AT Kearney has compiled a list of the most profitable Outsourcing destinations. Excerpts:
COUNTRY Overall Score Financial Score People Score Environment Score
INDIA 6.9 3.2 2.3 1.4
CHINA 6.6 2.9 2.3 1.4
MALAYSIA 6.1 2.8 1.3 2
THAILAND 6 3.2 1.2 1.6
BRAZIL 5.9 2.6 1.8 1.5
PHILIPPINES 5.8 3.3 1.2 1.3
MEXICO 5.7 2.6 1.5 1.6
SINGAPORE 5.7 1.7 1.5 2.5
USA(TIER II) 5.5 0.5 2.7 2.3
Environment Score measures a country’s business environment based on the economic/political environment, infrastructure quality, cultural exposure, and IP security.
The interesting point to not here is that China, which has the second-highest overall score (just behind India) has the same Environment score as India. This basically means that although China’s Physical infrastructure is of course better than India’s, their IT Infrastructure is apparently at the same level as that of India. I didn’t quite understand “how!”
Also, Argentine, Philippines, Sri Lanka and Pakistan are the only countries behind India (& China) on the Environment Score.
People Score measures a country’s people skills and availability based on the IT/BPO industry size and quality, labor force availability, educational skills, language skills, and attrition risk.
India undoubtedly leads on the People Score. Interestingly, India and China again have exactly the same score. Although India I think has a slight edge here as far as the language skills of the workers go. China, however, is making all efforts to catch up fast and is taking initiatives to introduce English as a compulsory language at the Primary School level.
Financial Score measures a country’s financial attractiveness based on the costs of compensation, infrastructure, and taxes and regulations.
China’s lower Financial Score is probably the only drawback but that again would be a result of a booming economy with a higher wage-rate. With the rising wage rates in India, this gap would be narrowing as well.
Bottomline: With India’s rising Wage Rate, the cost of setting up shop in India is increasing. If we go strictly by the results of the report, India needs to better its IT Infrastructure (Connectivity, Broadband et al) if it is to prevent China from becoming the hottest Outsourcing destination. As far as the People Score is concerned, with the introduction of English at the primary level, China would probably better India unless we improve the quality of skilled man-power.
Note: The above list is not complete. I have removed certain countries form the list. To view the complete list, read the BusinessWeek write-up on Global Outsourcing.
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