TOP
The gateway to the global sourcing of IT and BPO services
Research Report
50
G
N
I
G
R
EME
OUTSOURCING
GLOBAL
CITIES
Global Services-Tholons Study
They are not Bangalores or
Makatis yet; but they could get
there sooner. There are nine new
entrants and six dropouts from
the 2007 list
Premier Sponsor
THE LOCATION
By Avinash Vashistha, Tholons, and
Imrana Khan, Global Services
T
IER-1 GLOBAL SERVICE PROVIDERS
such as Accenture, ACS, Cognizant,
Capgemini, CSC, EDS, Genpact, HP, IBM,
Infosys, LogicaCMG, TCS, Satyam and
Wipro continue to increase their global presence. The difference is that service providers
such as IBM and Accenture are looking to tier-2 and tier-3
Indian cities for expansion, while the Indian providers
Infosys, TCS and Wipro are heading toward cities in South
America and Eastern Europe.
In a way, the choice of the right city has become more
important than the choice of the country. It is rather the city
(than the country), which represents a more accurate package of attributes that service providers seek. Thus, Cebu City
and Monterrey matter more than the Philippines and
Mexico from a decision-making standpoint.
This study identifies those locations that are globally recognized for their “specific” outsourcing services offerings as
well as the ones that are establishing themselves as specialized locations for particular outsourcing functions. To make
the study complete, like last year, we have also come up with
the names of top emerging outsourcing cities as that’s the
main focus of this study. There are eight such cities instead
of five that we had reported last year. (See Table 2 —“Top 8
Global Outsourcing Locations.”)
This year’s list of top 50 emerging global outsourcing
cities, though, has quite a few surprises. We profiled nine
“new entrants” — including Quezon City (The
Philippines), Toronto (Canada), Rio de Janeiro (Brazil),
Mexico City (Mexico), Jaipur (India), Singapore
(Singapore), Chengdu (China), Guadalajara (Mexico) and
Mandaluyong City (The Philippines) — to the list. (See
Table 3.) Last year we had profiled top 15 emerging outsourcing locations.
2 GlobalServices
THE PARAMETERS OF EVALUATING THE CITIES
In order to provide location assessment, Tholons
has considered “six general categories” — “Scale &
Quality of Workforce (including education),”
“Business Catalyst,” “Cost”, “Infrastructure,” “Risk
Profile” and “Quality of Life.” Within these six segments are fifteen sub-categories, each possessing a
corresponding weight.
The parameters above are the same components,
which differentiate cities, and to a large extent determine their individual capacities to fulfill particular services. Cities with large, English-proficient labor pools,
for example, may be better equipped to provide voicebased customer support while a smaller city with
robust infrastructure and adequate supply of network
engineers may be better candidates to provide infrastructure managed services. Consequently, there is no
definitive set or order of parameters, which will provide
a definitive advantage for each city across all service
lines. Each parameter must take into consideration a
number of determining factors: Type of service, desired
scale, and nature of delivery, to name a few aspects.
THE LOCATION-ASSESSMENT FRAMEWORK
Our “Location-assessment Framework” takes into
consideration an expansive set of variables when evaluating a city’s potential as a delivery center. Further, the
quantitative data gathered is substantiated and analyzed qualitatively.
In analyzing the capacity and potential of individual
city centers, Tholons identifies the inherent characteristics of a location — its key differentiator and at the
same time, its primary inhibitor. The recognition of
these city-specific aspects is also essential in correlating which specific service lines a city has the potential
or is most capable in delivering. City A for example, can
have a high percentage of its labor pool that is Englishproficient, but may also have a smaller percentage of IT
or technical-related university graduates as compared
to City B — having a low number of English-speaking
graduates, but a more favorable ratio of IT graduates. In
this case, we can infer from a resource perspective, that
City A may be more suitable for delivery of customersupport services, while City B may be better equipped
to fulfill ITO-related services such as engineering or
software development.
From a service-delivery perspective, the more successful outsourcing cities have leveraged on their
The Perspective of the City
Location assessment based on a city as opposed to a
country is reflective of the ongoing trend we are witnessing
in the global outsourcing arena. Service providers are look-
www.globalservicesmedia.com
October 2008
ASSESSMENT
available resources to capture specific
market segments. Cities in the Philippines
for example, continue to avail of their
large English-proficient workforce in
catering to the U.S. customer-service market. The same holds true for Central and
South American cities that have been
quick to capitalize on the growing
Hispanic population in the U.S. Further,
despite the U.S. currency’s recent slide,
these destinations continue to be more
cost efficient as compared to onshore
(U.S.) delivery centers.
Due to the deteriorating political situation in the state of West
Bengal, we continue to put
Kolkata on the watch list.
Political disturbances contributing to an unfavorable
climate for business would
prove to be a big hindrance
for the city to attract investments. However, we expect
the government to take steps to restore
normalcy and to continue on the growth
path as an outsourcing destination.
Cities are differentiated not only by
their available resources (quality/type of
labor force, cost, available infrastructure
and such), but also by their long-term
potential in fulfilling demand for specific
services. In many instances, these scalerelated inhibitors can directly impact
what type and size of outsourced services that location can fulfill. For headcount-dependent processes such as
voice-based customer support, lower
cost and large population bases are
often required.
There are also various regional and
ecosystem dynamics, which differentiate
the capacities of cities. A converging
Europe is a prime example. As Europe
continues to expand its unified market,
cost-effective destinations in Eastern
Europe will continue to increase their
market share of outsourced services
from customer nations in Western
Europe. In this regard, Eastern European
cities such as Kraków and Prague will
continue to leverage their nearshore and
cultural compatibility advantages. Alternatively, cities in
countries with large population bases such as India and
China will maintain competitive advantage by offering
scale and labor costs, which
most destinations will be
unable to counter. Cities in
these two countries — with millions of
people — will also have the best potential
to offer a wider array of outsourced services. However, this does not necessarily
imply that the advantage is exclusive to
such mega cities. Cities such as Ho Chi
Minh City, Vietnam, and even smaller
destinations like Monterrey, Mexico have
made inroads in high-value ITO and engineering services. For similar sized cities
that may have demographic constraints,
identifying the available strengths within
their ecosystem is essential in developGS
ing their respective niche markets.
Budapest
Shanghai
Santiago
CITY CHARACTERISTICS WITH RESPECT TO SPECIFIC SERVICE
ITO (Infrastructure Managed Services)
Priority
Low
Cost
Scale & Quality of Workforce
Infrastructure
Risk Profile
Business Catalyst
Quality of Life
High
BPO (Contact Center)
Scale & Quality of Workforce
Infrastructure
Business Catalyst
Cost
Risk Profile
Quality of Life
Singapore
ing to identify and tap the inherent capabilities and capacities of specific locations. This transition on how service
providers view locations illustrate both the maturity of the
outsourcing model and heightened focus on optimization of
October 2008
service-delivery. Today, a single provider can have centers in
multiple countries and cities, with each city having the optimal conditions to fulfill specific service lines. Software development can be done in Bangalore, customer service can be
GlobalServices 3
The Global Services-Tholons Study
done out of Makati City, while engineering services are
delivered out of Kraków. The one-stop-shop country model
has in fact given way to the more efficient, multicity, bestof-breed city model.
Further, this also reflects the increased responsibilities,
which local government units now have in developing their
respective cities. City officials, infrastructure providers and
local stakeholders are often better able to promote, stimulate
and market their city’s specific capabilities to potential outsourcing service providers. Moreover, local stakeholders are
able to address infrastructure and ecosystem concerns in a
timelier manner. Many city mayors and local government
units, for example, can provide city-specific tax incentives
and telecom providers can deploy connectivity in a much
more targeted scale. In contrast, nationwide agendas and
developmental rollouts, as otherwise mandated by national
governments, are often prolonged and drawn out — a pace
unfavorable to most service providers.
Though we highlight the increasingly vital role, which
individual cities play in a country’s outsourcing industry, we
do not discount the significance that national governments
and institutional bodies play in shaping the sector. National
governments and industry bodies are commonly tasked to
provide guidance, policies and set direction. Likewise, these
organizations provide essential monitoring and regulatory
roles — ensuring that labor and business-related concerns
are managed and implemented.
As such, the role of the city with regards to outsourcing should not be viewed as one, which has become
entirely independent of the country. Rather, one should
view the evolution of the city as a direct result of a country’s inherent capabilities as an outsourcing provider.
Referring to Prague as a “Center for Excellence” for software development, or Ho Chi Minh City for IT
Outsourcing (ITO) processes, for example, highlights the
respective country’s strengths.
The Locations & the Year Gone By
The past eighteen months have been an incredibly
dynamic period for the global outsourcing industry.
The ongoing slowdown in the U.S. economy, the continuing maturation of the outsourcing model, the rise of
tier-2 and tier-3 cities as delivery centers, the heightened
level of competition and emergence of “global Business
Process Outsourcing (BPO) providers” are some of the
key ecosystem movements we continue to closely monitor. We have noticed that with each fundamental shift
in the market, stakeholders in turn are requiring a deeper understanding of delivery locations. This level of
knowledge has become essential not only to maintain
financial objectives, but more so to ensure competitive
advantages and longevity in an increasingly competitive
market environment.
The region-wise analysis reveals something near to obvi4
GlobalServices
LOCATION FIRST
By Shyamanuja Das
A
h! The debate is still alive. It is more
than a decade since Jack Welch made
the world believe in his 70-70-70 formula — 70 percent of the GE’s processes can be outsourced; 70 percent of what can be
outsourced can be offshored; and 70 percent of
what can be offshored can be executed in India.
Many technology and pure services firms have
actually bettered on that formula. There are
start-up firms in the valley that are born global —
just a few heads in the U.S. and rest in India.
Yet, the debate remains. I will but add one
more page to that. But as the Nobel Prize winning economist Amartya Sen, well, argues,
sometimes the arguments are as important as
the final conclusion. At least majority of Indians
believe so and I am no exception either.
First let us examine the question a little carefully: Should you choose a location first or a
partner first? The question, then, inherently
excludes the captive option. It is for a company
that has decided to outsource to a third-party
service provider (a partner). The reason I am
specifically pointing this out in the beginning is
that the importance of location selection is minimized significantly, if not eliminated completely
in this case.
Now, let us build typical scenarios.
Let’s say, to start with, a very large company
with global business presence is looking at a
mega outsourcing deal. In this case, it is safe to
assume that it will need the work to be executed
in different languages, for different time zones
with some business continuity or at least disas-
ous. That is, Asian cities are the ones that rock the top 50
cities chart. However, the interesting thing is that not only
the tier-1 cities in the Asia-Pacific region are ruling the outsourcing industry but also there are many tier-2 and tier-3
Asia-Pacific cities that are fast emerging as outsourcing destinations. Of the top nine emerging cities, six — Cebu City
(The Philippines), Shanghai (China), Beijing (China), Ho
Chi Minh City (Vietnam), Kolkata (India) and Shenzhen
(China) — are from the Asian continent. Thirty-eight percent of the top cities list have been occupied by such locations followed by 26 percent by Central & Eastern
European cities.
October 2008
The Global Services-Tholons Study
OR PARTNER FIRST?
ter-recovery capability built in. All these point to a
multilocation strategy. Any large service provider
that can execute this contract should either have
presence in multiple locations or capability to quickly add some locations, or ideally both. Fortunately for the customers
of outsourcing, most large global service
providers, irrespective of their country of
origin, are today building that capability.
Whether it is IBM, Accenture or EDS or
TCS, Infosys and Wipro, all of them today
have a strong global delivery strategy.
Let us say a small or medium company wants
to outsource what could be of significant size for
that company but general IT or business process,
like finance and accounting work or entire customer-service work, even though by sheer dollar
terms it may not be classified as a mega deal. In
that case, it may not always be possible for the
company to influence the service provider to go
to a location of its choice. But in practical terms,
it may not be a major roadblock, as most service
providers today are fairly mature in generic business-process delivery, and they will always find a
good fit for the work. So, this one too goes to
partner first.
But what about a large (or even) small company looking to outsource very specialized work?
Say, design of some automotive components or
design of algorithms? In that case, while a partner-first approach can be convenient, one would
argue that a better approach is to select a location
first. And considering that most specialized work
does not happen in hundreds of locations, the
company will have to choose between two to three
locations; that is not that tough.
In many such cases, it is important to choose
not just the country but specific location. Take
engineering design services. Within
India, there are a few places like Pune
(otherwise a tier-2 location), Bangalore,
Hyderabad and Chennai that come on
top, rather than Mumbai or Delhi.
The rational behind choosing/shortlisting locations first, in these cases, is not
just because of the capability of the
workforce, but there is the danger of
missing out good, small, specialized players, if
one does not have a first-hand evaluation of
GS
these locations.
Shyamanuja is Editor, Dataquest, CyberMedia.
Losers & Gainers
The Bangalores …
With each passing year, our location assessment continues
to be a target that’s moving and morphing like an amoeba,
with a new set of market variables that need to be considered.
Our location-assessment framework, thus, follows a deeper
approach to identify the emerging global outsourcing locations. Thus, we see new entrants — even some among the
ones who topped the emerging cities list — spanning over
the list as well some going away from the listing. The cities
that were recognized in our last year’s list and that could not
make to the list this time can be seen in the table below
which also shows the list of new entrants (See Table 1).
The year’s list of top global Bangalores is bigger than the
last year’s. Our Top 5 Global Outsourcing Cities list has now
become Top 8 Global Outsourcing Cities with some new
members — Chennai (India), Hyderabad (India), Makati
City (The Philippines) and Pune (India). As expected,
Indian cities dominate the top list once again. Makati City,
as part of the Philippines NCR (National Capital Region)
holds its ground, while Indian cities with the entrance of
Chennai, Hyderabad and Pune continue to dominate the
top chart. (See Table 2.)
October 2008
Continued on page 26
GlobalServices 5
Chart 1
REGION-WISE BREAKUP (%)
8
n=50
24 4
6
38
20
Middle East
Africa
Western Europe
North America
South America
Central &
Eastern Europe
Asia Pacific
26
TOP GLOBAL
OUTSOURCING
Table 2
CITIES
The region-wise analysis reveals something near to
obvious — Asian cities are the ones that rock the top 50
cities chart. However, an interesting point is that not
only the tier-1 cities in the Asia-Pacific region are ruling
the outsourcing industry but also many tier-2 and tier-3
Asia-Pacific cities are fast emerging as outsourcing destinations. Of the top nine emerging cities, six — Cebu
City (The Philippines), Shanghai (China), Beijing (China),
Ho Chi Minh City (Vietnam), Kolkata (India) and
Shenzhen (China) — are from the Asian continent.
Thirty-eight percent of the top cities list has been occupied by such locations followed by 26 percent by
Central & Eastern European cities.
Makati City
Table 1
DROPOUTS
Rank (2008)
31
36
37
38
45
50
City
Perth
Baguio City
Leeds
(Yorkshire & Humber)
Birmingham, Alabama
Oklahoma City,
Oklahoma
Juarez
Bangalore
l Chennai
l Delhi NCR
l Dublin
l Hyderabad
l Makati City
l Mumbai
l Pune
l
Country
Australia
The Philippines
U.K.
U.S.
U.S.
India
India
India
Ireland
India
The Philippines
India
India
Mexico
NEW ENTRANTS*
Rank (2008)
21
22
26
30
31
36
37
44
45
City
Quezon City
Toronto
Rio de Janeiro
Mexico City
Jaipur
Singapore
Chengdu
Guadalajara
Mandaluyong City
Country
The Philippines
Canada
Brazil
Mexico
India
Singapore
China
Mexico
The Philippines
Singapore
Dublin Docklands
With a rapidly maturing, expanding global outsourcing
industry, our last year’s “Top 5 Global Outsourcing Cities”
chart has now become “Top 8 Global Outsourcing Cities.”
Makati City, as part of the Philippines NCR (National
Capital Region) holds its ground, while Indian cities with
the entrance of Chennai, Hyderabad and Pune continue to
dominate the top chart.
*THE NEW ENTRANTS HAVE BEEN PROFILED IN THE NEXT PAGES STARTING FROM PAGE NO. 30 TO PAGE NO. 34.
6 GlobalServices
October 2008
Top
50 Emerging Global Outsourcing Cities
Table 3
Rank Rank
Cities
Country
(2008) (2007)
Time
Zone
(GMT)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
4
8
10
6
16
5
11
15
14
13
12
9
17
20
23
18
21
19
7
25
NEW
NEW
22
24
28
NEW
29
26
27
NEW
NEW
33
32
34
40
NEW
NEW
43
42
41
46
30
44
NEW
NEW
47
39
35
48
49
October 2008
Cebu City
Shanghai
Beijing
Ho Chi Minh City
Kraków
Kolkata
Cairo
São Paulo
Buenos Aires
Shenzhen
Hanoi
Chandigarh
Curitiba
Prague
Pasig City
Dalian (Dairen)
Coimbatore
Santiago
Colombo
Johannesburg
Quezon City
Toronto
Guangzhou (Canton)
Belfast
Budapest
Rio de Janeiro
San José
Warsaw
Brno
Mexico City
Jaipur
St. Petersburg
Kuala Lumpur
Accra
Bratislava
Singapore City
Chengdu
Bucharest
Moscow
Sofia
Monterrey
Glasgow City
Brasília
Guadalajara
Mandaluyong City
Tallinn
San Antonio
Halifax
Kiev
Ljubljana
Philippines
China
China
Vietnam
Poland
India
Egypt
Brazil
Argentina
China
Vietnam
India
Brazil
Czech Republic
Philippines
China
India
Chile
Sri Lanka
South Africa
Philippines
Canada
China
Ireland
Hungary
Brazil
Costa Rica
Poland
Czech Republic
Mexico
India
Russia
Malaysia
Ghana
Slovakia
Singapore
China
Romania
Russia
Bulgaria
Mexico
U.K.
Brazil
Mexico
Philippines
Estonia
U.S.
Canada
Ukraine
Slovenia
+8
+8
+8
+7
+1
+5:30
+2
-3
-3
+8
+7
+5:30
-3
+1
+8
+8
+5:30
-4
+5:30
+2
+8
-4
+8
Offset
+1
-3
-6
+1
+1
-6
+5:30
+3
+8
Offset
+1
+8
+8
+2
+3
+2
-6
Offset
-3
-6
+8
+2
-6
-4
+2
+1
Population
(in mn)
est. in 2007
0.8
21.6
15.9
5.4
0.8
13.6
7.7
10.9
3.0
26.3
2.2
2.3
1.8
1.9
0.6
3.9
4.7
5.4
2.5
3.9
2.3
2.5
14.2
0.6
2.5
6.1
0.4
1.7
0.7
8.5
6.5
4.8
1.9
2.0
0.5
4.6
7.8
1.9
11.0
1.3
1.1
0.6
2.5
1.6
0.3
0.4
1.3
0.4
2.7
0.3
Currency
Exchange Rate
(as of Sept. 10th, '08)
USD 1 =
Philippine peso (PHP)
Chinese yuan (CNY)
Chinese yuan (CNY)
Vietnamese dong (VND)
Polish zlotych (PLN)
Indian rupee (INR)
Egyptian pound (EGP)
Brazilian reai (BRL)
Argentine peso (ARS)
Chinese yuan (CNY)
Vietnamese dong (VND)
Indian rupee (INR)
Czech koruna (CZK)
Chinese yuan (CNY)
Indian rupee (INR)
Chilean peso (CLP)
Sri Lankan rupee (LKR)
South African rand (ZAR)
Canadian dollar (CAD)
Chinese yuan (CNY)
Euro (EUR)
Hungarian forint (HUF)
Costa Rican colon (CRC)
Polish zlotych (PLN)
Czech koruna (CZK)
Mexican peso (MXN)
Indian rupee (INR)
Russian ruble (RUR)
Malaysian ringgit (MYR)
Ghanaian Cedi (GHS)
Slovak koruna (SKK)
Singapore Dollar (SGD)
Chinese yuan (CNY)
Romanian leu (RON)
Russian ruble (RUR)
Bulgarian lev (BGN)
Mexican peso (MXN)
British pound (GBP)
Mexican peso (MXN)
Estonian kroon (EEK)
U.S. dollar (USD)
Canadian dollar (CAD)
Ukrainian hryvna (UAH)
Slovenian tolars (SIT)
PHP 46.59
CNY 6.84
CNY 6.84
VND 16,527.50
PLN 2.46
INR 44.80
EGP 5.41
BRL 1.77
ARS 3.06
CNY 6.84
VND 16,527.50
INR 45.12
BRL 1.77
CZK 17.59
PHP 46.59
CNY 6.84
INR 45.12
CLP 529
LKR 107.88
ZAR 8.06
PHP 46.59
CAD 1.07
CNY 6.84
EUR 0.71
HUF 170.66
BRL 1.77
CRC 548.79
PLN 2.46
CZK 17.59
MXN 10.55
INR 45.12
RUB 25.61
MYR 3.46
GHS 1.16
SKK 21.39
SGD 1.44
CNY 6.84
RON 3.59
RUB 25.61
BGN 1.39
MXN 10.55
GBP 0.56
BRL 1.73
MXN 10.55
PHP 46.59
EEk 11.08
USD 1
CAD 1.07
UAH 4.38
SIT 169.70
GlobalServices 7
Top
50 Emerging Global Outsourcing Cities
Rank
Key Service Providers
Major Universities
(2008)
1
Accenture, ACS, Convergys, eTelecare, People Support
2
Accenture, Cognizant, EDS, Infosys, Neusoft, TCS, Wipro, Unisys
Univ. of the Philippines, Univ. of San Carlos
East China Univ. of Science & Technology, Shanghai Jiao Tong Univ.
3
Accenture, Capgemini, EDS, IBM, Infosys, TCS, Wipro, Unisys
Beijing Univ. of Tech., Peking Univ., Renmin Univ. of China
4
FPT Software, IBM, Luxoft, Vietnam Software Outsourcing Co.
Ho Chi Minh City National Univ., Univ. of Technical Education
5
Capgemini, HCL, Hewitt, IBM, LogicaCMG, Philip Morris
AGH Univ. of Science & Technology, Cracow Univ. of Technology
6
Capgemini, Cognizant, Genpact, HCL, IBM Daksh, TCS, Wipro
Univ. of Calcutta, Bengal Engineering & Science Univ.
7
C3, Convergys, EDS, Raya Contact Center, Tamima, Xceed, Unisys
Al-Azhar Univ., Ain Shams Univ., Cairo Univ., Call Center Academy
8
Accenture, Convergys, Cisco, Dell, EDS, Fidelity, Satyam, TCS
Univ. of Sao Paulo, Federal Univ. of Sao Paulo
9
Accenture, Convergys, Cognizant, EDS, HP, Globant, TCS, TeleTech
Universidad Catolica Argentina, Universidad de Buenos Aires
10
ACS, AT&T, HP, IBM, Siemens, Satyam
Shenzhen Univ., Shenzhen Institute of Technology
11
Vietnam Offshore Services, Spi, Vietnam Software Outsourcing Co.
Hanoi Univ. of Technology, Hanoio National Univ.
12
IBM Daksh, Infosys, Net Solutions, Netsoft Global Services, Quark
Punjab Univ.
13
Accenture, Atos Origin, Wipro, Unisys
The Federal Univ., Catholic Univ., The Federal Technical Univ.
14
Accenture, HP, Infosys, LogicaCMG, Unisys
Charles Univ., Czech Technical Univ.
15
Sitel, Unisys
Univ. of the City of Pasig
16
Accenture, Convergys, IBM Global Services
Dalian Univ. of Technology, Dalian Maritime Univ.
17
Cognizant, TCS, Wipro
Anna Univ., Bharathiar Univ.
18
Accenture, EDS, TCS, Unisys
Pontificia Universidad CatÓlica de Chile, Univ. of Chile
19
Astron BPO, IBM, Lingua, LogicaCMG, Virtusa, WNS
Univ. of Ceylon, Univ. of Colombo, Univ. of Peradeniya
20
Accenture, Satyam, TCS, Unisys
Univ. of Johannesburg, Univ. of the Witwatersrand
21
IBM Daksh, C3, Sitel, One Touch Center, eTelecare, Sykes
St. Paul Univ. Quezon City, Univ. of the Philippines
22
Accenture, Cognizant, EDS, Infosys, LogicaCMG, TCS, Unisys
Univ. of Toronto, York Univ., Ryerson Univ.
23
Accenture, Atos Origin, Capgemini, EDS, Siemens, Unisys
Sun Yat-sen Univ., South China Univ. of Technology, Guangzhou Univ.
24
Firstsource, HCL BPO Services, TeleTech
Queen's Univ. Belfast, Univ. of Ulster
25
Accenture, Convergys, EDS, EPAM, Genpact, LogicaCMG, TCS
Budapest Univ. of Tech. & Economics, Corvinus Univ. of Budapest
26
DBA, EDS, Politec, Satyam, Teleperformance, Unisys
Federal Univ. of Rio de Janeiro, Federal Univ. of State of Rio de Janeiro
27
Accenture, CCC, IBM, Unisys, SlashSupport
Univ. of Costa Rica
28
Accenture, EDS, TCS, Unisys
Univ. of Warsaw, Warsaw Univ. of Technology
29
Accenture, CSC, IBM Global Services, Ness Technologies
Masaryk Univ., Brno Univ. of Technology
30
Accenture, ACS, EDS, Hildebrando, Softtek, Stefanini, TCS, Unisys
National Autonomous Univ. of Mexico, Metropolitan Autonomous Univ.
31
Infosys, Genpact, ST Microsystems, Spanco
Rajasthan Univ., Rai Univ.
32
EPAM, Exigen Services
Herzen State Pedagogical Univ. of Russia, Saint Petersburg State Univ.
33
Accenture, Convergys, HCL, LogicaCMG, TCS, Wipro
Univ. of Malaya, Univ. of Kuala Lumpur, Tech. Univ. of Malaysia
34
ACS
Methodist Univ. College Ghana, Wisconsin Intl. Univ. College
35
Ness Technologies, Unisys
Comenius Univ., Univ. of Economics, Slovak Technical Univ.
36
Accenture, CSC, Cognizant, EDS, HCL, IBM, TCS, Unisys, Wipro
National Univ. of Singapore, Nanyang Technological Univ., SIM Univ.
37
Augmentum, Dextrys, EDS, Genpact, Neusoft, Wipro
Southwest Jiaotong Univ., Chengdu Univ. of Technology
38
Genpact, Ness Technologies, Perot Systems, Unisys, WNS
Univ. of Bucharest, Univ. Politehnica of Bucharest
39
Accenture, Convergys, EDS, EPAM, IBM, LogicaCMG
Moscow State Technical Univ., Bauman Moscow State Technical Univ.
40
HP, Sofica, SBND Tech., Sutherland Global Services, Unisys
Saint Clement of Ohrid Univ. of Sofia, Technical Univ. of Sofia
41
Accenture, ACS, Sutherland Global Services
Univ. of Monterrey
42
Unisys, LogicaCMG
Univ. Of Glasgow, Univ. Of Strathclyde, Glasgow Caledonian Univ.
43
Accenture, Convergys, Politec, TCS, Unisys
Univ. of Brasilia
44
TeleTech, Hispanic Teleservices, Perot Systems, TCS
Universidad de Guadalajara, Universidad Panamericana
45
CPI Outsourcing, eTelecare, IBM Daksh, ICT Group
Don Bosco Technical College, The Jose Rizal Univ., The Rizal Tech. Univ.
46
IBM, Hansapank, LogicaCMG, SAS (SSC*), SEM IT Partner, Solvus
47
Tallinn Univ., Tallinn Univ. of Technology, Tallinn College of Engineering
Univ. of Texas, St. Mary's Univ., Trinity Univ.
48
ADP, EDS, Keane, TeleTech, CSC, Unisys, Fujitsu
49
EPAM, Luxoft, GlobalLogic, LogicaCMG
Kyiv National Technical Univ., Kiev National Taras Shevchenko Univ.
50
Unisys
Univ. of Ljubljana
10 GlobalServices
Dalhousie Univ., Saint Mary's Univ., Univ. of King's College
October 2008
CHINA, CHINA, EVERYWHERE
Language Skills
English
English, Japanese
English, Japanese, Korean
Chinese, English, French
English, Polish, Japanese
English
Arabic, English, French, German, Spanish
English, Portuguese, Spanish
English, French, Portuguese, Spanish
Chinese, English
Chinese, English, French
English
English, German
English
Chinese, English
English
English, Spanish
English
English
English
English, French
Chinese, English
English, Irish
English, German
English, Spanish
English, Polish
English
English, Spanish
English
English
English
English
English
English
Chinese, Japanese, English
English, Romanian
English, Russian
English, French
English, Spanish
English
English, Spanish
Filipino, English, Chinese
English, French, German, Finnish
English
English and French
English, Russian, Ukrainian
Whether it is the 2008
Olympic Games, or the list of
emerging global outsourcing
locations, China dominates
both. In the former, Chinese
athletes bagged the maximum
gold medals, and in the latter
Chinese cities claimed six
places. These cities are:
l Shanghai (at the 2nd
position)
l Beijing (at the 3rd)
l Shenzhen (at the 10th)
l Dalian (at the 16th)
l Guangzhou (at the 23rd)
l Chengdu (at the 37th).
Of them, Shanghai is already
known as one of the mature
destinations for providing services offerings such as F&A,
product development, R&D and
testing, and Guangzhou is
known for engineering-services
offering. Outsourcing services
such as application development and maintenance and
business analytics are now also
being offered from Shenzhen
and Shanghai, respectively.
Consequently, the country
has become home to numerous
IT and BPO services providers.
While global providers such as
Accenture, ACS, Atos Origin,
AT&T, Capgemini, Cognizant,
Convergys, EDS, Genpact, HP,
Infosys, IBM, Satyam, TCS,
Wirpo and Unisys have their
presence across China, local
providers such as Augmentum,
Bleum, Dextrys and Neusoft are
also known at a global scale.
Even though a lot is happen-
ing in the Chinese outsourcing
space, there are some other
areas — encouraging the usage
of English language in schools —
which the Chinese government
is focussing on.
With supportive government
and favorable outsourcing conditions, China’s outsourcing industry is set to flourish further.
That means we might see some
new Chinese names in this list
or some of the top emerging
cities moving to the top outsourcing cities’
list in our next
study on outsourcing
GS
cities.
English, Slovene
October 2008
GlobalServices 11
Outsourcing Cities by Functions
Table 4
Functions
Established
ADM
Business Analytics
Engineering Services
Bangalore, Chennai, Dublin, Hyderabad, Mumbai
Bangalore, Chennai, Delhi (NCR), Kraków, Mumbai,
Bangalore, Chennai, Guangzhou, Pune, St. Petersburg
Finance and Accounting
Human Resources
Legal Services
Product Development
Research and Development
Testing
Emerging
Ho Chi Minh, Pune, Shenzhen
Bucharest, Cairo, Shanghai
Coimbatore, Delhi (NCR), Moscow,
Prague
Bangalore, Kraków, Makati City, Mumbai, Shanghai
Cebu City, Colombo, Pune
Bangalore, Bucharest, Budapest, Makati City, Prague
Cebu, Kraków, Tallinn
Chennai, Makati City, Mumbai
Cebu City, Johannesburg, Pune
Bangalore, Chennai, Ho Chi Minh, Moscow, Shanghai
Bucharest, Pune, São Paulo
Bangalore, Dublin, Moscow, Shanghai, St. Petersburg
Beijing, Bucharest, Chennai, Prague
Bangalore, Chennai, Ho Chi Minh, Hyderabad, Shanghai, Bucharest, Cairo, São Paulo
Toronto
White: Same as last year; Red: Jumped from 2007 emerging list to 2008 list of established cities; Black: New entrants
NEW CATEGORIES
Functions
Contact Center
(Multilingual)
Contact Center (English)
Established
Emerging
Bucharest, Buenos Aires, Cairo, Dalian, Kraków,
Mexico City
Bangalore, Delhi (NCR), Dublin, Makati City, Mumbai,
Toronto
Casablanca, San José, São Paulo
Can You Name this One?
In the 2008 Top 50 Emerging Global Outsourcing Cities
list, there is a city that springs the biggest surprise. Here’s a
set of clues to find that out:
l In this city, the outsourcing industry continues to
flourish tremendously. The outsourcing facilities of
global companies such as Capgemini, HCL and Philip
Morris are already operational here.
l In this city, the obvious choices for customers are to
outsource their F&A, business analytics and multilingual
contact-center. The city has had skills in these areas in the
past too. The city is also an emerging location for
nearshoring HR services.
l In this city, the labor costs are quite competitive. An
entry-level techie can mint $680 to $600 per month, while
a BPO exec with similar experience can expect his salary to
Cathedral, Mexico City
12 GlobalServices
Cebu City, Kolkata, Pune
be between $380 and $100 per month.
l In this city, many U.S. and Western European
companies enter much before than other Eastern European
cities to source their F&A and business-analytical
services from.
l In this city, many educational institutions are producing thousands of students every year.
l In this city, the outsourcing industry is expected to
grow further.
This city is Kraków, the capital of Poland. The comparative analysis reveals that this year Kraków has bagged the
fifth place with an improvement of 11 positions from last
year’s 15th rank.
City by Functions
As the global outsourcing market becomes increasingly
competitive, we expect the cities to be more focused in identifying appropriate service lines and in developing their service-delivery capabilities. This means, as the industry
matures, cities will be compelled to recognize the services
they can deliver best. The concept of an individual location
being a “one-stop-shop” has given way to “smart/
multi/selective sourcing” models, wherein selected processes
are outsourced only to the most appropriate destination.
Therefore, we deviate from the notion of an “ideal location for all outsourcing services.” This study is more inclined
toward the fact that there are locations which are more suitable for specific outsourcing processes — services logically
gravitate to destinations where conditions are most optimal
for their delivery.
October 2008
The lower cost equation does not always work. It’s always
a trade-off between cost benefit and complexity. In many
instances, where the cost benefit is an advantage for distant
offshore locations, the complexity of services that can be
processed is consequently lower. For instance, offshore cities
such as St. Petersburg, Shanghai, Bangalore, Makati City,
Ho Chi Minh City and Delhi (NCR), to name a few, provide high-end, complex functions but not at a lower cost.
Similarly, customers can easily get the less complex work
done from onshore locations such as San Antonio and
Glasgow at a lower price.
Crystal Ball Gazing
As the outsourcing industry matures and the quest for
cost-effective and resourceful services-delivery locations continues, we would see some new tier-2 cities making headlines. A few of them are:
l Nizhniy Novgorod, Russia: This tier-2 city in Russia is
already witnessing huge R&D activities. Intel’s R&D facility is already operational in the city.
l Cork, Republic of Ireland: The city is not only supporting the small outsourcing operations but also encouraging them to expand further.
l Tianjin, China: Another tier-2 Chinese city is getting
ready to serve the global outsourcing services’ buyers on a
larger scale. Vast labor pool and low-cost of operations in the
city are sufficient enough to allure the outsourcers.
l Bacolod City, The Philippines: We tag this Filipino city as the promising next wave outsourcing city in
the country.
l Amman, Jordan: The government is actively supporting the capital region of Jordan, Amman, to count it among
the most attractive outsourcing locations in the Middle East
and African continent.
About the Study
For the third consecutive year, Global Services and
Tholons have identified the top 50 emerging global outsourcing cities. These locations are not Bangalores or
Continued on page 34
THE RELATIONSHIP BETWEEN COST BENEFIT & COMPLEXITY OF THE PROCESS
High
Chart 2
H
H
Complexity
Toronto
HH
H
H
Shanghai
Low
H
H
H
H
H H
Delhi
São Paulo
San Antonio
Buenos
Aires
October 2008
Bangalore
(NCR)
Glasgow
Low
H
Kraków
Bucharest
Dublin
On-site
H
St. Petersburg
Onshore
Dalian
Cairo
Nearshore
Cost benefit
H H
Makati
Ho Chi Minh
Offshore
High
GlobalServices 13
A
Report
An IT Services Outsourcing
Country Guide
States and Cities that Offer Unique IT Business Opportunities
By Daniel Tkach
Mexico City
"0C4.:4?D;:;@7,?4:9
84774:980?=:,=0,49
cluded,) is the capital city of Mexico and the economic heart of
the country. Greater Mexico City (the metropolitan area) has a
population of 19.2 million. Mexico City has a per capita income
of more than 23,000 USD (purchasing power parity adjusted
,9/ =,96> ,> ?30 0423?3=4.30>? @=-,9 ,227:80=,?4:9 49
?30B:=7/=:8?:
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nancial services, retail, pharmaceutical, and tourism.
Higher Education and Professional Workforce: The National
Autonomous University of Mexico (UNAM) is the largest (with
269,000 students) university in the Americas. Other major high
0=0/@.,?4:949>?4?@?4:9>,=0?30#,?4:9,7%:7D?0.394.9>?4?@?0
?30"0?=:;:74?,9@?:9:8:@>)94A0=>4?D)"?30("?30
('" ?30 )94A0=>4/,/ %,9,80=4.,9, )% ,9/ ?30 )94A0=>4
dad La Salle. 13,000 IT professionals graduate every year.
Why Invest in Mexico City: Mexico City is a very attractive
place for foreign investment due to its high infrastructure and
3@8,9 .,;4?,7 >?,9/,=/> ,> B077 ,> ?30 =:-@>?90>> :1 4?> 49
ternal market. The city welcomes investments and productive
;=:50.?> 49 ?30 ( G07/ ,9/ ;=:A4/0> 49.09?4A0> ,9/ 2=,9?> 1:=
relevant projects.
State of Mexico
The State of Mexico (population: 14,000,000) surrounds Mexico
City, with which it has practically merged. The main cities in the
state are Toluca (the capital), Naucalpan and Tlalnepantla.
(30(.:8;,940>:1?30'?,?0:1"0C4.::110=,7,=20A,=40?D
:1>0=A4.0>49.7@/492(.:9>@7?492/,?,.09?0=>491=,>?=@.?@=0
8,9,20809? ,9/ ,;;74.,?4:9 /0A07:;809? ,9/ ?0>?492 9
/@>?=D >:7@?4:9> 1:.@> :9 ?30 ,@?:8:?4A0 -4:?0.39:7:2D ,9/
;3,=8,.0@?4.,7 >0.?:=> %$ >0=A4.0> 49.7@/0 .:9?,.? .09?0=>
data mining, help desk, market analysis, F&A services and loan
application processing.
Higher Education and Professional Workforce: The State of
Mexico is the home of three of the most prestigious universities
in Mexico—the National Autonomous University, the State of
Mexico University and a campus of the Monterrey Technology
9>?4?@?05,200 IT professionals graduate every year.
Why Invest in the State of Mexico: The State of Mexico has a
7,=209@8-0=:1,7=0,/D0>?,-74>30/8@7?49,?4:9,7.:8;,940>
(30>?,?0;:;@7,?4:9095:D>,3423<@,74?D:17410(30=04>>4294G
.,9?,A,47,-474?D:1<@,74G0/3@8,9=0>:@=.0>,9/?30>?,?03,>
an excellent infrastructure. The government of the state actively
>@;;:=?>1:=042949A0>?809?>49(,9/:110=>,=4.3>0?:149.09
tives and tax exemptions for investors.
Sponsored Report
State of Jalisco
The State of Jalisco (population: 6,800,000) strongly supports the
2=:B?3:1("0C4.,9.:8;,940>?3,>/0A07:;0/,=:-@>?491=,
>?=@.?@=01:=27:-,7.:8;,940>?:.:9/@.?-@>490>>49,9/1=:8
Jalisco and created advanced technology centers. Jalisco’s main
cities are Guadalajara, Chapala and Puerto Vallarta.
Guadalajara is known as the Mexican Silicon Valley. Over 70
49?0=9,?4:9,7 .:8;,940> >@.3 ,> 090=,7 70.?=4. " 9?07
4?,.34 0B70?? %,.6,=/ '40809> 70C?=:94.> ,9/ ':70.?=:9
3,A00>?,-74>30/1,.474?40>49@,/,7,5,=,(.:8;,940>49@,
/,7,5,=,:110=,/A,9.0/(>0=A4.0>49.7@/492,;;74.,?4:9/0>429
/0A07:;809?,9/?0>?49208-0//0/>:1?B,=01:=?30,@?:8:?4A0
and aerospace industries, wireless applications, printers, medical
devices, and multimedia.
Higher Education and Professional Workforce: Guadalajara
is a very important center of universities and educational centers
with national and worldwide prestige that include the Universi
/,/%,9,80=4.,9,('$)94A0=>4/,//0@,/,7,5,=,":9?0=
=0D 9>?4?@?0 :1 (0.39:7:2D ,9/ ?30 )94A0=>4/,/ @?L9:8, /0
@,/,7,5,=,)
(;=:10>>4:9,7>2=,/@,?00A0=DD0,=
Why Invest in Jalisco:",9D70,/492(,9/%$.:8;,940>
.:9/@.?:;0=,?4:9>49?30>?,?0-0.,@>0:14?>,/A,9?,20>>@.3,>
,.:9A09409?20:2=,;34.7:.,?4:9<@,74G0/(3@8,9=0>:@=.0>
excellent infrastructure and state investment incentives.
State of Nuevo Leon
The State of Nuevo Leon (population: 4,500,000) shares a 9 miles
-:=/0= B4?3 ?30 )' >?,?0 :1 (0C,> ? 10,?@=0> , >0.@=0 3423
-,9/B4/?3 .:88@94.,?4:9> 90?B:=6 ,9/ =0>0,=.3 ,9/ ?0.3
nology parks. The main cities in the state are Monterrey, (the
capital), Guadalupe, and Apodaca.
Monterrey is B077 69:B9 49 ?30 27:-,7 ( 8,=60?;7,.0 ,9/
8,9D7,=20"0C4.,9,9/9/4,9(>0=A4.0;=:A4/0=>3,A00>?,-
lished their delivery centers in the city.
Higher Education and Professional Workforce: Monterrey
is home to two of the nation’s most prestigious universities, the
#,?4:9,7@?:9:8:@>)94A0=>4?D:1#@0A:!0:9,9/?309>?4
?@?:(0.9:7:24.:/0>?@/4:>'@;0=4:=0>/0":9?0==0D":9?0=
=0D9>?4?@?0:1(0.39:7:2D,9/4230=/@.,?4:9$?30==0;@?
0/@94A0=>4?40>49.7@/0?30)94A0=>4?D:1":9?0==0D)",9/
?30)94A0=>4/,/&024:8:9?,9,(30>?,?03,>34230=0/@.,
tion institutions from which 3,000 IT professionals graduate
every year.
Why Invest in Nuevo Leon: #@0A:!0:9-:=/0=>?30)',9/
49A0>?:=> ,=0 ,??=,.?0/ -D ,9 80=4.,9>?D70 -@>490>> .@7?@=0
?30 ,A,47,-474?D :1 34237D 0/@.,?0/ ;=:10>>4:9,7> ,9 0C.07709?
infrastructure and a high quality of life. The state government
offers incentives and tax exemptions to investors.
A
Report
-$%"$/"'&%"'$!&"*""$'+$%"$%&(!&%"#$"* &+'&'$.!&+& ,"!! !&$&(+")$"%&%%&!% #(%&&! !&%"%"&)$!$)$#$"
curement, and the legal and IP protection provided by the NAFTA treaty. The decision of where to conduct
business in Mexico, however, depends on your ﬁ rm’s strategy. Some companies prefer the states with the largest
population of IT professionals, such as Mexico City, Jalisco, and Nuevo Leon. Others prefer locations with a
%&$")!
!'%&$+""'!($%&%!$!+"!($"! !&%'%"$!&&"
Mexico, Puebla, Sinaloa, Sonora and Veracruz.
State of Puebla
State of Sonora
(30'?,?0:1%@0-7,;:;@7,?4:9
4>7:.,?0/49?30.09
?0=0,>?:1"0C4.:%@0-7,4>,>?=,?024.>?,?01:=?=,/0-0?B009
@=:;0,9/?3080=4.,>(308,49.4?40>49?30>?,?0,=0 Puebla
(the capital), Tehuacan and Cholula.
(308:>?/D9,84.>0.?:=>49%@0-7,,=0?30,@?:8:?4A0?0C
?470,9/,;;,=0780?,7B:=64921@=94?@=0,9/.3084.,749/@>
tries. The state is home to a competitive workforce specialized
in industry and services.
Higher Education and Professional Workforce:%@0-7,4>,
9,?4:9,7,9/49?0=9,?4:9,7.09?0=1:=34230=0/@.,?4:9?3,?10,
?@=0>8,9D@94A0=>4?40>,9/?0.394.,7>.3::7>>@.3,>?30)94
A0=>4/,/ /0 7,> 8K=4.,> )94A0=>4/,/ -0=:,80=4.,9, 09
08K=4?,)94A0=>4/,/@?L9:8,/0%@0-7,)94A0=>4/,/%:;@7,=
@?L9:8,/07>?,/:/0%@0-7,,9/?30":9?0==0D9>?4?@?0:1
(0.39:7:2D,9/4230=/@.,?4:9-.,#"//&,+)/$.!
uate in Puebla every year.
Why Invest in the State of Puebla:%@0-7,4>=,?0/,>F,90C
.07709? /0>?49,?4:9 1:= 1:=0429 /4=0.? 49A0>?809?I -D '?,9/,=/
%::=> ,9/ 4?.3 &,?492>(30 8,49 1:=0429 .:8;,940> B4?3
:;0=,?4:9>49%@0-7,,=0:10=8,9=,E474,9,9,/4,9'B4>>
=09.3,9/80=4.,9:=4249(30:A0=9809?:1%@0-7,:110=>
,??=,.?4A049.09?4A0>1:=(49A0>?809?>
State of Sinaloa
The State of Sonora (population: 3,100,000) shares an extensive
-:=/0=B4?3?30)'>?,?0:1=4E:9,,9/,>3:=?0=:90B4?3#0B
Mexico. The main cities in the state are ".*,/&)),0%" -&
tal), Ciudad Obregón and Nogales.
(30 49/@>?=D 49 ':9:=, 3,> -009 :=409?0/ ?: ,@?:8:?4A0
,0=:>;,.0,9/070.?=:94.>,9/4>9:B2=:B4921,>?4991:=8,
?4:9(0.39:7:2D ':9:=, 3,> -@47? ,(0.39:7:2D %,=6 /0>4290/
>;0.4G.,77D1:=?30(9/@>?=D,9/?B:,//4?4:9,7(0.39:7:2D
%,=6>,=049?30;7,99492>?,20
Higher Education and Professional Workforce:':9:=,10,
tures 48 Universities and multiple specialization schools. The
main institution of higher education is the University of Sonora
)#'$# (30=0 ,=0 @94A0=>4?40> 49 ':9:=, 49.7@/492 ?B:
.,8;@>0> :1 ?30 ('" ":9?0==0D 9>?4?@?0 :1 (0.39:7:2D
1000 IT professionals graduate every year.
Why Invest in the State of Sonora: The state’s proximity to
?30)'?30,A,47,-474?D:1?,709?0/;=:10>>4:9,7>@>@,77D0/@
.,?0/49?30)'?303423@>0:19274>37,92@,20,9/?30>42
94G.,9?7:B0=:;0=,?4:9>.:>?>8,60':9:=,,A0=D,??=,.?4A07:
.,?4:91:=(49A0>?809?>,9/,9,?@=,7:;?4:9?:>0=A0?30)'
West Coast. The government of Sonora actively supports foreign
49A0>?809?>49(?3=:@234?>F>:1?7,9/492I;=:2=,8
State of Veracruz
The State of Sinaloa (population: 2,700,000) is located in the
9:=?3B0>?:1?30"0C4.,9&0;@-74.(308,49.4?40>49?30>?,?0
are Culiacán (the Capital), Mazatlan and Los Mochis.
The technology sector of the state of Sinaloa is growing at a
D0,=7D=,?0:1
(308,491:.@>:1?30(49/@>?=D49'49,7:,
4>:9:9?,.?09?0=>,9/90,=>3:=492:1,;;74.,?4:9/0A07:;
809? >0=A4.0> (30 >?,?0 3,> :90 :1 ?30 7,=20>? ( .7@>?0=> 49
"0C4.:?3,?2,?30=>G1?DGA0.:8;,940>:1,/A,9.0/(8,?@
rity level.
Higher Education and Professional Workforce:'49,7:,10,
tures 48 Universities and multiple specialization schools. 3000
IT professionals graduate every year, and a large percentage of
?308,=09274>3H';,94>3-47492@,7
Why Invest in the State of Sinaloa: Sinaloa is an excellent
7:.,?4:91:=(49/@>?=D49A0>?809?>1:=27:-,7(;=:A4/0=>?3,?
B,9??:0>?,-74>3,90,=>3:=0/074A0=D.09?0=49"0C4.:B4?3?30
7:B .:>? 09A4=:9809? :110=0/ -D , ?40= 7:.,?4:9(30 >?,?0 4>
conveniently located very close to the U.S., and its time zone is
'((30>?,?02:A0=9809?:110=>2090=:@>49.09?4A0>1:=49A0>
tors in technology.
The State of Veracruz (population: 7,200,000) is located in the
0,>?.09?=,7 ;,=? :1 ?30 @71 :1 "0C4.: (30 8,49 .4?40> 49 ?30
state are Xalapa (the capital), and the port cities of Veracruz
and Coatzacoalcos.
The state’s principal natural resource and dominant industry
4> :47 4? 4> ?30 8,49 0C?=,.?4:9 ;=:.0>>492 ,9/ ?=,9>;:=? 3@-
for much of the country’s oil reserves and is a leading producer
of agricultural products. The ver@cluster is a regionally highly
.:8;0?4?4A0(.7@>?0=
Higher Education and Professional Workforce: Veracruz
has 49 universities that offer degrees in information technology.
(30 8,49 @94A0=>4?40> ,=0 )94A0=>4/,/*0=,.=@E,9, )94A0=>4
/,/@?L9:8,/0*0=,.=@E,9/)94A0=>4/,/"0C4.,9,;7,9?07
Veracruz. 1100 IT professionals graduate every year.
Why Invest in the State of Veracruz: The government of Ve
racruz is strongly committed to the growth of the state and pro
A4/0>49.09?4A0>,9/?,C-=0,6>.=0,?4920C.07709?:;;:=?@94?40>
for investment. The environment is friendly and the cost of living,
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Daniel Tkach is the CEO of PartnersMarket Consulting, Inc.
Strategic Marketing advisors to MexicoIT.
Contact: dtkach@partnersmarket.com
Learn more about the Mexican states and cities at ZZZPH[LFRLWFRPRUFDOO
21
Quezon City, The Philippines
Supportive government, world-class infrastructure, vast and
affordable talent pool help the city to bag 21st position in the list
Q
uezon City is the most populous city in the country with 2.3 million
people; a third of its residents under 15 years. These demographics
point toward the city’s readiness to tackle new opportunities in the next
three to five years.
With the help of 65 colleges and universities, the city produces an enormous number of educated workerforce every year. To leverage the vast talent pool for the growth
of the BPO industry, the city’s government is taking several innovative steps including the introduction of a 320-hour competency course for call-center agents for poor
on Sept. 15th, 2008. Besides free meal, transportation allowance will also be provided.
As of now, the city has lured close to 57,000 business establishments, with BPOs
finding the city a cost-effective location. At present the city has over 60 BPOs and
about 35 call centers. A BPO agent in the city earns more than $250 per month. Also
the labor costs in the city are comparable to other major global outsourcing cities.
Even though the monthly rental charges in Quezon City is $2 to $4 per square
feet, registering property for any business purposes can take about 39 days in order
to complete the eight property registration procedures.
Quezon City has good infrastructure, and is well networked with the major highways, thoroughfares and mass transit systems of Metro Manila. Even the longest highway in the metropolis and the country’s widest highway run through the City. Two
elevated light rail systems also make commuting, to and from Quezon City easy. GS
Above: Libis by night located
at the Southeastern corner
of Quezon City
Below: Katipunan Avenue, a
major road in Quezon City
22
Toronto, Canada
One of the good options for the U.S.-based companies to
nearshore their testing and contact-center functions
T
Above: Toronto city
Below: Yonge-Dundas Square
16 GlobalServices
oronto, the city with a population of 2.5 million, is known for the
immense R&D activities, skilled talent pool, renowned universities, supportive government initiatives and world-class infrastructure. The
information and communication technology sector is the region’s
largest private-sector employer in the technology hotbed of Canada, Toronto. The
city is home to a mature and diverse IT-services industry. However, labor cost in
Toronto is higher than the wages in most of the other global outsourcing destinations. An IT professional in Toronto pockets no less than $2,200, which could go
up to $3,000. Even a BPO executive earns between $2,000 and $2,400 per month.
The per month rental charges for commercial real estate in the city are
$2 to $3 per square feet. In addition, Toronto-based businesses typically can use
investment tax credits to offset up to 75 percent of its federal tax for a year, with
unused balances carried forward 10 years, according to Toronto’s Economic
Development Body.
The city has a well-educated and skilled talent pool. University of Toronto, York
University and Ryerson University and several other colleges and IT training facilities churn out a large educated workforce suitable for knowledge-based industries.
Toronto’s extensive road and rail connections further make it a flourishing destiGS
nation in addition to the great international connections.
October 2008
26
Rio de Janeiro, Brazil
A tempting treat for global outsourcing service providers to set
up their shop
R
io de Janeiro is the second largest city in Brazil with its vibrant population of some 6.1 million. Over years, the city has been a tempting treat
to many providers such as DBA, Politec, Satyam and Teleperformance
to set up operations here. Apart from playing host to the third-party centers, some companies including Citigroup and Oracle have set up their captive centers in the city.
The city’s universities churn out approximately 265,000 students and 20,000
researchers every year. There are almost 110 universities and educational institutions
in Rio de Janeiro that offer 566 programs for technical education. Therefore, the city
provides an alternative source of highly skilled and low-cost technical professionals
for IT projects and staff augmentation. Techies can be hired at a lower cost of $420
to $440 per month. Favorable time zone — depending on the season the city is just
one or three hours later than New York — cultural proximity and large pool of English- and Spanish-speaking people make it an ideal destination for setting up call-center facilities and BPOs. An entry-level BPO worker can make $360 to $330 per month.
With 15 procedures, starting a business in Rio de Janeiro takes 68 days, and the
total start-up cost could go up to 10.9 percent of GDP per capita. The per month
rental charges in the city are between $4 and $5 per sqft. With 14 procedures, it takes
75 days to register a property and set up a shop in the city. And it takes about three
GS
percent of the property value to register a property in the region.
Mexico City, Mexico
Above: Rio de Janeiro city
Below: Leme Beach
30
The NAFTA status boosts outsourcing in most of the tier-1 and
tier-2 Mexican cities such as Mexico City and Monterrey
M
Above: Mexico City Cathedral
Below: Santa Fe business
district
October 2008
exico City, the capital region of Mexico, is the most vital industrial, economic and cultural center in the country. In the top 50 cities’
list, this new entrant has been positioned at the 30th place, and has
left many global, well-known counterparts behind — St. Petersburg
(Russia) and Bucharest (Romania) to name a few. Even though Mexico City has been
known as one of the top outsourcing destinations in Mexico, this is the first time that
this city managed to get a place in our top 50 cities’ list.
Today many U.S. and European companies outsource their IT-services requirements to Mexico City. Apart from being a delivery location for many of the global
IT-services providers — such as Accenture, EDS, Softtek and TCS to name a few —
the city also supports large contact centers and BPO markets. Proficiency in English
and Spanish languages helps the country to cater to the large Hispanic community
in the U.S. More than 70 percent of the Mexico City BPO market is concentrated
in the Mexico City axis.
At $340 to $360 per month, the salary of entry-level BPO employees in Mexico
City is $20 to $40 higher than the BPO agents in Guadalajara and Monterrey while
there is no variation in the salaries of entry-level techies in all the three cities — they
earn $360 to $380 per month. Unlike Indian outsourcing cities there is no major difGS
ference between the salaries of techies and BPO agents in Mexico City.
GlobalServices 17
31
Jaipur, India
Being geographically closer (5 to 6 hrs drive) to Delhi NCR,
Jaipur’s infrastructure is able to attract and retain global providers
W
ith the inauguration of the much-awaited IT Special Economic
Zone (SEZ), Mahindra World City, in Aug. ’08, Jaipur has allured
numerous IT and BPO companies. Many such companies
including Infosys, Wipro and Connexions are already operating
or intending to operate out of the SEZ. Infosys’ BPO center at the SEZ is the
company’s second facility in the city with a seating capacity of 3,200 employees.
Infosys’ first such center in Jaipur was built in 2006 with a seating capacity of
890 employees.
Beyond the SEZ, the city has other BPOs like Spanco, and captives like Ericsson to name a few. GECIS (now GE) and Genpact were one of the earliest entrants
into the city with the employee base of 1,200 and 1,000 people, respectively. An
entry-level BPO agent earns from $140 to $160 per month, while an entry-level
techie pockets no less than $200 per month.
The city with a population of 6.5 million people (estimated in 2007) offers big
cost-saving opportunities to the outsourcing industry. Jaipur’s 410 colleges and 15
universities including 25 engineering colleges and 27 business-management institutes churn out thousands of graduates per annum.
Even though the standard of living in the city is not as great as many other Indian cities, the per month rental charges in Jaipur is $1 to $3 per square feet. Also
Jaipur’s railway and airport are well connected with all major cities in India. GS
Above: Hawa Mahal
Below: Carving at Amer Fort
Singapore City, Singapore
36
Not only does the city have local and skilled talent to pitch on
but it also employs thousands of foreign white-collared workers
W
Above: Central Business
District
Below: C751B train at Eunos
MRT Station
18 GlobalServices
ith tremendously increasing countrywide economic developments, there is hardly any difference left between Singapore and
its capital region Singapore City. No doubt, it is now referred
as the “city-state.” In 2007, the per capita GDP of Singapore
was about $37,289, with a 7.7 percent annual growth rate and an annual inflation rate of 2.1 percent.
Fourteen bilateral and multilateral trade agreements including USSFTA (the
U.S.-Singapore Free Trade Agreement), EFTA (European Free Trade Association:
Iceland, Liechtenstein, Norway, Switzerland), mark the city-state as one of the
most business-friendly countries in Asia. Singapore, therefore, houses thousands
of multinational corporations.
The labor costs in Singapore are relatively higher than other Asian countries. However, they are lower than those in the U.S. A BPO agent in Singapore earns (from
$1,400 to $2,000) seven times more than what an agent in India gets for the same
job. Interestingly, techies earn almost double than BPO employees in Singapore.
Even the real-estate costs are very high in the city. The per month rental charges
are $10 to $11 per square feet. However, the city-state enjoys the benefit of having
the strongest intellectual property protection in the entire region of Asia, according
GS
to The World Economic Forum.
October 2008
37
Chengdu, China
An important outsourcing hub in China and home to global
providers such as EDS, Wipro and Genpact to name a few
C
hengdu is the economic center of Southwestern China. The city is an
important global IT outsourcing destination. Several IT companies such
as EDS, IBM, HP, Neusoft, Dextrys (formerly known as DarwinSoft),
Augmentum, Wipro, Genpact have their presence in the city.
The city with a population of 7.8 million people has a large pool of highly skilled
IT professionals. A large number of universities and research institutions in Chengdu churn out over 20,000 students per year.
In addition, Chengdu’s labor cost is quite competitive, which is about two thirds
the wages in coastal cities, and the employee turnover rate is below 10 percent, according to Invest Chengdu’s statistics. On an average, a mechanical engineer earns about
$4,488.65 per year, while a software engineer gets $9,299 per annum.
Also, Chengdu is an important R&D center in China. The city houses several SEZs
including Chengdu Hign-tech Industrial Development Zone and Chengdu Economic
and Technological Development Zone. Chengdu Information Association and Chengdu New and High Technology Industry Area have established an “Implementation
Plan for Speeding up the Development of Chengdu Software Outsourcing.”
Chengdu has a world-class infrastructure, and is well connected with the other
metropolis such as Beijing and Shanghai. Chengdu Shuangliu International Airport
is the sixth largest airport in mainland China. The city has one of China’s densest highGS
way networks with 10 expressways so far.
Guadalajara, Mexico
Above: Jin RIver & Anshun
Bridge
Below: Temple in Chengdu
44
The city’s educational system makes it suitable for engineering
services outsourcing
G
Above: Puerta de Hierro
Below: Mormon Temple
October 2008
uadalajara, Mexico’s Silicon Valley and the second largest city with a population of 1.7 million people, has attracted significant levels of foreign
investment. The multinational enterprises that Guadalajara hosts
have helped to transform the city into an excellent place to do business.
The city’s IT industry in the city boomed after the inking of the North America
Free Trade Agreement. Since then the foreign direct investments has been growing.
However, the industry noticed a shakeout in 2001 to 2003 when most of the MNCs
started shifting their shops toward “far” East.
Guadalajara is the hotspot for the engineering-services industry because of its capability to churn out engineers from universities such as Universidad de Guadalajara
and Universidad Panamericana, to name a few. Many educational institutions and
the government are working together to groom up world-class techies.
The engineering services in the city were earlier related to just the manufacturing segment but now it has grown to other areas such as design engineering. Guadalajara houses several IT outsourcing firms such as Perot Systems and TCS. The BPO
sector is already flourishing in the city with key BPO providers such as Hispanic Services and TeleTech. An entry-level BPO executive can make $320 to $340 per month.
In addition, Guadalajara is also a major national and international transportation
and shipping hub. The city is also served by Guadalajara International Airport. GS
GlobalServices 19
45
Mandaluyong City, The Philippines
Besides entering our list for the first time, Mandaluyong has
recently bagged The World Bank’s business-friendly city status
I
n a small population of 295,733 people, the overall literacy rate in the City
of Mandaluyong is pegged at 99 percent with exactly one percent belonging to the illiterate group, as per the Philippines’ National Statistics
Office’s results. There are three major universities — Don Bosco Technical
College, The Jose Rizal University, The Rizal Technological University — and 47
colleges in the city. Over 40,000 students graduate every year from these educational institutions. Most of the colleges offer short-term courses on computer
and technical education. A techie can earn $320 to $340 per month during his
initial professional journey.
While Cebu city in the Philippines is the undisputable BPO hub, Mandaluyong City is gearing up to share the load. BPO players such as eTelecare are also
expanding in the city. Last year, eTelecare completed a facility in Mandaluyong City
— accommodating up to 3,000 employees. An entry-level BPO executive pockets around $280 to $300 per month.
In 2007, new businesses in the city grew 21 percent from the year before. Interestingly, it takes only 21 days to register a property in the City of Mandaluyong.
The per month rental charges in the city is between $2 and $4 per sqft.
Mandaluyong City is considered to be the heart of Metropolitan Manila as it
has three routes to link the two cities together. Mandaluyong City’s biggest asset
GS
is its easy road access – both within the city and to the adjacent cities.
Continued from page 27
Makatis. These are the ones that are not only capable
enough, but are also gearing up fast to compete with such
global “Silicon Valleys” for providing IT and BPO services.
To make the location assessment further easier for the global buyers of outsourcing services,
we have also identified established and emerging
cities by various functions such as application
development and management, business analytics, contact center (multilingual and English),
engineering services, finance and accounting,
HR, legal services, product development, R&D
and testing. In addition, we have also identified
the top eight global outsourcing locations.
Methodology
To determine delivery and consumption trends for global outsourcing services in specific destinations, Tholons utilized similar surveys and interviews with tier-1 and tier-2
providers and service buyers. The data gathering methodologies were also applied to determine market and labor sizes
as well as expansion strategies of tier-1 and tier-2 providers.
In addition, governments, industry bodies and related
stakeholders were also interviewed to provide both primary
data and validation of analysis.
20
GlobalServices
Mandaluyong City skyline
We obtained historical stats from governments, global
institutions and agencies, and economic-related data
from monetary bodies. Publicly released data from government sources were also considered when using country-specific market data. Publicly available
financial records such as quarterly and annual reports, industry bulletins and trade publications were used to verify market assumptions and analysis.
A combination of comprehensive quantitative and qualitative analysis was considered
in developing the rankings. The proprietary
weighting and ranking system was developed
and refined by senior Tholons consultants. Further,
qualitative analysis was implemented to provide perspective to the quantitative results of the report. Tholons
carefully considered numerous variables when providing
final rankings, and considered the impact which nonnumerical data plays in the assessment of global outGS
sourcing locations.
Avinash Vashistha is the CEO of Tholons, a global advisory, investment
and research firm. With additional inputs from the Tholons' team —
Manuel Ravago, Skanda Jankiram, Paul Santos and Vinu Kartha —
and Global Services' team — Keerthi Nair and Namita Goel
October 2008
GATEWAY
to the Global Sourcing of IT and BPO Services
Connecting the global buyers and providers of IT and business process
outsourcing services. Global Services, your own global media platform, not
only helps you to choose your partner but also enables you to leverage its media
solutions to make your outsourcing relationship work. Global Services’ authentic and on-time content facilitates right outsourcing partnerships. Our portfolio
includes a magazine, a website, newsletters, events and custom solutions.
The gateway to the global sourcing of IT and BPO services
globalservicesmedia.com

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