India remains atop outsourcing market

India remains king as far as outsourcing is concerned, but other countries are rapidly catching up, according to a study. But the Middle East and North Africa region is slowly emerging as a promising back-office destination, global management consulting firm A T Kearney says.

According to A T Kearney's Global Services Location Index (GSLI), India, China and Malaysia continue to lead the index by a wide margin ''through a unique combination of high people skills, favorable business environment and low cost".    

In particular, India has remained at the forefront of the outsourcing industry and actually has become an enabler for industry growth through expansion of Indian offshoring firms into other countries, it added.    

The survey further said that West Asia and North Africa is emerging as a key offshoring region because of its large, well educated population and proximity to Europe.

"The Middle East and Africa area has the potential to redraw the offshoring map and in the process bring much needed opportunities for its large, underemployed educated class," GSLI project manager Johan Gott said.    

Employment paradox
The survey further said that although the global financial crisis has slowed recent offshoring moves, the percentage of companies' staff offshore may well increase as a result of the crisis. Layoffs at home are not translating to layoffs among offshore workers as companies seek to reduce costs.

''While cost remains a major driver in decisions about where to outsource, the quality of the labour pool is gaining importance as companies view the labour market through a global lens driven by talent shortages at home, particularly in higher, value-added functions,'' said Norbert Jorek, a partner with A T Kearney and managing director of the firm's Global Business Policy Council.

In addition to Egypt and Jordan, ranked at sixth and ninth respectively, some other emerging outsourcing destinations were Tunisia (placed seventeenth), United Arab Emirates (29) and Morocco (30).

Saharan Africa also showed strength. Ghana ranked at 15, Mauritius 25, Senegal 26 and South Africa at 39.

''The dynamics of global offshoring are clearly shifting as companies re-evaluate the political risks, labour arbitrage and skill requirements in the context of the likely aftermath of the global economic crisis,'' A T Kearney chairman and managing officer Paul A Laudicina said.

GSLI analyses and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centres and back-office support.