Amidst all the brouhaha about the backlash against India as an offshore outsourcing destination, some succor was recently provided to the embattled Indian BPO and IT services community. It came in the form of AT Kearney’s 2004 Offshore Location Attractiveness Index that ranked India as the No.1 global outsourcing destination ahead of China, that ranked second. Asian powerhouses like Malaysia, Singapore and Philippines also figured in the Top 10 club.

The study analyzed 25 countries against 39 measurements in three categories. Financial factors made up for 40% of the index weightage, people skills and availability contributed 30% and local business environments accounted for the remaining 30%. Not surprisingly, India’s status as the leader of the pack is bolstered by its cost advantages, and more significantly by the depth and range of offshoring experience and people skills—advantages which have been tom-tommed about for years both by enterprises who outsource to India as well as the Indian BPO/IT services players.

Rather than basking in the glory, the report offers enough indications about which the Indian industry should take note off immediately if they want to maintain the competitive advantage. India might have pipped China to the post for the time being, thanks to its mature market and quality of IT education and management, but it is no more a secret that China is working on a war footing for a long time now to nullify India’s advantage. Add to that, China’s cost advantages and large educated labor pool plus cultural and language synergies is helping it grow as an offshore destination for Japanese and Korean companies. This, unfortunately, is one important fact most of the Indian lobbyists tend to overlook—while India might continue to have the English advantage for some more time, Japan and Korea together contribute close to 20% of the global outsourcing pie.

Not only China, it is time for India to wake up to threats from other unexpected quarters too. India should seriously look at competition not only from traditional Asian rivals like Philipines and Malaysia (which are in the Top 10 club), but from East European and Latin American countries like Czech Republic, Poland, Hungary, Brazil and Chile.

Add to this the fact that developed countries like Singapore, Canada and New Zealand also score heavily on fronts like the business environment index (much ahead of India) thanks to aggressive government promotions, excellent education and infrastructure, high social and political stability and strong IPR protection.

TEAM DQ

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