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| Indian cities still hot for outsourcing |
| BS Reporter / Mumbai Oct 22, 2009, 00:43 IST |
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But countries like Canada, Poland, Vietnam are honing their skills
Reconfirming the fact that Indian cities are the most preferred destination for outsourcing, six Indian cities — Bangalore, Delhi-NCR, Mumbai, Chennai, Hyderabad and Pune — figure among the eight top global destinations for outsourcing of services along with Manila and Ireland’s Dublin city, according to the 4th Global Services-Tholons Top 50 emerging outsourcing destinations survey.
Compared with last year, the latest study reveals minimal shifts in rankings because of the overall slowdown in the pace of outsourcing activity on the back of a global recession. For instance, it’s for the fourth year in a row that India’s Silicon Valley, Bangalore, has managed to retain its numero uno position.
| TOP OUTSOURCING DESTINATIONS |
| 2008 |
2009 |
| Bangalore |
Bangalore |
| Chennai |
Delhi NCR |
| Delhi NCR |
Mumbai |
| Dublin |
Manila |
| Hyderabad |
Dublin |
| Makati |
Chennai |
| Mumbai |
Hyderabad |
| Pune |
Pune |
| Source: Global Services |
The Delhi NCR region overtook Chennai this year to claim the second spot, while Mumbai moved up four places to claim the third position. Hyderabad fell two places to rank seventh while Chennai came sixth (it was number two last year). Pune remain static at the eighth position.
Bangalore’s success, notes the report, lies in the fact that major service providers like Infosys Technologies and Wipro in the city continue to attract a major chunk of global buyers. The city came into focus way back in 1991 as an IT hub with the support of the Software Technology Parks of India (STPI) Act and soon developed its BPO capabilities as well.
If Bangalore’s strength lies in high-tech talent pool due to an abundance of educational institutions in the city, Delhi is far better in terms of its BPO capabilities, notes the report — especially its contact centers. Delhi-NCR (National Capital Region), which comprises the three cities of Delhi, Noida and Gurgaon, offer a conducive eco-system for business analytics, finance and accounting, software development, product development, engineering services and contact center services in English.
Mumbai city exhibits an established position in the global outsourcing space owing to various factors like infrastructure, a large talent pool of around 60,000 employees in the BPO sector and developed policies. India’s IT-services industry was born in Mumbai in 1967 with the creation of Tata Consultancy Services (TCS). Top services providers like TCS, IBM, Infosys, Wipro, HCL, Mahindra Satyam, Accenture, CSC, ACS, Caliber Point, Firstsource, Convergys, Genpact, WNS Global Services, Minacs, Cognizant and EDS are present in the city.
Chennai, which fell four places to the sixth rank this year, remains India’s second-largest exporter of software, IT and related services and contributes 39 per cent of the Indian state of Tamil Nadu’s GDP. It’s home to major IT services providers like TCS, Infosys, Wipro, Cognizant, HCL, Mahindra Satyam, IBM, Accenture, Polaris, L&T InfoTech, PerotSystem and Vertusa.
However, according to the report, the hot and humid climatic conditions in the city are still a black mark to some extent which might influence a minor percentage of employees to leave the city.
The report, however, cautions that though India and the Philippines occupied the pole positions, ‘emerging’ destinations are innovating to carve a niche for themselves and grab a share of the outsourcing pie. For instance, the next 10 outsourcing destinations — considered to be ‘Top 10 Aspirants’ from a total of 68 destinations — are dominated by China’s Shanghai, Beijing and Shenzhen, Vietnam’s Ho Chi Minh City and Hanoi, Poland’s Krakow, Argentina’s Buenos Aires, Egypt’s Cairo and Brazil’s Sao Paulo, according to the study which was jointly conducted by IT advisory firm Tholons and the Global Services division of Cyber Media.
For the present, though, India continues to top the list with revenues of $40 billion in IT-BPO export services in 2008. Indian IT-BPO export services posted a 35 per cent year-on-year growth in the last five years.
The Philippines, too, increased outsourcing revenues by 25 per cent from $4.8 billion in 2007 to $6 billion in 2008 while increasing industry employment by 33 per cent to an estimated 400,000 employees.
Avinash Vashistha, CEO of Tholons, cautioned: “For a CIO today, finding a center of excellence is more than just lower cost. The service providers need to think through their offerings as the competitive advantage is rapidly vanishing due to cut-throat competition and market saturation.”
India, the Philippines, Ireland, China and Brazil figure among the Top 5 Offshore nations, notes the report. They are categorised by a high degree of maturity and record of successful delivery capabilities. These countries typically have ‘Centers of Excellence’ across multiple outsourcing segments and rank highly in a number of location assessment scenarios.
These five countries offer the strongest value propositions to clients based on the Location Assessment Platform and are considered as prime locations when considering specific outsourced processes. They will most often also have the unique advantage of scale and capacity as compared with smaller or emerging locations.
In contrast, countries like Canada, Russia, Mexico, Vietnam and Poland figure among the top five emerging nations. The difference is most pronounced in the service level maturity. In terms of potential, though, they are not far behind, states the report.
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