as a large country. Of the 10 countries in the world with more than 125 million people, only the United States ranks among the top 10 countries in the Prosperity Index.

� economic growth is not enough for the BRiCs. Despite being regarded as leaders among emerging economies, in order to develop into prosperous nations, the BRICs will have to foster improvements in areas beyond economic factors. GS

Source: The 2010 Legatum Prosperity Index Brochure

direct implications on national prosperity.

� prosperity is about balance. All of the top ranking countries in the Index perform well across all eight sub-indexes.

� Material wealth cannot be explained only by economic fac-tors, and happiness cannot be explained only by subjective

the Prosperity Index are electoral democracies, and the other two (Singapore and Hong kong) are semi-democratic societies.

� Changes in the “social fabric” of a country can lead to big changes in national prosperity. Shifts in tolerance, satisfaction with free-dom of choice and other social attitudes and practices clearly have

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Ukraine

Indonesia

Namibia

Macedonia

Peru

Jordan

Venezuela

Uzbekistan

Ecuador

El Salvador

Algeria

Turkey

Guatemala

Bolivia

Syria

Lebanon

Honduras

Moldova

Nicaragua

India

Egypt

Ghana

Nepal

Iran

Mali

Senegal

Cambodia

Bangladesh

Tanzania

Rwanda

Uganda

Sudan

Zambia

Cameroon

Mozambique

Kenya

Yemen

Nigeria

Ethiopia


Pakistan

Zimbabwe



Cop

yrig

ht ©

20

10 L

egat

um L

imit

ed


Source: The 2010 Legatum Prosperity Index™

Destinations Compendium 2011One Stop Resource On Global Outsourcing Destinations

RELEASING NOVEMBER 2011Inviting countries, cities, associations to take part in this initiative


� Beijing 88

� Belfast 90

� Brno 91

� Budapest 92

� Buenos Aires 96

� Cairo 98

� Chandigarh 98

� Coimbatore 100

� Colombo 101

� Curitiba 103

� Dalian 104

� Guangzhou 106

� Hanoi 107

� Ho Chi Minh 109

� Johannesburg 111

� kolkata 113

� krakow 115

� kuala Lumpur 117

� Mexico City 119

� Prague 120

� Rio de Janeiro 122

� San José 124

� Sao Paolo 126

� Santiago 128

� Shenzhen 130

� Singapore 132

� St. Petersburg 133

� Toronto 134

� Warsaw 136

� Ahmedabad, Bangkok, Bhubaneswar, Brasília 137

� Bucharest, Cape Town, Dubai, Glasgow City 138

� Guadalajara, Istanbul, Jakarta, kyiv 139

� Montevideo, Moscow, Mysore, Nizhniy Novgorod 140

� Penang, Perth, Seoul, Taipei 141

* This section contains information about cities which have been extensively sourced from various published sources, government sites, and other Internet resources and their factual accuracy needs to be independently ascertained.


city Profile � beijing

Beijing, a metropolis in northern China, is the capital of the People’s Republic of China. This city has the advantage of a government that is enthusiastic about modern technology and

supports software industry.Beijing is very much advanced and modernized, in

terms of infrastructure, as most of China has a rich and authentic (power and telecommunications) base. The growth of Changping Software Park, Zhongguancun Software Park (zPark), and Beijing Industry University Software Park reflects this support. zPark, lodging some 130 companies, is one of the prominent national software industry bases in China.

As regard to tax incentives, Beijing has some local facili-ties to encourage the software industry in the city (distin-guished from those offered on a national basis):• Taxrefundsonone-timeinvestments,forthepurchase

of cars or accommodations, when hiring senior soft-ware management or senior technical personnel.

• Exemption from individual income tax on govern-ment-funded awards given to senior software talent.

Beijing has around 1 million software support staff. The employee supply is plentiful and is expected to increase further as the Chinese government is upgrading its IT edu-cation. This destination has 18 universities with engineer-ing courses and ten with specific courses on programming. Importantly, it’s also home to Peking University (also known as Beijing University) and Tsinghua University (the Harvard and MIT of China, respectively). Both universi-ties have engineering departments that produce outstand-ing university graduates. In short, Beijing is literally the birthplace of current and future software engineers.

With a total number of 165,000 graduates, Beijing boasts of being headquarters of around 200 IT compa-nies focused on global outsourcing. There are around 26,600 employees working in ITOs, 34,200 in BPOs, and 15,200 in kPOs excluding domestic outsourcing resources. Its been seen that quality education in Beijing is

higher than the rest of China. Approximately, 70 percent of the employees in the outsourcing industry have gradu-ate degrees. Most of the university students choose their second language as English.

Beijing has vantage over other cities in the areas of scale and technical expertise of the workforce, infrastructure, risk profile, and lower attrition; but its labor cost com-pared to other Chinese cities like Shanghai or Guangdong and Indian cities is 10-15 percent higher.

Contributing 30 percent of the total Chinese out-sourcing revenue, Beijing attracts revenue of $580M in IT and BPO sector from Japan (49.8 percent), United States and Europe (45.5 percent), India, Hong kong, and others (4.7 percent). In regard to the financial

The Birthplace of China’s IT Industry

Quick FactsCity Beijing

Region East Asia

Country China

City Population 22,000,000

City Average Monthly Entry Level Salary (in US$) per month (BPO)

$7,000

City Average Monthly Entry Level Salary (in US$) per month (ITO)

$7,350

City Real-Estate Cost US$21.66 per square meter per month

Major Service Providers in the City

Microsoft, IBM, Sun, BEA, Oracle, Infosys, Wipro, Satyam, Bearingpoint, Accenture, Capgemini, HP, TCS, Unisys, and CapGemini

Primary Language Spoken Mandarin Chinese

Other Languages Spoken English, Japanese, Korean

GDP US$173.7B

Time Zone China Standard Time (UTC+8)

CurrencyExchange rate

Yuan$1= 6.65 CNY

Unemployment 4.1 percent

Beijing Financial Street (Source: Wikipedia)

Beijing China


city Profile � beijing

industry, Beijing is looked up as one of the most devel-oped cities in China.

Also, this city is host to the country’s IT indus-try, which was born in Beijing’s designated industri-al park, Zhongguancun, near Peking University and Tsinghua University. known as China’s Silicon Valley, this park con-tinues to be a major center for electronics and computer-related industries and pharmaceuticals-related research.

Some of the notable com-panies based in Zhongguancun Software Park are Microsoft, Sun Microsystems, BEA, IBM, Oracle, Accenture, Lenovo, P&G Process Design Center, BeyondSoft, Neosoft, ComFrame, TCS, Infosys, Wipro, and Reuters.

Regardless of a drop in the country’s overall foreign direct investment amid the global slowdown, Beijing rose 7.7 percent year-on-year in January, 2009, according to the Beijing Municipal Bureau of Commerce. The capital city’s foreign direct investment arrived at $700M in January, up from the $650M during the same period of last year. A total of 90 overseas invested enterprises were approved in January.

The city also confronted with the collision of recession. Most of the export-oriented outsourcing units have seen reasonably big slowdown in new client deals this year.

Beijing government has framed certain policies to

encourage the outsourcing industry. According to the gov-ernment policy, a company can benefit 0 percent income tax for the first two years and 50 percent income tax for the following three years after authorization. The authorized

company can deduct employee’s salary and training cost by 100 percent from the revenue before income tax.

According to the Tax Law of China, the maximum deduct-ible salary is $144.291 per per-son and maximum deductible training cost is 1.5 percent of the employee’s salary. The com-pany is allowed to deduct its

R&D cost by 150 percent from its taxable income of this year. For the self-developed software products, the VAT rate was 17 percent before 2010. However, the authorized company will get 14 percent VAT refunded immediately when the VAT is paid. The imported equipments for the company’s own use is tariff free.

The State Council of the Chinese government has created 19 software parks under its ‘Torch Program’.The 2,100 companies within these parks account for over 80 percent of China’s total software sales.

Beijing not only has excellent connectivity to major global destinations, but also has one of the best telecom connectivity/bandwidth.

This is why the city is a major hub of China’s IT indus-try and is considered a Tier 1 city for outsourcing. GS

Contributing 30 percent of the total Chinese outsourcing rev-enue, Beijing attracts revenue

of $580M in IT and BPO sector from Japan, United States and Europe, India, Hong Kong,etc.

SNAPSHOT

➤ A company can avail the benefit of 0 percent income tax for the first two years and 50 percent income tax for the following three years after authorization. The authorized company can deduct employee’s salary and training cost by 100 percent from the revenue before income tax.

➤ According to the Tax Law of China, the maximum deductible salary is $144.291 per person and maxi-mum deductible training cost is 1.5 percent of the employee’s salary.

➤ Beijing rose 7.7 percent year-on-year in January, 2009, according to the Beijing Municipal Bureau of Commerce. This city’s foreign direct investment arrived at $700 M in January, up from the $650 M during the same period of last year.

➤ This city is host to the country’s IT industry, which was born in Beijing’s designated industrial park, Zhongguancun.


T raditional sourcing locations, which have been at the forefront of the outsourcing boom, will sooner or later reach a saturation point. Companies are now looking at different loca-

tions to consider for their outsourcing activities, and Belfast is a well-placed outsourcing destination amongst other places.

Belfast, capital city of the Northern Ireland, is the most successful region in the Uk at attracting Foreign Direct Investment. The city attracts largest number of software development projects in Uk. Belfast is home to strong software, financial services, and telecom sectors.

Students achieving first-class or upper second-class hon-ors degree, have increased by 29pecent over the last decade from 4,012 to 5,165. The literacy is 99 percent in Belfast. This indicates that there is enough talent pool in Belfast. Also, labor costs are 15 percent lower than the Uk average, while labor turnover is less than 8 percent. The unemploy-ment rate for Belfast currently stands at 6.4 percent (the Northern Ireland rate is 6.6 percent). This compares with the Uk average of 7.9 percent (December 2009).

The GDP growth rate is 6 percent and the inflation is 4.8 percent. Gross Value Added (GVA) per capita provides a good comparative measure of productivity. It is compulsory for the Uk businesses to register for VAT (value added tax), if sales of taxable goods and services provided in the previ-ous 12-month period exceed £67,000 ($106,857.36). The number of VAT-registered businesses was 8,730 in 2009.

New businesses can benefit from a variety of tax allowances and reliefs that cut tax bills. These include capital allowances for investment in equipment and premises and tax relief and credits for spending on research and development. Corporation and personal taxation are among the lowest in Europe.

Capital allowances of up to 100 percent in the first year for small-to-medium sized enterprises (SMEs) are available, for expenditure on environmentally friendly plant and equipment. Also, tax credits for research and development are available to stimulate scientific innovation for small

medium-sized enterprises (SMEs). In addition to government support, ready access to a

highly skilled and loyal workforce and the existence of an already thriving local industry has encouraged major com-panies such as Nortel Networks and BT to choose Belfast as a location for their software operations. Belfast’s ICT sector has grown rapidly over the past years. The principal areas of focus have been in the fields of software development, mobile communications, Internet, and e-commerce.

The rapid growth of this sector owes much to a number of indigenous companies who have successfully tapped into international markets as well as the academic research and support that encourages further innovation and devel-opment in the sector.

In 2009 over £500M ($797,327,654.98) worth of developments were unveiled, including a number of land-mark buildings that opened their doors to the public again following extensive refurbishments. GS

The FDI Magnet of UK

Quick FactsCity Belfast

Region Western Europe

Country United Kingdom

City Population 268,323

City Real-Estate Cost US$19.0884


Microsoft, Citigroup, Bombardier Aerospace, Fujitsu, HCL BPO, L&T Infotech, MindEye Inc., TCS, Supervalu, SAP Research Center.

Primary Language Spoken English

Other Languages Spoken Spanish, French, Italian, or German

Literacy Rate 98 percent

GDP US$12.1306782B

Time Zone GMT/BST


British pound (sterling) $1=£0.627625


Belfast Northern Ireland


Brno—Czech Republic’s second-biggest city by economic activities and third-largest city by area—is the capital of the South Moravian Region. It is situated in the central part of

Europe and within its 200-kilometer radius lie other impor-tant European capitals: Prague, Vienna, and Bratislava.

As the growth engine of the Southern Moravian region, this city hosts a wide range of universities and institutions, and is the second-largest center of education in the Czech Republic. The large number of universities here attracts grad-uates who prefer to remain here rather than move to Prague. This region’s highly qualified workforce -talented information technology professionals- is fluent in multiple languages.

In recent years, Brno has become an investors’ base with relatively new types of foreign investments such as technol-ogy parks, developmental and shared service centers, and voice service centers. This capital offers advantageous state and city support for investment and a qualified and adapt-able workforce at favorable labor costs.

Brno achieves the second highest amount of FDI in the country, after Prague. With the arrival of foreign investment, there has been a marked expansion in strategic services.

Czech Technological Park of Brno is a joint invest-ment by the City of Brno and the British multinational firm P&O, in close cooperation with Brno Polytechnic University. It provides home to a number of leading com-panies, including Honeywell Controls, Siemens, Star 21 Networks, Bobst Eastern Europe, SGI, Bovis Lend Lease, Southern Moravia Center for Innovation, Timken Czech Republic, Vodafone Czech Republic, IBM Global Services Delivery Center Czech Republic, Control Techniques Brno, FEI Czech Republic, Phoenix Contact, ENERGO-PRO Czech, CSC Computer Sciences, and Symbol Technologies.

As competition between countries and regions for cross-border investment

intensifies with some locations becoming expensive and some getting saturated, the Czech Republic has managed to maintain its position as one of the world’s most attrac-tive locations for FDI.

As per Ernst & young European Attractiveness Survey from 2009, Central and Eastern Europe is consid-ered to be the most attractive business locations and rank ahead China, India, Russia, and Western Europe. The Czech market of information and communi-cation technologies (ICT) recorded a turbulent growth in recent years. GS

The Growth Engine of Southern Moravia

(Source: www.kelioniumanija)

Brno Czech Republic

Quick FactsCity Brno

Region Eastern Europe

Country Czech Republic

City Population 1,151,500 (Dec 2009 est.)


US$1,118


US$1,574

City Real-Estate Cost US$11–21


IBM, Accenture, Infosys, Microsoft Innovation Center, Red Hat, Grisoft, Atento, Czech Technical center, IBA Group, SDE, Monster Worldwide, Progeon, DSG International, IDS Scheer, AVG Technologies

Primary Language Spoken Czech

Other Languages Spoken Czech, German and Yiddish

Literacy Rate 97percent

Time Zone GMT +0100


Czech Koruny (CZK)$1= 18 CZK

Unemployment 11.35percent (Jan 2010)

With the arrival of for-eign investment, there

has been a marked expansion in strategic

services here.


Europe’s City of the Future

Budapest Hungary

T he global ICT sector is presently undergoing a rash of mergers and acquisitions, and the Hungarian ICT sector is no exception to this trend. The main strengths of Hungary are its

low employment costs, good IT and communication infra-structure and the profile of its capital city Budapest.

Budapest is split into two distinct sides: Buda and Pest. Buda side is more peacefully residential and quieter than the Pest side. Almost 60 percent of Hungary’s industry are focused around Budapest.

As per Financial Times’ fDi Magazine, Budapest ranks third in European Cities and Regions of the Future 2010/11. This ranking is on the basis of cost effectiveness, quality of life, economic potential, infrastructure, business friendliness, human resources and FDI promotion strategy. As a result of its liberalized investment policy, Budapest has a conducive economic environment. However, there is a substantial number of trained work force and highly quali-fied employees, still the employee compensations are low.

Hungary upholds a healthy economic growth through this post-EU accession period. In recent times, it has wit-nessed a changeover from central economy to a market-oriented economy. Its inflation figures have also dropped in this period. Hungary continues to show a healthy eco-nomic growth through this post EU accession period.

Budapest offers a highly skilled and diverse workforce, with broad language skills and technical and customer fac-ing skill sets. This city has relatively low property costs and has the reputation for strong technical/R&D skills. But, the increasing labor cost is one of the major factors that has become headache for most of the companies.

In a recent survey by Mastercard Worldwide, Budapest ranked third in the economic and commercial environment categories. Moreover, unemploy-ment rate is the lowest (7.5 per-cent) in the central-Hungarian

region (Budapest). Some of the notable companies based in Budapest are

Convergys, Infomatix, Genpact, TCS BPO, Getronics, EPAM, Unisys, Siemens, Synergon, Ericsson and Nokia, Cognizant, IBM, Sykes, GE, Diageo, IT Services EDS, ExxonVodafone, Mobil, GE, Dell, Capgemini, and Morgan Stanley.

LogMeIn - with its headquarters near Boston and its engineering base in Budapest- plans to tackle giants like Cisco Systems, Microsoft, and IBM, with an easy-to-use product for holding meetings and exchanging information over the Web.

According to a report pub-lished late last year, 10,000 Hungarians were engaged in call centers in the Budapest region. Besides research centers, technological parks also facili-tate the clustering of high-tech

Quick FactsCity Budapest


Country Hungary

City Population 3271110


Convergys, InfomatiX, Genpact, TCS BPO, Getronics, EPAM, Unisys, Siemens, Synergon, Ericsson and Nokia, Cognizant, IBM, Sykes, GE, Diageo, IT Services EDS, ExxonVodafone, Mobil, GE, Dell, Capgemini, and Morgan Stanley

Primary Language Spoken Hungarian

Other Languages Spoken English, German

Time Zone CET (UTC+1)


Hungarian forint (HUF)

Unemployment 9 percent

Almost 60 percent of Hungary’s industry is focused

around Budapest.


city Profile � budapest

companies such as: T-Online, IBM, HP, Compaq, Black Hole Software, Ericsson, Tata Sons, Canon, GraphiSoft, Microsoft, Thales Nanotechnology, Zalaegerszeg, komárom – Foxcom, Nokia, etc.

The information, communications, and technology (ICT) sector in Hungary has grown in recent years, and the country has come forth as one of the most developed outsourcing markets in the region. This destination has a service-based economy, with industry and agriculture con-tributing less than 35 percent of GDP.

For the city of Budapest, GDP per head (based on PPP) stood at approximately $35,000 in 2008. As per Prices an Earnings, Budapest has one of the lowest gross earnings. The average gross monthly salary is $1,264.33. The average pre-tax wage in 17–24 age group is approximately $851.878.

In the past 15 years, Hungary has become a major address for for-eign capital. Cumulative FDI has reached over $79,867,831,745.73, whereas investment growth has risen year after year. The figure below shows FDI stock per capita in the CEE region, 2009.

Budapest also boasts of the infopark, which is the first innova-

tion and technology park in Central and Eastern Europe. Encompassing the 2007–2013 fiscal years, government is exploiting different measures to promote broadband access in the second national development plan in Hungary.

Hungary has made steady progress in eradicating pirated IT materials from the marketplace since 2003-when Hungary was placed on the Priority Watch List for IP violations-composing primarily of patent and data exclusivity issues. GS

Source: wiiw, FDI statistics, 2009, ICEG, 2010

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Czech Republic

Slovakia Hungary Bulgaria Poland Romaina

SNAPSHOT

➤ As per Financial Times’ fDi Magazine, Budapest ranks third in European Cities and Regions of the Future 2010/11. This ranking is on the basis of cost effectiveness, quality of life, economic potential, infrastructure, business friendli-ness, human resources and FDI promotion strategy.

➤ Budapest boasts of the infopark, which is the first innovation and technology park in Central and Eastern Europe. ➤ In the past 15 years, Hungary has become a major address for foreign capital. Cumulative FDI has reached over

$79,867,831,745.73, whereas investment growth has risen year after year. ➤ Hungary has made steady progress in eradicating pirated IT materials from the marketplace, since 2003-when

Hungary was placed on the Priority Watch List for IP violations.


The Frugal Man’s Outsourcing Paradise

Buenos Aires aerial view

Buenos Aires

Argentina

Buenos Aires is the capital of Argentina. One of the largest cities in South America, it is the financial, industrial, commercial and cultural center. Also one of the world’s leading ports,

it lies on the Parana River, near where the river enters the Atlantic Ocean.

Buenos Aires is the second-largest metropolitan area in South America, after São Paulo. The city’s service sector is diversified and well-developed by international standards and accounts for 76 percent of its economy (compared to 59 percent for all of Argentina’s).

With 14.4 million inhabitants, it has 38 percent of the nation’s population and 35 percent of the country’s eco-nomic activity. In the city, the workforce numbers about 1.4 million people, with about 36 percent involved in serv-ices, 18 percent in trade, 17 percent in manufacturing and about 12 percent in finance, insurance, and real estate.

Buenos Aires, a recognized player on the global BPO scene, continues to be a frugal man’s paradise. This des-tination is growing at double-digit rates in terms of both volume and value of the electronic commerce and payment business.

Currently, it is ranked 269 overall, most expensive place in the world for expatriates to live, out of 300 interna-tional locations. However, electricity is 30–60 percent less expensive than United States - the average cost for power is US$0.04 per kilowatt per hour. Property is affordable; the median sale price per square meter of office space is around $65 per square foot.

Buenos Aires has a large talent pool and a number of reputed educational institutions, capable of supplying workforce to the IT–BPO industry. Argentina’s cultural closeness and linguistic similarity with Europe is an added advantage, as it allows the country to additionally tap busi-ness from markets in Europe.

Spanish is the official language, but Portuguese and English are also spoken in the city, which provides multi-lingual services. English language skills of the population

are becoming stronger, as education in English is being encouraged. The city has low attrition rates.

As regards office space, Buenos Aires posseses Class A office space. However, vacancy rates are on the decline because of high demand leading to rising sales and lease rates.

The city can serve US markets effectively as Argentina lies in the same time zone as the East Unite States. When speed of response and deadlines become an issue in projects, working with people in a similar time zone becomes a cru-cial component to a smooth and effective work process. This city’s time zone offers the added advantage- it is one hour ahead of Eastern Standard Time (EST-USA), 4-5 hours ahead of Pacific Standard Time (PST-USA), and 3 hours behind Greenwich Mean Time (GMT-Uk).

The IT–BPO industry (high-tech sector in general) is growing rapidly and has been prioritized and encouraged through incentives by government. The Software Law

Quick FactsCity Buenos aires

Region South America

Country Argentina


City Real-Estate Cost US$65 per square foot


Microsoft, Intel, Motorola, IBM, Hewlett Packard, Wipro, TeleTech, TCS, Latin3, Sabre, Ceitech, Google, MCI, etc.

Primary Language Spoken Spanish

Other Languages Spoken English, Portuguese, Italian, German, French

Literacy rate 96 percent

GDP $245B

Time Zone GMT -0300


Argentine peso (ARS)ARS1.00 = USD 0.251889



city Profile � buenos aires

establishes that software production is to be considered as a productive transformation activity and accorded the same priority and incentives as other industrial activities.

Buenos Aires, one of the main markets in Latin America and in the world, is the ninth most populated urban con-glomerates in the world. It is the 13th urban center with the largest income in dollars in the world, ahead of cities like Hong kong, Miami or Sao Paulo, and its growth prospects are excellent.

Unlike much of the rest of the country, this city has a varied economy, which helps it main-tain a degree of stability, despite the rampant inflation that has often burdened the entire coun-try. This region maintains low debt levels and debt service requires less than 3 percent of the total budget.

known as the Paris of South-America, its GDP (Gross Geographic Product) almost triples the average income per capita in Argentina.

This complex, energetic, and seductive port city, which stretches south-to-north along the Rio de la Plata, has been the gateway to Argentina for centuries.

The growth of Argentina’s IT-BPO industry during recession was adversely affected. However, in the last few years, a large number of multinational companies have set up their operations in Buenos Aires. This industry has been

growing rapidly since then, mak-ing it one of the fastest grow-ing sectors in the economy. The prominent services from Buenos Aires include software develop-ment, call center, back-office operations (such as data process-ing) and creative services (such as design and media services).

Buenos Aires has seen a lot of movement and change due to the arrival of multinational companies establishing their regional hubs and offices in the city. Global giants with the likes of Google and MCI have set up shop in this region. GS

Class A office space is on the decline because of high

demand leading to rising sales and lease rates.

SNAPSHOT

➤ The prominent services sourced from Buenos Aires include software development, call center, back-office operations (such as data processing) and creative serv-ices (such as design and media services).

➤ The Software Law establishes that software produc-tion is to be considered as a productive transformation activity and accorded the same priority and incentives as other industrial activities.

➤ Some of these incentives encapsulate: lower turnover tax rates and exemption from provincial taxes, benefits in municipal fees, access to financing with preferential terms and discounts on services such as electricity, gas, water and communications.

➤ known as the Paris of South-America, its GDP (Gross Geographic Product) almost triples the average income per capita in Argentina.

➤ This city can serve US markets effectively as Argentina lies in the same time-zone as the East Unite States.


“The Victorious City” of the Middle East

Cairo Egypt

Cairo—the capital of Egypt and the largest city in Africa—means “the victorious city”. The economy of Cairo was ranked first in the Middle East, and 43rd globally by Foreign

Policy’s 2010 Global Cities Index.It is the chief commercial and industrial center of

Egypt. The majority of the nation’s commerce is generated here, or passes through the city. Majority of publishing houses and media outlets and nearly all film studios are settled in Cairo, as are half of the nation’s hospital beds and universities.

Increase in population of Cairo shows an upward trend. One-third of the total population is under 15 and nearly three-fifth is under 30. The positive implication is that the population is relatively young. The most populous metropolitan area in Africa, it ranks 16th among the most populous metropolitan area in the world. Majority of the population is Egyptians, with less number of foreigners.

Cairo is the economic center of Egypt, with two-thirds of the country’s gross national product generated in the greater metropolitan area. Today, the majority of its work force is employed in service sector jobs, especially in gov-ernment, financial services, and commerce. English and Arabic are commonly spoken in this destination along with German, French, Spanish, and Italian.

Egypt is one of the world’s fastest growing locations for global outsourcing and services, and has seen huge investments in the last year, with companies such as EMC, Stream Global Services, and Sykes Enterprise, collaborat-ing with Information Technology Industry Development Agency (ITIDA) and outsourcing their business in Egypt. It should be noted, Egypt is fast becoming one of the world’s most attractive locations for global outsourcing. Currently, most foreign companies -locating IT and BPO positions- in Egypt use Cairo as their base.

Industries in Cairo have developed fast, churning out new job opportunities for the natives. This city has been recognized as one of the world’s top ranking offshoring

cities. This destination’s multilingual workforce, business analytics, and testing services act as its strongest key func-tions. In addition, allure of this city is that it is a low- cost base, embraces the large supply of skilled multilingual agents, has an amazing geographical position and it is eco-nomically and politically stable.

Egypt hopes to see a tenfold increase in exports from its growing outsourcing industry by 2020. It will boost its focus on information technology (IT) entrepreneurship and co-ownership of intellectual property. Egypt’s econo-my, buoyed by rising exports, could grow by 5.5 percent in fiscal 2010/11 and attract $10B in foreign direct invest-ment (FDI) as it recovers from the global economic crisis.

There are also extremely attractive tax breaks and associ-ated financial incentives available to foreign companies, so Egypt looks attractive on price, too. The typical per-seat cost for a call center is around $15,000—a highly competi-tive figure.

Quick FactsCity Cairo

Region North Africa

Country Egypt

City Population 78,866,635 (2009)

City Real-Estate Cost $1,322 per square meter


Oracle, Orange, Microsoft, C3, Convergys, EDS (HP), Raya Contact Center, Tamima, Xceed, Unisys, IBM, Vodafone, Alcatel-Lucent

Primary Language Spoken Arabic

Other Languages Spoken English, French, Italian, German, Spanish

Literacy rate 71percent

GDP $328.1B

Time Zone GMT + 2


Egyptian pound (EGP)$1= 5.77 EGP

Unemployment 11.4percent


city Profile � cairo

From its inception, Cairo’s economy has been based on governmental functions, commerce, trade, and industrial production. It is an outsourcing haven, with its vast dedi-cated technology and outsourcing park in Smart Village, and the development of Maadi Park, which will house in excess of 135,000 employees. Smart Village, the Egyptian ICT hub located in the suburbs of Cairo, offers facilities for more than 35,000 people and is home to a growing number of regional and international technology vendors including Vodafone, Ericsson, Microsoft, and Oracle. Additional Smart Village offices are being planned for Alexandria to accommo-date the countries fast-growing ICT industry. Mobile phone network operator Vodafone has 800 contact center agents in Cairo serving the domestic, Uk, Australian, and New Zealand markets. Network technology provider Alcatel-Lucent has 300 technical support staff in Cairo. Local contact center outsourcing provider xceed has 1,900 employees in Cairo supporting customers across Europe, the United States, Canada, and the Gulf. Satyam opened a center in Cairo in July 2007, from where it does some application develop-ment. Wipro gained a presence in Egypt with the acquisi-tion of development center New Logic. Currently, it has

around 40 employees, but plans to expand to 300. One business park, designed for BPO and ITO deliv-

ery, is currently being built-in downtown Cairo. Maadi Park will have the capacity for 45,000 employees in over 40 buildings in 2 million square meters. Operations are expected to begin there later this year, with comple-tion scheduled for 2012. As well as expanding capacity,

Maadi Park offers a more con-venient location, being closer to central Cairo and having better transport links—it will be near the city’s metro network. While there are plans to build business parks in other cities in Egypt, currently nearly all ITO and BPO work is located in Cairo’s Smart Village.

Some major names, such as Oracle, Orange, and Microsoft have set up captive operations in Cairo, while major IT outsourc-

ers such as IBM and EDS (HP) have had presence here for many years.

The largest expansion plans are also Cairo centric, with the previously discussed Maadi Park location, which is being developed currently. The options of where to locate are limited outside Cairo’s Smart Village, while there are plans to build other parks in other Egyptian cities, these are still in the planning phase. GS

Smart Village, the Egyptian ICT hub located in the suburbs

of Cairo, offers facilities for more than 35,000 people and is home to a growing number of regional and international

technology vendors

SNAPSHOT

➤ Cairo is the economic center of Egypt, it generates two-thirds of the country’s gross national product.

➤ Extremely attractive tax breaks and associated financial incentives are avail-able to foreign companies. The typical per-seat cost for a call center is around $15,000—a highly competitive figure.

➤ The largest expansion plans are also Cairo centric such as Maadi Park location. Maadi Park will have the capacity for 45,000 employees in over 40 buildings in 2 million square meters.

➤ Egypt hopes to see a tenfold increase in exports from its growing outsourcing industry by 2020 and will boost its focus on information technology (IT) entre-preneurship and co-ownership of intellectual property.


Building Social Infrastructure

Chandigarh India

Chandigarh is the first ‘planned’ city of India. known for its architecture, urban planning, and ambient environment, it is one of the best-managed cities in India. It is very well-con-

nected to all major centers of the region and New Delhi, capital of India. With a population of about $1.297M (2009), Chandigarh’s per capita income is the highest in India at $2,430.73 in 2007–08.

Chandigarh’s strength lies in its social infrastructure, which has led to the growth of major IT companies in this city. Apart from infrastructure, its proximity to Delhi and lucrative IT talent pool attracts IT business centers. Major multinational corporations and Indian firms such as Dell, Infosys, Quark, Ranbaxy, Reliance, Satyam, IBM Daksh, ICICI Prudential (for software development), Taurus Agile, IndiWork Software Solutions Private Limited, Netgains Network Solution, Promatics Information Services, UniSolsInfosyatems, Voicepack Infotech Private Limited, Chandigarh Infotech center, Inde-Dutch System India and SmartData have offices in this destination. Infosys, one of the largest IT companies in India and the world, was amongst the first to set up operations in the city.

In the last one decade, this destination has seen rapid growth and has been emerging as the “knowledge Hub” of the north.

Developed land, dedicated telecom bandwidth and telephone exchange, and other pivotal facilities such as banking and public transport makes it a highly suitable office space for MNCs and corporate alike. Chandigarh, “The Silicon Valley of North India,” has all the trap-pings of being a technology city—good living standards, cosmopolitan outlook, skilled manpower, and excellent infrastructure. These factors attract IT/ITES/BPO invest-ments in the city.

Chandigarh houses many institutes of higher learn-ing, such as the Punjab Engineering College, Chandigarh Engineering College, Punjab University, and the Postgraduate Institute of Medical Research. The Chandigarh

Administration has been working on the development of human resources and has set up bodies like the Chandigarh Training On Soft Skills (CTOSS) Programme and Society for promotion of IT in Chandigarh (SPIC).

In Chandigarh, companies are mainly engaged in services such as Information Technology (IT), IT Enabled Services (ITES) consisting of inbound and outbound BPO and training center, search engine optimization and Internet marketing solutions, global IT solutions like soft-ware development and consultation (viz. delivering cost-effective software solutions and web services to small and medium enterprises), E-Commerce, website designing & development and CMS programming solutions to clients in USA and Europe and sale and maintenance of server and desktops to customers from defense, banks, research institute, and central government offices.

The IT companies in Chandigarh are mainly located in Rajiv Gandhi Chandigarh Technology Park (RGCTP) and at the DLF campus. RGCTP is a major step in the IT industry of Chandigarh. Several national and multinational

Quick FactsCity Chandigarh

Region South Asia

Country India

City population 1.297 million (2009)

Major service providers in the city

Dell, Infosys, Quark, Ranbaxy, Reliance, and Satyam

Software exports $182,371,022.91 (2009–10)

Software exports from RGCTP $159,385,089.56 (2009–10)

Primary language spoken Hindi, Punjabi

Administrative languages English, Hindi

Literacy rate 81.94 percent (2001)

GDP USD 2,177 Million (2006–07)

Time zone GMT/UTC + 05:30 hour


Rupee (INR)1USD = 45.3100INR


city Profile � chandigarh

IT companies are generating investment and employment opportunities to the region by setting up shops here.

Now more than 10,000 professionals are working in RGCTP and an investment of more than $ 219,466,300.10 has poured in. It is estimated that once completed, phase I and phase II would provide direct employment to more than 30,000 professionals, and an equivalent number would be directly employed in phase III taking the fig-ure of direct employment from RGCTP to more than 60,000 professionals. Accordingly, the total investment for RGCTP will cross $1.3B.

In 2009–10, the total export value of Chandigarh’s soft-ware industry reached $182.2M, which is $18.2M (about 11 percent) more than $163.8M posted in 2008–09. Software exports from RGCTP alone aggregated $159.1M in 2009–10 against $135.2M in 2008–09, up 18 percent. Exports from the units located in other parts of Chandigarh, declined by about 25 percent to $ 22.9M from $28.6M

Sanjay kumar, IT-cum-finance secretary, UT Administration was quoted, “Defying the meltdown, the IT units located in RGCTP regis-tered a growth of more than 18 percent in software exports in fiscal 2008–09. But those located outside the technology park, registered a fall of more than 25 percent, pulling down the total growth rate to about 11 percent. It is estimated that the software exports from RGCTP will cross $987.1Mby the end of 2011.”

“The best year for the industry was 2008–09 when it registered an increase of 48 percent in software exports. In fiscal 2008–09, total software exports of IT companies, located in the RGCTP as well as outside, had risen to $164M from $110.5M in fiscal 2007–08, registering an increase of 48 percent,”stated Mr. Sanjay kumar.

Chandigarh Administration has been framing several policies, from time to time, so as to motivate investors to

invest into Chandigarh. They aim to create an appropriate industrial setup, improve the quality of the life of people, set up the right kind of business climate for various sectors of Chandigarh and contribute to the overall development of the economy.

In order to develop the requisite talent for knowledge Industry, a new state-of-the-art Education City is coming up in Chandigarh, which will have world-class educational faculty and excellent infrastructure. Following are other initiatives which will support Chandigarh is being an ideal outsourcing destination.

A Cyber Security Research Center (first of its kind in the country) has been set up in collaboration with NASSCOM and Punjab Engineering College for con-

ducting high-quality research on cyber security issues involving the academia, IT Industry, and government security agencies. Apart from research on cyber security threats, it will also aid and advise the State Police of the neighboring states in cyber security matters.

Society for Promotion of IT in Chandigarh (SPIC) has estab-lished centers of excellence in collaboration with Microsoft and IBM. The students are trained

in Microsoft Certified programmes which help the IT Industry get trained manpower.

C-TOSS, a programme for upgrading youths soft skills and make them suitable for employment by the IT-BPO industry has been started. Free training is provided in all government schools both in urban and rural areas enhanc-ing employability of students. Free training is also being imparted to school drop-outs from underprivileged sec-tions of the society under CITROP (Chandigarh IT Reach Out Programme).

All these policies by the government have made Chandigarh a preferred location for the IT/ITES/BPO companies. GS

Chandigarh, ‘The Silicon Valley of North India,’ has all the

trappings of being a technology city— developed land, dedicat-ed telecom bandwidth and tel-ephone exchange, skilled man-power, excellent infrastructure

and proximity to Delhi.


Set to Scale New Heights

Coimbatore India

Coimbatore is the second-largest city in the South Indian state of Tamil Nadu. This city is the second-largest software producer in Tamil Nadu, next only to Chennai. It is also the high-

est revenue-earning district in Tamil Nadu.Coimbatore is emerging as a IT/ITES destination due

to an ideal combination of good business infrastructure that includes telecom, power, quality of life, highly skilled workforce, low-cost of living, low pollution, and rapid pace of infrastructure development.

Tata Consultancy Services (TCS), Cognizant Technology Solutions, Robert Bosch GmbH, Tata Elxsi, kGISL, and CSS Corp. Pvt Ltd have set up centers in the city. IT major Cognizant was one of the first major players to start a development center in this destination, opened a techno-campus in 2009 with a capacity to employ 6,000 professionals. Its vice president, Vishnu Potty, admits to Coimbatore being a strong sourcing base for its operations across India.

In August 2010, Tidel Park -a 56-acre IT park- was inaugurated in Coimbatore. IT and ITES companies would occupy nine lakh sq ft space in Tidel Park. It is expected to provide employment to over 12,000 profes-sionals in one shift. This campus would house three major IT companies—Wipro, TCS, and HCL, while more than 40 companies have shown interest to start operating out of this IT-SEZ campus. In addition, Tidel Park holds a lot of importance for small and medium enterprises (SMEs) intending to conduct business from here, as operating from an SEZ will make them entitled to tax exemptions.

This city has a high literacy rate of around 78 percent which is even higher than the national average of 59.5 percent. One of the major reasons for this high literacy rate is the strong educa-tional policy of the government and its world-class facilities. There

are three universities, five deemed universities, 25 engineer-ing colleges, 14 polytechnics, more than 65 arts and science colleges, 44 MBA institutions, and other colleges. It produc-es more than 30,000 engineering graduates every year, thus boasting of an excellent human resources pool. Retention of talent pool has been a strong point for most of the players establishing a presence in Coimbatore. The IT majors hire 10 percent–15 percent of their total recruits from Coimbatore.

Also, it has the entire infrastructure required for an industrialized economy. Many airlines connect Coimbatore with metros namely Chennai, Bengaluru, Mumbai, Delhi, Hyderabad, and overseas cities such as Sharjah, Singapore, and Colombo. The city is also well-connected by train to major parts of India.

Coimbatore looks all set to scale new heights as a pre-ferred destination for corporate firms to expand their business presence. By 2014–15, Coimbatore is likely to add close to 100,000 jobs, which will in turn contribute to the growth in the per capita income of the city. GS

Quick FactsCity Coimbatore

Region South Asia

Country India


Tata Consultancy Services, Wipro, Cognizant Technology Solutions, Robert Bosch GmbH, Tata Elxsi, KGISL, and CSS Corp Pvt Ltd

Primary language spoken Tamil, English

Other languages spoken Telugu, Kannada, and Malayalam


Time zone GMT/UTC + 05:30 hour


Rupees (INR)1USD = 45.3100INR

By 2014–15, the highest rev-enue-earning district in Tamil Nadu is likely to add close to

100,000 jobs


The Backbone of Sri Lanka’s Economic Structure

Colombo Sri Lanka

Colombo, former capital of Sri Lanka, serves as a major port and the largest financial center of the country. It is the backbone of Sri Lankan economic structure.

Colombo has most of the amenities that a modern city possesses. Compared to other parts of the country, Colombo has the highest degree of infrastructure. This destination embraces considerably good stansards of elec-tricity, water, transport,road network, etc.

Majority of the city population possess good English language skills, which makes it ideal for financial, telecom-munication, and healthcare sectors. Colombo now has the world’s largest pool of Uk qualified English-speaking accountants.It has 90,000 graduates, according to Census and Statistics Dept. 2008.

This destination offers a rapidly growing niche work-force which is low-cost, highly adaptable and loyal. Currently, over 50,000 are employed in IT and BPO industry and the workforce is growing at over 20 percent year-on-year. The workforce is stable with very low attri-tion rates ranging from 10 percent to 15 percent. A recent World Bank study revealed that the country’s labor costs ranked the lowest, in comparison to many other outsourc-ing destinations. Its labor cost is 15 percent to 20 percent lower than India. The total cost per associate can be as much as 30 percent lower in many cases. Also, there is a lower upward wage pressure than many established global sourcing destinations.

In addition, this city’s geographical location, infra-structural facilities, direct access to Indian market, high quality standard of workforce, open economy, and various free-trade agreements make this place an attractive out-sourcing destination. HSBC, WNS Global Solutions, RR Donnelley, John keells Computer Services, Just in Time, Virtusa and Astron are some of the companies which have invested in this city. The growing IT-BPO industry in Colombo offers a unique advantage for small and medium enterprises (SME) to enjoy premium access to a high

quality talent pool. In September 2010, MphasiS opened their global deliv-

ery center in Colombo. “There were three main reasons to select Sri Lanka apart from other countries. One of the main reasons was the educational IT institutions and to build deeper roots with the talent supply chain in Sri Lanka. The other reason was that the Government of Sri Lanka has much enthusiasm for a sustainable economic growth. The keenness of the Board of Investment (BOI) played an important role in redefining the IT landscape in the country. This caused MphasiS to set up the global delivery center in Sri Lanka,” MphasiS CEO Ganesh Ayyar was quoted.

“We want to surprise MphasiS by showing the capabili-ties of the Sri Lankan talent. The country s exports will be measured in Billions of dollars and replace the millions very soon. The employees that joined the company today should also focus on providing their best to prove that Sri Lanka can,” Board of Investment chairman Jayampathi Bandaranayake was quoted.

The IT-BPO industry has been identified as a thrust industry by the government of Sri Lanka. Recognizing

Quick FactsCity Colombo

Region South Asia

Country Sri Lanka

City population 656,000 (2007)


HSBC, WNS Global Solutions, RR Donnelley, John Keells Computer Services, Just in Time, Virtusa, and Astron

Primary language spoken Sinhalese, English

Other languages spoken Tamil

Time zone UTC/GMT +5:30 hours

Currency

Exchange rate

Sri Lankan rupee (LKR)1 USD = 111.6196 Sri Lankan rupees


city Profile � colombo

the potential of this industry, the government has taken a number of positive steps - providing fiscal and other incentives and concessions- to fast track the development of this sector.

The national level competency development programs focus on building Sri Lanka as a Center of Excellence (COE) for key domain areas. Software services sec-tor focuses on Telecommunication, Banking Financial Services and Insurance (BFSI) and Software Testing. The BPO sector focuses on financial and accounting services, investment research, engineering services, and Uk-based legal services.

Earnings from exports of IT-BPO sector of Sri Lanka have shown a steady upward trend during the past decade. The industry has set a target of $ 2B in export revenue from IT-BPO sector by 2012.

Foreign direct investment (FDI) into Sri Lanka fell 16.8 percent to $208M in the first six months of 2010, compared to $250M in the first-half of 2009. In 2008, the country’s FDI hit a record $889M, but fell in 2009 to $602M due to the global downturn.

Sirimal Abeyratne, a senior economics lecturer at the University of Colombo was quoted saying, “War was one part of a problem. Uncertainties are still there, and the economic policies are not favorable to foreign investments. (Foreigners) are not certain about the macro economy in the long run. The reform process has not yet started, and the government policy document itself is against foreign investments, blaming the open economic policies.”

As part of a new FDI policy expected to be included in the country’s 2011 budget, Sri Lanka may scrap some tax concessions which had been offered to attract foreign investors during the protracted war.

Sri Lanka had targeted $1B in FDI in 2010, an opti-mistic aim over the economy after the end of a 25-year war. But the Board of Investment has said it may reach only around $600M, almost the same amount that came in 2009.

Sri Lanka’s BOI said that it will prioritize approvals of investment into specific sectors, as part of its thrust to

revive the country’s economy, after the end of a three-decade war. Foreign investments into IT, outsourcing, tourism, agri-culture, fisheries, education, infrastructure, ports, and avia-tion will take precedence over all others. “For these particular sectors, we will give highest possible importance. We want to develop these sectors,” BOI spokesman Dilip Samarasinghe was quoted.

According to World Bank, Sri Lanka’s investment climate must be improved and cost of doing business reduced, to attract the private invest-ment needed to speed up growth. Sri Lanka has been ranked at 105 out of 183 countries in the World Bank’s latest cost of doing business index. It has been sliding down the ranking scale. So, the country needs to increase private investment to about 27 percent of Gross Domestic Product, from the current 19 percent, to speed up eco-nomic growth to the levels needed to improve the lives of most people. GS

The city’s geographical loca-tion, infrastructural facilities,

direct access to the Indian mar-ket, high quality standards of the workforce, open economy, and various free-trade agree-ments make it an attractive

outsourcing destination.


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One of South America’s Rising Hotspots

Curitiba Brazil

Curitiba, capital and largest city of Brazilian state of Parana, is an outsourcer’s dream. With a population of approximately 1.8 M (2009) people, Curitiba is the seventh-largest city in

Brazil. Favorably located among sourcing hotspots Sao Paulo,

Buenos Aires, and Santiago, it has been making a name as a growing IT hub. In last two years, several large off-shore outsourcing operations were established in Curitiba such as Accenture, HSBC Global Technologies, Siemens, ExxonMobil, Atos Origin, and Wipro. These outsourc-ing centers were attracted by the high quality of life, low wages, and excellent infrastructure support from the city.

In March 2010, Wipro technologies opened its new global delivery center, Curitiba Center, in the city. This destination was chosen for Wipro’s Latin America operation due to the available talent pool and the excellent infrastructure support that the city offers. Mayor of Curitiba, Beto Richa, made a statement that the city embraces best in life quality and infrastructure. “Wipro Technologies is an innovation company and a great employer brand, and its investments in Curitiba will bring even more knowledge to our city and state,” Beto was quoted.

Curitiba is known for its strong infrastructure, attrac-tive economy, and savvy urban planning. “you can get anywhere in the city in less than 25 minutes by car. And the quality of life is so good that we can attract profession-als even from Sao Paulo and Rio, who often don’t mind the lower wages here,” Jacques Depocas, Global Head of Center Operations at HSBC Global Technologies was quoted. According to Depocas, Curitiba also has one of the best banking and financial service systems in the world, one of the reasons that HSBC is set up here. The cost of living is also estimated at up to 30 percent lower than in larger Brazilian cities.

Curitiba has a very educated workforce, with a 96

percent literacy rate. It has 55 higher education institu-tions, with five universities. About 157 technical courses are given by 88 institutions. Curitiba has the highest per-centage of English schools per capita in Brazil. Thus, there is a sizeable talent pool.

This destination is famous as an IT-friendly city. The tax incentives and support from the city really helps to build a good business environment. The Curitiba Offshore Center, an association of the local IT companies in Curitiba, pro-vides valuable support and information for US firms con-sidering setting up there. In addition, municipal govern-ment has established the Curitiba Technopark—specific regions in the city, that integrate and interconnect univer-sities, IT companies, and R&D institutions in both public and private sector. There are incentives for larger compa-nies to locate in the Technopark such as a reduced sales tax to 2 percent and a 10-year exemption of real estate and other municipal taxes. GS

Quick FactsCity Curitiba


Country Brazil

City population 1,851,215 (2009)

City real estate cost Apartment for buying: US$ 1,105.39 per square meterApartment (1 bedroom) for rent: US$ 295.67per square meter


Accenture, HSBC Global Technologies, Siemens, ExxonMobil, Atos Origin, and Wipro

Primary language spoken Portuguese (official)

Other languages spoken German, Italian


Time zone UTC-3 (UTC-3)


Real (BRL)1 USD = 1.67964 Brazilian Real


The beautiful coast city of Dalian is located in the southern tip of China’s northeast region. Dalian has a population of about 6 million (2009). It is the most developed city in the northern region

of China, where the most talented of the 130 million Chinese citizens seek jobs.

Dalian boasts of the largest concentration of software outsourcing enterprises in China. This destination was established by the Ministry of Commerce of China, as the service-outsourcing base of the country. In 2009, total industrial output of software industry in Dalian exceeded $60.2B and export value of service outsourcing industry amounted to US$1.4 B.

Dalian’s software industry has developed rapidly. From 1999 to 2009, the annual growth rate was 53.32 percent. Sales profits are 72 times higher than a decade ago and export volumes too are 41times higher than a decade ago.

Dalian is a well-suited destination for both BPO and IT outsourcing for the following reasons : it is the finan-cial center of northeast China and has a large number of foreign banks; it offers a good engineering education at the well-known Dalian University of Technology, which is especially useful for software companies looking for new employees, it is close to Japan and korea and its geographic location gives it an advantage in attracting good outsourc-ing opportunities.

Dalian Hi-Tech Zone and Dalian Software Park are the two areas where IT and BPO companies have setups. There are over 500 enterprises in the Dalian Software Park, 41 percent of which are foreign-funded. Thirty-seven Fortune 500 companies including IBM, HP, Accenture, Panasonic, Sony, Hitachi, NTT, Oracle, AVAyA, NEC, Fidelity, BT, etc. have established bases in Dalian. Many Japanese and korean companies have also set up centers due to the language capabilities.

Major IT companies based in the software park are:• US companies: BearingPoint, Citibank, Dell,

Accenture, Fidelity Investments, Genpact, HP, IBM,

Oracle Corporation, etc.• Chinesecompanies:ChinaSoftware&Service(CS&S),

Neusoft Group, Neusoft Institute of Information, New Touch, DHC, Hisoft, etc.

• European companies: British Telecom (UK), SAP(Germany), Oostsourcing (A joint venture of Akyla 40 percent, Better Be 40 percent, Insight 20 percent, Netherlands)

• Japanese companies:Alpine,FujitsuDevice,Hitachi,NEC, Panasonic, OMRON, Sony, Sumitomo Wiring Systems, yokogawa Electric, HAL Film Maker, Jtekt, MI Communication, etc.

• Othercompanies:Satyam(India),Wistron(Taiwan),konica Minolta, DHC, Lüshun South Road Software

Quick FactsCity Dalian

Region East Asia

Country China

City population 6 M (2009)

City average entry level salary (in US$) per month (ITO)

Average annual salary is $7,056 (2009)


Fortune 500’s Intel, Starbucks, Volkswagen and Bosch GROUP, Toshiba, Panasonic, LG, STX, and BT

Software and service outsourcing revenue of Dalian HIDZ

RMB 17.7 B (2009)

Export value from the software and service outsourcing sector in Dalian HIDZ

US$ 510 M (2009)

Primary language spoken Standard Mandarin

Other languages spoken Dalian dialect

GDP USD 55.5 B (2008)

Time zone UTC/GMT +8 hours


Renminbi (RMB or CNY)1 USD = 6.64151745 Chinese yuan

Handling 80 percent of Japan’s Outsourcing Business

Dalian China


city Profile � Dalian

Industry Belt Demonstration Room, etc.As the core area of software and information service

industry in the city, Dalian Software Park is now progress-ing toward the ‘Service Outsourcing Center of Northeast Asia.’

“The rapid growth of our software park in the past dec-ade can be attributed to effective government support, the concentrated industrial cluster, the internationalized qual-ity system, and improvements in our training system,” Gao Wei, president of Dalian Software Park Co Ltd (DLSP) was quoted.

Dalian High-tech Industrial Development Zone (Dalian HIDZ) consists of six areas including the Software Park. It is surrounded by universities and other educational institutions. The fact that a large number of universities are located near Dalian HIDZ has proven useful for software development companies looking to recruit new employees who can speak Japanese, korean, or English. The pil-lar industries of Dalian HIDZ include software and informa-tion services, biotechnological research and production, and medicine and new materials.

In the first-half of 2009, the software and service out-sourcing industries of Dalian HIDZ generated revenue of $266,445,877.84 accounting for 90.3 percent of Dalian’s total. The export value from the soft-ware and service outsourcing sector in Dalian HIDZ rose 34.9 percent year-on-year and exceeded US$ 510 M.

With an aim to expanding outsourcing business and compete with India’s dominance in outsourcing indus-try, in July 2010 Finance Ministry of China, announced business tax exemption of 5 percent, for the outsourc-ing companies that extend to the end of 2013.These tax exemptions apply to all companies offering information technology outsourcing (ITO), business process outsourc-ing (BPO) and knowledge process outsourcing (kPO) in 21 cities in China.

In June 2010, the 8th China International Software and Information Service Fair (CISIS) was held at Dalian World Expo Center, attracting more than 700 companies and over 20 countries and regions from around the world. The fair held six theme forums on the service outsourcing, software innovation, industrial trends, patent protection, project management and project innovation, of which the IT project management forum and the project innovation forum was held for the first time this year.

More than 60,000 people are working in the software

outsourcing industry in Dalian. Most of the IT work-ers come from the numerous engineering schools of the universities in Dalian and other cities in the area, includ-ing Dalian University of Technology, Dalian Liaotong University, Northeast University, etc.

Dalian now handles 80 percent of Japan’s outsourcing business. Dalian also is unique among similar Chinese cities in the software industry business because of its busi-ness operations model. Instead of operating strictly as a state-owned business, Dalian Software Park operates as a government-facilitated, privately run enterprise.

The Software School at the Dalian University of Technology is China’s biggest software demonstration engineering school. The Dalian Neusoft Institute of Information is among the earlier software institutes estab-lished at the university.

However, this city is still not at par with top outsourcing destinations like India and Philippines. It faces some chal-

lenges in outsourcing. Though running an outsourcing business in Dalian is cheaper overall, the city struggles with providing a competitive labor pool and still lacks infrastructure compared to other locations. Investment costs in Dalian, especially labor costs, are relatively high when compared to those of other cit-ies in Liaoning. Also, the area surrounding Dalian is less devel-oped than the coastal areas of

China in the east and south. Dalian still lags behind Beijing and China in software

research and development (R&D) capabilities. Dalian’s outsourcing business still is mostly focused on Japan, while its share of the global outsourcing industry is much smaller.

Still, Dalian is well on its way to a stronger competitive position. “In the near future, the best opportunity for development in China lies in technology and services out-sourcing. We will make good use of our solid foundation and geographic advantage in our efforts to make Dalian the leading city of the global outsourcing industry,” xia, Dalian’s mayor, was quoted. GS

In July 2010 the Finance Ministry of China, announced

business tax exemption of 5 percent for outsourcing com-

panies in 21 cities in China, that will extend to the end of

2013


Western-style buildings on Shamian Island (Source: Wikipedia)

China’s Software Export and Innovation Base

As the capital city of Guangdong Province, Guangzhou is the political, economic, science, technology, educational and cultural hub of the province. It is the prominent coastal city

in South China. Guangzhou’s location is advantageous; it has a wide

service range, complete infrastructure and good city envi-ronment, which are desirable for the business development of software enterprises and software professionals.

The major industries promoted in the zone include logistics, international trade, computer software and processing industry. In 2009, Guangzhou’s GDP touched ¥911.28 B ($133.5 B), and the per capita income was ¥89,498 ($13,111).

Guangzhou is a national software industry base and a national software export and innovation base. Out of the top 500 companies, 35 have established software enter-prises in Guangzhou in the fields of data treatment and embedded software development, banking, insurance, telecom, etc. This destination enjoys a superior position in the development of application software and system integration in addition to basic software (including system software and supporting software). The investment attrac-tiveness of Guangzhou has led to the setting up of IBM’s software innovation center, Microsoft’s (China) industrial base, Intel’s international security data solution center, Baishigao’s design center, etc. here. Besides the German RIB Group and Trans Cosmos from Japan have established software R&D, outsourcing, and training programs in Guangzhou.

In 2008, there were 385 direct investment projects in Guangzhou. The total investment amounted to $16 B with FDI totaling $5.9 B. The amount of FDI China received climbed up for the fifth consecutive month in the end of 2009, up 103 percent year on year to $12.1 B.

In recent years, Guangzhou annually invested over RMB500 M in the construction of software parks, which

function as the software and hardware environment suit-able for the software industry concentration. The manu-facturing industry has a big demand for software and IT services, which helps software industry to develop fast.

It is anticipated, that the software industry will have over 2000 software enterprises with an annual growth of 35 percent for software export and with an export value of $1.2 B.

Guangzhou Software Park has been a national outsourc-ing base since 1999 and is the second-largest software industry base in the nation, after Beijing. The city’s ties with its southern neighbor, Hong kong, has made Guangzhou a prime outsourcing center for Hong kong’s IT demands, customer service, and call centers.It is anticipated, that the software industry will have over 2000 software enterprises with an annual growth of 35 percent for software export and with an export value of US$1.2 B. GS

Quick FactsCity Guangzhou

Region East Asia

Country China



$6,000


$10,000

City Real-Estate Cost US$3014


IBM, Guangdong Visoinsky, HSBC Software, BEA, Cagemini, PCCW, TWO Group, China Elite Info, HDPG, Sierra Atlantic

Primary Language Spoken Cantones, Putonghua,

Other Languages Spoken English

Time Zone CST


Renminbi (RMB)$1= 6.65 CNY

Guangzhou China


Promising Destination for Domestic and Foreign Investors

Hanoi Vietnam

Hanoi, the capital of Vietnam, is the national political and administrative center, the hub of culture, science, education, economy and international relations. Because of its geo-

economic and political significance, it is regarded as a promising destination for both domestic and foreign inves-tors. Hanoi and Ho Chi Minh City account for over 90 percent of the outsourcing revenues of Vietnam.

According to Hanoi Department of Planning and Investment, in the first nine months of 2010, the city’s GDP growth rate was estimated at 10.6 percent, about 1.86 times higher than the same period in 2009. Hanoi is expected to gain 2010 GDP growth rate of over 10.5 percent. Therefore, the city is trying to reach the economic growth rate of 11 percent–11.5 percent.

Figures by the General Statistics Office (GSO) of Vietnam showed that in the first nine months of 2010, Hanoi’s trade gap reached nearly $10M, a two-fold increase from the city’s export turnover. Specifically, over the first nine months of 2010, total export value of Hanoi businesses reached an estimated $5.59B, a 19.5 percent rise compared to the same period last year. The GSO stated that Hanoi’s export turnover of the whole year of 2010 will likely hit $ 7.644B, up 20.8 percent.

Pham Quang Nghi, secretary of the Ha Noi Party Committee, articulated that Hanoi would take the lead in luring foreign investment and that there have been more than 8,000 projects worth a total committed capital of $18B in the last few years.

Vietnam’s Ministry of Information and Communications has drafted a plan to develop the country’s IT industry. The plan envisages that Vietnam would be among countries with the most attractive outsourcing industry and Hanoi would be in a group of 10 emerging cities for outsourcing. The plan also aimed to attract over $5B in foreign invest-ment for the information technology industry.

IBM, GEMALTO, Teleperformance, Deloitte, Siemens, and FPT Software are among the key companies based in

Hanoi. FPT Software had announced in October 2010 that it would invest $57M in a software park at the Hoa Lac Hi-tech Zone in Hanoi. The project is expected to generate 8,000 jobs, mainly in the software sector. FPT Software said that within the next 4 years, 80 percent of its production will be conducted under outsourcing contracts and the remaining will focus on products, services and solutions for the domestic market.

The city of Hanoi has a population of 6.5M. Vietnam’s large population shows a developing and potential market. Besides, cheap production costs combined with the gov-ernment’s support have been making Vietnam the most outstanding competitor in terms of price.

It is a center of abundant intellectual and talented human resources. Here, there are more than 80 percent

Quick FactsCity Hanoi

Region Southeast Asia

Country Vietnam


City real estate cost Land to buy: $5,000 per sq m (2008)Apartment space to buy: between $300 and $1,000 per sq m (2008)


IBM, GEMALTO, Teleperformance, Deloitte, Siemens, FPT Software

Primary language spoken Vietnamese

Other languages spoken Northern Vietnamese

Literacy rate 97.9 percent (2009)

GDP growth rate 10.6 percent (Jan–Sep 2010)

Time zone ICT (UTC+7)


Dong (VND)1 USD = 19,655.7 Vietnamese dong

Unemployment 3.24 percent (2009)


city Profile � hanoi

of scientists and managers in the country. According to a recent report by Ministry of Science and Technology, Vietnam has about 3,000 to 4,000 new IT students every year, of which half are software developers. known for their skills and diligence, Vietnamese IT students emphasize potential of the future software industry in Vietnam.

With its advantageous geographical position and because it is an intersection of many land roads, railways, and air routes -from and to many provinces and localities in Vietnam, as well as many other countries in the world- Hanoi is becoming a national transaction center and an important international transaction center.

Over the past 20 years, Foreign Direct Investment (FDI) in Hanoi has recorded enormous encouraging achievements, making funda-mental changes in the city’s socio-economic life. yet, a number of problems have also emerged in FDI attraction and realization, particularly the risk of unbal-anced economic development, overloaded infrastructure, envi-ronmental pollution, unhealthy competition and business, conflicts between employers and employees.

In 2008, the registered FDI reached a record high of $5,091M, of which $1,456M was realized. In 2009, given the negative impacts of the global crisis, Hanoi, like many other cities and provinces, saw a sharp decrease in the amount of projects, committed and realized capital.

The first ones who recognized this potential and started outsourcing to Vietnam were small- and medium-sized software companies in the United States. Vietnam realized that to receive such attention and to build a dedicated core of IT experts, there many things have to be done to support IT education in Saigon, Hanoi, and other cities with potential in IT development. The famous universi-ties in Hanoi (Hanoi University of Technology, Vietnam National University Hanoi, Post & Telecommunications

Institute of Technology) have educational collaboration with well-known universities all over the world.

Vietnam has advantages over other countries in the region due to its low labor costs and good location for transporting products to other countries in Southeast Asia and other parts of the world.

The business environment in Vietnam has become more friendly. This has been affirmed by chairman and CEO of the Japan External Trade Promotion Organisation (JETRO), yasuo Hayashi. After India and China, Vietnam is Japan’s biggest outsourcing software partner. Hayashi stressed that more and more Japanese enterprises pay attention to Vietnam when they expand their operations overseas.

Vietnam now stands sixth among the economies Japanese businesses want to expand their sale activities in the next 3 years. It has also jumped two places to stand at fifth place among the markets where Japanese partners wants to expand research and development (R&D) activities. However, Hayashi said, that sev-eral Japanese enterprises are still

concerned about business risks in Vietnam, especially risks from the country’s poor infrastructure and incomplete legal system.

Vietnam needs to create the most favorable conditions for foreign corporations so that they can produce and export hi-tech products here.

Vietnam faces some obstacles such as Internet connec-tions, sometimes, can be painfully slow since there is no fiber-optic broadband network. Another drawback is the lack of fluent English speakers, though this problem can be tackled as most communication is via e-mail.

Helping balance out these deficiencies are the country’s low wages -programmers earn about one-tenth what com-puter programmers make in the United States -, a young and highly motivated workforce and low staff turnover rates of about 5 percent. GS

Hanoi and Ho Chi Minh City account for over 90 percent

of the outsourcing revenues of Vietnam.


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Home to Vietnam’s Software Parks

Ho Chi Minh City Hall

Ho Chi Minh City

Vietnam

Ho Chi Minh City (HCMC) is the largest city of Vietnam. It has a population of 7.163 mil-lion with a literacy rate of 97 percent. With a rising economy, well-educated populace, and

modern facilities, it is considered the economic, cultural, scientific, and technological hub of Vietnam. It is the saf-est, fastest-growing city in Southeast Asia and is quickly becoming an important hi-tech center of the region.

The economic growth of the city is apparent in the increase of GDP per capita: in 2006 the GDP per capita of the city was $730, in 2007 it was $ 2,100, and in 2009 it was $2,800, compared to Vietnam’s average level of $1,042 in 2009.

Although the economic growth of the city between 2005 and 2010 averaged just 11 percent, lower than the set target of over 12 percent, because of the global financial crisis and economic recession, it is still a high growth rate compared to the general context.

Outsourcing to Ho Chi Minh City generally falls into application development and maintenance, product devel-opment and testing. Major IT companies operating in Ho Chi Minh City include IBM, Intel, France Telecom,Telstra, Compaq, Siemens, Fujitsu, Acer, Hewlett Packard, Oracle, Paragon Solutions, Cyrus Intersolf, etc.

It is home to 3 successful Export Processing Zones, 15 industrial parks, 2 software parks, and 1 hi-tech park. These parks—the Quang Trung Software Park (QTSC), Saigon Hi-Tech Park, and the Tan Thuan Export Processing Zone—include software enterprises, dot.com companies, and software training schools. In addition, these parks provide residencies and favorable taxation for workers.

The QTSC software park has been in operation for 9 years with a total area of 430,000 square meters designated for software production, research, training, development, and distribution. When it was established in 2001, QTSC attracted about 20 companies. Now more than 100 companies are in the park with 57percent of them being foreign-invested companies. In 2009, the park reported

total revenues amounting to $100M. The QTSC software park is working towards attract-

ing more local and foreign companies to invest. Chu Tien Dung, general director of QTSC, said the company would make use of their experience acquired over the years to map out a long-term development strategy. “Our three main goals are to attract the biggest enterprises and nurture small ones to turn the park into Vietnam’s biggest software producer; supply high-quality human resources to help the sector take off; and create a favorable business environment to help firms thrive,” Dung said.

QTSC has become a well-known software park brand in the country. “As for future development plans, I think, it’s necessary to build a chain of Quang Trung Software

Quick FactsCity Ho Chi Minh City


Country Vietnam


Average annual salary of software programmer (in US$)

US$15,000– US$20,000


IBM, Intel, France Telecom,Telstra, Compaq, Siemens, Fujitsu, Acer, Hewlett Packard, Oracle, Paragon Solutions, Cyrus Intersolf

Total revenue from QTSC software park

US$100 Million

Primary language spoken Vietnamese

Other languages spoken Chinese, English, French

Literacy rate 97.9 percent

GDP per capita $2,800 (2009)

Time zone UTC/GMT +7 hours


Vietnamese Dong (VND)1 USD = 19,565.44 Vietnamese Dong



city Profile � ho chi Minh city

Cities in other cities and provinces or even in foreign countries to further promote the QTSC brand,” Le Manh Ha, director of the HCMC Department of Information and Communications, said. “When the QTSC brand is well developed, it will certainly attract multinationals whose satellite companies can follow suit by setting up shop at QTSC.”

The largest software park in Vietnam, the Thu Thiem Software Park, is scheduled to come up by 2012 in Ho Chi Minh City.

These IT parks will help the city in particular and Vietnam in general to be an outsourcing place for other enterprises in developed countries.

Ho Chi Minh City boasts the best infrastructure in the nation, including modern transportation and telecommuni-cation systems. It is also the country’s center of higher edu-cation. There are over 80 univer-sities and colleges with a total of over 400,000 students. The out-sourcing companies draw most of their staff from graduates of HCM City National University and the University of Technical Education. Ho Chi Minh City has a young population with 65 percent of people below 35 years of age. Salaries and cost of living in the city are lower than capital Hanoi.

However, foreign direct investment (FDI) flows into the city have declined in 2010. According to the Department of Investment and Planning of Vietnam, FDI into Ho Chi Minh City in the first 4 months of 2010 is estimated at $526M, a drop of nearly 17 percent compared to the same period in 2009.

The 4-month figure only accounted for 6.26 percent of the full year’s target, the department said. The city has tar-geted $8.4B in FDI for 2010, or one-third of the national FDI target.

The global outsourcing business relies largely on the quality of service that is provided, rather than the talent pool, and in this respect Vietnam has still a long way to go.

Lack of fluent English-speaking professionals is another problem.

While corruption remains a matter of concern in Vietnam, government leaders say they are working to reduce red-tapism and bureaucratic processes. Most large companies that outsource to India and the Philippines, however, know how to handle this hurdle.

Vietnam may still be some years away from gaining the prominence of an India, Philippines, or China, but it has definitely emerged as a serious player in outsourcing market.

The Vietnamese government plans to invest about $58M in developing the software technology and digital industry by 2012. This plan will create favorable condi-tions for domestic IT companies to develop.

Vietnam hopes its information and communications industry will comprise 8–10 per-cent of the gross domestic prod-uct in the next 10 years, accord-ing to the government’s ICT Development Strategy. Under the strategy, Vietnam will strive to become one of the world’s top 10 high-tech outsourcing desti-nations for software and digital content production. Vietnam

plans to develop 15 information technology parks to support the country’s developing information and com-munication technology industry by 2020, according to the Ministry of Information and Communications.

The software industry of Vietnam experienced a 40 percent surge with revenues of $880M in 2009. The gov-ernment is also implementing a plan to improve human resources in the sector. The government aims to have 30 percent of Vietnamese students ready to meet the out-sourcing demands of foreign markets by 2015.

Deputy Minister of Vietnam, Tran Duc Lai, said the new information technology will offer special prefer-ences to investors, in addition to offering specific tax incentives under legislation that took force in September 2009. GS

The largest software park in Vietnam, the Thu Thiem

Software Park, is scheduled to come up by 2012 in Ho Chi

Minh City.


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Corporate Headquarter of South Africa

(Source: www.aroundaboutcars.com)

Johannesburg South Africa

Johannesburg is the epicenter of South Africa’s financial services industry. The city is one of the 40 largest metropolitan areas in the world. It produces 16 percent of South Africa’s GDP and

accounts for 40 percent of Gauteng’s (one of the nine prov-inces of South Africa) economic activity. The service and other industries include IT, real estate, transport, banking, broadcast, print media, private health care, transport, and a vibrant leisure and consumer retail market. There exists a large skill base that can be absorbed into growing the BPO skills base. Johannesburg generates 16.5 percent of the country’s wealth and employs 12 percent of the national workforce.

More than 70 percent of South African companies have their headquarters here. Many global companies such as Microsoft, Call Center Nucleus, IBM Innovation Centers, Accenture, Mahindra Satyam, SAP, Lenovo, P&G, BeyondSoft, TCS Design House, Direct Channel Holding, etc. have set up their strategic business units here. According to DIT (Durban Institute of Technology), ITeS-BPO export is expected to reach $12.4B by 2010 from $11.7B in 2009.

South Africa has gradually established itself as a viable player in the global BPO market. Although South Africa is not competing against tier-one players such as India, China, and the Philippines at present, it is increasingly becoming more attractive as a tier-two destination. With strong industry leadership and government support, this position can be strengthened in a significant manner.

Outsourcing activity within the local market is increas-ing. This is attributed to the increased awareness of cost savings and improved efficiencies associated with outsourc-ing. South Africa unlike other locations such as India and Philippines has a well-established domestic outsourcing market. As a result, the country is considered to be a new player in the global offshore outsourcing market.

Since 1996 Johannesburg has shown positive real GDP growth, which has outpaced the national growth rate.

This can be ascribed to the dominance of the fast-growing financial and business services sector in Johannesburg’s economy, which has consistently outperformed average growth rates. When Johannesburg’s growth is compared to that of other metros, the city consistently outperforms its counterparts. Its economy is much larger than any of the others and its Gross Value Added in 2004 was R204 B. The financial and business services sector, which has always been the cornerstone of the city’s economy, has become relatively more important. Its economy is growing

Quick FactsCity Johannesburg

Region South Africa

Country Middle East and Africa



$1,000–$1,100


$1,500–$1,600

City Real-Estate Cost $125 per square feet


Microsoft, Call Center Nucleus, IBM Innovation Centers, Accenture, Mahindra Satyam, SAP, Lenovo, P&G, BeyondSoft, TCS Design House, Direct Channel Holding, etc.

Primary Language Spoken Afrikaans

Other Languages Spoken English, Ndebele, Pedi, Sotho, Swazi, Tsonga, Tswana, Venda, Xhosa, and Zulu


GDP Johannesburg alone accounts for 16 percent of South Africa’s GDP.

Time Zone BST (UTC-3)

Currency South Africa Rand$1 = 6.98 ZAR



city Profile � Johannesburg

faster than the population growth rate. Johannesburg is creating a substantial number of new jobs in the right sec-tors. Factors that will improve the distribution of income include a steady and strong growth in employment in the right sectors such as permanent formal sector jobs in sec-tors that pay above-average salaries and have retirement, medical and other benefits; and an increase in broad-based Black Economic Empowerment to increase the owner-ship of wealth. Johannesburg has 1.5-million economically active people out of a total population of close to 3 million.

An underconstruction 24-hour center coming up in Johannesburg will provide another 3,000 new jobs. The new project in Johannesburg will be operational in the ensuing 12 to 14 months, giving the country’s BPO sector the much-needed boost and help it to generate revenues worth over R7.4 B during 2010. The City of Johannesburg has the highest number of call cent-ers - more than 360- employing some 35,000 call center agents in outsourced and captive (in-house) call centers in ICT, financial services, banking, tourism, hospitality and business-to-business.

The use of wireless technology for data and communi-cations is on the increase. It is cheaper, easier to use and costs less in infrastructure set up as well as maintenance. For this Johannesburg needs to offer broad bandwidth in conjunction with wireless technologies. It should be noted that about two-thirds of South African companies use SAP software.

During recession, South Africa’s Johannesburg Stock Exchange fell by 31 percent last year in mid-November. As a result, a lot of investors withdrew their investments. Since then South Africa’s currency has depreciated touch-ing R9/$ for the first time in 6 years.

Johannesburg is a city in economic transition and it has grown from a mining town into a financial and manufac-turing capital, and later into a financial and services capita and it now faces the toughest challenge of all—becoming a knowledge capital. There is a transition underway in the economy of Johannesburg, away from low-skilled work, and towards high-skill, service-based enterprise—which requires access to advanced services such as telecommu-

nications, and high reliability of basic services such as electric-ity. Johannesburg is the largest single metropolitan contributor to national economic product. National average growth in gross domestic product has been 1.8 percent over the last 10 years, and Johannesburg has marginal-

ly outpaced that growth with an average 2 percent growth per annum over the last decade.

The city’s economy is dominated by four sectors, three of which are service sectors. The four key sectors are as follows: • financialandbusinessservices;• retailandwholesaletrade;• communityandsocialservices;and• manufacturingsector.

All taxation is handled through the South African Revenue Service (SARS). South African residents have been taxed on their worldwide income. This includes the income of a for-eign-controlled company. Certain types of income from outside South Africa are exempt and credit is allotted for foreign taxes paid. The tax year is 1st March to 28th (or 29th) February. Employees’ tax is deducted at source (pay-as-you-earn) and paid by employers to the authorities monthly. The tax thus deducted is a credit against the employee’s total tax liability as assessed by his or her annual tax return. GS

Unlike India and Philippines, South Africa has a well-

established domestic outsourcing market.

SNAPSHOT

➤ Johannesburg produces 16 percent of South Africa’s GDP and accounts for 40 percent of Gauteng’s (one of the nine provinces of South Africa) economic activity.

➤ This city has the highest number of call centers - more than 360- employing some 35,000 call center agents in outsourced and captive (in-house) call centers in ICT, financial services, banking, tourism, hospitality and business-to-business.

➤ According to DIT (Durban Institute of Technology), ITeS-BPO export is expected to reach $12.4B by 2010 from $11.7B in 2009.

➤ During recession, South Africa’s Johannesburg Stock Exchange fell by 31 percent last year in mid-November. As a result, a lot of investors withdrew their investments. Since then South Africa’s currency has depreciated.


IT Hub of Eastern India

(Source: www.infobengal.com)

Kolkata India

Kolkata, formerly known as Calcutta, is the main business, commercial, and financial hub of eastern India. The capital of the state of West Bengal, the city has in recent times been

transformed to a major information technology hub in India.

More and more businesses are setting up office in kolkata, including international giants such as IBM, Texas Instruments, Cisco Systems, Intel Asia Electronics Inc, Deloitte, Sun Microsystems, Honeywell, PwC, HSBC Global Technology, Capgemini, Atos Origin, Foster Wheeler, Siemens, Novell, AIG, Skytech, Lexmark, and ABN AMRO Bank. Leading the way in growth have been the kolkata-based companies such as Serenus Infotech, Intelliant Technologies, Alumnus Software, Metalogic Systems, TCG Software, Data-Core, UshaComm, RS Software, among numerous others.

Other big Indian software firms have already made kolkata their hub of operations for the eastern region of India. Of these Wipro, TCS, Tech Mahindra, ITC Infotech, HCL Technologies, Cognizant, Genpact, Tata Interactive Systems, CMC Limited, NIIT Technologies, Moser Baer Ltd., Aditya Birla Minacs, and Sonata Software leading the way.

kolkata, being the dominant metropolitan city of east-ern India, has attracted major software and telecom firms across India and abroad to set up their development center here. The Eastern Region Council of NASSCOM, the premier trade body and the chamber of commerce of the IT-BPO industries in India, is situated in kolkata.

Owing to the recent boom in the economy of kolkata and also the state as a whole, West Bengal is now the third fastest growing economy in the country and the city’s IT sector is growing at a rate of 70 percent per year—twice the national average.

In 2009, kolkata’s GDP grew to $150B, the third high-est among Indian cities. With its huge economy and cheap

living expenses it is one of the world’s major centers of business in GDP PPP (purchasing power parity) terms.

Several IT-SEZ and IT parks have come up in the city, attracting software corporations and foreign direct investment in kolkata. kolkata today boasts of 3 Software Technology Parks (STP), with more coming up. The 2,50,000 square feet standard design factory with modular Software Technology Park I and the 100 percent export-oriented 60,000 square feet, state-of-the-art Software Technology Park II house some key IT players from Europe and the Silicon Valley. Privately-owned IT facili-ties, like Infinity and Bengal Intelligent Park, have attract-ed big IT companies too.

At the operational level, the government has ensured ease of operations in kolkata through Webel (West Bengal Electronics Industry Development Corporation), which acts as a single-window support center for all IT inves-tors in the state. Webel helps companies obtain built-up space on rent/lease and in the purchase of land. It also

Quick FactsCity Kolkata

Region South Asia

Country India


City real estate cost (US$ per sq. ft)

Commercial office space for sale: US$ 226.46–US$ 294.39 per sq ft


Pricewaterhouse Coopers, IBM, TCS, Cognizant, Skytech, Lexmark, AIG, and HSBC

GDP USD 150 Billion (2009)

Primary language spoken Bengali

Other languages spoken English, Hindi

Time zone UTC/GMT +5:30 hours


Rupees (INR)1 USD = 45.3100 INR


city Profile � Kolkata

interacts with government bodies to help procure last-mile connectivity, to get power connections and interacts with the local municipality to reduce the company’s exposure to bureaucratic problems. Webel has set up an IT “Incubation Center” to properly utilize the huge pool of human resources and knowledge competencies that the state possesses. This center provides a platform for aspiring and talented software and telecom professionals in kolkata to float their own IT-start ups. The IT incubation center helps turn viable ideas from talented professionals into business propositions.

In October 2010, the chief minister of West Bengal Buddhadeb Bhattacharjee laid the foundation stone of East kolkata IT Park at Nonadanga, kolkata, with an aim to attract more IT biggies and gener-ate more employment in West Bengal.

The East kolkata IT Park will be the fourth such endeav-or of the West Bengal govern-ment. The earlier ones include IT hubs at Salt Lake, Rajarhat and Bantala. “Our largest IT companies are in Salt Lake, where 80,000 people work. Around 10,000 employees are working in the Rajarhat area. Then there is the IT park in Bantala. Now we have one in Nonadanga,” said the CM.

Approximately 1 million square feet of space would be developed in the East kolkata IT Park. The IT Park is expected to be fully operational within 2 years. The park would have a Regional Skill Development Center and an Infrastructure Management Center, along with network-ing, hardware, and telecom laboratories to help generate more employment.

“Several top IT companies, like Rolta, HSBC Electronics Data Processing Limited, and HCL Infosystems have already evinced interest in setting up their facilities in the

park,” Buddhadeb Bhattacharjee said. “Ten thousand high-end jobs will be created in

kolkata when the park becomes operational,” said the CM. “We are trying to set up more such IT parks at Durgapur, Siliguri, and kharagpur that will generate more software jobs for fresh graduates in the state,” added the chief minister.

West Bengal IT minister, Debesh Das said, “The Park is a key milestone in the progress of the state’s indus-trial development especially given that it will lead to the creation of 50,000 indirect jobs over and above the 10,000 direct ones.”

HCL Infosystems would set up a center of excellence in the IT Park that would serve as the company’s regional head-quarters. Over 1,500 are expect-ed to be employed at the hub. Rolta chairman k.k. Singh said, “We are going to set up a soft-ware research and development unit here. We will invest Rs 250 crore ($55.02M) and expect to generate 5,000 jobs.”

West Bengal has been one of the fore-runners among Indian states in attracting FDI in recent years. FDI flow into West Bengal has led to devel-opment of infrastructure in the state. The IT companies in the state have been given special status so that they can improve the infrastructure. FDI has also boosted the real estate industry in West Bengal. Unemployment had been a major area of concern for West Bengal. With the inflow of FDI, vast opportunities of employment have opened up in this state.

kolkata houses 12 universities and numerous colleges affiliated to them. The city is home to many nationally and internationally reputed colleges and institutions aimed at supplying a highly-skilled workforce. kolkata also has the lowest attrition rates. GS

With its huge economy and cheap living expenses Kolkata

is one of the world’s major centers of business in GDP

PPP terms.

SNAPSHOT

➤ kolkata and also the state as a whole, West Bengal is now the third fastest growing economy in the country and the city’s IT sector is growing at a rate of 70 percent per year—twice the national average.

➤ In 2009, kolkata’s GDP grew to $150B, the third highest among Indian cities. With its huge economy and cheap living expenses it is one of the world’s major centers of business in GDP PPP (purchasing power parity) terms.

➤ In October 2010, the chief minister of West Bengal Buddhadeb Bhattacharjee laid the foundation stone of East kolkata IT Park at Nonadanga, kolkata.

➤ HCL Infosystems would set up a center of excellence in the IT Park that would serve as the company’s regional headquarters. Over 1,500 are expected to be employed at the hub.


Europe’s “Silicon Valley”

Krakow Poland

Krakow, the second-largest city of Poland, is one of Poland’s most important economic centers. krakow is the technology hub for Central and Eastern Europe. It is sometimes referred

as Europe’s “Silicon Valley.” The city is the corporate seat of international banks, associations supporting business activities, and chambers of commerce.

krakow is perceived as an appropriate place to conduct investment and economic activity. key service providers in the city are IBM, Capgemini, HCL, Hewitt, LogicaCMG, Philip Morris International, AES, Microsoft. In total, firms from the outsourcing sector employ 16,000 workers in 50 centers within the city. Outsourcing specialties of krakow are: business analytics, finance and accounting, human resources, and multilingual contact centers.

krakow offers attractive business opportunities and the amount of direct foreign investments is constantly increas-es. The largest foreign investments in krakow are in bank-ing, industry, and trade sectors, and over the recent years in IT, financial and telecommunications services. Apart from the European companies, there is also considerable US investment. The largest investments in krakow and the region include those from Affiliated Computer Services, CapGemini, PwC Polska, IFS Poland, Airline Accounting Center (Lufthansa Group), IBM BTO Business Consulting Services, Hewitt, Centrum Finansowe Tesco, Electrolux, Shell, Philip Morris, Exult, kPMG, Google, Motorola, IBM krakow Software Laboratory, Delphi Polska, and ComArch.

kraków Technology Park (kTP) is one of the signifi-cant determinants of krakow’s investment attractiveness. kTP was established in 1998 as a special economic zone covering a total area of 122.35 ha. Main investors in the kraków Technology Park are: Motorola Inc., RR Donnelley, AMS, ComArch SA, AZ-Soft SA, Alcro-Beckers AB, ABM SOLID SA. Entrepreneurs investing in the kTP can avail of income tax exemptions. Capital expenditures above 2 million Euros ($2.6M) used to entail

zero income tax over the first 6 years and 50 percent reduc-tion thereafter till 2009. At the same time, investments under 2 million Euros warrant income tax exemptions matching expenditures. There are also other incentives such as bigger depreciation write-offs.

kTP is the city’s high-tech powerhouse providing industrial base for krakow’s 15 higher education institu-tions and over 140 research centers. Investments pertain-ing to IT, electronics, communications, software and hardware, material engineering, biotech, genetics, etc. are encouraged in the Park.

The krakow Technology Park consists of 4 separate areas: the 36-hectare Jagiellonian University Technology Park, the 30-hectare Technology Park of the krakow University of Technology, the 35-hectare Sendzimir Steelworks Technology Park, and the youngest 21-hectare Tarnow Industrial Cluster.

krakow metropolitan area is an attractive place as a labor market with approximately 1.5 million residents. Highly motivated people with excellent qualifications are on the job market and are ready to work immediately. The employment costs are lower in krakow than elsewhere (for

Quick FactsCity Krakow

Region Central Europe

Country Poland

City population 755,050 (2008)


IBM, Capgemini, HCL, Hewitt, LogicaCMG, Philip Morris International, AES, Microsoft

Primary language spoken Polish

Other languages spoken English, Japanese

Time zone UTC/GMT +1 hour


Polish Zloty (PLN)1 US Dollar = 2.87936 Polish Zloty



city Profile � Krakow

example, 30percent less than in Warsaw). Compared to the other parts of the country krakow has many advantages for businesses wanting to locate here, like high availability of IT specialists and executive staff, high productivity at low labor costs and flexibility and excellence, advanced foreign language competence, friendly environment for science and research and strong business connections.

Another advantage of krakow is its convenient geo-graphic location, on the crossroads of important transporta-tion routes. Transportation accessibility of the city is being constantly improved by the executed infrastructural invest-ments. Convenient train connections with Warsaw and other major cities and an international airport with numer-ous domestic, European, and Pan-European connections are all very significant to the efficient conducting of business.

The intellectual potential of krakow is created by 22 universities, nearly 20,000 academic lecturers (includ-ing approximately 1,800 pro-fessors), and 210,000 students in higher education, more than 30,000 new graduates a year, 8,000 IT sciences students, and 5,000 mechanical engineers. Major universities of krakow are AGH University of Science & Technology, Cracow University of Technology. There are 8 uni-versities in Krakow with It degrees. krakow has a plentiful group of highly skilled person-nel in all modern sectors of the economy, and it attracts investors that represent various industries. The unemployment rate in krakow ranks among the lowest in Poland and it had slipped below 3 percent in 2008.

“We chose krakow because of the multiplicity of tal-ents and resourcefulness of knowledge, which the city can offer,”kristof kloeckner, vice-president of IBM Software Group was quoted as saying.

“We see an objective in opening similar centers in places where there is an opportunity to employ top spe-cialists in their fields. krakow is such a location,” Artur Waliszewski, Director of Google Polska, was quoted as saying about the opening of the research and development center in krakow.

The economic significance of krakow is reinforced by the demographic potential of the region—approximately 8 million people live within a 100 km radius of the city. This constitutes an accessible potential market. An additional advantage is the fact that 60percent of the inhabitants of the city are people under age 45.

krakow is emerging as a key R&D center for many US

firms. Google, IBM, Motorola, ABB, SABRE, Delphi, fujitsu all have R&D centers in the city.

There’s a lot of offshore BPo from CapGemini, IBM, Motorola, Shell, ACS, Fortis Bank, UBS, Comarch, Unicredito Bank, Tesco, International Paper, HSBC, Lufthansa, StateStreet, HCL, Philip Morris, Hewitt, Alexander Mann, Hitachi, Accounting Plaza, EDF Energy, UPM-kymenne, etc.

IBM is one of several large corporations massively building its presence in the city. Since 2002, IBM has boosted staff in krakow ten-fold, to more than 900 people, at a facility that provides finance and accounting services to business customers. Another 200 people work at an IBM software lab founded in 2005.

Many European IT companies outsource their software development to Poland because no communication, cul-tural, territorial, or quality issues occur there. Most Polish

companies are much closer than their Asian counterparts—geo-graphically, culturally, and in the way they do business. Poland is only an hour ahead of the Uk, so communication is quicker, simpler, and more reliable than it is with a country in another time zone. Wages are significant-ly lower in Poland than in the Uk and Western Europe. And Polish IT professionals have very strong academic background which guarantees the highest

level of IT developers’ education.A further advantage is that Poland is now a well-estab-

lished member of the Eu, meaning there are no legal obstacles to cooperate with Polish IT companies both remotely and on site. GS

Krakow has many advantages for businesses wanting to

locate, like high availability of IT specialists and executive

staff, high productivity at low labor costs and flexibility and excellence, advanced foreign

language competence,etc.


The Gateway to the ASEAN Market

KL’s symbol, the Petronas Twin Towers (Source: wikitravel)

Kuala Lumpur Malaysia

The Malaysian business process outsourcing (BPO) industry would be worth roughly US$ 2 Billion by the year 2012 at current pace. kuala Lumpur and its surrounding urban areas form

the most industrialized and economically, the fastest grow-ing region in Malaysia.

kuala Lumpur is the capital and second-largest city of Malaysia in terms of population. Malaysia’s strong talent pool and advantages have placed it among the top three Shared Services Outsourcing (SSO) destinations in the world. kuala Lumpur is an ethnically diverse city with a well-educated, multicultural, multilingual population. Even if the official language is Bahasa Malay, most people speak good English. Malaysia’s outsourcing and shared services (SSO) industry is likely to undergo a consolida-tion of sorts as it seeks to reinvent itself in the face of stiff competition in the global market.

The city remains the economic and business center of the country. kuala Lumpur is a center for finance, insur-ance, real estate, media, and the arts of Malaysia. kuala Lumpur is rated as an alpha world city, and is the only global city in Malaysia, according to the Globalization and World Cities Study Group and Network (GaWC).

The total current employment in kuala Lumpur is estimated at around 838,400. The tertiary or service sector forms the largest component of employment in kuala Lumpur, representing about 83 percent of the total compared to 71 percent in the kLC (entire klang Valley Region, also known as Greater kuala Lumpur or kuala Lumpur Metropolitan Area). The tertiary sector comprises finance, insurance, real estate & business services, whole-sale & retail trade, restaurant and hotel, transport, storage and communication, utilities, personal services, and gov-ernment services.

Being strategically positioned as the gateway into the ASEAN market and having market-oriented economy, supportive government policies, and a large local business community that is ready to do business with international

corporations, kuala Lumpur is a highly competitive manu-facturing and export base. The 2011 budget has been announced against the backdrop of a robust growth of 7 percent expected for this year from 6 percent forecast ear-lier and set to expand by 5-6 percent next year, buttressed by a superlative showing of the ringgit regionally.

Incentives have been given to boost the capital mar-ket through issuance of three new stockbroking licenses to eligible local, foreign, or joint-venture companies to raise retail market participation. As for the East Coast Economic Region (ECER), RM178 million ($57.3M) has been allocated to develop industrial parks and other areas.

Quick FactsCity Kuala Lumpur


Country Malaysia



US$800–1,000


US$1,200–1,600

City Real-Estate Cost RM720 per square feet


IBM, Oracle Corporation, Ericsson, Samsung, DiGi, Intel, Hewlett Packard, accenture, Nokia, etc.

Primary Language Spoken Bahasa Malaysia

Other Languages Spoken Cantonese, Mandarin, and Tamil. English

Literacy Rate 97.5 percent

GDP Kuala Lumpur along with other cities contributed 62.7 percent to the national GDP

Time Zone MST (UTC+8)

Currency Malaysian ringgit (RM)$1= 3.1 MYR



city Profile � Kuala lumpur

The Gross Domestic Product (GDP) for kuala Lumpur is estimated at RM73,536 million ($23.7B) in 2008 with an average annual growth rate of 5.9 percent. The per capita GDP for kuala Lumpur in 2008 was RM48,556 ($15,650) with an average annual growth rate of 5.9 percent.

The city has a large number of foreign corporations and is also host to many multinational companies’ regional offices or support centers, particularly for finance and accounting, and information technology functions. Moreover, most of the countries’ largest companies have their headquar-ters based here.

Other important economic activities in the city are educa-tion and health services. kuala Lumpur also has advantages stemming from the high concen-tration of educational institu-tions located within its bounda-ries, providing a wide range of courses. There has been growing emphasis to expand the economic scope of the city into other service activities such as research and development that supports the rest of the economy of Malaysia. The tourism sector also plays an important part in the city’s economy, providing income, employment and expanding business opportunities. As an extension of this, many large worldwide hotel chains have presence in the city. kuala Lumpur is the fifth most visited city in the world, with 8.94 million tourist arrivals in 2008.

Multimedia Super Corridor, Malaysia (MSC) is an important component of the Malaysian e-strategy. It is a dedicated 15 x 50 km corridor outside kuala Lumpur that aims to attract global ICT companies to undertake research, develop new products and technologies, and export from this base. Conceptualized in 1996, the MSC is envisioned to become a global test bed for ICT applications. It is also intended to be the ideal growth environment for Malaysian ICT small and medium enterprises (SMEs) seeking to transform themselves into world-class companies. To attract the targeted companies, the Malaysian government has committed to the following four promises: a Bill of Guarantees, world-class infrastruc-ture, a suite of cyber laws, and incentives.

Some of the notable companies based in kuala Lumpur are IBM, Oracle Corporation, Ericsson, Samsung, DiGi, Intel, Hewlett Packard, Accenture, Nokia, etc..

kuala Lumpur is a very attractive place for foreign investment due to its high infrastructure and human capital standards, as well as the robustness of its internal market. The city welcomes investments and productive

projects in the IT field and provides incentives and grants for relevant projects.

Insofar as kuala Lumpur is the capital of the nation, its economic catchments encompass the entire country. The present range of human activities in the city, its infrastruc-ture and buildings, its parks and monuments, its spectrum of social, spiritual, recreational and entertainment facili-ties, and its concentration of governmental and non-

governmental institutions are manifestations of the city’s func-tion as the capital of the nation. With the relocation of federal government administrative func-tions to Putrajaya, some diminu-tion of this role is likely to be felt, but the city will remain the economic and business center of the country. This is due to the fact that kuala Lumpur and its conurbation (kLC) form a region that is the most industri-

alized and economically the fastest growing in the country. Furthermore, the development of the kuala Lumpur International Airport at Sepang, the creation of the MSC, which includes Putrajaya and Cyberjaya, and the expan-sion of Port klang have reinforced the national and inter-national economic significance of the city. As an interna-tional business center, kuala Lumpur vies with cities such as Singapore, Bangkok, Manila and Hong kong for pri-mary position in the Asia Pacific Region. In realizing its vision to become A World-Class City, kuala Lumpur must address the regional, national and international perspec-tives, embrace the opportunities presented and define its specific role. GS

Malaysia’s outsourcing and shared services (SSO) industry is likely to undergo a consoli-dation of sorts as it seeks to reinvent itself in the face of

stiff competition in the global market.


BPO Boom Causing Ripple Effect Throughout Mexican IT Industry

(Source: media.photobucket.com)

Mexico City Mexico

Mexico City is the capital and largest city of Mexico. known for being the most populat-ed Spanish-speaking country in the world, Mexico boasts of a free market economy. It

is the world’s 12th largest economy and has the highest per capita income within Latin America.

The recent boom in business process outsourcing (BPO) is not only creating much-needed jobs, but is also having a ripple effect throughout Mexico’s IT industry. Mexican IT firms are suddenly flexing their muscle on a global stage.

Mexico has enviable human capital with respect to BPO services such as contact center. Moreover, there is active support from the Mexican government. Huge government incentives to set up contact centers may touch all the right buttons with the contact center outsourcers companies and in-house shared services organizations.

As an “alpha” global city, Mexico City is one of the most important financial centers in North America that is located in the Valley of Mexico. Mexico’s GDP plunged 6.5 percent in 2009 as world demand for exports dropped and asset prices tumbled. However, with Mexico’s econo-my and GDP per capita both growing at high rates now, in which Mexico City’s GDP is set to at least double within the 2010–2020 decade according to numerous economic reports.

Mexico’s trade regime is among the most open in the world, with free trade agreements with over 50 coun-tries, including the United States, Canada and the EU. Mexico City is responsible for generating 21 percent of Mexico’s Gross Domestic Product, and the metropoli-tan area accounts for 34 percent of total national GDP. Government officials expect the economy to grow 4–5 percent in 2010. The principal taxes payable by individu-als and by corporations operating in Mexico and, in cer-tain cases, by foreign companies, are those levied by the federal government. State and municipal governments

have more limited tax powers and are not authorized to levy general corporate income taxes. The federal cor-porate income tax rate is 35 percent. There are no state taxes on corporate net income. A value-added tax (VAT) at the general rate of 10 percent is payable on sales of goods and rendering of services, rents, and imports of goods and services.

Some of the notable companies based in Mexico City are Tata Consulting, MindTree, NoShore Group, Indra, Genpact, Neoris, Softtek, ACS.

Mexico City is a very attractive place for foreign invest-ment due to its high infrastructure and human capital standards, as well as the robustness of its internal market. The city welcomes investments and productive projects in the IT field and provides incentives and grants for relevant projects. GS

Quick FactsCity Mexico City

Region Central America

Country America

City Population 112,468,855 (July 2010 est.)

City Real-Estate Cost US$5.31 per square feet (Class A) and US$4.79 per square feet (Class B)


Tata Consulting, MindTree, NoShore Group, Indra, Genpact, Neoris, Softtek, ACS

Primary Language Spoken Spanish (92.7percent)

Other Languages Spoken Spanish and indigenous languages (5.7 percent), indigenous (0.8 percent), unspecified (0.8 percent)

Literacy Rate 91.4 percent (2009)

GDP $1.465 Trillion (2009 est.)

Time Zone CST (UTC-6)

Currency Mexican Pesos (MXN)$1 = 12.26 MXN



The IT Capital of Central Europe

(Source: media.photobucket.com)

Prague Czech Republic

Prague is indisputably becoming the capital of Central Europe. Many large companies have their regional headquarters here and the city is an enticing investment location, despite

being more wealthy (and therefore expensive) than many Western counterparts.

Prague is the capital of Czech Republic (CR). Prague has a strategic location in Europe; it’s centrally located and has easy transport links. Prague is often considered the heart of Europe.

The capital city of Prague is the largest city of the Czech Republic. Its area is 496 sq km, which is only 0.6 percent of the CR’s territory, but with the population of 1,212,097 inhabitants (2007) it represents 11.7 percent of the total population of the CR. Prague then markedly dominates the population structure in the Czech Republic. Prague has a well-developed transport and telecommunications infra-structure. It has a highly skilled and educated workforce. Much of the working population is qualified to degree level or higher.

Prague ranks among important and developed regions even within the entire EU. After the 1990s a very fast transformation in a wide range of socio-economic areas has taken place in Prague. The city has become an attrac-tive territory for investors especially among foreign eco-nomic entities, for whom it is a mark of good reputation to acquire residencies within Prague.

There has been a substantial improvement in the quality of connection of Prague to European and the worldwide communication network. There is a stable and manifold labor market and potential of labor force with above average qualification. Quality background of educational, scientific, and research institutions plays an important role too.

There are 800,000 employees in Prague. The number of foreign residents in Prague has been increasing in spite of the country’s economic downturn. As of March 2010, there were 148,035 foreign workers living in the city

making up about 18 percent of the workforce, up from 131,132 in 2008. Approximately one-fifth of all invest-ment in the Czech Republic takes place in Prague city.

Prague’s economy accounts for 25 percent of the Czech Republic’s GDP making it the highest performing regional economy of the country. According to Eurostat (statistical office of the European Union), in 2007, its GDP per capita in purchasing power standard was 42,800 € ($58,380). Prague was ranked the fifth best-performing European NUTS 2 level region at 172 percent of the EU-27 average.

The city boasts skilled IT workforces and centers of excellence set up by major multinational corporations such as Accenture and Cap Gemini.

Extraordinary advance of Prague in economic perform-ance per capita is due to several key factors, namely, high rate of commuting to work (in 2008 amounted to 18.5 percent of all employees in Prague), the concentration of gross value added generated by the government sector, the concentration of most of the services sector (banking, insurance, telecommunications), a higher price level which is not reflected in the regionally different conversions of

Quick FactsCity Prague


Country Czech Republic



Accenture, Cap Gemini, Siemens, Honeywell, Sun Microsystems.

Primary language spoken Czech


GDP per capita (recalculated - in purchasing power standards)

€ 42,800 (PPS) (2007)

Time zone UTC/GMT +1 hour


Czech Koruna (CZK)1 USD = 18.1970375 Czech Koruna


city Profile � Prague

GDP at purchasing power parity and high compensations of employees.

Accenture’s Europe Business Process Outsourcing Delivery Center in Prague was established in 2001. Currently, the Prague Center employs more than 1,500 accounting, HR, and administration professionals and plans call for expanding the facility in phases. Some well-known multinational companies have established research and development facilities in Prague, among them Siemens, Honeywell, or Sun Microsystems.

In October 2010, Cisco announced the opening of its Prague Center of Excellence, which uses the latest technol-ogy in providing sales and partner coverage to 27 countries in Central and Eastern Europe and the Commonwealth of Independent States (CIS). The center is serving some 350 partners and 2,500 custom-ers in 27 countries. According to Alexander Winkler, general manager, Cisco Czech Republic, “Cisco is investing in the Czech Republic as part of our long-term commitment to the country. We have been present in the Czech market since 1995, and over the past 15 years have established several regional functions in Prague. We have chosen the Czech Republic, and in partic-ular Prague, for the Center of Excellence activity due to the availability of educated talent, excellent communications infrastructure, and the fact that it is an attractive location for team members, both local and international.”

Prague has a lower unemployment rate than the rest of the country. Even though jobs have declined in the manu-facturing sector, Prague still holds the largest industrial center in the Czech Republic.

However, what cannot be forgotten are weaknesses:

mounting crime, bad environment, overloaded transport, and increased costs of living for the population.

Prague is still a little cheaper than most European capital cities for essentials such as food and transport. But for luxury goods like electrical appliances, cosmetics and fashion, prices are higher here than elsewhere.

In 2008 inflows of foreign direct investment in Czech Republic were roughly $10.73B. By U.S. Embassy esti-mates, the United States is among the top 5 investors in the Czech Republic. FDI have contributed significantly to the CR’s economy’s strength. The stock of FDI in the country amounts to around 50 percent of GDP.

Despite broadly favorable economic performance, long-term unemployment remains high. Thus, the Czech

Republic must continue to address the structural problems in the labor market.

Important remaining issues that still need to be addressed include: restoring the long-term sustainability of public finance through reforms in health and pension systems; improving the functioning of the labor market to increase labor mobility; and

continually improving the business environment.According to the medium-term state budget for 2012

and 2013 of the Czech government, the Czech economy could grow by almost 4 percent in 2013. In 2009 the Czech economy fell by 4.1 percent and the average year-on-year inflation was 1 percent. Unemployment calcu-lated by the International Labour Organisation (ILO) was 6.7percent on average in 2009.

For 2010, the Finance Ministry expects the economy to expand by 1.6 percent. The year 2010’s growth should mainly be pulled by foreign trade. GS

Prague is an enticing invest-ment location, despite being more wealthy (and therefore more expensive) than many

Western counterparts.

SNAPSHOT

➤ Approximately one-fifth of all investment in the Czech Republic takes place in Prague city.

➤ Prague’s economy accounts for 25 percent of the Czech Republic’s GDP making it the highest performing regional economy of the country.

➤ In October 2010, Cisco announced the opening of its Prague Center of Excellence, which uses the latest technology in providing sales and partner coverage to 27 countries in Central and Eastern Europe and the Commonwealth of Independent States (CIS).

➤ According to the medium-term state budget for 2012 and 2013 of the Czech government, the Czech economy could grow by almost 4 percent in 2013.

(Source: www.gumbopages.com)


Attractive for High-value Services

Rio de Janeiro

Brazil

Brazil has Rio de Janeiro—this seems to be one of the important selling points for outsourcing to the country.

The political situation in Rio is favorable for outsourcing. The services sector constitutes the promi-nent portion of GDP (65.52percent). Especially after the discovery of oil in the Campos Basin, Rio has been pulling in more companies and investments. Rio stands second nationally in the financial and services sector. Rio de Janeiro has 8 out of 10 of the country’s top science and technology schools; it produces a large number of post-graduates and PhDs every year. This enhances Rio’s attrac-tiveness for high-value services. It has expertise in BPO and call centers; there are science and technology business parks; there are government financing, R&D credits, etc.

The state has internationally recognized research cent-ers, which form highly skilled technicians. The Fund for Social and Economic Development (Fundes) is aimed at funding working capital for new businesses or expansion of enterprises already installed. Rio’s economy boasts of a respectable number of IT professionals and highly quali-fied workforce.

A new employment and income generation plan is the recent approval of the bill establishing the Ecological and Economic Zoning (EEZ) in Rio de Janeiro. The presence of a large number of universities and research centers of excellence and a basic infrastructure (major telecommuni-cations hub in the country) makes the capital a major pole of Information Technology. Brazilian currency in recent years has become a stable currency, and is strong against the US dollar and the Euro.

Chinese companies have been investing in Brazil by building telecommunications and infrastructure projects. China continues to fuel Brazil’s economic growth. The economic slowdown seems to have brought the two coun-tries closer together.

Time zone, U.S. like culture, and an expanding software industry with a more than ample supply of IT

professionals are the major strengths of Rio. The average price of commercial rent in Rio is around one-third of the price in Mumbai and Moscow. key service providers oper-ating in Rio are Telemar, Petrobras, AES Communications, Light, Furnas, InfiNet Wireless, Comtex, DBA Engenharia de Sistemas Limited, etc.

As regards call center and eBPO services, Rio is the headquarters of three of the six largest telecom companies in Brazil. It should be important to note that application development and maintenance is the specialty of Brazilian IT programmers. The main outsourcing center in Brazil, other than Rio de Janerio, is Sao Paulo. The National IT organization is the Sociedade de Usuários de Informática e Telecomunicações.

Brazil is the largest economy in South America and is

Quick FactsCity Rio de Janeiro


Country Brazil



$330–$360


$420–$440

City Real-Estate Cost $500 per square foot


Telemar, BR Distribuidora, Embratel, etc.

Primary Language Spoken Brazilian Portuguese

Other Languages Spoken English, French, Spanish, and Russian


GDP US$ 46.9 Billion

Time Zone BST (UTC-3)

Currency Reais (BRL)$1 = 1.71 BRL



city Profile � rio de Janeiro

fast emerging as a prominent player in the services globali-zation arena, on account of its huge technical talent pool and nearshore advantage. Brazil has accomplished excel-lence in applications management, infrastructure managed services, and security technology development along with multilingual BPO capabilities.

Rio de Janeiro has the second-largest GDP in Brazil, behind São Paulo and is the 30th richest city in the world with a GDP of $152B.

It has a comparatively smaller pool of educated English speak-ers than India or Canada. The 2016 Olympic Games are com-ing to Rio de Janeiro and is expected to generate about $40B of investments. Rio is also one of the host cities of the 2014 FIFA World Cup.

As per Brasscom, IT-BPO sector in Brazil comprises about 7 percent of Brazil’s GDP and it is still growing at a good pace. After more than four decades of development, Brazil has grown to become the eighth largest market in the world. Growth forecasts for the IT-BPO segment have remained high despite the global economic crisis, turning over $v59.1B in 2008. Large Brazilian and multinational

companies has been part of the country’s economy for decades. As a result, the country has a strong IT labor pool with deep industry specific expertise. Revenue comes mainly from IT services, with 73 percent related to development, a higher proportion than in other coun-tries. The Brazilian government has its aim set to become one of the three key global IT centers in the world. Its

goal- to increase IT-BPO exports from $2.2B in 2008 to $3.5B by 2010- is close to being achieved. To help drive development they have implemented numerous initiatives, including favora-ble tax reductions, government sponsored venture capital funds and IT education support.

As of 2014, there will be about $200M worth of tax gen-eration in Rio. The expected

investment in the city by 2010–2012 is $91B. Due to the upcoming international sporting events to be held in the city, besides investments from the private sector, there will be significant improvements in security. All this demon-strates that there will be a great future ahead for the city in terms of professional growth and economic develop-ment. GS

Time zone, U.S. like culture, and an expanding software industry with a more than

ample supply of IT profession-als are the major strengths

of Rio.

SNAPSHOT

➤ Rio de Janeiro has the second-largest GDP in Brazil and is the 30th richest city in the world with a GDP of $152B.

➤ Rio stands second nationally in the financial and services sector.

➤ The Brazilian government aims to become one of the three key global IT centers in the world. Its goal- to increase IT-BPO exports from $2.2B in 2008 to $3.5B by 2010- is close to being achieved.

➤ As of 2014, there will be about $200M worth of tax gen-eration in Rio. The expected investment in the city by 2010–2012 is $91B.


Bridging the US and Latin America

San Jose Costa Rica

San Jose is Costa Rica’s capital and the larg-est metropolitan city. It is the seat of national government, the focal point of political and economic activity, and the major transporta-

tion hub of Costa Rica. The population of San Jose is 346,000.

The majority of the IT activity and free trade zones in Costa Rica takes place in the San Jose metropolitan area and the adjacent cities located in the provinces of Cartago, Heredia, and Alajuela.

San José has been able to attract FDI in IT-enabled services because of the country’s location; the legacy of past investments in human capital and infrastructure, a stable political system, attractive tax and tariff conditions in the Free Zones (FZs) combined with pro-active foreign investment promotion through CINDE (foreign invest-ment promotion agency).

San Jose has a strategic location, as a bridge between the United States and Latin America, as well as the Atlantic and the Pacific. Proximity to the United States reduces the delivery time for goods exported to the United States, and it is a strategic asset for near-shoring of IT-enabled services, especially given similar time zones.

San Jose is known for its labor force, its business envi-ronment and the lifestyle it offers resident executives and investors. The city’s strategic location, political stability, and business incentives, have all contributed to millions of dollars in investment from multinational companies such as Intel, Hewlett-Packard, and ArtinSof.

Intel has the most significant technology park in San José. Intel’s decision to build a microchip assembly and testing facility in San José played a huge role in the mag-nitude and nature of foreign investment flows to Costa Rica, as it put the country on the map for transnational corporations in the high-tech sector.

San José is among the least expensive cost-of -living cities in the world and second only to Quito, Ecuador in the Americas. San José’s prices are the second lowest

among the cities of the Americas; the cost of goods and services is among the lowest in the world. San Jose’s cost of living ranks close to the middle when compared to 118 cities worldwide. The cost of living in Guatemala City or Pamama City is about 14 percent higher than in San José.

In 2009, 29 foreign companies entered or enhanced operations in the country, accounting for more than $304 Million in investment and creating 5,729 jobs, according to the CINDE.

Costa Rica is the safest place in Central and South America for multinational companies to conduct business. Foreign investors remain attracted by Costa Rica’s political stability and high education levels. Costa Rica’s major eco-nomic resources are its fertile land and frequent rainfall, its well-educated population, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian continents.

After experiencing positive growth over the previous several years, the Costa Rican economy shrank slightly in 2009 (-2.5 percent) due to the global economic crisis. The economy has experienced a rebound in 2010 with a 3.6

San Jose – Quick FactsCity San Jose

Region Central America

Country Costa Rica

City population 346,000


Intel, Hewlett-Packard, ArtinSof

Primary language spoken English

Other languages spoken Spanish, Vietnamese, Chinese, and Tagalog

Time zone UTC/GMT -6 hours


Costa Rican Colon (CRC)1 US Dollar = 520.253 Costa Rican Colon


city Profile � San Jose

percent GDP growth rate. Costa Rica enjoys the region’s highest standard of living, with a per capita income of about U.S. $10,569 (2010 est., PPP), and an unemploy-ment rate of 6.7 percent.

According to AACCLA (Association of American Chambers of Commerce in Latin America), Costa Rica’s labor force has been rated as the most productive and fast learning in Latin America. Costa Rica’s workforce is also extremely well trained and IT-proficient. Education is mandatory and free until the ninth grade, and strongly emphasizes computer and tech-nology skills. The result is that Costa Rica has one of the high-est literacy rates in the American continent (95.8 percent), and is a great value proposition for IT outsourcing firms. A considera-ble number of people have some knowledge of English, a result of the introduction of foreign language instruction in primary schools in 1994 and the prevalence of English-speaking tourists.

Costa Rica also provides stability- economic, political and with respect to capital-labor relations, again mostly due to the social democratic model and strong institutions developed in the past. Costa Rica’s main universities are the University of Costa Rica, in San Jose and the National University of Costa Rica, in Heredia. Costa Rica also has several private universities.

To attract more foreign companies to invest in Costa

Rica, Foreign Trade Promotion Office (PROCOMER) of the country organized the “Costa Rica Investment World,” an international investment promotion fair, in April 2010 in San Jose. The event attracted more than 105 foreign investors and provided networking and education through a series of panels focused on Costa Rica’s investment envi-ronment and target sectors.

Despite its many advantages, Costa Rica is not a perfect sourcing destination. One criticism is that its workforce

(2.1 million) is too small for the multinational IT and BPO mar-ket it’s targeting. San Jose with a population of 346,000 is the only city in Costa Rica that can support a decent-sized outsourc-ing operation, as compared to other cities none of which have populations over 70,000. “It’s a small country and that doesn’t work well for a growing compa-ny,” Mario Chaves, CEO of

Avantica Technologies, an IT services provider, was quoted as saying “We didn’t want to rely on our ability to grow only in Costa Rica, so we looked at outside locations.” His company Avantica currently has around 200 employees. He’s looking to hire another 200, which he admits is dif-ficult in Costa Rica. “Not that it can’t be done. Intel’s operation has around 4,000 workers in Costa Rica, HP has 6,500 and Procter & Gamble has 1,350 – but you need those kind of hefty resources to attract that talent,” he had said. GS

Intel’s decision to build a microchip assembly and testing

facility in San José played a huge role in the magnitude and

nature of foreign investment flows to Costa Rica


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The “Brazilian locomotive”

São Paulo

São Paulo is Brazil’s bustling economic and financial center. São Paulo has a metropolitan population of about 20,500,000 (2009 est.). It is the world’s third-largest city and the largest

in South America. This city is also the most prosperous in Brazil, with the highest per capita income and overall standard of living.

São Paulo has evolved from a small village into one of the world’s top cities. Its proximity to the United States makes it distinctly more accessible than more distant Asian locations. São Paulo, therefore, qualifies as a “near-shore” location for the US market, along with Canada and vari-ous Caribbean countries.

São Paulo is Brazil’s most important business center. With the country’s best infrastructure and a highly skilled labor force, it can be called the “Brazilian locomotive,” that drives the national economy. Almost every major industry in Brazil is based there, and 15 percent of Brazil’s gross national product is generated in here. The city cur-rently has almost 60 percent of call center positions in the country.

São Paulo with its ideal location and growing economy has become a big draw for many foreign investors. The Economic Commission for Latin America (ECLAC) says Brazil is the top recipient of FDI in Latin America.

In November 2010, Capgemini, one of the world’s fore-most providers of consulting, technology and outsourcing services, announced that it is growing its BPO footprint in Latin America with the expansion of its delivery centers in the Campinas region of São Paulo.

São Paulo has the greatest number of higher education and research institutions in the country. The city has 3 state and 3 federal universities, aside from a number of private institutions. As a result, São Paulo features a great number of skilled and highly qualified professionals capa-ble of developing the most complex applications. The city’s solid technological base also enables professionals to deal with technological innovations. São Paulo has one of the

highest concentrations of software university graduates in Latin America.

Brazil—with its 250,000 IT professionals, 23,000 annual IT graduates, and infrastructure capable of sup-porting double-digit growth—is at the heart of the IT services supply chain in the Southern Hemisphere.

In fact, most major U.S. players including HP, Accenture, and Unisys have an escalating presence in Brazil, which has been largely unaffected by the recent glo-bal economic slump. In June 2010, IBM announced plans for its first South American research center in Brazil, as part of its strategy to sell technology and services to large, fast-growing emerging nations.

Indian outsourcers such as Satyam, Infosys and Wipro have been aggressively expanding in Latin America. Tata Consultancy Services (TCS), for example, has 3 global delivery centers, including an Oracle center of excellence

São Paulo – Quick FactsCity São Paulo


Country Brazil

City population 20 million (2009)

Cost of renting office space (Annual rent)

$100 per sq ft

Average programmer’s salary (in BRL)

R$ 1,000–R$1,800

Graduate’s salary (in BRL) R$2,500–R$4,000


HP, Accenture, Unisys, TCS, EDS, Deloitte, Motorola, Intel, Nortel Networks, TIBCO, Stefanini IT Solutions, Kaseya

Primary language spoken Portuguese

Other languages spoken Japanese, Spanish, Korean

Time zone UTC/GMT -3 hours


Brazilian Real (BRL)1 USD = 1.71996 Brazilian Real



city Profile � São Paulo

and more than 1,500 employees working in Brazil. EDS, Deloitte, Motorola, Intel, Nortel Networks, TIBCO, Stefanini IT Solutions, kaseya, Politec, and Nokia have offshore centers in São Paulo.

Intel’s Latin American headquarters, Intel Brazil, is located in São Paulo and is primarily focused on sales and marketing. The Intel office in São Paulo is the largest Intel sales office in Latin America.

According to the Brazilian Association of Information Technology and Communication Companies (BRASSCOM) Brazil’s offshore outsourcing market hit $1.4B in 2008, rising 75 per-cent in a single year. Brazil’s recognition as one of the most promising and rapidly emerging economies makes it a natural destination to evaluate for IT services.

By 2020 Brazil hopes to be one of the world’s top 4 in off-shore IT, turning over $20B. But to achieve that goal the country will need to overcome a number of challenges—one of which is to train 300,000 IT special-ists in the next 10 years to reduce the cost of labor.

High rate of student dropouts from IT graduate courses and high taxes are other barriers. There is an imbalance between supply and demand. The professional graduate does not meet company demands, because he enters the work market unprepared. “We need to produce profes-sionals on a large scale and quickly with a curriculum that meets company needs. Today firms are in great need of programmers costing less. As they are unable to find them they hire specialized graduates, which in turn drives up labor costs. An average programmer earns between R$ 1,000 ($576.5) and R$1,800 ($1037.5) while a graduate earns between R$2,500 ($1,441) and R$4,000 ($2,305.6). Training capacity is a large bottleneck of Brazil. There

are companies that are stopping exports because they are unable to find skilled labor,” says Rafael Moreira, from the Ministry of Development, Industry and Overseas Commerce (MDIC).

The country’s objective is to increase its income six-fold from software exports and tech services that amounted to $3B in 2009. That means an increase in the IT contribu-tion to national GDP from 3.5 percent in 2010 to 5.3 percent.

In 2008, IT-BPO market of Brazil turned over $59.1B, including exports and in-house IT. Brazil’s IT-BPO sector

is among the strongest and most mature in the world. Combined with the communications sector it accounts for about 7 percent of Brazil’s GDP. Large Brazilian and multinational companies have been part of the country’s economy for decades. As a result the country has a strong IT labor pool with deep industry spe-cific know-how. Revenue comes mainly from IT services, with 73

percent related to development, a higher proportion than in other countries.

The Brazilian government aim to increase IT-BPO exports from $2.2B in 2008 to $3.5B by 2010 is close to being achieved. To help drive development they have implemented numerous initiatives, including: favorable tax reductions, government-sponsored venture capital funds, and IT education support.

Brazil’s economy boomed at a 9 percent annual rate in the first quarter of 2010, its fastest pace in at least 14 years. Economists now see Brazil’s gross domestic product expanding more than 7 percent this year, putting it among the fastest-growing in the world.

With brisk growth and considerable natural resources, the country is becoming a global heavyweight. GS

In November 2010, Capgemini announced that it is growing its BPO footprint in Latin America with the expansion of its deliv-ery centers in the Campinas

region of São Paulo.


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The Magnet for Americans

Santiago Chile

Chile’s steady economic growth has transformed Santiago into one of Latin America’s most modern metropolitan areas, with extensive suburban development, dozens of shopping

centers, and impressive high-rise architecture. It has very modern transport infrastructure.

Santiago has the attributes that have made emerging markets attractive to outsourcers, such as cheap wages, dependable, state-of-the-art infrastructure, and govern-ment incentives. Santiago contributes around 45 percent to the total GDP.

Santiago is the capital and the largest city of Chile. It is considered as the administrative, industrial, commercial, financial, and cultural nerve center of Chile. The city has a population of 5,822,316 with 95.7 percent literacy rate. Chile has a workforce of about 7.2 million, 3.1 million of which is in Santiago,

In addition to the United Nations offices, Santiago is home to many international company headquarters for Latin America, and the city is often the first choice for Latin American investment.

In recent years, due to the strong growth and stability of the Chilean economy, many multinational companies have chosen Santiago as the place for their headquarters such as HP, Reuters, Procter & Gamble, Intel, Coca-Cola, Unilever, Nestlé, kodak, BHP Billiton, IBM, Motorola, Microsoft, Ford, yahoo! among others.

Polaris Software Lab, a specialist in Information Technology (IT) for the financial sector, opened a new Latin American development center in Santiago in 2009. Polaris has identified Latin America as an integral growth market for its expansion strategy. “Santiago offers quali-fied professionals at competitive (salaries),” said Cristian Basauri, the company’s senior vice president for Latin America. “We are going to recruit local talent to under-stand the market. On this basis, we will implement our products and insert ourselves into the local system,” explained kartik kaushik, CEO for America.

Other companies that have set up their operations in Santiago are: the Brazilian IT company Politec for SAP solutions; Evalueserve for market research, equity and IT analysis; TCS for back office functions and software application development; Accenture for IT consulting; Capgemini for financial services, BHP Billiton, and Shell.

In 2009, US company Equifax opened a software lab in Santiago. Equifax selected Santiago because of the “safety of the city and country, political and economic stability, and the knowledge of its young professionals,” says Mario Godoy Zanni, CEO of Equifax Chile. Santiago also is a magnetic place for Americans, he adds. “There’s always someone from Atlanta visiting.”

Andre Schenkel, the director and senior vice president of Citigroup’s Chile Technology Services Center says Santiago is “extremely safe by South American standards.” It’s a livable city. Citigroup has clients in New york who spend 2 hours on a train to get to work. “I have a 7-minute walk,” Schenkel notes. Citigroup recently expanded its

Quick FactsCity Santiago


Country Chile

City real estate cost Apartment for sale: US$1,720 per sq m


Polaris Software Lab, Politec, Evalueserve, TCS, Accenture, Capgemini, Equifax, Citigroup

Combined IT-BPO export $300–$350 Million (2008)

Primary language spoken Spanish

Other languages spoken English

Literacy rate 95.7 percent

Time zone UTC/GMT −4 hours


Chilean peso (CLP)1 USD = 476.8 Chilean pesos

Unemployment rate 10.8 percent (2009)


city Profile � Santiago

workforce there to 125; most are developing new financial software tools. Oracle has a 200-person IT office, with 75 working on software development. It plans to double its staff in Chile before 2011.

Costanera Center is a mega project in Santiago’s financial district. This includes a 280,000-square-meter (3,000,000 sq ft) mall, a 300-meter (980 ft) tower, 2 office towers of 170 meters (558 ft) each, and a hotel 105 meters (344 ft) tall. When completed in 2012 it will be the tallest building in Latin America.

The city has good infrastructure for the IT-BPO indus-try. It offers a large and ready talent pool. A large number of companies source Spanish language call centers and BPO services from the city. The government of Chile pro-vides financial and other support for high-end industries and setting up an IT-BPO business in Chile is fairly easy. The city is very well situated for near-shore business due to simi-lar time zone and cultural affin-ity with the United States.

Favorably located in the mid-dle of the country, Santiago is a short distance from 2 major ports and has an international airport offering departures to 187 desti-nations. In addition, the city has efficient transport infrastructure, major banking institu-tions, and highly regarded universities. Santiago’s telecom infrastructure is the best in Latin America with high speed connectivity.

Santiago offers significant cost advantage in terms of competitive wage-rates, and lower operating and living costs compared with other cities in the Americas. On aver-age, IT salaries are lower in Chile than they are in Mexico, another near-shore option for outsourcing engineering work. Wages tend to be on par with those in Brazil, but rent averages 40 percent less in Santiago than in São Paulo. The Chilean government also offers incentives, including grants for IT outsourcers.

Santiago is the educational hub of the country and over 22,000 graduates enter the workforce each year. The high

literacy levels and strong educational system make these graduates well suited for the IT and kPO industry. The government has introduced various programs to improve English language skills that include mandatory English languages from 5th grades in the school to university level. On the other hand, CORFO, the investment pro-motion agency of Chile has created a national register of English speakers where interested individuals are evaluated on “Test of English for International Communication” (TOEIC) score, a test that measures the capability to per-form in a bilingual working environment.

There are over 130 IT-BPO companies in Santiago. The major IT-BPO services sourced from Santiago include IT services, customer support, finance and accounting, human resources, marketing, and technical support. The combined IT-BPO export from the city was between

$300M and $350M in 2008.The World Economic Forum

ranks Chile highest among all Latin American countries in its Global Competitiveness Index, citing such factors as the avail-ability of scientists and engi-neers. Chile has a wide business network of free trade agreements with countries in Asia, Latin

America, the European Union, and the United States which provides Santiago with a great opportunity as an outsourcing destination.

In 2008 Chile’s outsourcing industry brought in $843M in revenue, of which $169M were from ITO and $198M were from BPO services. Chile will be exporting $5B in services by 2015 according to current projections.

While Chile is rising, there is little fear of it toppling India or its Latin American neighbors as an IT hub. The software services sectors in Brazil, Mexico, and Argentina are much larger than Chile’s $820M sector. Tech centers elsewhere in Latin America are expanding rapidly because of their much larger labor forces—Chile’s entire workforce of 7 million is smaller than the metropolitan populations of São Paulo or Buenos Aires. GS

IT salaries are lower in Chile than they are in Mexico, anoth-er near-shore option for out-sourcing engineering work

SNAPSHOT

➤ There are over 130 IT-BPO companies in Santiago. The major IT-BPO services sourced from Santiago include IT services, customer support, finance and accounting, human resources, marketing, and technical support.

➤ Santiago offers significant cost advantage in terms of competitive wage-rates, and lower operating and living costs compared with other cities in the Americas. On average, IT salaries are lower in Chile than they are in Mexico. Wages tend to be on par with those in Brazil, but rent averages 40 percent less in Santiago than in São Paulo.

➤ Santiago is the educational hub of the country and over 22,000 graduates enter the workforce each year.➤ The World Economic Forum ranks Chile highest among all Latin American countries in its Global Competitiveness

Index, citing such factors as the availability of scientists and engineers.


The China- Hong Kong Link

Shenzhen China

Shenzhen is a coastal city in southern China. Shenzhen is fourth on the Chinese mainland in terms of economic power and one of the cities that has generated the biggest eco-

nomic returns. In 2009, Shenzhen’s economy maintained a healthy

momentum of development. GDP grew by 10.7 percent to $120B, according to the city’s development and reform commission. Its per capita GDP grew to $13,581, topping the country. Due to the global economic crisis, Shenzhen’s foreign trade volume dropped 10.4 percent compared with the previous year to $270.155 B, but still ranked first among the nation’s large and medium-sized cities. The city has set a goal of 11 percent GDP growth for itself in 2010.

Shenzhen hosts 15 percent of China’s IT industry. More than 400 of the world’s 500 largest companies have their offices in the city. Shenzhen is a huge software and IT serv-ices outsourcing base. The city is already well recognized internationally as a software and IT city and companies worldwide see this region as a place to locate when looking at China outsourcing.

A number of domestic and foreign outsourcing service companies take Shenzhen as an international business base to accelerate the expansion of business such as IBM, Evans, Da Zhan, Peng kai, Freeborders, CS&S, Huawei, ZTE, and Tencent.

Shenzhen Software Park is an important vehicle estab-lished by the government to support the development of software industry of the city. The Park was founded in 1996 with an area of 11.5 sq km. The Park is integrated with Shenzhen Hi-tech Industry Park in the Nanshan district of Shenzhen.

The Shenzhen municipal government has also built the necessary ancillary infrastructure required to support the Software Park, including housing, hospitals, training and education facilities, libraries, and recreational facilities. This, in turn, has attracted to the Park a large number of

well-known domestic and international technology compa-nies. Many of them, such as king Dee, kingdom, Tencent, MCM, kejian, Oaking, Guanri, Liming, Aspire-Tech have become tenants of the Park. Bank of China, China Mobile, ChinaSoft, NeuSoft, Powerise, HuaSheng, QiMing, as well as IBM, Oracle, HP, Microsoft, Siemens, Zensar, Bank of Switzerland, and Orange Communications have invested in research and development facilities within the Software Park.

The Shenzhen Software Park and its member compa-nies have targeted 3 major segment of the software export market: software exporting and outsourcing, embedded software, and IC design. Many multi-national software companies have used the Park for their software and IC design outsourcing needs. IBM operates a global services delivery center along with its global procurement center there. Oracle created the Oracle Technology Resource Center in the Park to perform integration to the Oracle platform. More than 1,500 software enterprises are settled in the Shenzhen Software Park, collectively employing over 100,000 engineers.

Quick FactsCity Shenzhen

Region East Asia

Country China

City population 14 million

GDP per capita USD 13,581


IBM, Oracle, HP, Microsoft, Siemens, Zensar

Primary language spoken Mandarin

Other languages spoken Cantonese, Chinese, English

Time zone UTC/GMT + 8 hours


Chinese yuan (CNY) 1 U.S. dollar = 6.63979762 Chinese yuan



city Profile � Shenzhen

Shenzhen Software Park’s offshore Development Center focuses on the high-end of ITO and BPO projects in the areas of BFI (banking, finance, insurance), TWU (telecom, wireless & utilities), and MRD (manufacturing, retail, and distribution).

The city has well-developed communication infra-structure, including designated trunks for international gateway. Shenzhen is a link between the Chinese mainland and Hong kong and a transport hub in coastal southern China. Shenzhen is located less than 45 minutes away from downtown Hong kong. The city has an international airport that con-nects to 18 international cities. Shenzhen is the terminal sta-tion for the important Beijing-to-Shenzhen railway route. In order to attract more businesses and accommodate the growing demand of the population, new roads and railways projects such as the Guangzhou-Shenzhen Coastal Expressway and the Shenzhen-Hong kong Express Rail Link are under construction and are expected to be completed in 2012.

The city leads in high-tech, financial services, foreign trade, shipping, and creative cultural industries.

There are 10 universities located in Shenzhen, with

50,000 students on campuses citywide. The area has been a magnet for IT engineers from all over the country. There are about 800,000 engineers working in IT/high-tech related areas.

The average age in Shenzhen is less than 30. About 88 percent of the total population is between the ages of 15 and 59, thus forming one of the youngest labor forces in the country. Labor costs are also substantially lower than in

neighboring Hong kong. During the first 8 months of

2010, China’s software business achieved revenue of CNy828.6 Billion ($124.7B), a year-on-year increase of 29.8 percent and the growth rate was 8.8 percent higher than the same period of 2009, according to China’s Ministry of Industry and Information Technology.

During Jan–Aug 2010, China’s software export was

$14.4B, a year-on-year increase of 26.4 percent. The growth rate was 14.6 percent lower than the same period of last year, but 3.7 percent higher than that in the first-half of 2010. Its export of software outsourcing services was $1.75B, a year-on-year increase of 30.4 percent and the growth rate was 6.7 percent lower than the same period of last year. GS

The Shenzhen Software Park and its member companies

have targeted 3 major segment of the software export market:

software exporting and out-sourcing, embedded software,

and IC design

SNAPSHOT

➤ Shenzhen hosts 15 percent of China’s IT industry. More than 400 of the world’s 500 largest compa-nies have their offices in the city.

➤ About 88 percent of the total population is between the ages of 15 and 59, thus forming one of the youngest labor forces in the country. Labor costs are also substantially lower than in neighbor-ing Hong kong.

➤ In 2009, Shenzhen’s economy maintained a healthy momentum of development. GDP grew by 10.7 percent to $120B, according to the city’s develop-ment and reform commission. Its per capita GDP grew to $13,581, topping the country.

➤ Due to the global economic crisis, Shenzhen’s foreign trade volume dropped 10.4 percent compared with the previous year to $270.155 B, but still ranked first among the nation’s large and medium-sized cities.


Growing Into the “Trusted BPO Hub of the Region”

The Merlion, a national symbol of Singapore (Source: Wikipedia)

Singapore City

Singapore

Singapore is a country that is often mentioned for outsourcing. Singapore is growing at double-digit rates in terms of both volume and value of the electronic commerce and payment business,

and is closest to its clients in a region that has highest growth potentials.

The nation is thinking big in terms of being a BPO hub in Asia. The Singapore government as well as its lead strategy planning and executing agency, the Economic Development Board, are hard set to push the small island nation in Asia to develop into a “trusted BPO hub of the region”. The Singapore government has committed to develop the nation into a high value-added BPO hub. Singapore recently leapt into first place in the global IT economy rankings produced by nonprofit Tech-Economy.org, surpassing the United States and Sweden. Singapore earned top marks for its free-trade policies and visionary government.

Singapore boasts of a well-educated population with a highly skilled workforce and a strong pool of senior man-agers. It has a world-class telecommunications infrastruc-ture and very stable political and economic environment. Singapore is competitive for high-end requirements. Because its infrastructure is so strong and its business environment is so favorable, it has fared well as an outsourcing location for data center operations and network management.

Although labor rates are relatively high, they are lower than those in the United States. Singapore is recognized by international agencies such as World Economic Forum, Political and Economic Risk Consultancy and Business Environment Risk Intelligence as one of the most condu-cive places in the world to do business. To date, over 7,000 multinational corporations (MNCs) have established a presence in the country, of which 60 percent have chosen to make Singapore their regional headquarters. Many have also chosen to site their global or regional IT hubs in Singapore.

Singapore is the world’s fourth leading financial center and a cosmopolitan world city, playing a key role in

international trade and finance. After a contraction of 6.8 percent in the 4th quarter of 2009, Singapore claimed the title of fastest-growing economy in the world, with GDP growth of 17.9 percent in the first half of 2010.

Singapore has great IT infrastructure and has been often used for a regional data center hub. With its available talent pool, infrastructure, and environmental advantages, Singapore is rapidly transforming into one of the favorite cities for investment in the Southeast Asia region. Singapore will continue to focus its efforts towards attracting high-end vertical-focused activities such as those in the financial services industry, IT operations and business continuity and disaster recovery functions. With all these qualities, Singapore is well positioned to be the trusted hub for stra-tegic IT-enabled activities such as global and regional CIO functions, innovation centers, and technology develop-ment centers. GS

Quick FactsCity Singapore

Region East Asia

Country Republic of Singapore



$1,500–$1,900


$2,300–$3,300

City Real-Estate Cost $859 per square foot


Citibank, Credit Suisse First Boston, Hewlett-Packard, IBM and Microsoft,


Other Languages Spoken Malay, Mandarin Chinese, Tamil

GDP S$74,925M (2010)

Time Zone SST (UTC+8)

Currency Singapore dollar (SGD)$1 = 1.29 SGD



New Entrant into Product Development Sector

Palace Square, as the main square of the Russian Empire it was the setting of many events of great historical significance

(Source: Wikipedia)

St. Petersburg Russia

Often called the Northern Capital of Russia, St. Petersburg is one of the country’s major business centers. Its close location to Western Europe also makes it attractive for foreign

businesspeople. The fourth-largest megapolis of Europe, its geopolitical, intellectual, economical, cultural, and histori-cal advantages are unique.

In the product-development sub category, the city of St. Petersburg has figured as a new entrant in the emerging city space. Unlike IT-BPO companies, product-develop-ment companies have a very niche market. The educa-tional structure of St. Petersburg is capable of generating skills required to make the city one of the most potential outsourcing cities for product development. The strong presence of offshored product-development companies such as Reksoft and DataArt displays the growing activities in this space. The city is known as an established destina-tion for engineering and R&D services. St. Petersburg also has expertise in areas such as R&D, health-care services, engineering services, etc.

Local governments provide additional incentives to IT companies. For example, St Petersburg allows IT compa-nies that have invested more than $1.8M in the city to enjoy a reduced profit tax rate of 20 percent (normal rate 24 percent) and companies whose investment in the city exceeds $5.6M additionally enjoy 50percent concession on property tax.

St. Petersburg is well ahead of the other regions of North-West Federal Region by the basic indices of social and economic development, especially in civil construc-tion and trade. A lot has been done for the development of the transport complex, improvement of the industry structure, attracting tourists, and culture development. All these actions have set the base for steady economic growth in

the coming years. St. Petersburg is a strong leader in the ratings of the most investment-attractive regions of Russia. Its great intellectual, scientific, and personnel potential and stable development in the previous years gives the city a comfortable atmosphere for business start-up and devel-opment. The government is trying to encourage economic growth and assist the business community in the city.

With an increasing amount of foreign interest and investment in St. Petersburg, the city is fast becoming

rich along with its inhabitants. This has a great effect on property prices, which has driven skywards over the past few years. As per the World Bank, Russia’s economy will see a robust recovery in 2010, but unemployment will remain high. GS

Quick FactsCity St. Petersburg


Country Russia

City Population 4,596,000 (2010 est.)


$6,000


$10,000

City Real-Estate Cost $96.87 per square feet


Luxoft, Intel, Sun Microsystems, Sovkomflot, Petersburg Fuel Company and SIBUR

Primary Language Spoken Russian, English

Other Languages Spoken Estonian or Finnish

Literacy Rate 99.4 percent

Time Zone MSK/MSD (UTC+3/+4)

Currency Russian Ruble (RUB)$1 = 31.05 RUB


St. Petersburg has expertise in areas such as R&D, health-

care services, engineering services, etc.


The ICT Hub with Depth and Variety

Toronto’s skyline from the island (Source: http://pages.interlog.com/~gilgames/toskyln.htm)

Toronto Canada

Toronto is the technological heart and soul of Canada. The city’s vital Information and Communication Technology (ICT) bunch has been providing more than $20B annually to the

economy.Toronto is the commercial, distribution, cultural, finan-

cial, entertainment, and industrial center of Canada, as well as the banking and stock exchange center of Canada. It should be noted that many world-leading high-tech companies are drawn to Toronto to invest and grow their operations. It is the country’s main wholesale and distribu-tion point. Ontario’s wealth of raw materials and hydro-electric power has made Toronto a chief center of industry. According to the Branham300 (2009), of the top 250 Canadian ICT companies, 40 percent are headquartered in the Toronto region.

Over the past few years, the City of Toronto together with other orders of government, has been working in close association with ICT industry stakeholders to produce a strategy for this strategic sector with the aim to become and be recognized globally, as one of the five most advanced, creative, and fruitful locations in the world for ICT research, education, business, and investment by 2011. ICT Toronto, a multi-stakeholder partnership was pro-duced to function as an advisory and reference group and potential ICT think tank to carry out the ICT Strategy.

Toronto’s leading economic sectors include aerospace, transportation, media, arts, film, television production, publishing, finance, business services, telecommunications, software production, medical research, education, sports industries, and tourism. The Toronto Stock Exchange—the world’s eighth largest in terms of market value—is headquartered in the city.

Toronto is Canada’s prominent media market, and the fourth largest media center in North America (behind New york City, Los Angeles, and Chicago). Toronto is a major international center for business and finance. By and large, Toronto is regarded as the financial capital of

Canada. The city is an important center for the media, publishing, telecommunications, information technol-ogy, and film production industries; it is home to major companies such as Research In Motion, BCE, Thomson Corporation, CTVglobemedia, TELUS, Celestica, Nortel Networks, CGI Group, Softchoice, MTS Allstream, Aastra Technologies, Open Text, Mitel Networks, Shaw Communications, CAE, MacDonald, Dettwiler and Associates, and Rogers Communications, etc.

In terms of employment, the service side of the ICT cluster is the largest, followed by development and manu-facturing. The City of Toronto has over 50 percent of all ICT companies located in the Greater Toronto region. The city distinguishes on two key location factors, offering strong competitive advantages including labor force avail-ability, and market accessibility.

Quick FactsCity toronto

Region North America

Country Canada



$2,000–$2,400


$2,200

City Real-Estate Cost $2 to $3 per square feet.


Accenture, Cognizant, EDS, Infosys, LogicaCMG, TCS, Unisys, etc.


Other Languages Spoken French

GDP $248 Billion

Time Zone EST (UTC-5)

Currency Canadian dollar $1=1.01 CAD



city Profile � toronto

The Toronto region leads North America in offering a diverse, talented pool of Interactive Digital Media services. The digital media industry consists of more than 950 com-panies employing about 16,000 people and approximate revenue of between $1.1 Billion and $1.2 Billion annually in Ontario. A number of major corporations are estab-lished in the city, including the Hudson’s Bay Company, Manulife Financial, TD Canada Trust, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank, Bank of Montreal, Celestica, Four Seasons Hotels, Rogers Communications, MDS Inc., and many others.

Toronto, with a population of 2.48 million people (5.5 million in the GTA—Greater Toronto Area) is acclaimed as one of the most multicultural cities in the world and is graded as the safest large metropolitan area in North America by Places Rated Almanac.

Toronto’s overall employment in 2009 was 1,291,200 down by 1.4 percent from 2008. During the past year, growth was found in half of the major employment sectors, wherein the services sector grew by 0.9 percent. Despite the slowing economy, Toronto continues to be a suitable place for new startups and relocations from elsewhere. Annual sales for the ICT cluster amount to over $32.5 Billion, whereas the annual exports for this cluster are over $6.2B. Toronto’s GDP is $138B. The unemployment rate is 9.99 percent, and the total labor force amounts to 1,487,960. Toronto is a world leader in digital microwave transmission, satellite communications services, and data distribution networks.

Toronto ICT potency lies in software and systems devel-opment, manufacturing, and ICT services. Toronto ICT Cluster is the largest in Canada and third largest in North America. Globally focused manufacturers and develop-ers produce software, hardware, new media, and communications solutions that permeate and act as accelerator in all areas of the economy. Toronto has more than 5,000 ICT companies.

With a total number of 130,511 graduates as of 2008, this city has a substantial poten-tial of human resources to serve different sectors.

The Canadian Association of Internet Providers (CAIP) has grown to represent ISPs (Internet Service Providers) of all sizes from across Canada. Although there is still a great chance to enhance the number of its members—something the organization is actively engaged in—its current members already supply almost 90 percent of the Internet connections to Canadian homes, schools, and businesses. Moreover, Canada’s federal R & D system

and Ontario’s provincial tax exemptions provide some of the most magnanimous R & D tax benefits for busi-nesses. The City’s taxation measures are expended to maintain and increase necessary programs and services that are vital for a prosperous Toronto. After a solid eco-nomic growth and inflation in the first half of 2007, the economy began to go through slower growth since the second half of 2007 due to the global ripple effects caused by the sub-prime mortgage crisis in the United States. As of June 15, 2010, the goods and services tax (GST) rate has been 5 percent. The level of Taxation in Canada is average among Organisation for Economic Co-operation and Development (OECD) countries. Approximately 70 percent of the Canadian government’s income comes from taxation, the rest from investments, tariffs, and fees. Corporations functioning in Ontario are generally taxed at a rate of 30 percent.

By way of equivalence, there is a combined rate of taxa-tion that is less than the combined statutory U.S. federal and state tax rates as follows:

Canada Ontario Combined

General 19.0% 12.0% 30.0%

Manufacturing and processing 18.0% 10.0% 28.0%

Small business 11% 4.50% 15.5%

Source: http://www.toronto.ca/invest-in-toronto/tax_rates.htm (2010 Corporate Income Tax Rates).

In this context, it is advisable to note that the corporations operating in this location collect employment insurance premiums and Canada Pension Plan (CPP) contribu-tions, from both the employer and the employee, to pro-

vide support for loss of employ-ment (including maternity leave) and retirement. There are also employment insurance premiums to be paid by both the employee and the employer.

Toronto’s competitive advan-tage dwells on its depth and vari-ety of its ICT operations. With its world-leading renowned post-

secondary education, R&D, expert talent pool, high-per-formance infrastructure, and supportive government ini-tiatives, Toronto is a natural place where information-ori-ented companies can invest and excel. Additionally, there are some important grounds to outsource services to Toronto because of the following facts: reduced capital expense, improved IT performance and reliability, reduced IT overhead, a technology edge over competitors, and access to different skills and technology as needed. GS

ICT Toronto, a multi-stakehold-er partnership functions as an advisory and reference group

and potential ICT think tank to carry out the ICT Strategy


Assuring a High Return on Investment

Warsaw City Center (Source: Wikipedia)

Warsaw Poland

Hot on the heels of many of the countries in the region joining the European Union (EU) earli-er this year, European-based companies are not only looking at Central and Eastern Europe as

an outsourcing destination, but also to open offices there. Warsaw is the city that can expect the biggest influx of com-panies over the next five year. Warsaw comes top for low cost of staff and best value for money of office space.

Warsaw has a flourishing economy virtually free of unemployment. It provides an appealing business environ-ment with a full array of modern business services and well-groomed professionals familiar with western stand-ards. It is the financial center of Eastern Europe and an important consumer market. It has become the focus of foreign investments and a driving force in the growth of the entire country’s economy. Out of approximately 244,000 companies registered here, 98.5 percent are pri-vate. Warsaw enjoys first place nationwide in terms of per-centage of companies with foreign capital registered. One great advantage of Warsaw is its labor market. 20 percent of the Warsaw population boasts a university degree.

In the current economic condition, companies are seri-ously looking to retain their core talent and processes while attempting to reduce costs in non-core business operations. These usually include financial operations as well as HR, procurement processes, and IT, the latter being frequently outsourced to a third-party provider.

Warsaw has the biggest engrossment of electronics and high-tech industry in Poland. In Warsaw, one can clearly discover how the city is taking full advantage of the magnificent and unparalleled chances originating from the emergence of free market and the development of democracy. Moreover, it should be noted that Warsaw is one of the fastest growing cities in Europe. The investment boom is visible all over in Warsaw. Warsaw’s average apart-ment price is down 10percent from the peak of Q2 2008. As per a latest report, Warsaw could get an additional Billion Euros ($1.35B) from Brussels in 2011–2012 as

reinforcement for the country’s dynamic economic growth in recent years. According to Article 41 of the Polish VAT Act of 11 March 2004, the basic VAT rate on goods and services in Poland is 22 percent. This rate applies to most types of services.

The number of state-owned enterprises is decreasing on a regular basis and the number of companies with foreign capital growing. The largest foreign investors are Daewoo, Coca Cola Amatil, and Metro AG.

Those investing in Warsaw can be sure of a very high rate of return on capital invested—a rarity in large cities, and a developed, absorbent consumer market. GS

Warsaw- Quick FactsCity Warsaw


Country Poland



US$1,700


US$2,000

City Real-Estate Cost US$21–22 per sq m per month


Hewlett Packard, Accenture, Avon, Dimar, HP, IBM, Maersk, Sitel, Tschibo, TNT Express, France Telecom, Transcom, ABN AMRO, Cili Group, CTM Teleperformer, Thomson, Quest-Tek, etc.

Primary Language Spoken Polish

Other Languages Spoken German, English


GDP US$33,000

Time Zone CET (UTC+1); Summer DST (CEST) (UTC+2)

Currency Zlotych (PLN; symbol zł)$1 = 2.87 PLN



A flourishing IT industry, excellent IT infrastruc-ture, internationally famed institutes such as IIM, DA- IICT, and more set against the backdrop of a

supportive government ensure that Ahmedabad is slowly becoming a preferred outsourcing destination.

This city encapsulates a rich pool of English speaking workforce, that is 40 percent cheaper in comparison to other Indian metros. In addition, the crime rate here is low thereby providing a secure environment.

The city also has a healthy supply of Grade A office spaces here. The state government is actively endeavoring

to promote the growth in IT industry. A successful exam-ple is the development of Info-City, an IT hub providing a comprehensive platform to IT/ITES companies to set up their operations. Having a remarkable IT policy it is on the right side of legal and security issues.

The 3rd Eye Voice IT SEZ, the city’s first IT/ITES special economic zone (SEZ), is set to become opera-tional in March 2011. Around a 100 small companies functioning from different locations under Software Technology Park of India (STPI) scheme are planning to shift into the upcoming Rs 550 crore project. GS

ahmedabad, india

T hailand has set a challenging target – to be one of the world’s top three countries for outsourcing by 2013, building a 4-Billion-baht industry. In line

with this, an outsourcing association was formed in 2009. The Thai IT Outsourcing Association, or TITO.

Bangkok, capital of Thailand, dominates the country’s economy. On the outsourcing map, the city is climbing up the ladder.

In the short term, it is looking at animation and dig-ital content outsourcing, which fits in with Thailand’s creativity profile, and other fields such as database management outsourcing services, accounting business

process outsourcing and COBOL programming and development outsourcing.

Majority of the country’s universities are located in or around the capital. A large pool of computer literate and English speaking professionals, good IT skills, work practice adhering to ISO standards, good broadband connection ensure that outsourcing to Bangkok is a prof-itable option.

On the flip side, Thailand is not the cheapest of loca-tions. Also it is beginning to face a shortage of engineers, among other skilled workers as many have obtained jobs overseas. GS

bangkok, thailand

The economic liberalization policy adopted by the Government of India in the nineties resulted in the metamorphosis of Bhubaneswar, capital of Odisha.

It drew large investments in the field of telecommunica-tions, IT and higher education.

It is home to Infosys, TCS, The Finland telecommuni-cation company, Gennum Corporation, Pricewaterhouse Coopers Pvt. Ltd., Mahindra Satyam and Genpact among others.The city’s lucrative talent is a result of over 60 engineering colleges present here. Most of the

outsourcing firms are here planning on expanding their setup. Future plans of Infosys call for investing $60M in Bhubaneswar for its second project.

Many firms have planned long-term investment plans for Bhubaneswar. For example, Genpact has announced to set up a BPO center in the city, which is expected to generate 3,000 jobs. Similarly, MindTree Consulting’s new project for the city is likely to create 5,000 jobs in Bhubaneswar. However, these two projects are behind schedule. GS

bhubaneswar, india

F amed for its fighting spirit, stamina and skill on the football pitch, Brazil is set to show the same quali-ties in the field of outsourcing.

In their quest for a suitable offshore location, buyers search with a checklist encapsulating labor costs, political, economical and social risks amongst others. Brasilia gives a comforting answer to most of these check points. This city is excellent in many outsourcing sectors such as e-com-merce, financial sector, games and software management.

Brasilia is armed with a valuable labor pool which is cheaper in comparison to almost all other South American or European countries. However, India and China are still a step up when it comes to cost advantage. In addition, there is also a lack of IT professionals with good communication (English) skills. Government and industry traders are working towards rectifying this problem by developing copious training programs that focus on English speaking. GS

brasilia, brazil


O nce known as ‘Little Paris’, Bucharest’s talent pool has made it the ‘almost’ perfect land for outsourcing. Praiseworthy resources backed with

not so praiseworthy government policies makes this city ‘almost perfect.’

Proficiency in English, French and German, excellent IT skills, job commitment, low absent rate coupled with low costs has ensured buyers prefer Romanian workforce. On the export front, this city embraces strong hold in R&D outsourcing, security and embedded software devel-opment and mechanical engineering outsourcing.

Bucharest houses Genpact, Wipro and Teleperformance’s - three of the largest outsourcers- largest operations in cen-tral and eastern Europe.

The downside of this city is that the Romanian state does not recognize outsourcing activity as a distinct business. The absence of separate recognition spells that outsourcing activities have to fit in with other activities recognised by the government.

However, Romanian government is working towards making the city better suited for outsourcing. For this, it is enhancing rural broadband access. GS

bucharest, romania

E conomic center of the Western Cape Province, Cape Town has over the years established itself as a preferred outsourcing destination.

BPeSA Western Cape was founded in 2001 to promote and develop the IT-enabled services industry in Cape Town, with a strong initial focus on contact centers. It operates both as a specialist investment promotion agency for business process outsourcing (including call centers) and as a regional trade association and networking body for the industry.

Several big names like TeleTech and Royal Dutch Shell

have their call canters here.The allure of Cape Town, South Africa’s capital, is

strong government support, state backed incentives – start-up and expansion grants and discounted telecom-munication prices, time zone compatability with Europe and a favourabe exchange rate. In addition, English is the primary language for over one million residents of the capital. Thus, there are little issues with accent for cus-tomers in Uk. However, the labor costs of English speak-ing workforce are double in comparison to Philippines and India. GS

cape town, South africa

P erceived as a trading hub and shopping paradise, Dubai is slowly but swiftly establishing its foothold in the global outsourcing market. This development has

been characterized by copious government initiatives. One such initiative being Dubai Outsourcing Zone (DOZ) – the first free zone in the world-which is aiming at making this destination the perfect base for outsourcing operations.

Recently, DOZ, a member of TECOM Investments, announced a partnership with the Arab Outsourcing Forum for the second consecutive year. DOZ and Arab

Outsourcing Forum have joined hands to support the business requisites of Middle East region.

Despite strong support from Dubai’s authorities, buy-ers find labor costs expensive. However, in order to ensure higher costs do not play show stopper, the Dubai government offers benefits such as 100 percent tax-free environment for 50 years, no corporate tax, no income tax, no custom duty, 100percent foreign ownership, no restriction on profit or capital repatriation and reduced real estate cost. GS

Dubai, Uae

G lasgow city boasts of having the largest economy in Scotland with the third largest GDP per capita in UK, after London and Edinburgh. The call

center industry started mushrooming here since the 1990s. Today, a large percentage of Scotland’s call center employees are employed in Glasgow.

One of the attractions of Scotland, is its proximity to London. Also, there is a pool of educated human resource as the city is a major center of higher education and

academic research.The Customer Contact Association, the professional

body for the Call Center, Contact Center, and Customer Service Industry in the Uk, is headquartered in Glasgow.

Dell’s second largest business center outside the US is based at Glasgow’s City Park. Eaton has had its shared service center operations in Glasgow since 1997 because of its reputation as a financial services center with a skilled and multilingual workforce. GS

Glasgow, UK


G uadalajara, capital of the Mexican state of Jalisco, has the second largest economy and industrial infrastructure in Mexico. This city contributes

37percent to Jalisco’s total gross production. Electronics and information technology sectors have

gifted this destination the title ‘Silicon Valley of Mexico’. It is Mexico’s main producer of software, electronic and digit-al components. General Electric, IBM, Intel Corporation, Freescale Semiconductor, Hitachi Ltd., Hewlett-Packard,

Siemens, Flextronics, TCS and Jabil Circuit have opera-tions based in the city.

Guadalajara is host to good universities and educa-tional centers thus producing a talent pool of valuable human resource. Also, its proximity to US, reduced tar-iffs under NAFTA, treaty rules facilitating bilateral trade, favorable exchange rates and good infrastructure brings this destination to the list of top 100 outsourcing cities. GS

Guadalajara, Mexico

I stanbul, Turkey’s largest industrial center generates 21.2 percent of Turkey’s gross national product and contributes 40 percent of all taxes collected. This second

largest city in Turkey produces 27.5 percent of the country’s national product.

The allure of Istanbul lies in its ample and low-cost workforce, availability of large number of qualified peo-ple who are fluent in German language, low staff turno-ver, flexible labor laws, low set up and operation costs

and proximity to Europe. Its weaknesses include the fact that the call center sector is not yet totally recognized by the government.

As Siemens Business Services and Lufthansa serve their customers from Istanbul, it is becoming the ‘back-yard’ of German speaking countries.

About150 call centers are situated in Istanbul. The banking industry employs about 40percent of the work-force, followed by mobile telephone service suppliers. GS

istanbul, turkey

I ndonesia aspires to rival India and China in the out-sourcing gamble and it’s relying on Jakarta, its capital and largest city. However, in order to accomplish its

aspirations, this destinatiaon needs to cover up its pitfalls. Jakarta offers one of the brightest students and pro-

grammers who have proven their worth in numerous competitions. On the language front, all students get a minimum of six years of English language, making every

graduate capable of reading and writing this language. Although, the wages are relatively low there is a shortage of manpower.

Recently, this destination was in news as Minister of manpower and transmigration Muhaimin Iskandar plans to rearrange existing outsourcing work contract system. The reason being, current system was considered to cause losses to workers. GS

Jakarta, indonesia

K yiv, the capital and largest city of Ukraine, is home to many high-tech industries and higher education institutions . Barclays Capital, announced in June

this year that it has chosen Kyiv as the location for its third global technology center. Kyiv’s exceptional technical talent coupled with strong analytical skills made this the chosen city. Also, for Western European and North American citi-zens there are no visa compulsions here.

Approximately 50 percent of the graduates in the cap-ital are hired to provide professional services to European

customers. This destination is well tailored to conduct services with Western European countries. However, issues such as communication and employee retention have been causing inconvenience to the buyers.

kyiv has the highest salaries for IT employees as compared to other Ukranian cities like kharkov, Donetsk, Dnepropetrovsk, Lvov.

kyiv hosted the IT Business Forum dedicated to promotion and development of the Ukrainian software development and outsourcing market in 2009. GS

Kyiv, Ukraine

bucharest, romania

G lasgow city boasts of having the largest economy in Scotland with the third largest GDP per capita in UK, after London and Edinburgh. The call

center industry started mushrooming here since the 1990s. Today, a large percentage of Scotland’s call center employees are employed in Glasgow.

One of the attractions of Scotland, is its proximity to London. Also, there is a pool of educated human resource as the city is a major center of higher education and

academic research.The Customer Contact Association, the professional

body for the Call Center, Contact Center, and Customer Service Industry in the Uk, is headquartered in Glasgow.

Dell’s second largest business center outside the US is based at Glasgow’s City Park. Eaton has had its shared service center operations in Glasgow since 1997 because of its reputation as a financial services center with a skilled and multilingual workforce. GS

Glasgow, UK


A late entry on the outsourcing map, Uruguay’s capital Montevideo already houses eminent play-ers such as Tata Group, TCS, Accenture, IBM, HP,

Towers Watson and Sabre Holdings. Credit goes to the capital’s technically able workforce. The geographic loca-tion (GM-3) of Uruguay gives it an added advantage in doing business with US and east cost. Also, the government policies – exporting software from Uruguay has no taxes- encourages the development of this industry. Uruguay and in particular Montevideo are noted for a high standard of living at a low cost.

The country’s main technology park, Zonamérica, is located in Montevideo where tax exemptions under the Free Zone system are granted.

IT and consulting services are provided from Montevideo to more than 30 clients.

English is not widely spoken in this city. However, it boasts of a small percentage of bilingual IT professionals. Some 37 percent speak English.

On the legal front, absence of specific incentives for the outsourcing service sector is seen as a

missing link for the industry’s growth. GS

Montevideo, Uruguay

M oscow encompasses good human IT- resources, developed infrastructure and a significantly large pool of OSD providers. Man power

geared up with latest technical skills is available at low costs. The competitive advantage of this city is its R&D skills.

However, there are few disadvantages attached to this city, legal issues being intellectual property rights, export and import, taxation, labor and currency law. Also, Russia does not have any agency that provides CMM (Capability Maturity Model) assessment, which is a

model of process maturity for software development. In addition, the cost of infrastructure is high. Moscow

is the world’s fourth most expensive city for expatriates, according to the Worldwide Cost of Living Survey 2010 from Mercer.

Nokia Siemens Networks announced plans in September this year to set up a Global Network Operations Center (GNOC) near Moscow. The compa-ny plans to make a significant investment over a period of five years to develop the center. GS

Moscow, russia

T he second largest city in the state of Karnataka, Mysore’s proximity to the ideal outsourcing des-tination Bangalore makes it a preferred destina-

tion. Since 2003, IT companies have cast their footsteps in

this city. Today, Infosys has established one of the largest technical training centers in the world and Wipro has set up its Global Service Management Center (GSMC) at Mysore.

This city pays huge importance to the education sector. It houses University of Mysore, whose alumnus include N.R. Narayana Murthy, National Institute of Engineering, prestigious B-Schools such as SDMIMD, JSS Center for Management studies and Bhavan’s Institute of Management.

Vast and affordable talent pool, good infrastructure and supportive government ensures outsourcing to this destination is profitable. GS

Mysore, india

F ourth largest city of Russia, Nizhny Noygorod is the economical and cultural center of Volga-Vyatka economic region.

This city is home to 25 scientific R&D institutions that emphasis on telecommunications, radio tech-nology, theoretical and applied physics. In addition, there are 33 institutes focusing on higher education such as Nizhny Novgorod State Medical Academy, Nizhny Novgorod State University, Nizhny Novgorod

Technical University, and Nizhny Novgorod Institute of Information Technologies. Thus, it comes as no surprise that this destination ranks amongst the lead-ing Russian cities in regard to quality of software R&D providers.

Tecom, Devetel Ltd., MERA Networks, RealEast Networks, Auriga and Teleca are the outsourcing soft-ware developers that cater to telecommunication ven-dors. Also, Intel has opened its R&D center here. GS

Nizhny Noygorod, russia


M alaysia’s second smallest state Penang is the third-largest economy amongst the states in Malaysia. This destination houses key outsourc-

ing players such as IBM, Idea Capital, Intel, Motorola, MoBif, Citicorp, Agilent, JABIL Shared Service Center, DELL, Seagate, National Instruments, PMC Sierra.

Education plays a significant role in this city as it has 33 universities and private colleges. Thus, there are plenty of English speaking developers available. However, in comparison to China and India the labor cost is expensive.

Government policies -no income tax for up to 10 years, investment tax allowance, no duties on import of multimedia equipment for Malaysia Status Companies -are encouraging. GS

Penang, Malaysia

P icture perfect Perth takes pride in being placed eighth in The Economists 2010 list of Worlds Most Livable Cities. Once known as the City of Lights,

it encapsulates fantastic weather, lovely beaches, grand golf courses, good infrastructure and friendly inhabitants.

The capital and largest city of Australia, Perth domi-nates the Western Australian economy. Also, it houses four public and one private university churning out edu-cated workforce. Thus, there are many driving factors for outsourcing firms - access to cheap skills, cultural match

between the vendor and client, English-speakingpopulation, and proximity to worlds top markets and

Government support.The Perth managed services sector is saturated with

providers including ASG, CSC, Empired and Fujitsu, which benefit from lengthy government contracts, with still more coming in, like CSG. GS

Perth, australia

T he Seoul Special City, capital and largest city of South Korea, ranks 10th on the chart of top ten global cities in the Global City Index of 2010. This

city accounts for only 0.6percent of South Korea’s land, yet it generates 21percent of the country’s GDP. Equipped with highly technological infrastructure, this destination is headquarters for Samsung, LG, Hyundai, Kia and SK.

Home to a large number of universities-Seoul National University, korea University and yonsei University- it

produces educated resources. However, English is an issue. Outsourcing centers face difficulties in finding manpower with language compatibilities.

The future looks bright for Seoul as South korea’s IT market is projected to strengthen in 2010. Also, South korea plans to invest $341.1M by 2013 for developing local software industry. GS

Seoul, Korea

A s the capital of Republic of China, Taipei is the nucleus of rapid economic development in the country. It is the largest city of Taiwan, that holds

one of the world’s largest foreign exchange reserves for over $352B. The GDP per capita of Taipei is 48,400, the second highest in Asia.

On the education front, 20 universities have cam-puses located in this city. These include National Chiao Tung University (NCTU) - Taiwan’s oldest

university,National Taiwan University (NTU), National Taiwan Normal University, Mandarin

Training Center and more. Thus, it generates a talent pool of valuable workforce.

This destination is performing well in manufacturing outsourcing space. Credit goes to its growing outsourc-ing orders for notebooks and PCs. In addition, Taiwan’s cellphone shipment is expected to rise 23.8percent to hit 26.26 million. GS

taipei, taiwan

Montevideo, Uruguay

M oscow encompasses good human IT- resources, developed infrastructure and a significantly large pool of OSD providers. Man power

geared up with latest technical skills is available at low costs. The competitive advantage of this city is its R&D skills.

However, there are few disadvantages attached to this city, legal issues being intellectual property rights, export and import, taxation, labor and currency law. Also, Russia does not have any agency that provides CMM (Capability Maturity Model) assessment, which is a

model of process maturity for software development. In addition, the cost of infrastructure is high. Moscow

is the world’s fourth most expensive city for expatriates, according to the Worldwide Cost of Living Survey 2010 from Mercer.

Nokia Siemens Networks announced plans in September this year to set up a Global Network Operations Center (GNOC) near Moscow. The compa-ny plans to make a significant investment over a period of five years to develop the center. GS

Moscow, russia

Mysore, india

Nizhny Noygorod, russia

By Smriti Sharma

Destinations Compendium 2011One Stop Resource On Global Outsourcing Destinations

RELEASING NOVEMBER 2011Inviting countries, cities, associations to take part in this initiative


Documents

Destination Compendium 2010