Asia remains the best region to choose as offshore location, with India, China and Malaysia representing the top 3 in A.T. Kearney’s ‘Global Services Location Index’. In this report, the consulting firm examines the offshoring landscape around the globe and ranks the top destinations for global offshoring.
Offshoring, when a company conducts activities outside its country of origin, took off in the late 1990s, and was mainly driven by an increased need for large-scale IT operations. Currently, many large companies have large parts of their service operations offshore, and analysts expect that midsize and small companies will follow. For hosting countries, attracting offshore activities is an important manner of boosting its economy, attracting know-how and building skills. As a result, countries are continiously trying to entice companies to offshore production to their premises.
Global Services Location Index
The ‘Global Services Location Index’ (GSLI) 2014 by A.T. Kearney is the sixth edition of the report in which the consulting firm examines the offshoring landscape in 51* countries around the globe, and ranks the top destinations for global offshoring. To come to this ranking, three main categories were researched; financial attractiveness, people skills and availability, and business environment. The weight given to these metrics is based on their importance to the location decision. ‘Financial factors’ constitute for 40% of the published index. ‘People skills and availability’ and ‘business environment’ both accoung for 30% of the total weight.
Looking at the top 20, Asia dominates with 6 countries in the top 10, and 8 in the top 20. The top 3 remains steady compared to 2011 – with India ranking as the number-one offshoring destination in the world, followed by China and Malaysia. The second highest ranking region for offshoring is Latin America, with Mexico and Brazil in the top 10, both countries scored higher in 2014 compared to 2011. Mexico gained two places and Brazil 4. Chile is found on number 13 and lost three places.
Other regions to be found in the top 20 are Eastern Europe (Bulgaria on #9, Poland on #11, Lithuania on #15 and Romania on #18), North Africa (Egypt on #10 and Jordan on #20), North America (#14), Western Europe (Germany #17) and the Middle East (United Arab Emirates on #19).
* The countries investigated for the research, were selected on the basis of corporate input, current offshore services activities, and initiatives by the government to promote the sector.