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Global Services A CYBERMEDIA Publication

An integrated media platform which connects the


various constituents of the global technology and Pradeep Gupta
Chairman & Managing Director
business processing services industry ecosystem.
Cyber Media (India) Ltd.
E. Abraham Mathew
Directory of Services President
Ed Nair
Newsletter
Editor
A regular digest of key industry happenings. ed@cybermedia.co.in
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Webinars sruthir@cybermedia.co.in
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by industry specialists. virendrap@cybermedia.co.in

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Editor’s Note

The Business
of Places
B usiness is all about ideas, money, and people. And places. This is
specifically true in the global services industry.
As we end this decade that marked the maturing of global sourcing
of services, the role of outsourcing locations has really played out very
well for all of us to see. For one, global sourcing was always about the
Ed Nair ‘place’. In the beginning, it meant India and now it means much more.
The journey from thereon has been fascinating.
Editor Remarkably, the journey also coincided with many other con-
ed@cybermedia.co.in comitant trends like rapid globalization, liberalization of economies,
growth in emerging economies, and technology refresh cycles. These
trends spurred the growth of global locations from where services
IT and BPO are could be delivered.
both global business The other point is that services in the form of IT and BPO are both
global business opportunities and tools for economic development for
opportunities and countries. The breadth of economic impact of pursuing global services
tools for economic is wide: it includes increase in FDI, growth in exports, increase in
development for domestic employment, rise in purchasing power, infrastructure devel-
opment, and overall GDP growth. Every country including India is
countries. This year’s witness to these effects.
research and ranking The Global Services Destinations Compendium is an attempt to
feature 100 cities bring together the myriad dynamics of outsourcing locations in one
place— complete with research, data, profiles, and expert opinions. At
from 49 countries. the most granular level, we look at cities and how they compare with
each other. More importantly, we look at how upwardly dynamic the
cities are compared to previous years. The research and ranking from
Tholons feature 100 cities from 49 countries. It is indicative of the
phenomenal spread of the global services business.  GS

6   GS Destinations Compendium 2010 www.globalservicesmedia.com


A T R U E P U B L I C P R I V AT E PA R T N E R S H I P

W o r l d ’s # 9 Fa vo ra b l e
Outsourcing Destination
“A.T. Kearney Report 2009”

Reliable Infrastructure

Educated Technical Human Resources

Your Gateway to the Middle East

Fast Growing Economy


Contents

11 49
Expert Speak
The Top 100 Cities
� Choosing the Right
by Avinash Vashistha &Manuel Ravago, Tholons
The list of Top 100 Outsourcing Cities will set the outlook for the Off-Shoring Destination  50
industry in coming years. by Atul Vashistha, Founder & Chairman, Neo Advisory
� Compete or Cooperate? Bridging the Nearshore-
Offshore Divide  53
by Anupam Govil, Founder and CEO, Global Equations
� Rise of IT-BPO Outsourcing Frontiers Regional
Analysis  56
by Viral Thakker and Nishant Mathur, KPMG
Advisory Services, India
� Latin America: The Next Sourcing Frontier or an
Afterthought?  59
by Esteban Herrera, Senior Vice President, HfS Research
� Africa: The emerging frontier for services
21 JORDAN ­offshoring  63
Country In by H.Karthik and Nikhil Rajpal, Everest Group
Focus: JordAn � Location Selection Best Practices  65
by Jehil Thakkar and Shailesh Narwaiye, KPMG
27 Advisory Services, India

Regional Dynamics � Global Sourcing for FAO: Strong, Successful and


by Sruthi Ramakrishnan Growing  68
by Stan Lepeak, Managing Director, EquaTerra Global
� Location Assessment: Perception and Research
Reality for Global Businesses  28
� Why Latin America is Still a BUY  71
� Europe: Showcasing the by Mario Tucci, Senior Global Business Consultant
Challenges and Opportunities  32 � Africa- The Next Outsourcing Frontier  72
� Perspectives and by Dr. P.K.Mukherji, President & Managing Partner,
Potential of Asia’s Avasant Asia
Hotspots  36 � Latin America Emerges as a Key Outsourcing
� Middle East & Africa: Destination for 2011  74
Leveraging Africa & by Don Jones, Partner, Technology & Life Sciences
Middle East  41 Practice, BDO USA
� Latin America: The � Africa as an Outsourcing Destination  76
Enduring Promise of by Pumela Salela, BPO/ITeS expert Consultant, World
Bank
Latin America  44
� Offshoring in the Latin American Region  82
by Pradeep Udhas, Executive Director, IT/ITeS Sector,
KPMG

8   GS Destinations Compendium 2010 www.globalservicesmedia.com


� India’s Global Expansion: Eyeing Latin
America  83
by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ
� Legatum Prosperity Index  84

87 � Dalian  104
� Guangzhou  106
� Santiago  128
� Shenzhen  130
City Profiles
� Hanoi  107 � Singapore  132
� Beijing  88 � Ho Chi Minh  109 � St. Petersburg  133
� Belfast  90 � Johannesburg  111 � Toronto  134
� Brno  91 � Kolkata  113 � Warsaw  136
� Budapest  92 � Krakow  115 � Ahmedabad,
� Buenos Aires  96 � Kuala Lumpur  117 Bangkok, Bhubaneswar, Brasília  137
� Cairo  98 � Mexico City  119 � Bucharest, Cape Town, Dubai, Glasgow City  138
� Chandigarh  98 � Prague  120 � Guadalajara, Istanbul, Jakarta, Kyiv  139
� Coimbatore  100 � Rio de Janeiro  122 � Montevideo, Moscow, Mysore, Nizhniy
� Colombo  101 Novgorod  140
� San José  124
� Curitiba  103 � Penang, Perth, Seoul, Taipei  141
� Sao Paolo  126

Destinations
Compendium 2011
One Stop Resource On Global
Outsourcing Destinations

RELEASING NOVEMBER 2011


Inviting countries, cities, associations
to take part in this initiative

For more details, write to


satishg@cybermedia.co.in

9   GS Destinations Compendium 2010 www.globalservicesmedia.com


� Ranking Fluctuation  12
� Methodology and Scope of Study  15
by
� Point of Scale Resistance  15
Avinash Vashistha
� The Top 100 Cities  16 Chairman and CEO, Tholons
� Top 10 Emerged Cities  18
Manuel Ravago
� Top 10 Emerging Cities  19 Research Director, Tholons
The Top 100 Cities

Ranking Fluctuations
The 2010 List of Top 100 Outsourcing Cities is a deliberate attempt to
encapsulate trends in the new era of services globalization.

Boon or Bane? likewise provides insight to the future potential of locations


Change has been the best descriptive word for the out- in addressing emerging trends and demands in services
sourcing industry in 2009, and this year, Tholons has globalization.
encompassed the world’s Top 100 Outsourcing cities -
twice the number of previous Lists. The expansion of the Location Assessment Framework
list has created an avenue for a more concise understand- These recent events in the global economy certainly high-
ing of industry movements – across 49 countries from 10 lighted the importance of more accurately assessing a loca-
defined regions. tion and the corresponding outsourced services that can be
Industry experts noted that the outsourcing activities potentially delivered. Given this, the Location Assessment
from 2009 to this year have become sluggish. Countries Framework has been applied in generating this report. The
tried their best to prove resiliency in the crisis and opted Framework covers six broad categories with fifteen subcat-
for strategies that could mitigate the effects. Indeed, some egories, with each category and subcategory having their
of the countries that had been resilient experienced smaller own respective weight. These weights are then utilized to
GDP growth, below expected growth targets; on the other generate a corresponding ‘City Score.’ These categories are
hand, countries which were greatly affected by the global “Scale and Quality of Workforce”, “Business Catalyst”,
recession posted negative growth, which often deterred “Cost”, “Infrastructure”, “Risk Profile” and “Quality of
their development as service delivery locations. Life”.
Likewise, the repercussions of the global economic The parameters above are the essential components in
crisis postponed many large outsourcing deals across geog- differentiating cities from each other. Consequently, the
raphies, while forcing service buyers and providers alike to parameters serve as guide in determining the capabilities
stretch operational budgets. The mantra of ‘doing more for of each city to deliver services in the wider spectrum of the
less’ has never been more relevant to the service providers outsourcing industry. Aside from presenting the inherent
as it was this past year. The effects of the downturn also strengths, the parameters are also an effective base for iden-
spurred apprehension among clients in renewing outsourc- tifying the inhibitors or areas for improvement which may
ing contracts. This cautionary stance was felt by most if undermine the development of the industry in the loca-
not all horizontal and vertical segments of the industry. tion. The framework also reveals additional factors which
On a positive note, many have viewed these challenges may spur a location’s service delivery maturity.
as opportunities, treating the economic downturn simply The combination of these parameters results in a specif-
as a transitionary (or even evolutionary) phase for the ic correlation of the cities to their respective service niche.
industry. There is now a greater call for delivering complex For example, considerations in the workforce extend from
services than maintaining cost advantages, which leads to scalability to employability of workforce. Cities with an
a more widespread transformation of outsourcing models abundance of Spanish-proficient speakers will have a
to fit the requirements of an ever-changing buyer market. greater value proposition for catering voice-based BPO
Further, there is a stronger focus on business transforma- services to the US Hispanic market. Likewise, cities with
tions among service providers, which will foster enhanced high percentage of engineering graduates may be better
customer satisfaction. In the end, stronger buyer-provider equipped to venture into the ESO space.
relationship will be seen. Cost still plays a significant factor in locating. Coupled
The 2010 List of Top 100 Outsourcing Cities is a with the capacity to deliver specialized services, low cost
deliberate attempt to encapsulate such trends in this new cities can have a definitive advantage in attracting inves-
era of services globalization. Thus, this year’s List is not tors or service providers. Along with this, developed and
only a reflection of the current competitiveness (and stat- supportive ITeS infrastructure is needed in order to fulfill
ure) of cities in the global outsourcing landscape, the List the requirements of the industry. In order to support the

12   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

Scale & Quality Cost Businee Catalyst Infrastructure Risk Profile Quality of Life

• Labor Pool • Cost of Operations • Government • Connectivity • Social infrastructure • Commerical Risk
• Skills Availability • Cost of Training Benfits/Incentives • Bandwidth Availability (Hospitals, Educations • Political Risk
• Graduate Output • Cost of Real Estate • C ompetitive • Transportation Institutions, etc.) • Natural Risk
• Complexity • cost of Bandwidth Landscape • Non-work Culture • Social Risk
• Cost of Living • Untapped Labor Pool • Availability of
• Cost of other • Employement Profile Recreation/Leisure
Infrastucture facilities

Skills and Savings Business Operational Business Non-Business


Scalability Environment Environment Risk Environment

growing ITeS industry, Kuala Lumpur for example, has improvement in perceived risk in the country by the cli-
shown concerted effort in improving infrastructure, which ent nations. The city of Kuala Lumpur moves up 4 places
contributes to its overall attractiveness as an outsourcing highlighting the city’s robust and continuously developing
destination. infrastructure and maturity of service delivery capabilities
Factors such as Risk Profile and the Quality of Life in for high-value ITO and FAO.
the cities are also included to assess the viability of the On the other hand, the major drops were seen in Tier
location. Political violence and social unrest may greatly II locations: Nizhny Novgorod, Thiruvananthapuram,
affect the conduciveness of business operations in the city. Cordoba, Chandigarh, Belfast, Accra, and Jaipur. One
One recent example is the increasing crime rate in Mexico, possible reason is the inability of Tier II locations to
which has definitively affected the decisions of service pro- improve on service delivery maturity, in relation to its Tier
viders in locating and expanding in the country. I competitors in their respective countries. The two-old
The Framework also considers various regional dynam- factors can be attributed to this: quality of scalable labor
ics which also have a direct influence on the positioning of pool and infrastructure concerns.
the cities in the global outsourcing space. Latin America Many Tier II locations likewise have struggled to
is reputed for its nearshore advantages to the US; on the develop labor pools, or to at least reach the same labor pool
other hand Eastern Europe is known for its cultural affinity quality of Tier I locations. Many Tier II locations have
and geographic proximity to the Western European client also experienced labor migrations of their highly-skilled
market. resources, and as induced by rising unemployment rates.
The Tholons Location Assessment Framework thus Challenges pertaining to employability have also been an
becomes more relevant in critically identifying, monitor- occurring problem in many Tier II cities – especially when
ing, and evaluating the competencies of emerging global considering English proficiency and technical skills. For
outsourcing destinations. example, the city of Jaipur in India has lost some of its
appeal as a destination of choice due to the perception of
City Movements: Losers and Gainers low employability of its technical and managerial talent
The top gainers this year were mostly Tier I destinations pool. In contrast, and in St. Petersburg in Russia, the high
– Colombo, Kuala Lumpur, Singapore, Brasilia, and technical graduate output is one of the major contributing
Montevideo. A clear factor for the movement is attributed factors which moved its ranking up, albeit having high
to the global effects of the economic crisis. With most labor costs.
economies recovering and rebuilding their competencies, Weak infrastructure support also remains a deterrent
service providers have been more keen on strategically for service providers from locating in Tier II cities. For
placing their investments in (safer) Tier I cities and in instance, India’s ITeS-related infrastructure is nearing peak
locations with established service delivery capabilities. capacities, which makes it less efficient in fulfilling the
For instance, the city of Colombo moves up 5 places this requirements of the industry. This is noticeable among
year, in recognition of its capabilities in FAO, producing Tier-I locations in India and is further observed among
accountants that meet UK standards and the significant Tier II locations.

13   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

Movement Major Gainers Movement Major Losers Education, or Application Development Management
+6 St. Petersburg -4 Nizhniy Novgorod services from its cities. Thus, the country value proposition
+5 Colombo -4 Thiruvananthapuram is merely a rough summation of the service capabilities of
+5 Singapore -4 Belfast its key outsourcing cities.
+5 Brasilia -5 Cordoba
City-centric assessments also receive greater traction
from large service providers, and as city’s can better
+5 Montevideo -5 Chandigarh
decouple themselves from the broad or oftentimes ‘generic
+4 Kuala Lumpur -5 Jaipur
proposition’ of the country. Value propositions of the cities
+4 Brno -5 Accra
are oftentimes overshadowed by the generic country value
+4 Tianjin
proposition. Cebu City for example has high potential
to become a global KPO player but the city’s image is
The downturn has proven the importance of location often overshadowed by the Philippines’ voice-based BPO
assessment for investigating the service delivery maturities reputation.
of outsourcing destinations. Factors for locating may not For Tier II cities, decoupling will become an increas-
entirely rest on the cost advantages but on the quality and ingly necessary process, especially among emerging cities
complexity of services being delivered. Service providers with very specific skill set propositions. Decoupling from
have been keen in evaluating the best-fit city which will the country image will entail an efficient highlighting of
deliver their processes. the local value propositions and a more focused marketing
Thus, the challenge now lies for the emerging countries and promotions strategy.
to increase its overall competitiveness to gain traction in The underlying premise for decoupling still lies on the
the outsourcing landscape. This will require more effective coordination among key stakeholders in the particular
and creative initiatives that will position better position location. More responsive decision and implementation
their countries in the market and highlight their inherent will be required as the city-centric approach is significantly
service delivery advantages. smaller compared to country-level approach. Successful
concerted effort will also be a crucial factor in identifying
City-centric Approach – The Continuation of and building the outsourcing industry in the city.
the Paradigm Shift The revamp of the global economy marks the emer-
City-level analysis has always been the best approach in gence of key trends in outsourcing – a paradigm shift
identifying corresponding service delivery strengths. As encompassing the types of services and the geographies of
compared to country-wide analysis, a city-centric approach ideal locations. In the near-term, we should experience a
allows a more granular investigation of the inherent capa- more granular approach to location assessment - focusing
bilities of and the opportunities for each potential city. on cities rather than countries and as a city-centric
For example, a country having specialization in IT services approach fosters better identification of specific niche
may encompass Software Development, IT Training and services.  GS

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

14   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

Methodology and Scope of Study


T
he Top 100 Emerging Outsourcing Destinations governments, trade bodies, and global institutions, while
2010 report was fulfilled through a combina- government publicly released data were used to present
tion of proven methodologies. First, surveys and country macroeconomic data, while market assumptions
interviews were conducted with Tier I & II and analyses were grounded by data such as annual reports,
service providers and buyers aimed at determining trends industry bulletins, and trade publications. In generating
in delivery and consumption of outsourced services in the rankings in the report, a combination of qualitative
specific destinations as well as determining market and and quantitative analyses, developed and refined by senior
labor sizes, identifying the expansion strategies of Tier I & consultants, considering numerous variables in providing
II service providers. Second, secondary research was con- the rankings and evaluating the impact of non-numerical
ducted in support of primary means. Country economic data on the assessment of outsourcing locations were
information were gathered from historical data from employed.  GS

Point of Scale ResistanceSM


T
he current global outsourcing landscape is amount of investments flowing into the sector. It can
marked with by heightened competition with also be seen in aspirations (or intent) of students to
service delivery locations aiming at securing take education related to specific outsourcing service
their respective shares of the global outsourc- lines.
ing market. One major challenge for these locations is ❑ Low Employability: Employability is a factor of qual-
how to better integrate their respective labor pools in the ity of education, quality of institutions and availability
outsourcing sector as service providers most often choose of industry-relevant skill sets of a given labor pool.
locations on the basis of accessibility of qualified talent ❑ High Competition: Competition is a significant fac-
in the long-term. With this shift of paradigm from basic tor for scalability as it can come from not only the
availability to sustainable and employable talent supply, services outsourcing industry but also from other
the concept of Point of Scale Resistance (POSR) has been industries hiring from the same pool.
introduced in analyzing service delivery locations. This ❑ High Risk: The perception of risk can vary across the
concept refers to the point beyond which organizations stakeholders in the industry, and hence high risk loca-
will encounter challenges in ramping up operations in a tions (at times with excellent talent pool availability)
specific location – highlighting sustainable employability fail to provide scalable solutions.
of talent. For instance, if Country A has a POSR of 850, ❑ Financial Feasibility: While focus has remained on
this means that service providers would theoretically cost and operational benefits, high salary inflation
encounter difficulties in ramping-up headcount beyond inhibits scalability.
850 employees. This clearly suggests that scalability is a
function of multiple parameters and not just population, The POSR concept will become an increasingly important
and the inhibitors have been classified into the following consideration for emerging delivery locations to promote
segments: their capabilities as it assists in identifying what a location
❑ Low Demand: Demand can be seen not just in the can/cannot or should not do when assessing its service deliv-
number of MNCs present in the country to the ery capabilities.  GS

15   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

The Top
100 Cities
2007 2008 2009 2010 City 2007 2008 2009 2010 City
Top5 Top8 Top8 1 Bangalore 25 20 19 28 Johannesburg
Top5 Top8 Top8 2 Mumbai - 22 23 29 Toronto
Top5 Top8 Top8 3 Delhi (NCR) - 26 21 30 Rio de Janeiro
Top5 Top8 Top8 4 Manila (NCR) 32 33 27 31 Kuala Lumpur
1 Top8 Top8 5 Chennai 21 17 18 32 Coimbatore
2 Top8 Top8 6 Hyderabad 33 32 31 33 St. Petersburg
Top5 Top8 Top8 7 Dublin 27 29 30 34 Brno
3 Top8 Top8 8 Pune 22 23 24 35 Guangzhou (Canton)
4 1 1 9 Cebu City - 30 26 36 Mexico City
8 2 2 10 Shanghai 24 24 25 37 Belfast
16 5 4 11 Kraków 26 28 28 38 Warsaw

10 3 3 12 Beijing - 36 36 39 Singapore

14 9 6 13 Buenos Aires - 37 33 40 Chengdu

11 7 7 14 Cairo - 31 29 41 Jaipur

15 8 8 15 São Paulo 46 41 37 42 Monterrey

6 4 5 16 Ho Chi Minh City 43 38 34 43 Bucharest

18 16 12 17 Dalian (Dairen) 44 43 41 44 Brasília

13 10 9 18 Shenzhen 34 34 32 45 Accra

17 13 11 19 Curitiba 42 39 38 46 Moscow

7 19 17 20 Colombo - - 43 47 Tianjin

12 11 10 21 Hanoi - 44 39 48 Guadalajara

20 14 14 22 Prague 40 35 35 49 Bratislava

5 6 15 23 Kolkata - - 47 50 Montevideo

19 18 16 24 Santiago 41 40 40 51 Sofia

29 27 20 25 San José 47 46 46 52 Tallinn

9 12 13 26 Chandigarh 35 48 45 53 Halifax

28 25 22 27 Budapest 49 50 49 54 Ljubljana

16   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

2007 2008 2009 2010 City 2007 2008 2009 2010 City
Casablanca - - - 79 Penang
- - 44 55
(Dar-el-Beida)
- - - 80 Seoul
48 49 50 56 Kyiv
31 - - 81 Perth
- - 48 57 Alexandria
- - - 82 Bucaramanga
- - - 58 Bhubaneswar
- - - 83 Asunción
30 42 42 59 Glasgow City
- - - 84 Wroclaw
- - - 60 Istanbul
- - - 85 Amman
- - - 61 Cork
Birmingham,
38 - - 86
- - - 62 Jakarta Alabama
- - - 63 Nizhniy Novgorod - - - 87 St. Louis, Missouri
- - - 64 Bogotá Santa Rosa,
- - - 88 Laguna (or Metro
- - - 65 San Juan Laguna)
- - - 66 Lima - - - 89 Valparaíso
- - - 67 Thiruvananthapuram - - - 90 Port Louis
- - - 68 Medellin
- - - 91 Mysore
- - - 69 Davao City
Indianapolis,
- - - 92
- - - 70 Xi’an Indiana

- - - 71 Córdoba - - - 93 Dubai
- - - 72 Ahmedabad Oklahoma City,
45 - - 94
Oklahoma
- - - 73 Cape Town
- - - 95 Belgrade
- - - 74 Taipei
- - - 96 Campinas
- - - 75 Recife
- - - 97 Novosibirsk
39 47 - 76 San Antonio, Texas
- - - 98 Iloilo City
- - - 77 Bangkok
- - - 99 Tunis
Leeds (Yorkshire &
37 - - 78
Humber) - - - 100 Bacolod City

Status 2010
  ESTABLISHED     EMERGING     ASPIRING  

17   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

Top 10
Emerged
Cities

T
his year’s list of Top Emerged Outsourcing Pune, considered as the educational hub producing
Cities has expanded, identifying ten global quality labor pool in ESO and ADM remains at 8th place
delivery locations. Two new cities join the this year as it faces stiff competition from other emerged
eight previously acclaimed outsourcing cities. Indian cities.
Cebu City and Shanghai have significantly developed their Cebu City has been successful in further developing
respective outsourcing industries which have allowed these its outsourcing capabilities. An established English voice-
cities to join the Top 10 Emerged List. based processes sector supports its 9th place rank.
Bangalore retains first place for the 4th year running, Shanghai has developed complex IT and R&D services,
setting an example through its high talent output, and optimizing its labor pool, cost advantages, and transport
established and expanding service delivery capabilities. linkages, rounding of the Top 10 list this year.   GS
Mumbai moves up to 2nd place this year, with its huge
labor pool consistently displaying enhanced service deliv- Rank 2010 Rank 2009 City Country
ery in complex and high-value FAO services.
Delhi NCR moves down to 3rd place this year, owing 1 1 Bangalore India
to rising real estate costs and infrastructure stress on Delhi 2 3 Mumbai India
City, and despite its established FAO sector.
Manila NCR stays at 4th place as it encounters chal- 3 2 Delhi (NCR) India
lenges in moving up the value chain towards KPO services, 4 4 Manila (NCR) Philippines
given its mature service delivery in voice Contact Support
& FAO. 5 6 Chennai India
Chennai moves up to 5th place due to its access to the 6 7 Hyderabad India
large technical talent pool from Southern India and its
maturing service delivery capabilities. 7 5 Dublin Ireland
Known as the IT hub of India, Hyderabad moves up to 8 8 Pune India
6th place owing to its mature service delivery capability and
large pool of engineering and technical graduates. 9 - Cebu City Philippines
Despite its mature delivery capability in R&D and IT 10 - Shanghai China
services, Dublin constantly faces high costs and limited
scalable labor – the city slips to 7th place this year.

18   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Top 100 Cities

Top 10
Emerging
Cities

T
he list of Top 10 Emerging Cities will set the Vietnam’s Ho Chi Minh, an ITO-centric city, has
outlook for the industry in the coming years. significantly dropped three places due to scalability and
With cities coming from South America and employability of its labor pool and as service providers in
MENA regions, it is compelling to see stiffer the city have begun to experience scale-up issues.
competition arising from these locations in order to cap- Leaping 3 places, Dalian is one of the impressive
ture a significant share of the global outsourcing market. emerging outsourcing cities this year. The city experienced
Each city in the list has been positioning itself and their an estimated 30 percent increase in software and services
respective niche services and specific target markets - lead- outsourcing exports last year. Dalian has remained success-
ing to more defined value propositions per city. ful in targeting the Japanese and South Korean markets for
The only Eastern European city, Krakow leads the Top ITO and KPO services.
10 Emerging Outsourcing Cities List. The city has been Shenzhen moved one rank lower this year due to lower
constantly moving up the ranks since 2008. The city has annual graduate output coupled with challenges in creat-
built expertise in delivering FAO services with improving ing conducive business environment for investors.
service delivery maturity for ITO and HRO services. Large Curitiba takes ninth place this year. The city gov-
multinational companies have established their presence in ernment has embarked various initiatives like Curitiba
the city, like Capgemini, Google, IBM and Microsoft. Offshore Center to promote the city as a prime ITO hub
Beijing is second in the list of Emerging Cities. The in Brazil.
city’s primary strength is its enormous scale and talented Sri Lanka’s chief outsourcing city, Colombo, closes the
labor for ITO services. In fact, the ITO sector has already Top 10 Emerging Cities List. A significant factor for its
captured 80 percent of the total outsourcing revenues of inclusion is th e recognition of its capabilities for delivering
the city. However, Beijing continually faces challenges FAO services, together with the improvement of the per-
improving its business climate as it remains affected by ceived business and political risk.  GS
strict government regulations.
Buenos Aires, the primary outsourcing city of Argentina, Rank 2010 Rank 2009 City Country
also moved one place higher in this year’s rankings. The
city has been harnessing its capabilities in delivering mul- 1 4 Krakow Poland
tilingual Contact Support Services to key markets. This 2 3 Beijing China
specialization contributes to the improving service delivery
maturity of the city. 3 6 Buenos Aires Argentina
A notable outsourcing city of the MENA region, Cairo 4 7 Cairo Egypt
moved to fourth place this year. The fusion of nearshore
advantage to Europe and multilingual skills of the people, 5 8 Sao Paolo Brazil
positions the city in delivering quality voice-based services 6 5 Ho Chi Minh City Vietnam
to European and Arabic markets.
Sao Paulo continues to move up the rankings, being the 7 12 Dalian China
banner high-value ITO city of Brazil. With still an under- 8 9 Shenzhen China
utilized pool capable of fulfilling R&D and Engineering
services, Sao Paulo is poised for better positioning in high- 9 11 Curitiba Brazil
value services in the coming years. 10 17 Colombo Sri Lanka

19   GS Destinations Compendium 2010 www.globalservicesmedia.com


COUNTRY-IN-FOCUS
Ensuring Global Visibility
A special feature for countries to showcase their uniqueness
There are numerous outsourcing destinations that exist as
great alternatives to India and China.

Inviting Countries to showcase


capabilities that accentuate
their uniqueness.

Examples of Country-in-focus feature


Egypt Philippines Jordan

JORDAN

For more information write to satishg@cybermedia.co.in


JORDAN
Advertorial Interview of Country Representative

Stable Costs and High Quality of Talent


Pool is Jordan’s Primary Value
Proposition
How is the Jordan economy growing
presently, and what are the projections for
the immediate future?

Jordan has focused on creating a globally


integrated economy that is knowledge-
centric. Over the past two decades, prudent
fiscal and monetary policies have helped in
maintaining low inflation rates in the range of
3-5 percent and a stable currency. Exports in
the country increased from USD 4.3 billion in
2005 to nearly USD 6.3 billion in 2009. His Excellency Marwan Juma Mr. Aiman Mazahreh
Minister of Information & Chairman-Int@j
Communications Technology
External debt during the period decreased

Jordan is fast emerging as a destination of


from 56 to 21.7 percent. Gross official reserves
at the end of 2009 stood at USD 10.8 billion.

Jordan has adopted aggressive and choice for outsourcing.


comprehensive development processes with
active participation from the private sector to the economy, and produce14,928 direct Together with attractive incentives,
which are targeted at creating an investment- jobs. Exports have increased with an average investor-friendly policies and excellent
friendly climate in the country. Many of 343 percent in comparison to 2007, while infrastructure, Jordan has everything
businesses are finding Jordan to be one of the investments increased by 164 percent. The required for a smart outsourcing
most liberal and business-friendly economies industry is expected to grow to USD 250 destination. Jordan’s progressive
in the region. million over the next three years, creating government has also recently launched a
over 10,000 jobs. The outsourcing sector is new Development Zone strategy,
further supported by Jordan being one of encompassing multiple specialized zones
How did the outsourcing industry evolve in
the initial countries in the region to establish at specific industries such as outsourcing.
Jordan and what is the expected growth in
a chapter of the International Association of These development zones offer aggressive
the industry?
Outsourcing Professionals (IAOP). This financial incentives to complement existing
Jordan, as an outsourcing destination, started reflects on the growth of the country as an economic advantages of operating in
gaining prominence a decade ago. Key outsourcing destination and provides an Jordan.
potentials for the growth of the industry such extremely conducive environment for
as a qualified workforce, competitive cost service providers and shared services
What are the infrastructure
structures, a near-shore location and a organizations.
requirements of the industry and how
convenient time zone were identified early well does the country meet these
on. Strong government backing was provided What are the key factors that contribute requirements?
with world-class infrastructure, dedicated
into making the country an outsourcing
business parks and a liberal economic Jordan has one of the most open
destination of choice?
environment. Today Information and telecommunication markets in the Middle
Communication Technology (ICT) and Jordan’s primary value proposition lies in its East which is overseen by an independent
Information Technology Enabled Services stable costs, and the high quality of its talent regulator. Jordan is connected to the
(ITES) industry both contribute 14.3 percent pool that is sustainable in the long-term. international network through various fiber
...continued
http://www.intaj.net/outsourcing
Advertorial Interview of Country Representative

...continued from previous page


optic links, in addition to satellite connectivity government taking to ensure quality of by integrating technology in the
and terrestrial links with neighboring talent and how are you ensuring classrooms. Intel Teach Initiative has been
countries using modern fiber optic cable scalability of the available talent? introduced as a worldwide program that
networks. Jordan has three main submarine focuses on using computer technology as a
cables that provide reliable international Jordan has a young population with nearly powerful teaching tool and enhances the
connectivity. In addition, Damamax is part of 70 percent under the age of 30. Jordan has creativity levels of both teachers and
the Hong Kong Telecom Group PCCW’s Global one of the most successful education students. An MoU was signed between
Network, providing MPLS connectivity to systems in the region with a literacy rate of Microsoft and the Ministry of Education in
more than 1,000 cities worldwide at very 92 percent. The country is ranked first in the 2003 that focuses on creating an
competitive prices. Middle East by the World Bank in terms of Innovative Teachers Network (ITN), a
educational reforms. The government School Technology Innovation Center
The country has developed dedicated spends 20.6 percent of its public (STIC) and an Education Support Center.
business parks within the Development expenditure on the educational system.
Zones to nurture the growth of its priority English is being taught at an early age in all The government is providing computer
sectors, such as ICT and BPO. These business schools, and modern technologies and labs in all public schools and universities as
parks offer plug-and-play office space, methods have been introduced in the part of its comprehensive e-learning
connectivity and services to local and educational system to ensure technology program. A country-wide broadband
international firms and a streamlined process proficiency. network connecting all public schools,
of setting up operations. universities, community access centers and
There are a number of public-private community colleges is also being
initiatives that are focused on creating a deployed.
People are a key asset in this industry. knowledge-based economy in the country
What measures are the industry and the

http://www.intaj.net/outsourcing
Outsourcing Oasis of the Middle East Advertorial The Jordan Factfile

Jordan, located where Africa, Asia and Europe converge, is ideally positioned as
an investment gateway to the Middle East.

The country’s robust economy, huge talent pool of human capital, temperate climate, convenient
time-zone, state-of-the-art infrastructure and the ongoing economic liberalization procedures
make it one of the most preferred destinations for outsourcing firms. Jordan’s immense human
capital is one of the main drivers of growth in the region. A workforce, widely regarded as one of
the most competitive and qualified in the region, has contributed to Jordan being ranked ninth in
the 2009 Global Service Location Index (GSLI) by analyst firm AT Kearney. Strong work ethics and
low attrition rates work in Jordan’s favor. Jordan invests more than 20.4 percent of its GDP on
education and has more than 200,000 upcoming graduates to meet the demands of the fast
growing outsourcing industry.

Jordan possesses world-class infrastructure in terms of Internet connectivity, telecommunications


network as well as transport accessibility within the country and to international destinations.
Dedicated business parks which boast of international standards of connectivity and services have
been set up in Amman and Irbid to nurture the growth of the BPO industry in the country. These
parks offer a streamlined regulatory environment and various tax benefits, coupled with high-end
housing and associated facilities to attract and retain further investment in the outsourcing sector.

Jordan enjoys strong government support and reliable telecom connectivity through various
international submarine cables for its ICT sector. This has made it the fastest growing sector in the
Jordanian economy with an annual average growth rate of 25 percent. The ideal location of the
country, investment-friendly economic climate and competitive rates contribute to the steady rise
of Jordan as a preferred outsourcing location.

at a glance
Currency: Jordanian Dinar Countries that outsource business to Jordan:
Gulf Cooperation Council (GCC) countries, US, UK, Middle East
Main industries: Tourism, Banking & Financial Services, and North Africa (MENA) region
Engineering Services, Healthcare & Pharmaceuticals, Energy &
Renewable Energy, Information & Communications Technology Key verticals: Healthcare, Banking, Insurance, Telecom,
Hospitality, Technology
Literacy rate: 92%
Key services: Business Process Outsourcing,
Languages spoken: Arabic (official), English, French, German, Information Technology Outsourcing, Knowledge Process
Armenian, Spanish Outsourcing, Shared Service Centers and contact centers

International airport: Amman (2), Aqaba Some big players: Hewlett-Packard (HP), Dell Perot Systems,
CISCO TAC, CrysTelCall, Extensya, Aspire Services, Microsoft, Oracle
GDP growth (World Bank): 2.8% (2009)
Key competitive advantages: Robust Economy, Strategic Location
th
Global ranking: 9 in the 2009 Global Service Location and Convenient Time Zone, Immense Human Capital Resources,
Index by analyst firm AT Kearney Investor-friendly Economic Environment

Quick look at the IT-BPO sector growth Main cities: Amman, Irbid

Total number of employees: 14,928 Emerging locations: Aqaba


Annual growth rate of IT/BPO sector: 25 percent
http://www.intaj.net/outsourcing
Advertorial Opportunities and Future Potentials

The Face of Jordan


Now and Beyond

Jordan’s commitment to economic liberalization and its privatization program have been recognized by the
World Bank. The World Bank lauded the privatization program as one of the most successful programs in
the Middle East and North Africa (MENA) region.
Jordan has created a competitive, free market Jordan’s strength lies in the ICT, health and Jordan is also taking necessary steps to
though a multi-pronged privatization financial sectors. The growth of the enhance the existing infrastructure base in
approach. Today, the private sector plays a outsourcing industry is expected to the country. In 2010, VTEL Jordan and
major role in spearheading growth and concentrate on these sectors by building Reliance Globalcom are establishing a link
development in the country. Jordan is now vertical specialization in financial services, to the FALCON undersea cable through
seen as one of the most business-friendly medical services, IT outsourcing, Aqaba which would triple the current
economies in the region. The government has telecommunications and tourism services. bandwidth. It will be the first 'Terabit' cable
also taken significant steps to streamline landing in Jordan.
The future of the ICT sector looks rosy with
regulations and decrease red tape.
the sector continuing its exponential The future of outsourcing in Jordan
Establishing business ventures in Jordan now growth. Jordan's National ICT Strategy for promises to be bright with an industry
takes less time than the average number of the next three years identifies the sub- poised for growth in all sectors. KPO and
days in the MENA region. sectors that are conducive for growth in the BPO operations are expected to head the
current economic situation in the country. growth ably supported by concerted
The Development Zones established across
Government initiatives to facilitate this efforts put in by the government and the
the country in key business areas offer
growth are also laid out. The plans include private sector. An attractive business
reliable infrastructure, specialized services,
developing a USD 3 billion ICT sector, environment, combined with supportive
labor and resources to access major regional
provision of 35,000 jobs and increasing government policies and world-class
and global markets. At present, there are six
Internet penetration to 50 percent. Other ICT infrastructure, will continue to make Jordan
zones that are operational throughout the
initiatives include provision of laptops to one of the most sought after outsourcing
country offering various investment
university students, encouraging women in locations in the MENA region.
opportunities. Jordan’s ICT sector today is the
technology programs and graduate Contact info:
fastest growing sector offering more than Int@j
internship programs.
80,000 jobs with an annual average growth Tel: +962 6 5152322
rate of 25 percent. e-mail: info@intaj.net

http://www.intaj.net/outsourcing
Quotes from Reports Advertorial Testimonials

Jordan at the ninth place is another top multi-lingual agents with university designed to make Jordan more accessible
performer as it has solid capabilities in IT and education, coupled with excellent language to the rest of the world.
is home to numerous successful outsourcing skills has been a compelling reason for this
companies that compete internationally. It growth. Jordanian telecom has invested over USD
has also one of the region’s most favorable 400 million in recent years in a number of
business environments. It is clear that from the standpoint of technology solutions designed to make
telecommunications, Jordan has made Jordan more accessible to the rest of the
~ A.T Kearney Report 2009 significant strides over the past decade. In world.
addition to the efficiencies still being
realized by the deregulation of the telco ~ Datamonitor
Currently, there are several contact center
sector in 2005, Jordanian telecom has
operations in Jordan serving clients
invested over USD 400 million in recent
domestically and offshore, across a variety of
years in a number of technology solutions
vertical markets. In addition, the availability of

Publications
It looks like another little oasis of IT delivery is As to the cultural milieu, Jordan has an open have rendered it definitive advantages,
building up as the vast sands of the Middle and welcoming arm. On the infrastructure including a favorable time zone, proximity
East blow winds of new market opportunity; side, areas like powers, roads and buildings to continental Europe and the country's
now Jordan joins the club, as it gets all set to are positive. It has already been recognized perception as a stable oasis in a stormy, but
woo the outsourcing industry. on the eco-friendly distinction, where the vital, region.
example of Amman, a building zone, is cited
At the Nasscom Summit 2009, foreign as an example, and an award-winning case Enthusiasts also point out that Jordanians
delegations of many hues and shades were in masterful city planning. can offer relatively low compensation costs,
seen exploring and selling business as well as exposure to English languages by
opportunities in the new world order that is ~ Global Services Magazine virtue of its strong focus on education,
shaping up for a post-recession scenario. We especially at the tertiary level.
could see delegates from Jordan too. They
were not only prepared for a strong ~ Jordan Business: Jordanian Magazine
competitive pitch, but also had large To highlight the benefits, Jordan’s
spoonfuls of the pudding’s proof up their geographic and geopolitical positioning
sleeve.

Testimonials
Jordan is open for business with a very dedication has paid off, and businesses Development Zones.
capable and sought after workforce, continue to succeed. Thanks to all the
competitive cost structure, political stability, partners involved, the country continues to His Excellency Dr. Bilal Bashir
Chief Commissioner, Development Zones
ease of access, robust ICT infrastructure, as gain visibility as an outsourcing destination.
Commission
well as a government that is fully committed
to creating the right investment environment. Som Mittal
President, National Association of Software
These are only some of the factors that
and Services Companies (Nasscom)
position Jordan as a great global destination Jordan has enabled the ITO/BPO services
of choice as well as the ideal access point and industry and we run our operation supported
gateway to the Arab world. by a strong legislative base, a sound telecom
infrastructure and skilful human capital which
His Excellency Mr. Marwan Juma BPO investors will find in Jordan a highly really makes our business succeed. The
Minister of Information and Communications advanced legislative and infrastructure government is involved in updating the skills
Technology platform that supports their work and of IT trainees to qualify them for our line of
business endeavors. The Development Zones business.
Commission (DZC) facilitates all necessary
Coming to Jordan opened our eyes to the
procedures and arrangements for the Kaushal Shah
country’s potential. The country’s will and
industry to operate and prosper in the Managing Director, Aspire
http://www.intaj.net/outsourcing
by Sruthi Ramakrishnan

� Location Assessment: Perception and Reality for Global


Businesses  28
� Europe: Showcasing the Challenges and Opportunities  32
� Perspectives and Potential of Asia’s Hotspots  36
� Middle East & Africa: Leveraging Africa & Middle East  41
� Latin America: The Enduring Promise of Latin America  44
Regional Dynamics

Location Assessment: Perception and


Reality for Global Businesses
Global Outsourcing Locations

Evolution of Services Driven Economy


15 years ago, there were very limited options in terms of outsourcing. India was the
predominant answer for IT outsourcing. 10 years ago, BPO started coming up as
well. At that point, 2 primary locations emerged: India and Philippines. Predominant
clients for them were the US and UK, basically the English speaking countries.
When Europe started showing interest, people were very finicky about the data
Acts and data privacy as they started having Eastern Europe come into prominence.
Some of the South American countries began coming into prominence through
nearshoring from the US and their Spanish language capability.
What is it that makes a location emerge as a preferred location? Perceptions about
a country and the reality can be very far (illustrated in table 1).

Why are clients seeking new geographies?


Clients are beginning to look outside India, Canada, Philippines and Eastern Europe
and Latin American countries, because of:
• Localization- More so if you have a product and have to localize that for a given
country. Every product cannot be built to meet the local conditions of every
country, but a regional center can help facilitate localization of products. Also, a
client in the US outsourcing his call center functions would rather have his service
provider provide services out of a center in the US rather than offshore.
• Evolving and Developing Processes- Some locations are reaching talent saturation,
leading clients to look for other locations where they can get talent at better qual-
ity and at a better price.

Figure 1  The Global


Offshoring Landscape

Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global
Businesses’

28   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

City Perception Reality Table 1  Global Delivery


Locations - Perception vs.
Colombo, Sri A war-torn nation One of the fastest emerging FAO destinations with
Lanka more than 50,000 people employed in the IT/BPO
Reality
industry in Colombo and growing at over 20 percent
year-on-year. Sri Lankan IT BPO industry grew at 23
percent even during the war time.
Accra, Ghana Cocoa Producer Nation Destination for Back Office processes with presence
of companies such as ACS and 3G (Contact Support)
and the development of initiatives such as the Kofi
Annan ICT Center of Excellence for Human Capital and
Infrastructure Development. Companies like 3G are
looking to expand workforce in the next few years in
this commercial gateway to Western Africa.
Bhubaneswar, Crowded Tier-II City One of the fastest growing IT regions in India with
India ample labor force in IT and Engineering (with 60
Engineering colleges producing 25,000 graduates
per year). Bhubaneswar is a location of choice for
big industry players in India with the presence of
companies such as Wipro, Infosys, Mahindra Satyam,
and Tata Consultancy Services.
Santiago, Chile considered as a Foreign investor-friendly business environment and
Chile small LatAm country with technical industry capabilities strongly support high-
a limited population and value services in KPO-ESO. Chile’s IT-ITES workforce
not known traditionally produces $38,095 per FTE in the industry which is
for outsourced services 41 percent more than India. This is due to higher
value services being performed out of Chile compared
to India (on an average).
Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global
Businesses’

Figure 2  Key Question:


Where should we locate?

Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global
Businesses’

29   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Figure 3  Parameters
influencing selection:
Process Requirements and
Geographical & Operational
Delivery Models.

Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global
Businesses’

Outsourcing
• Integration of new countries into the Global Economy (Example: Brazil, South
to the Right
Africa, China)
Location vs. • New Customer Segments are emerging- For example, customers are looking at
Brazil because it is a significant economy growing at a fast pace. So while certain
Offshoring?
things can be outsourced to Brazil, at the same time clients are looking at address-
The change in terminology ing the available market there. The same can be applied to China.
is a sign of maturing of the • Customer Demand is becoming more sophisticated
industry and its players. The
right solution at this point to Why will existing solutions not be enough in the new decade?
the outsourcing/ offshoring/ • Closer to Customer
nearshoring debate is global • New Generation of Services
sourcing. It is more offshor- • Specialized Skill Requirement
ing than outsourcing. • Established Locations inhibited by Talent Saturation
Why global sourcing?
Firstly, if something is not Moving from Emerged to Emerging
outsourced to a third- party There is a move, where clients are feeling that emerged destinations are saturated in
vendor, it is insourcing. terms of the labor pool, and have salary inflations year over year. There is a churn in
Outsourcing does not neces- the people which leads to lower quality. So clients are looking for emerging destina-
sarily cover that. Secondly, a tions which probably have a higher talent pool available, lower costs and governments
significant number of clients more eager to attract investments. Clients who have been in outsourcing for around
are willing to have everything 10 years are moving from established locations.
sourced and not keep any- Main factors in play in this shift:
thing within the physical  Emerging destinations being viewed as opportunities:
confines of their office. This    • Emerging Locations will hold the key in the near future for Global corporations
does not mean it is going as they will provide as host of new opportunities. They are looking at such loca-
off the shore or out of the tions to bring high quality and scale together with low costs.
country.   • Emerging Economies, opportunities to tap the domestic talent and market, and
So the only term today evolving customer demands are driving client and service provider migration to
which covers all of this is new international geographies
global sourcing.   Perception marketing:
  • Perception Marketing: Effectiveness of conveying concrete information, strategic

30   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Figure 4  Emerging
Destinations – What to
Look For

Source: Tholons- Global Services January 2010 webinar ‘Location Assessment: Perception and Reality for Global
Businesses’

marketing, and promotions to combat negative external perceptions will be crucial


in attracting potential clients and competing in the global services industry
• “Employability” and “Scalability” are now more critical to “Productivity” and
“Sustainability” with exceedingly lower emphasis on “Cost Advantage” alone
 Importance of distinct Value Propositions:
• Competitive and shareholder pressures are driving demand, creating more nim-
ble, efficient market players
• Due to the rapid maturity of the services outsourcing industry, locations are
struggling to create and sustain their competitive advantage – making it even
more important for “value propositions” to be brought out using the “Centers
of Excellence” model

31   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Europe: Showcasing the Challenges


and Opportunities
The Emerging Nearshore

Western Europe has done a significant amount of nearshoring to Eastern Europe.


Over the years, the gap in GDP between Western Europe and Eastern Europe has
widened instead of declining, which has helped in attracting clients from the former
to the latter. This has helped in making nearshoring to Eastern Europe an attractive
Prominent Nearshore Options: opportunity.
Eastern Europe It has been a destination of choice for Western Europe for more than a decade and
66Poland: Kraków, Warsaw, this attractiveness has become stronger over the years.
Gdansk, Wroclaw
66Czech Republic: Prague, Brno CHALLENGES
66Hungary: Budapest  Clients face dilemma- No single country can take care of all languages. But
66Russia: St. Petersburg, Estonia can take care of the 5 major languages.
Moscow, Nizhniy Novgorod,  Most smaller countries do not offer scale
Rostov-on-Don, Novosibirsk
66Romania: Bucharest, ADVANTAGES
Cluj-Napoca  Europeans are conservative businessmen compared to their American counterparts
66Ukraine: Kyiv, Lviv
and are more comfortable keeping work closer to home. Thus nearshoring is a
favored option.
66Belarus: Minsk
 Considering a cut off population of 10 million, only Russia, Ukraine, Poland,
66Slovakia: Bratislava Romania, Belarus, Czech Republic, and Hungary have the advantage of a sizable
Bulgaria: Sofia talent pool
66Slovenia: Ljubljana  Multiple factors enable to be perfect nearshore options for Western Europe like:
1.  Financial Attractiveness 3.  Trade laws (European Union)
66Serbia: Belgrade
2.  Cultural compatibility 4.  Excellent Education
66Estonia: Tallinn
66Croatia: Zagreb Major clients nations in the region are:
66Latvia: Riga  United Kingdom  Denmark
66Lithuania: Vilnius  Spain  Finland
66Malta: Valletta  France  Germany
 Italy  Norway
Source: Global Shore 2010 webinar  Sweden
‘Europe: Showcasing the Challenges and
Opportunities’
REGIONAL DYNAMICS
 European Union member countries in Eastern Europe have significant advantages,
providing them the edge to become “nearshore locations of choice”
 A recent trend is of clients preferring to send work onshore or to nearshore loca-
tions. This is true for US itself. This is not necessarily because of a language pref-
erence. This is being preferred even at a higher cost than offshore locations. This
trend is favoring Eastern Europe.
 Being a part of the EU makes the smaller countries offering cost arbitrage very
attractive nearshore destinations, some other benefits for Eastern European

32   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

countries becoming members are:


• Political stability and greater integration
• Increased trade
• Increased inward investment
• Social policies and subsidies
 Eastern Europe has attracted a lot of investments from service providers and cli-
ents (captive operations) in the last 3-5 years making it a strong “offshore cluster”
and a “skills cluster”

Global Clientèle
 With 63 percentage of all developed countries in Western Europe, it is the largest
cluster of buyers across the world. This attracts large business firms from across
the world to have centers in the region to cater to the domestic markets in these
developed economies.
 Eastern Europe hence caters to the global clientele indirectly, this has successfully
built a strong brand for “Nearshore to Eastern Europe”, offering cost differential
of 15-20 percentage compared to Western Europe.
 Clients say productivity per employee higher in Eastern Europe than offshore loca-
tions like India, Philippines and China.
 High skill sets available for processes like Product Development (Turkey, Ukraine,
Russia), Regional Multilingual Skills (top 5–6 locations of previous list), and
R&D (Russia and across the region).
Europe: Centers of Excellence

Region/ Country/ City Core Specialization Companies Established


Figure 1  Europe: Centers
of Excellence.
• Specializes in R&D, Infrastructure SAP, Quest Software, IBM, Microsoft,
Western Europe

Ireland Dublin Accenture, Marino Software, PMI


Services and Custom Development
Application Software, Infosys, Deloitte, Amazon

• High value processes in Financial Barclays, Accenture, InfoTech, HCL,


U.K. Belfast Analytics, R&D and Applications Capgemini, HP-EDS, KPMG, Xerox,
Development Management ECOM, First Data

• Business Analytics, Finance and Google, IBM, Motorola, Fujitsu, HCL,


Poland Kraków Accounting Outsourcing, multilingual Capgemini, ACS, Hewitt, Quantum,
Contact Support, HR Outsourcing Sabre

• Focused on HR Outsourcing, R&D Sun Microsystems, Accenture, GE,


Czech
Eastern Europe

Prague processes and emerging destination for SAP, Google, Intel, Capgemini,
Republic
Engineering design services Mahindra Satyam, IBM

• Focused on HR Outsourcing, R&D in SAP, Microsoft, Sun Microsystems,


Hungary Budapest Software Development and Testing TCS, Genpact, Cognizant, Canon,
Mahindra Satyam, SCA

• Specializes in Engineering Design and Intel, Motorola, Sun Microsystems,


Russia St. Petersburg R&D services. Boeing, HP, Auriga, Google, Luxoft,
EPAM, Arcadia

Page 10
Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’

PRIMARY VALUE PROPOSITION


It is a viable nearshore destination for Western European clients for several reasons:
 Western Europeans prefer outsourcing to Eastern Europe than to traditional
offshore destinations like India or Philippines due to the unique service delivery
profile of Eastern Europe.
 Factors such as cultural affinity, skills expertise, labor pool availability which
includes engineers and scientists who are not abundantly found in offshore loca-
tions, contribute to this appeal.

33   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

 Bottomline- Eastern Europe would continue to maintain this advantage at least in


the near term.

Conclusion: Challenges and Opportunities


Challenges and
Key Accelerators:
Opportunities. •
 Strong combined “value proposition” for locating in Europe
 Nearshore advantage with Western Europe as client
 Excellent education system with high rate of employability
 Excellent cultural/linguistic compatibility
 Part of European Union (same trade laws, incentives, currency etc.)
 Time zone affinity
 High quality and reliable infrastructure and connectivity
• Key Inhibitors:
 Bureaucracy: Communism has left its legacy in excessive bureaucracy and processing delays
which often leads to ineffective business execution
 Corruption: The high levels of corruption in certain Eastern European nations often leads to
additional costs. Although this trend has decreased with the implementation and enforcement of
more stringent standards and policies by EU
 Labor/Talent Migration: Countries in the region have experienced a migration of talent
towards Western European countries where the pay is higher. This constitutes one of the
shortcomings of nearshoring to Eastern Europe, and is a result of the relatively short distances
between provider and client locations

Page 11
Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’

Q/A

Q Has macro-economic situation diluted the key value proposition of any of these coun-
tries?
The income coming from outsourcing is export- oriented. There is very little emphasis in terms of
domestic currency. There is significantly more impact in terms of currency of the source geogra-
phy rather than your own.
If the currency valuation of a country goes down, it may not be good for the country itself but
it increases its attractiveness

Q Russia does not seem to have performed according to the potential it is believed to pos-
sess. What can Russian industry do to have a bigger stake?
There is some challenge in terms of promoting what can be serviced out of Russia. They need
to do more focussed pormotion of what they can really do, especially cities like Moscow and St.
Petersburg.
Outsourcing history in Russia goes back a long time, but there have been only a few companies
which have been able to take the glag and move forward. And most of them are focussed on
R&D, in telecom, wireless, security.
One of the main issues related to outsourcing here is that the process discipline in Russia is not
as strong as in rest of Eastern Europe, or like in India and Philippines. Also, the infrastructure, as
compared to other Eastern European countries is not as robust.
So, experts feel Russia will continue to lag as compared to other Eastern European countries.

34   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Q Are there any IPR issues in Eastern Europe?


This has been one of the boons of being part of EU. As countries adopt the principle and cover
of EU, they are able to care of such issues.because of standardization of IPR in the European
Union. They also possess the capability to manage outsourcing from countries outside this par-
ticular block.

Q Which would be the best European market for SME IT outsourcing companies?
That depends on the exact area the IT outsourcing company is in. From a smaller perspec-
tive, for basic IT, the best destinations would be Poland, Czech Republic.But if a company is in
telecom or product development, then places like Russia can be considered.

Q What is the breakup of IT Services, IT Infrastructure Services and BPO services curently
provided from Eastern Europe?
Eastern Europe follows a different trend from other regions. Eastern Europe as a group of con-
tries has a very different profile from India or Philippines. IT services is probably 40 percent of
this. BPO would be another 40 percent, and about 20 percent would be infrastructure services.

Q What should be the strategy for a small country like Moldova which does not have the
scale, but has a location that is proximate to the EU? What is the potential for partnering
with players in India and the Philippines to kickstart the industry?
For a smaller country it is very essential that they differentiate themselves through a niche capa-
bility. Any partnership with India or Philippines would depend on what that niche is. Niche is
more in BPO and KPO. One of the things that a smaller country can do is to focus on analytics.
There is a significant amount of employability in that country, considering the demand for ana-
lytics. So from a BPO/ KPO perspective, that would be the right direction for that country.For
them to go into F&A would be absolutely wrong. Even from an IT perspective, there seems little
scope for a country like that to partner with India. A niche capability would be fine, at the same
time some of the ERP, SAP- based IT stuff or looking at doing something in business intelligence
would be good areas in IT.

Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’

Global Shore 2010 Webinar Series


Europe: Showcasing
the Challenges and Opportunities
View Webcast

35   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Perspectives and Potential of Asia’s


Hotspots
China and Philippines in Focus

Global IT spend is expected to increase at a faster rate post 2009 as several service
buyer markets unentangle themselves from recession. Growth may still be tepid but
nonetheless more significant than the previous 3 years.
Post recession clients are more aligned towards offshore benefits.

Drivers for Technology Spend:


 Cost reduction as clients look for demand recovery
 Growth in competition leading to need for scalable, optimized and effective
operations
 Diversification of business and expansion into new markets is pushing clients for
innovation and faster time to market
 Growing SMB participation as service buyer (currently at 33 percent of total
spend) globally

How suppliers can exploit growth in IT spend?


There remain opportunities for outsourcers, as offshoring spend remains relatively
small
 Identification of new delivery and engagement models
 Overhauling of existing resources/ network to offer higher value
 Foster innovation/ IP/ assets- must for gaining edge over competition
 Develop ready to deploy platforms / frameworks for multiple geographies in order
to enable faster time to market

The demand side is still composed of two regions of the globe- North America and
Western Europe, which together contribute about 55 percentage of global IT/ BPO
spend. Offshore revenue share is 75 percentage. But domestic markets from BRIC
nations will also become increasingly important players in the near term.
The supply side will stretch across geographies and begin accelerating the pace of
competition. Countries in S. America such as Argentina, Chile, Colombia, Uruguay,
etc. are some which will be vying to supply clients, particularly the Hispanic popula-
tion in US.
The incumbent Indian providers will continue to build delivery centers in key
delivery regions such as Latin America, Eastern Europe and China.

Game changing strategies on supply side :


 Vendors positioning themselves as End to End service providers rather than cost
saviors to increase wallet share
 Increased vendor consolidation and diversification (eg. Dell acquired Perot
Systems, Product vendors expanding services portfolio etc)
 Building capabilities around RIM/ IO* and platform based BPO services (Service

36   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

lines witnessing traction from client side)


 Vendors entering new regions to support existing client’s localization needs (deep-
ens client reach and wallet share)

Strong Domestic and Regional Markets


There is strong market potential in Asia Pacific region as evidenced by robust growth
rates of regional domestic economies. Apart from India and China, smaller countries
like Philippines and Vietnam, which are seen as supply side components, have strong
domestic consumption potential, as evidenced by their strong growth rates on the
back of increased domestic consumption.
 Healthy growth in IT spend provides tremendous scale for growth in these
markets
 Current outsourced market for the region is over US$22 Billion - primarily served
by local & regional vendors
 Technology spend by government, BFSI, telecommunication and manufacturing
will drive the growth
 International and regional vendors serving these markets have witnessed double
digit growth
Asia: Strongly Positioned to Facilitate Growth of Suppliers…

Established Cities Key Characteristics Value for Clients


Figure 1  Asia: Strongly
• Most prominent centers of offshoring (lowest risk) Positioned to Facilitate
• Bangalore Delhi NCR, Mumbai, Manila
NCR, Chennai, Hyderabad, Pune,
• Access to huge employable pool with niche and
diversified skill sets. Innovation & Growth of Suppliers…
• Hosts strong lines for innovation due to well established Time to Market
Cebu City, Shanghai, Beijing and processes and delivery capabilities.
others • House client’s commercial operations and BFSI
captives/ R&D centers of global clients and vendors

Emerging Cities
• Dalian, Chandigarh, Kolkata, • Lower salary inflation when compared to established
centers Cost
Colombo, Coimbatore, Guangzhou • Proximity to education institutes/ universities provides Optimization &
(Canton), Kuala Lumpur, Jaipur, stable supply of talent
• Attractive infrastructure and government policies provide
Growth
Chengdu etc long term confidence to investors

Emerging Tier II / III Cities


• Locations with high potential to compete head on with
• Bhubaneswar, Iloilo City, emerging cities
• Apart from providing cost and talent advantages these Niche Skills
Thiruvananthapuram, Santa Rosa etc cities are leveraged to service domestic market and
verticals such as government

New Cities
• Xian, Taipei, Seoul, Ahmedabad, • Low cost of operations is major selling point
Mysore, Jakarta, Bangkok, Davao, • Proximity to established/ emerging locations would Expansion
strengthened their visibility to clients
Bacolod, Penang etc

Page 7
Source: Global Shore webinar 2010 ‘Perspectives and Potential of Asia’s Hotspots: China and Philippines in Focus’

Service Delivery Cluster-


In the past 10 years, the service delivery cluster in Asia (earlier composed primarily of
India, Sri Lanka and Philippines) has evolved to a circle of multiple nations providing
a multitude of services and catering to a diverse group of markets and verticals.
For this cluster to further expand, and further clusters will emerge across the globe.
Each service cluster will develop its own niche and market development segment.
These clusters will lead to growth of the region as a whole.

Top Cities in Asia


Continuous demand has led to proliferation of outsourcing locations in Asia.
 Indian cities continue to lead the pack, followed by Philippines and China cater-
ing to both global and domestic requirements. Many, particularly in China are

37   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

looking at catering to the domestic market instead of the global requirements.


 Manila NCR, after Indian cities like Bangalore and Delhi, has been consistently
making it to the top of the outsourcing cities lists.
 China follows India in terms of most number of cities on the lists. Dalian has been
consistently moving up rankings.
 Several cities moving down the rankings are also an indication of strong competi-
tion among the cities. This also indicates the aggressiveness of cities in promoting
themselves as locations of choice.
 Most of the emerging Tier II/III cities are from Southeast Asia- from Philippines,
Indonesia, Thailand and Malaysia. This could be mostly due to initiatives under-
taken like by the Business Processing Association of Philippines (BPAC)

Centers of Excellence: Established Centers


Figure 2  Centers of Country/ City Core Specialization Companies Established
Excellence: Established
• Contact Support, Business Analytics, Oracle, Accenture, HP, Amdocs,
Centers Delhi NCR Software Development, Product Capgemini, SAP, Wipro, Infosys,
Development, Engineering Services Siemens, Motorola

• Application Development , Engineering Accenture, Capgemini, TCS, Wipro,


Hyderabad Services, Product Development, Infosys, Symphony, KPMG, Delloite,
Software Testing, Contact Support Dell, Hewitt, Karvy, Mahindra Satyam

Accenture, Capgemini, TCS, Wipro,


• FAO , Financial Analytics, Contact
Mumbai Infosys, KPMG, Deloitte, Morgan
Support Services
Stanley, JP Morgan, IBM Daksh
India
Sun Microsystems, Accenture, GE,
• Software Development, R&D, Contact
Bangalore SAP, Google, Intel, Capgemini,
Support Services
Mahindra Satyam, IBM

SAP, Microsoft, Sun Microsystems,


• Contact Support Services , Software TCS, Genpact, Cognizant, Canon,
Pune
Development, Testing
Mahindra Satyam, SCA

Philippines
• Contact support services, FAO, Medical Accenture, Convergys, People Support,
IBM, HSBC, JP Morgan Chase & Co.,
Manila NCR
Transcription
Sykes, Telus

Page 13
Source: Global Shore webinar 2010 ‘Perspectives and Potential of Asia’s Hotspots: China and Philippines in Focus’

Centers of Excellence: Emerging Destinations


Figure 3  Centers of Country/ City Core Specialization Companies Established
Excellence: Emerging
Destinations Philippines Cebu City
• High value processes in Financial
Analytics, R&D and Applications
Accenture, AWS, NCR, Lexysoft,
Alliance Software, Sykes Asia, Aegis,
Development Management Stream, Convergys, ePerformax

• Software Development, ADM, R&D, IBM, World Software Services, Neoris,


Shanghai
FAO softtek, Infosys, Accenture, Sitel, ACS

SAP, Tumbleweed Communications,


China Beijing • Software Development, ADM, R&D, FAO IBM, BTC International Contatct
Center, OPI Global, HP

IBA Group, Honeywell, SGI,


Shenzhen • Software Development, ADM, R&D, FAO Accenture, IBM, CSC, Deloitte, Ernst
& Young, Genpact

FPT, HPT, HiPT, IBM, VTCOMTECH


• ESO Software Development, Contact Co. Ltd, Equant, Contact Centre
Hanoi
Support Services
Vietnam
Vietnam
• ESO; Software Development, Contact
Ho Chi Minh City Teledata, VPT, Jupiter Systems, FPT
Support Services

Page 14
Source: Global Shore webinar 2010 ‘Perspectives and Potential of Asia’s Hotspots: China and Philippines in Focus’

38   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Conclusion: Challenges and Opportunities

• Key Accelerators: Challenges and


 Globally the strongest cluster of countries for outsourcing (India, Philippines, China,
Opportunities.
Vietnam, Singapore, Malaysia, Sri Lanka)
 Most mature incentives for outsourcing industry at offer in the region
 Key region to global outsourcing strategy for all organizations
 Huge employable pool as a result of quality education conducive for IT at affordable
salary cost
 Cultural affinity to client market supported by linguistic compatibility
 World class infrastructure to house delivery centers, R&D and Innovation labs

• Key Inhibitors:
 Quality of Life: Although the infrastructure has developed by leaps and bounds in these countries, it
is still difficult to retain the top level management professionals from client nations if they have to
reside in the region
 Sociopolitical Risk: Risk of terrorism, higher crime rates, and political instability in the region
 Corruption: High levels of corruption in Asia often leads to additional costs. The trend is expected to
subside as governments are becoming aware of export contribution from offshore services

Page 16

Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’

Q/A

Q What is keeping back cities like Dhaka from being among the list of outsourcing destina-
tions?
Numerous factors are taken into account for an outsourcing destination. Primarily scale and
quality of labor pool, costs, business capital aspect which mostly involves government benefits
and incentives, the competitive landscape within a particular location.
Infrastructure is the fourth major aspect considered. Risk profile is also very important. Quality
of life aspect involves the social infrastructure, education, hospitals, availability of facilities, etc.

Q Why is Kuala Lumpur, which is otherwise commercially rated high in terms of business
volume, not part of Asia’s top outsourcing destinations?
For Kuala Lumpur the cost component has to be considered. That holds it back from moving up.
But it is a feasible location for higher value services.
A lot more shared services operators are locating there, instead of outsourcers, and that is how
the value proposition is being considered there.
The same set of reasons could also hold for Singapore, aside from the scalability of talent.

Q Is the IP issue with China a continued concern or is it subsiding?


It is a perception-to-reality question. Perception is there are security risks in China and reality
is there are such risks. But often times, it is a cost vs. value consideration that many locators look
at when considering China. Are the cost benefits worth managing the security and IP risks?
It also depends on the sliver of services being discussed.
As more mature Indian or American providers moving there infuse global best practice stand-
ard, the risk will be mitigated or lessened. This makes the value proposition for China even more
appealing.
Introducing legislation for IP protection will also improve matters.

39   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Q What is the best location in Asia in terms of local management professionals and local
talent?
All of the outsourcing locations have a mid-management crunch. That is a weak spot in terms
of structure.
Most of the top cities in this list have been active for more than a decade. So there is a pool
of management talent which will be available there. So selection is the key there.
There are a large number of Indian managers in the Philippines. Cost will not be a considera-
tion here, but that is not a solution for the long term. Holding on to talent is a problem in loca-
tions like Philippines.

Source: Global Shore webinar 2010 ‘Perspectives and Potential of Asia’s Hotspots: China and Philippines in Focus’

Global Shore 2010 Webinar Series


Europe: Showcasing
the Challenges and Opportunities
View Webcast

Global Shore 2010 Webinar Series


Perspectives and Potential of Asia’s
Hotspots: China and Philippines
in Focus View Webcast

40   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Middle East & Africa:


Leveraging Africa & Middle East

Lower per capita GDP in the region provides significant cost advantage in all the cities
located in Africa and Middle East

Nearshore opportunity for Europe:


 Time zones similar to Europe offer immense near-shoring opportunity for the
region. Mauritius has the greatest time difference in the region with London, and
that is of four hours.
 The cornerstone of value proposition of any location is availability of talent, its
employability and scalability. Improving higher education & multilingual lan-
guage skills are key accelerators. Major countries of the region come in the top 100
of the global higher education index.
 Buyers are looking at a wider range of language skills. The language capability
(English, German, French, Arabic, Spanish) available here is not easily available in
other locations.
 There are several areas of improvement needed, yet there is improvement in the
top outsourcing cities of the region. The improved infrastructure provides better
broadband connectivity and electricity supply – this is essential for operational
continuity and reducing downtime
 Various government agencies have been formed to smoothen the procedures to
start the business, protect the investor and reduce the corruption. Political Risk
scores must be further improved in the region Offerings of the two main
regional hubs of Africa
Global Clientele Sub-Saharan Africa (Southern,
With 63 percent of all developed countries in Western Europe, it is the largest cluster West, East, Central)
of buyers across the world. This fact has not escaped the attention of large business � English, French, Portuguese,
firms from across the world that have set up centers in the region to cater to the � Banking, Financial Services,
domestic markets in these developed economies. Insurance (BFSI)
Thus Africa and Middle East cater to the global clientele indirectly - this has suc- � Telecommunications
cessfully built a strong brand for “Nearshore to Middle East & Africa”. What Latin � Voice
America is to the US, experts say Africa and Middle East will emerge for Europe. � Back Office
� KPO
Centers of Excellence in Middle East & Africa- North Africa
 Cairo: best-in-class promotion strategy followed by the government of Egypt � Arabic, German, Spanish
 Johannesburg: does not have geographical proximity but does have the advantage � IT Services
of time and cultural proximity to UK and other clients in Western Europe � Software development
 Casablanca: Expected to emerge as a strong player in coming years with its � Computer programming
 excellent French capabilities � Back Office
� R&D
South Africa has identified and adopted the following five strategic pillars for strength-
Source: Global Shore webinar 2010 ‘
ening and enabling its IT and BPO structure: Middle East & Africa: Leveraging Africa &
 Talent Development Middle East’

41   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics
Comparative snapshots of African Outsourcing
Destinations
Figure 1  Comparative
snapshots of African
Outsourcing Destinations

Note : the list is not exhaustiveNote : the list is not exhaustive


Source: Global Shore webinar 2010 ‘ Middle East & Africa: Leveraging Africa & Middle East’
Source : Avasant

 Strategic Marketing
 Quality Standards
 Incentives
 Telecoms

Africa: an Alternative to India and Philippines


Figure 2  African Countries  Africa lies in between the US and India and thus provides an evening shift for US
BPO
African & IT Services
Countries BPO & IT Services offshorers versus India’s night shift. This further enhances the low attrition value
proposition for Africa
South Africa : BFSI, Telecoms,Retail, ITO,KPO, LPO
 Setting up an African operation can costs 10–20 percent than India

 Ghana : Customer Care, Data Entry,English

 Despite the Economic Recession, African markets have grown at a rate of 5–6 percent
 Malawi : Customer Care, English
 Nigeria : Financial Services, Back Office


Mauritius
Kenya
: Financial Services, French, IT
: IT Services, Financial Services  The Services Sector contributes to over 60 percent of the GDP of some African countries


Egypt
Morocco
: Software Development, Back Office
: IT Services  African Nations are formulating policies that encourage the development of the IT
 Tunisia : IT Services
and BPO Services
Source: Global Shore webinar 2010 ‘  Free trade zones, tax exemptions, providing incentives for technology business
Middle East & Africa: Leveraging Africa & operations, relocation and development are some of the support measures offered
Middle East’
 Governments have steadily reduced the regulatory overhead and timeline required
to start a business.
 Africa is a risk-diversification option for India and the Phillipines

Q/A

Q What are the political risks in South Africa?


Experts feel that the entire region is still reeling from certain events of the past, which has pre-
vented the outsourcing industry from going to the region as fast as it should have. But now varied
requirements are coming from different source geographies.

Q What is the effect of China’s influence in Africa as China continues to use its economic
power to buy natural resources in the region?
China has been focused on natural resources and commodities. There have been a lot of influ-
ences as far as services economy is concerned.
But one issue where China’s influence is having a spillover effect is the infrastructure. China
has been helping build infrastructure in several African cities in return for commodities.

42   GS Destinations Compendium 2010 www.globalservicesmedia.com


Global Shore 2010 Webinar Series Regional Dynamics

Europe: Showcasing
Conclusion: Challenges and Opportunities

the Challenges and Opportunities


• Key Accelerators:
Challenges and
Opportunities.
 Multilingual capabilities can extend market reach to European markets
 Local Governments have been encouraging service industry by forming various View Webcast
supporting organizations
 Better time-zone affinity to Europe compared to Asian destinations
 Other than Israel, most countries have low per capita GDP making them cost
effective
 Due to proficiency in Arabic - Middle East region is also a service buyer market
• Key Inhibitors:
 Currency Risk: Highly volatile currencies and risk of inflation makes investors

Global Shore 2010 Webinar Series


cautious
 IP Risk: some of the countries in the region lead the world piracy and cyber crime
lists

Perspectives and Potential of Asia’s


 Diluted Value Proposition: Most countries in the region offer similar value
proposition - a unique positioning is critical for individual countries

Hotspots: China and Philippines


in Focus
Page 13

View Webcast
Source: Global Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’

Q What is the role of World Bank in promoting IT/ITeS or BPO activities in the region?
World Bank is taking a keen interest and supports various projects across the continent.
Individual countries approach the World Bank with their needs. Kenya has projects funded by the
World Bank. In Rwanda, it is funding an initiative called eRwanda, which is about developing ITC

Global Shore 2010 Webinar Series


in the country.
In such projects, the World Bank funds developing human skills, infrastructure particularly in
the BPO sector. They help develop SMEs in the sector. It promotes uptake and usage of IT by the

The Enduring Promise of


government, so that at the end of the day, the government can itself kickstart the outsourcing
sector by outsourcing its own activities.

Latin America
The World Bank also helps countries attract FDI to the BPO/ITeS sector. Helping ranges from
assisting the formation of implementing agencies to help building capacity in a particular sector.

View Webcast

Global Shore 2010 Webinar Series


Leveraging Africa & Middle East
View Webcast

43   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Latin America: The Enduring Promise of


Latin America
Unique Regional Dynamics

In recent years, clients have been preferring this region as a nearshore destination even
at higher costs than some of the farshore destinations.
Emerging destinations from the region are now competing with the more mature
Asian offshore destinations. South America has the maximum number of emerg-
ing outsourcing cities – buoyed by growing US demand for nearshore services and
regional economies tapping the under-utilized Services markets.

Top Cities in the Region


 Buenos Aires, Argentina has moved up in recent times.
 Santiago, Chile- one of the most promising locations for KPO and ITO, and has
very good skilled people to deliver on that.
But Chile, with a population of 60 million, cannot afford the same scale as
Argentina does. The question for Santiago is- can they train and make available
enough skilled people to compete with Chile, to take certain scalable work for
BPO?
 Brazil has largest scale in the region and Sao Paolo is a very favorite destination for
clients for domestic market. Just behind Buenos Aires in preference.
 San Jose, Costa Rica is a significant destination for ITO.
 Lima, Peru is a favorite as a lowcost nearshore destination
 Challenge- Perception of Colombia as a high risk destination has undergone sig-
nificant change, though clients are still apprehensive

Regional Outsourcing Dynamics


 Latin America has not caught up with inflation with regard to total cost, so is still
cost- effective. But cost is not the only factor. Countries are looking at reducing
total cost of operation:
• Mexico promises to lower costs, and offers incentives
• Uruguay has free trade zones which offer 0 percent tax
• Colombia gives exemptions in taxes
• Most govts have very aggressive promotion agencies.
 Total cost of doing service in Latin America is going to fall. The dollar has been an
issue in Latin America. The dollar is losing ground here, as in many other parts of
the world. Last year was especially complicated in this respect. This year is a little
more stable.

Markets the Region can Address


 With established regional markets, Latin America as a region has a very strong
value proposition of having the ability to cater to multiple markets
• Nearshore to US English and Hispanic Market- 20 percent of consumers in US
are Hispanic

44   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Value Proposition
Strong Regional : Diluted Individual

• European Markets in Spain (Spanish) and Portugal (Portuguese) • With established regional markets, LatAm
 Time zone issue- Latin America is very well positioned, is in more or less same proposition of having the ability to cater to
time zone as in US and Europe.  Nearshore to US English and Hispanic Ma
 Analysts say that with the world talking about ‘agile development’, it is very dif-  European Markets in Spain (Spanish) and

ficult to have agile development if you are farshore.


• However, reaching the global market is a
 Latin America can be part of a dual strategy for companies- whatever has to be players more particularly small and mediu
done in customer interface, do that with your Latin America team, and connect
with your Asia-based team for the rest of the process. • Unique Value Proposition for individual c
 Analysts advise looking beyond outsourcing traditional works to Latin America, Figure
many1  country
Value positions revolve around - M
DESTINATION
and thinking in terms of innovation. Latin America has leadership and partnership PropositionStrong Regional:
 Leads to commoditization of service delive
capability Diluted Individual
Opportunity for individual countries to diffe
 Clients find vendors ready to answer questions, and approachable as compared to
other countries Pr
 Area offers not just cost-effectiveness but is ideally located for testing innovations, Fu
to set up R&D facilities there.
 Challenge- Reaching the global market is a challenge for Latin America out-
sourcing players more particularly small and medium enterprises. Primary client Page 9

remains the regional market. The full potential of the region in catering to external
markets is yet to be optimized.

Value Proposition
Unique Value Proposition for individual countries is often weak, as a result many coun-
try positions revolve around being part of a ‘Multilingual Nearshore Destination’.
The region has to make effort to identify the niche value proposition that it has,
i.e., competitive advantage in niches within ITO, BPO and KPO industry. This will
also provide opportunity for individual countries to differentiate themselves from the
pack
 Colombia - 33 percent graduation students here are studying engineering. Colombia
is in fact, a country of engineers. Yet it is not exporting engineering services.
 Uruguay- Medical industry can prosper here. A very renowned French medical
institute has opened office here. Has more doctors per capita than any country in
the region.
 Chile building its competitive advantage from natural resources. There are services
Realizing Potential

Figure 2  Realizing
Developmental
Areas
Course of Action Realization Potential

• Comprehensive English training and proficiency 
Human Capital programs have been implemented 
• Technical/Finishing schools are now in place 

• Increase focused Promotion activities through


Marketing and partnerships between private and multilateral
Promotion agencies to attract large captive operators

• Government and Institutional support through Country


Business Climate funding and policy building has been accelerating specific
with focus on developing Service Industry associations

• Expand market in US by enticing large Indian


Market Expansion Providers to utilize region as a Delivery Hub
• Transition from Regional to Global Market

• Continue to transform image of South America, • Increasing ITeS SEZ /technopark build
Reality vs. particularly in areas related to Security and ups across region
Perception Infrastructure. Global image needs to be • Crime rate decreasing across South
enhanced. America

Source: Global Shore 2010 webinar ‘LatAm: The Enduring Promise of Latin America’
Page 10

45   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Destinations of Choice

Figure 3  Destinations of • Argentina Good scalability and capacity to provide multiple Service Segments
Choice
• Brazil Large domestic market, while having the best profile for scale in Latin America

• Chile Mature and proven destination for high-value ITO and KPO processes

• Colombia Robust infrastructure and talent pool for BPO & ESO. Risk perception is fast improving.

• Costa Rica ITO remains a strong point, and has capitalized on Intel as an anchor client

• Mexico Large labor pool, but currently experiencing domestic security issues

• Paraguay Strategically located with potential to provide niche services. Scale is a concern.

• Peru Rapidly evolving economy, offers capable talent at lower cost than competition

• Puerto Rico Affinity to US political/business environment. Relatively untapped destination.

• Uruguay One of the safest destinations, with rich and talented labor pool for ITO/KPO Services

On Tholons
Source: Global Shore 2010 webinar ‘LatAm: The Enduring Radar
Promise asAmerica’
of Latin future Offshore Nations:
• Venezuela
• Guatemala
• Panama
• El Salvador
• Nicaragua
around the natural resources. It has copper, it also has copper engineers. In a study
ofPageengineering
11
market in the US to help export engineering services from Chile,
it’s a very huge untapped market.
 Brazil – leader in the world in certain agri-business processes.
 Challenges-
• How to sell the region as a whole?
• Where there are natural resources, there is a service associated with it. But this
potential has been left largely untapped.
• Central America needs to move away from manufacturing to services

Conclusion: Challenges and Opportunities

Challenges and • Key Accelerators


Opportunities.  Potential to become Regional Service Cluster that can corner large US Hispanic market
 Large, developing economies like Brazil, Mexico, Argentina will provide lucrative regional
market for Outsourced Services
 Multilingual capabilities can extend market reach to European markets
 MERCOSUR and other trade agreements will be significant enablers
 Better time-zone affinity to US and Europe compared to Asian destinations
 Rapidly improving infrastructure and connectivity
 Diminishing advantage in manufacturing (due to China and India) has led governments to focus
on Services Industry
 ‘Coopetition’ - Creating healthy competition with India through cooperation. Entry of large
Indian and American Service Providers in the Region will accelerate Services Industry across
Latin America
• Key Inhibitors
 Diluted Value Proposition: Most countries in the region offer similar value proposition - a unique
positioning is critical for sustainable growth
 Service Delivery Maturity: Needs to be improved to expand its high-value services portfolio.
 Political & Economic Stability: Overly dynamic political landscape and fluctuating currency in
specific countries are reasons of concern for many large providers.

Source:
PageGlobal
12 Shore 2010 webinar ‘Europe: Showcasing the Challenges and Opportunities’

46   GS Destinations Compendium 2010 www.globalservicesmedia.com


Regional Dynamics

Q/A

Q The cost of telecom and taxes in countries in LatinAmerica are sometimes restrictive,
restrict moving projects from say, Chile to Colombia. Things to remember for intra-
regional movement of projects like call center work?
According to experts this is true if traditional modes of negotiating are followed.The way negotia-
tion is done in Latin America is a little different.
It is unfortunate to see tax retentions among countries. Brazil is withholding a lot of taxes.

Global Shore 2010 Webinar Series


Even within MERCOSUR (Uruguay, Paraguay, etc.), its not very easy to do business.
However, hope should not be given up, as the infrastructure, the vendors are still growing and
they are looking at the long term. So if you are large, if you are serious, you’ll get the deal you

Europe: Showcasing
need.

Qthe Challenges and Opportunities


Is there a country in Latin America which is setting itself apart in terms of specializing in
help desk services?
This is probably there in Central America. For mainframes and large systems its probably Brazil.
Its difficult to pinpoint one which excels. Colombia is providing a lot of call(?) services
Viewbut its still
Webcast
growing. So in the future, Colombia would be a good place to start as prices are still low.

Q There is a school of thought that locales within a continent or a large nation ought to
focus and offer differentiated advantages for specific verticals, e.g, Financial Services,
Semi-con work, to really attract the meaningful global anchor players. Is anything like that
happening in Latin Am? Are clusters like Silicon Valley, Bangalore, HongKong-Shenzen,
Shanghai-Hangzhou-Suzhou developing?
Global Shore 2010 Webinar Series
There are clusters emerging even in places like Mexico. Brazil, Uruguay and Buenos Aires is a
very important cluster here. Paragauy, with Brazil and Argentina around it can provide services

Perspectives and Potential of Asia’s


in Spanish.
The advantage is that such clusters are not consolidated, and are developing. That’s why there
is a first mover advantage in Latin America right now.
Hotspots: China and Philippines
in Focus View Webcast

Global Shore 2010 Webinar Series


The Enduring Promise of
Latin America
View Webcast

47   GS Destinations Compendium 2010 www.globalservicesmedia.com


WEBINAR SERIES: Rightshoring Strategies: Deriving Value, Defining Success

Global Shore 2010 Webinar Series!


WEBINAR SERIES
GlobalShore 2010 is a webinar series on the dynamics of outsourcing locations meant for
sourcing practioners and service providers to be able to make right decisions in choosing
service delivery locations.

The webinars are jointly produced by Tholons, the globalization and sourcing advisory com-
pany, and Global Services Media, the global media platform on the outsourcing industry.

Webinar Topic
Europe: Showcasing the Challenges and View Webcast
Opportunities
Perspectives and Potential of Asia’s Hot- View Webcast
spots: China and Philippines in Focus

View Webcast
The Enduring Promise of Latin America

Leveraging Africa & Middle East View Webcast

View Webcast
The Top 100 Outsourcing Cities-2010

Jonathan De
Luzuriaga
Avinash Vashistha Ed Nair Managing Director, Manuel Ravago
Chairman & CEO Editor SE Asia Research Director
Tholons Inc. Global Services Tholons Inc. Tholons Inc.

Fabrizio Opertti
Senior Integration
Brian Tumpowsky and Trade Specialist Mario Tucci
Director, Sourcing Pumela Salela Inter-American Senior Global
and Governance ITeS Consultant Development Bank Business Consultant
Publicis World Bank (IDB) and Entrepreneur
� Choosing the Right Off-Shoring Destination  50 � Global Sourcing for FAO: Strong, Successful and
by Atul Vashistha, Founder & Chairman, Neo Advisory Growing  68
by Stan Lepeak, Managing Director, EquaTerra Global Research
� Compete or Cooperate? Bridging the Nearshore-
Offshore Divide  53 � Why Latin America is Still a BUY  71
by Anupam Govil, Founder and CEO, Global Equations by Mario Tucci, Senior Global Business Consultant

� Rise of IT-BPO Outsourcing Frontiers Regional � Africa- The Next Outsourcing Frontier  72
by Dr. P.K.Mukherji, President & Managing Partner, Avasant Asia
Analysis  56
by Viral Thakker and Nishant Mathur, KPMG Advisory � Latin America Emerges as a Key Outsourcing
Services, India Destination for 2011  74
by Don Jones, Partner, Technology & Life Sciences Practice, BDO
� Latin America: The Next Sourcing Frontier or an
USA
Afterthought?  59
by Esteban Herrera, Senior Vice President, HfS Research
� Africa as an Outsourcing Destination  76
by Pumela Salela, BPO/ITeS expert Consultant, World Bank
� Africa: The emerging frontier for services
� Offshoring in the Latin American Region  82
­offshoring  63 by Pradeep Udhas, Executive Director, IT/ITeS Sector, KPMG
by H.Karthik and Nikhil Rajpal, Everest Group
� India’s Global Expansion: Eyeing Latin America  83
� Location Selection Best Practices  65 by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ
by Jehil Thakkar and Shailesh Narwaiye, KPMG Advisory
Services, India � Legatum Prosperity Index  84
Expert Speak

xperts by Atul Vashistha, Founder & Chairman, Neo Advisory

Choosing the Right Off-Shoring


Destination
While cost containment will continue to be an important factor in
the global sourcing decisions of organizations, other factors such as
access to a global talent pool, new market entry, and geographic risk
diversification have become increasingly important.

T
he global outlook for out- organizations, other factors such as classified as personnel cost and opera-
sourcing remains optimistic access to a global talent pool, new tions cost. Personnel cost in terms of
despite the recent economic market entry, and geographic risk wages, administration cost, related HR
crisis. Organizations continue diversification have become increas- cost accounts for approximately 40-50
to adopt outsourcing as a business ingly important. New destinations percent of the total globalization cost.
strategy and an effective optimization are constantly emerging in the global Operations cost is also another critical
and transformation lever, to help them marketplace. Organizations need to factor to be considered while setting-
mitigate the current financial and com- be aware of the changing landscape up operations. Operations cost include
petitive challenges. As a consequence across the more established as well as office real estate rent, telecommunica-
of increased adoption of outsourc- emerging destinations. tion cost, tax incentives, corporate tax,
ing, the global sourcing landscape has travel cost, cost of electricity, and cost
undergone significant changes. Many Methodology & Work Process to set-up a business.
global locations are now evolving to Six categories are critical to be ana-
serve specific needs of organizations lyzed while choosing a location. 2.  Service Maturity
embarking on their globalization jour- Service maturity typically gauges the
ney or evolving as mature globalizers. 1.  Financial Attractiveness relative capability of a location in the
Global sourcing is now main- Cost saving has been one of the tradi- global sourcing landscape. The pres-
stream. While cost containment will tional business drivers for globalization ence and type of services delivered
continue to be an important factor and continues to remain a critical by large IT and BPO companies is a
in the global sourcing decisions of decision criteria. Cost, broadly can be leading indicator to gauge the maturi-
ty of a location. The market size of the
S. No Location Factors Key Parameters outsourcing industry, multi-lingual
capability, established and emerging
Financial Real estate rent, support cost, corporate tax rates, labor
1
Attractiveness cost, HR cost, cost to start business, tax incentives services, industry specific focus are
few factors that help provide a holistic
Size of industry, presence of major IT & BPO companies,
2 Service Maturity multilingual capability, key services, industry specific
view of service maturity of a location.
services and focus
3  Human Capital
Size of workforce, university graduates output, attrition
3 Human Capital
rate, scalability, sustainability, wage inflation Global competitiveness is driving
market growth across domains, and
Number of ISPs, personnel computers, number of IT parks as organizations expand, the need to
4 Infrastructure
and SEZs, airline connectivity, road infrastructure
focus on core or anchor service capa-
5 Risks
Crime rate, financial risk, labor risk, infrastructure risk, bilities becomes increasingly critical.
geo-political and socials risk Human capital is the most critical
Government support and incentives, social environment, success factor to retain and grow core
6 Business Environment quality of living, bureaucracy, cost and time to set up competence in the global services mar-
business, cost of living
ket. The availability of a well-educated,

50   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

qualified labor pool, its scalability, and a futuristic evaluation parameter to be inflation and high productivity in the
sustainability in a competitive envi- considered would be the educational labor market in a particular location.
ronment are few key parameters to system that supplies appropriate qual- Numbers of university and technical
be considered while evaluating this ity labor force to meet the forecasted graduates, attrition rates, size of IT &
factor. While the above stated factors demand of the industry. Large num- BPO workforce are some of the factors
are specific to the current labor pool, bers of fresh graduates lead to low wage to be considered.

Location Assessment Framework Examples


Example 1: Critical assessment metrics analyzed while choosing a location from a current & future
standpoint:

Example 2: Cost Component Analysis – Location A

51   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

Example 3: SWOT Analysis – Location A

Example 4: Growth of 100000


Employees in Location A
80000 Cap Gemini E&Y
ACS
60000 EDS
HP Services
40000

20000

0
FY02 FY03 FY04 FY05E FY06E

4  Infrastructure 5  Risk pool, a critical success factor for loca-


With demand for sourcing of services A robust and pro-active risk moni- tions is the business environment and
surging globally, there is a definite toring system for global locations is the support system that it can provide.
need for a well established infra- proving to be a key success factor for Business culture, quality of life, govern-
structure adhering to global stand- sustainable business operations. Risks ment support, procedures, cost of liv-
ards. Infrastructure would encompass such as labor risk, financial risk, secu- ing, and cost and time to commence
physical infrastructure like air, land, rity risk, geo-political risk, and social business in a particular location are key
and sea connectivity and related sup- risk are the different types of risks to aspects to be studied. Understanding
port system, industry infrastructure be cognizant of while setting up new the business environment is a necessary
like development of technology parks, business in low cost locations. step for organizations setting up a busi-
presence of Special Economic Zones ness operation within its own country
(SEZs), and business infrastructure 6  Business Environment or outside.  GS
like availability of office space, tel- While a location could be financially
ecommunication, and other related attractive, and mature in terms of serv- Founder & Chairman, Neo Advisory (Formerly
business support systems. ice capabilities with a sizeable labor neoIT), Neo Group

52   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts by Anupam Govil, Founder and CEO, ­Global Equations

Compete or Cooperate?
Bridging the Nearshore-
Offshore Divide
For offshore BPO providers to succeed, they will have to tackle the Nearshoring
challenge.

N
earshoring is here to stay been slower at adopting this approach. such as Brazil, Chile, Costa Rica
and the Americas region They have either been unable to find and Dominican Republic have rapidly
is brimming with cost suitable mid-size acquisition candi- expanded their share of the outsourc-
competitive and compe- dates or have been reluctant to set up ing pie. Brazil exported IT-BPO serv-
tent destinations, each vying to be a grounds-up operation due to lack ices worth $2.2B in 2008 and is likely
the next big thing. But the loom- of familiarity with the region. It is to touch $3.5B by the end of 2010,
ing question is, will these contenders increasingly becoming apparent that while Costa Rica exported around
co-exist with the larger and more for offshore BPO providers to succeed $600M and Dominican Republic
mature offshore destinations or is in this market they have to tackle the over $450M. In fact nearshore out-
this a zero sum game? While many Nearshoring challenge. sourcing is expected to continue to
had initially dismissed Nearshoring grow annually at double digits to
as a niche trend unlikely to compete Offshore to Global over $20B by 2013. The business and
with well entrenched offshore desti- The offshore provider landscape is service delivery infrastructure in these
nations, the success of many destina- rapidly morphing with the matur- countries has improved significantly
tions in Central and Latin America ing of global sourcing. While serv- and is almost comparable to major
in attracting investments, providing ice providers are now expected to outsourcing destinations such as India
quality services and developing the offer seamless delivery of services and Philippines. However, apart from
desired mix of skills have proven them across diverse geographies, it has also Brazil, none of the other nearshore
wrong. More importantly, the need become important to shake off the tag countries have large locally owned
for de-risking and diversification has of an ‘Offshore’ provider to mitigate vendors that can go head to head
propelled Nearshoring as a critical the political backlash. They can bridge with the global or India based serv-
component of global sourcing. this perception gap by establishing ice providers. There is a distinct lack
Service providers are adopting a a multi-regional presence, especially of transformational or multi-tower
global strategy by developing new with a blend of onshore and near- outsourcing deals in the nearshore
locations that mirror client needs shore delivery. This is an imperative region due to relative nascency of the
as well as address the saturation of not only for major providers like providers and a narrower set of skills.
some offshore locations. Access to HCL, Patni and Genpact but also for But the potential is certainly there, as
capabilities not found offshore such the second tier companies wishing to is evident in the recent Cap Gemini-
as Spanish skills and cultural affin- diversify their client base and spread CPM Braxis deal which is seen as a
ity are making Nearshore Americas risk away from highly concentrated bold move by the French firm to pen-
an attractive choice. Most top tier offshore locations. etrate the lucrative Brazilian and Latin
global ITO and BPO providers are American market. Aegis’ acquisition
expanding their Nearshore footprint Bridging the Offshore- of Argentina based Actionline and
either through greenfield options or Nearshore Divide the recent acquisition spree by ACS
through acquisitions. But the pure Capitalizing on their talent pool (Xerox) and Teleperformance across
play offshore BPO providers have and nearshore advantage, nations the Caribbean and Latin America

53   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

are indicators of a market that has becoming an integral component of don’t always portray the right picture.
reached a critical mass. Such strate- a global services portfolio. Its impor- Many of the cities in Top 20 list also
gic transactions are rapidly changing tant to plan a Nearshore strategy with happen to be rated high in the Most
the landscape and accelerating the long term objectives and a sustainable Dangerous cities list. Countries like
maturity of services capabilities in the growth plan. Jamaica, South Africa and Colombia
region. Balanced Approach to Location are considered high crime, yet have a
Global corporations are rapidly Selection – Its more than just the flourishing outsourcing sector. Create
embracing Nearshoring, leverag- numbers: While Latin America offers your own decision matrix weighing
ing it for Comfort while expanding many nearshore choices, zeroing in on factors more important to you (and
Offshore for Scale. Its easier to test the exact country or location is not as your clients) and then look for the
new processes, vendor capabilities simple. There is a surprisingly high right combination of skills availabil-
and delivery models closer to home. variance in cost and performance fac- ity, process maturity, risks and costs.
However nearshore vendors still have tors between various countries in this Localization through
a long way to go in building com- region. Once a company has short- Partnerships: The Americas (Latin
plex service supply chains in a cost- listed a few locations based on broad and Central America) offers a siz-
efficient manner. Hence companies parameters such as the nature of serv- able regional market for corporations
seeking strategic, transformative and ices to be provided, client require- and service providers. Countries in
long term deals overwhelmingly pre- ments and cost considerations, there this region have a healthy growth
fer offshore destinations such as rate and mushrooming middle
India, China or Malaysia. The class. However, tapping into this
opportunity for Nearshore ven- Aegis’ acquisition of market requires considerable
dors is to offer a broader suite
of capabilities and scale through
Argentina based Actionline local expertise and a long term
approach. Local partnerships
collaborative partnerships with and the recent acquisition can prove critical in the success
larger offshore vendors. Hence of nearshore operations, espe-
they can emphasize their core
spree by ACS (Xerox) and cially during the initial stages.
differentiators and strengths Teleperformance across the A Local partner can not only
rather than build end to end ensure faster ramp up and access
capabilities. The offshore ven- Caribbean and Latin America to infrastructure and manpower,
dors on the other hand are seek- are indicators of a market that but they can also be the beach-
ing to establish nearshore deliv- head to penetrate the local and/
ery centers where client proc- has reached a critical mass. or regional market. This is espe-
esses can be piloted and initial cially true in countries such as
traction can be attained. Hence Brazil and Colombia where very
a marriage of convenience can bridge has to be a more detailed drill down little English is spoken and business
the Nearshore-Offshore divide. In this to identify the final location. Often customs can be quite different from
pursuit everybody wins. The clients factors that are not reflected in an North America. A good example is
feel more comfortable with an off- Evaluation matrix may play a larger the recent JV between Datamatics of
shore provider that has a Nearshore role. For example, Worker produc- India and Genti Teleservices of Brazil.
center, without sacrificing the process tivity and work ethics are not easily Genti benefits from Datamatics’
maturity and cost efficiencies. The captured in Location reports and can expertise in non-voice BPO while
nearshore providers can embellish only be judged through site visits and Datamatics gains access to Genti’s
their strengths and close their capa- interviews with management from expertise in voice services, allowing
bility gaps by bundling services with various groups (HR, Ops as well as the JV to offer a broader suite of serv-
offshore partners. Sales). Government support is still ices to their client base in Brazil.
critical in this region for long term The Right Business Model: For
Integrating Nearshore into sustenance, however don’t be swayed small to mid-sized providers, near-
the Global Services Supply by over the top incentives. Its more shoring should be approached with
Chain important to gauge the government’s caution as the market is still maturing
With the entry of global firms and efforts in ensuring skills development and a substantial amount of time and
growing maturity of local service pro- and inflation control. Also, statistics resource investment is required. At
viders, Nearshoring is increasingly such as crime rates or country rankings the same time not having a nearshore

54   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

presence can limit a provider’s ability seamless business continuity plan. Hot local government and infrastructure
to expand or bid on contracts requir- Sites, where the process is split across providers.
ing such capabilities. Larger firms multiple locations, can be another As the boundaries between
have the flexibility to deploy capital reason for having a blend of nearshore Nearshore and Offshore continue to
and resources and can often secure and offshore locations. Often providers blur, it is evident that clients will opt
client commitment for testing the cross-train their employees across mul- for providers that have a blended
new location but smaller providers tiple locations to take over each other’s portfolio. Eventually providers will be
have to get the business model right functions in the case of an emergency. measured by their maturity in leverag-
the first time. Most large companies Alternatively one could sign up with ing the right location for the right
prefer setting up a greenfield opera- a nearshore partner who can provide skills with the optimum balance
tion or acquiring an established local excess capacity when desired. between cost savings and perform-
firm, while smaller firms should look Experts Matter: It is important to ance. Successful players will be the
at entering into JV’s or Strategic bun- seek the help of advisors with sound ones who create a scalable network of
dling partnerships to minimize the knowledge of the region. Experienced global delivery by harnessing the com-
risks involved in ramping up or inte- Advisors will quickly narrow in on the plementary strengths of Nearshore
grating nearshore delivery centers. short list of location choices based on and Offshore locations.  GS
Widening the breadth of Business their prior experience. They can also
Continuity options. For mission crit- help facilitate and negotiate the right Anupam Govil is Founder and CEO of
ical processes, it is imperative to have a incentives and cost package with the ­Global Equations.

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

55   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts by Viral Thakker and Nishant Mathur, KPMG Advisory Services, India.

Rise of IT-BPO Outsourcing Frontiers


Regional Analysis
Shift in priorities in outsourcing strategies and exponential growth of the
outsourcing market has allowed newer offshoring clusters to evolve and
flourish.

I
T-BPO outsourcing phenom- Emergence of new offshoring Cluster 1: Asia Pacific
enon caught the imagination of destinations, each offering distinct Asia Pacific (ASPAC) is the most
the industry at the turn of this combination of advantages and risks, dynamic and fastest growing outsourc-
century. The Y2K phenomenon has given the customer a variety of ing cluster. The rise of Asia Pacific as
gave necessary impetus to the hiber- options to pick from. Though cost an outsourcing destination was led by
nating outsourcing industry. In the arbitrage is a common advantage success stories of India, followed by
initial phase, availability of skilled among all the outsourcing clusters, China. Over the last few years, other
workforce and cost arbitrage were the but parameters such as sustainability Asian locations such as Australia,
primary drivers of outsourcing indus- and scalability of business, quality of Malaysia, Sri Lanka, Vietnam and
try. Asia Pacific region, which offered work force, cultural and linguistic Philippines have gained spotlight on
both, took the first movers advantage affinity, etc. have become differenti- global IT-BPO map.
and emerged as the leading offshoring ating factors. The main parameters of influenc-
supplier. Since then, IT outsourcing The table below lists out some of ing Asia Pacific as a choice of out-
has become an essential part of every the objectives and priorities of the sourcing destination:
corporate strategy. With experience, demand side of IT-BPO outsourcing
the corporate outsourcing strategies industry and advantages and capabili- Low Costs: Most of the Asian out-
of businesses have matured to look ties offered by clusters of supply side. sourcing destination’s offer 20 percent
beyond mere cost arbitrage. Shift in We can categorize the outsourcing to 50 percent cost saving on labor
priorities in outsourcing strategies and clusters into three major categories over America and Europe. Availability
exponential growth of outsourcing – a) Asia Pacific (ASPAC), b) South of vast skilled labor force at lower
market has allowed newer offshoring America and c) Central and East cost gives Asia a massive advantage.
clusters to evolve and flourish. Europe (CEE) Though wages have increased in India

Objectives & Priorities Advantages & Capabilities


of Customers of Locations

The cost reduction mandate Scalability


Complexity of processes to be outsourced Specific skills and capabilities
Cultural and linguistic alignment Cost of operations
Degree of managerial control Similar time-zones
Time-zone alignment Cultural affinity to buyer

Figure 1:  Factors affecting the choice of location for outsourcing (Source: KPMG Analysis)

56   GS Destinations Compendium 2010 www.globalservicesmedia.com


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due to inflation, yet they are consider- Main parameters influencing South alternative as compared to the U.S.
ably lower than that in Unites States America as a choice of outsourcing and Europe.
of America and Europe. destination:
Cluster 3: Central and
Language Skills: India, Philippines Near shore and Time zone align- Eastern Europe (CEE)
and Malaysia have leveraged large ment: South American nations have Preference of West European com-
English speaking population to attract the unique advantage of proximity panies to near-shoring and cultural
key US and European markets. Asia to the biggest hub of outsourcing and linguistic similarities has made
Pacific markets – Japan, Taiwan supply end – USA. Near-shore opera- Central and Eastern Europe a viable
and Korea find China, Malaysia tion offers advantages of time-zone outsourcing destination. Bulgaria,
and Vietnam lucrative for regional alignment, faster implementation and Hungary, Poland and Russia are all
language skills and cultural affinity. better control over operations. set to compete with Asian and South
The region has struggled to capture American counterparts for the West
Non-English European market due Language skills: Spanish language European outsourcing market.
to absence of Spanish, French and requirements in the U.S. and the Main parameters influencing
German speaking work force. growing English language capability CEE as a choice of outsourcing
destination:
Large number of service provid-
ers: The large number of indige- The outsourcing story will Language skills and cultural
nous service providers offer wide affinity: Language skills are
choice for buyers looking to out- become really interesting important, and are often used
source to Asia Pacific countries. when Egypt and some other as a selling point by the near-
It also makes the region very shore destinations in the CEE,
cost-competitive. African countries also actively especially to Western European
join the IT-BPO outsourcing countries like Germany and
Experience and Maturity: Rich France.
experience in outsourcing indus- bandwagon
try has given India the deliv- Wage differential: In the new
ery maturity of offering end- EU states labor costs are near-
to-end solutions. It gives them edge of the labor pool in the region are ly 20 percent of those in Germany
over their counterparts. Malaysia and key to the region’s competitiveness. and France. Wages in countries like
Philippines have emerged as strong Mexico, Argentina and Costa Rica are Romania are one-tenth of those of
outsourcing destinations because of capitalizing on their sizeable pool of their European counterparts. The
the availability of workforce with English speakers by offering bilingual wage differential, even though it is
niche skills, whereas China based sup- services. considerable today, is narrowing as
pliers are also growing rapidly wage growth in the region is rising.
Cultural affinity with the U.S.: USA
Cluster 2: South America and Latin America share a number EU regulation: Since most of out-
Though South America has less than of cultural similarities. These aspects sourcing destinations including
10 percent share in global outsourcing of cultural affinity assist the U.S. Hungary and Poland, have joined
market, yet the region shows prom- and European companies to retain a EU, European customers find East
ise. With better economic stability, similar corporate culture in captive European outsourcing destination
the “near shore” advantage of South centers and facilitate business with more regulated then their Asian
America has become more compel- outsourcers. counterparts. It shifts some of the
ling for the United States of America. regulatory responsibilities towards the
Brazil, Mexico and Chile reaped the Cost Attractiveness: Latin America vendors. Schengen visa and adoption
benefits of the first mover advantage has a significant cost advantage over of Euro as a common currency has
and business maturity. Newer desti- Europe and U.S. Chile and Mexico also played its part in strengthening
nations such as Argentina, Uruguay are relatively more expensive loca- CEE cluster.
and Costa Rica are becoming viable tions as compared to Costa Rica and
options due to attractive cost and Argentina, however these regions Standard of Education: Most CEE
maturing business sector. can still provide a cost-competitive countries have superior educational

57   GS Destinations Compendium 2010 www.globalservicesmedia.com


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Figure 2: Analysis of Outsourcing Clusters


Cluster
Parameter
Asia Pacific Central and Eastern Europe Latin America
Major destinations India, China, Philippines, Malaysia Ukraine, Romania, Czech Republic, Brazil, Chile, Mexico, Argentina
Poland
Upcoming destinations Vietnam, Thailand, Sri Lanka, Slovakia Paraguay, Peru, Columbia, Equador
Pakistan
Closest markets Japan, Korea, Australia, India, China Western Europe US, Canada
Service Focus Global markets European markets North American markets
Reason for emergence as • Low costs • European language skills • Spanish language skills
a cluster • English language skills • Educated workforce • Cultural affinity with American
• Relatively mature service providers • Good infrastructure markets
Emerging areas of • Vertical BPO • Technology services • Contact center
opportunity • Knowledge services • BPO • BPO
Note: The table contains indicative data and may contain generalizations to enable comparison across regions. However, there are disparities within regions
on each of the above parameters, some of which are highlighted in following sections.
Source: KMPG Analysis

systems that are almost at par with outsourced has extended from “voice state-of-art infrastructure and cost
the EU-15. A study by MGI claims based” services to insurance under- effective work force. With the advent
that 50 percent of graduates (engi- writing. At the same time, new clus- of tier two outsourcing cities, custom-
27 January, New York
neers, mathematicians, statisticians ters have made the outsourcing market ers get several options even within a
and physicists) from the Czech extremely competitive. Suppliers need country.
Republic, Hungary or Poland are to continuously evolve and innovate From Y2K to global recessions,
suited to working for international to attract customers. For instance, outsourcing has come a long way. The
service“Other
providers.outsourcing conferences do not and
despite inflation have a good
increase mix ofspread
in wages Buyers of and Sellers. destinations
outsourcing
Most ofofthe
Emergence new time it is lot
clusters hasof sellers. So I think,
and real estate it’s aisgood
prices, India mix,across
still the you three
get to hear from
continents has been the
resultedthe buyers
into increaseprospective
in length andwhich is very important” .
most preferred destination because of biggest leap. But this can prove to be
breadth of outsourcing. The inhibi- maturity of industry in India and sup- just a beginning; Know the story
More will become
-Global Services Conference 2010 Attendee
tions and reservations against IT-BPO port extended by the government and really interesting when Egypt and few
outsourcing that existed, due to differ- promotional agencies. other African countries also actively
ent priorities of customers, have been Regional analysis gives hawk-eye join the IT-BPO outsourcing band-
diluted considerably by emergence of view of outsourcing destinations, wagon.  GS
new destinations. Outsourcing has but each of the regions also offers
been embraced by more customers large diversity to the customers. For Viral Thakker is Executive Director, KPMG
across geographies. With availability instance, in Asia, India offers mature Advisory Services, India. Nishant Mathur
of diverse technical and profession- IT-BPO industry and English speak- is Consultant, KPMG Advisory Services,
al skills, the breadth of work being ing workforce where as China offers India

27 January, New York

“Phenomenal & an Excellent platform to meet lot of clients and other people from same
industry. Good exchange of thoughts and ideas. I would definitely come back year after
year and would highly recommend people out there to come and participate”.
-Global Services Conference 2010 Attendee Know More

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xperts by Esteban Herrera, Senior Vice President, HfS Research

Latin America: The Next


Sourcing Frontier or an
Afterthought?
Nearly every provider of IT and Business Process services has wrestled
with a Latin American Strategy. The strategic question : Is Latin America
a destination of choice, or a destination of convenience?

I
n Spanish, the word “servicial” is destinations do. But viewed compre- some of the well-know near-shore
a high compliment. It describes hensively as a region, it’s a formida- advantages of similar time zones,
a person who is always ready to ble services population, with millions quick, relatively cheap flights, and
lend a hand, who senses what of qualified engineers, accountants, most importantly, cultural similarities
others need before they even ask. HR professionals, MBAs, doctors, with American and European clients.
Parents teach the concept to their lawyers, etc. and Billions of dollars However, the outsourcing industry
children, in hopes that they will devel- in demand for IT and IT-enabled here is not as mature, relying on hero-
op this behavior. Providing a service services ($8 Billion in Brazil alone). ics and creativity more than process
in Latin American culture is noble Latin America desperately needs, but and discipline.
and prestigious—so how is it that it probably will not get, a NASSCOM- The strategic question for both pro-
is not the business services engine of like organizing body that will refocus viders and buyers: Is Latin America a
the world? the industry away from its current destination of choice, or a destination
Nearly every provider of IT and nationalistic tendency. It could start of convenience?
Business Process services has wrestled with the already commercially friend-
with a Latin American Strategy. On ly Mercosul countries and perhaps Latin America as a
one hand, it is a large, relatively pros- expand northward as it proves its destination of choice
perous market with a wealth of well- success. Companies on either side of the serv-
educated professionals. On the other, Possibly the best-kept secret is the ices equation that see Latin America
it is highly fragmented and diversely abundance of English language skill as a unique and differentiated propo-
regulated; as a result, it has been dif- available in the region. For both voice sition will seek to leverage the cultural
ficult to scale. Another difficult choice and non-voice services, Latin America familiarity bred by the outsize influ-
for service providers is focus: are we is competitive with, or superior to, ence of the United States and Western
building for the local market or to most of the usual offshore back-office Europe on Latin American Society.
provide offshore/nearshore services? destinations when it comes to work- This has something to do with colo-
The two options require very differ- ing in English. HfS Research toured nial history, economic power, political
ent approaches, and therefore it is a call center facility in Nicaragua not influence and aid, and shared Judeo-
difficult to do both successfully at the too long ago, and found over 120 Christian foundations for legal and
same time. representatives placing outbound calls social structures (though the region
Perhaps the biggest limitation to in perfect, nearly unaccented urban is increasing in religious diversity
date has been the inability of the American English. Over 80 percent quickly). But it has even more to do
local industry to organize regionally. of these young employees had lived with a shared experience and popular
Individual Latin American countries in the United States at some point in culture. Latins who were teenagers
lack the population to offer the scale their lives. in the 80s remember when “Video
that more established Asian offshoring Of course, Latin America boasts killed the Radio Star” inaugurated

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MTV broadcasting, at exactly the Aggressively promote these advan- the companies that can afford to fol-
same time as in the US. Cable sub- tages and how they translate into low a “convenience” strategy are the
scribers throughout the entire region real business value ones that do not have a large com-
have more foreign (and mostly n Carve out new niches that fit mercial presence in the region—they
American) channel choices than they well—Application maintenance lack the language and culture-specific
do Spanish-language and local choic- is mature and well supported by requirements of companies with large
es. While there is a vibrant inde- other regions. But GUI design, footprints in Latin America, and they
pendent film industry in nearly every for example, has a cultural appeal are not large enough or “outsourced”
Latin American country, Hollywood element to it and is a strong enough to require the portfolio diver-
rules the cinemas. For all of Brazil’s niche for Latin American provid- sification. Service providers of any
compelling music, visit one of Sao ers. Focusing on the services that scale are unlikely to have no cus-
Paulo’s famous “boites” and you are are best provided from the region tomers with local requirements, be
most likely to hear Euro-pop mixed can only help they due to commercial need or geo-
by Europe’s top disc jockeys. Bottom n Lobby local governments for less graphic diversification. However, if
line, Buenos Aires looks and feels a lot restrictive service export policies the demand is not large, one or two
more like Boston than Bangalore. and tariffs—and reward the loca- medium sized delivery centers will
Outsourcing is ultimately about tions that embrace pro-business suffice.
providing services in a way that cre- regulatory environments Latin American service strate-
ates economic value for both parties. n Invest in local leadership gies that are more opportunistic will
Cultural understanding can certainly n Compete vigorously in the local probably emphasize the following
grease the wheels of the relationship, market and the global service elements:
but without an economic incentive, delivery playing fields to miti- n Site choices that reflect broad
there is little reason to proceed. Latin gate risk and enhance economic language and regional capability.
America still does offer labor arbitrage benefit Since there are likely to be less
for desirable skills, but it is fading sites and a smaller footprint over
just as quickly as anywhere else. On Latin America as a a large expanse of the map, com-
a pure labor rate basis, Latin America destination of convenience panies are more likely to choose
appears disadvantaged relative to India While the regional, all-in approach areas like southern Brazil, where it
and the Philippines, for example. But may well be right for many providers is easier to recruit bi- and tri-lin-
on a total cost of ownership (TCO) and clients, but it isn’t for everyone. gual speakers. Where companies
basis, that disadvantage shrinks. HfS For some enterprises and their provid- have a specific large market to be
research estimates the difference in ers, a more opportunistic approach to served, such as Mexico or Brazil,
TCO at no more than 10–15percent Latin America is more appropriate. companies may choose sites or
between most Latin America activ- Simply put, some companies do not providers with local strength
ity (whether IT or BPO related) and have the demand for services delivered n Niche activities—certain kinds
India-originated services. from Latin America, because their of application development, bi-
customers and their business doesn’t lingual contact centers, KPO, and
Companies that see Latin America require it. These companies will likely sports books, among others, are
as a destination of choice will logi- take advantage of niche expertise, all reflected with relative strength
cally invest more heavily, and their and the ability to provide “localized” in the region
strategies should reflect the following services when their limited presence n Customer acquisition, in the
elements: in the region demands it. A few oth- case of providers. There are still a
n Adopt a regional, networked ers might view Latin America purely number of captive shared service
approach, rather than a country- as a diversification move, a nearshore centers in the region that could be
by-country approach. Make sure minor site wih disaster recovery capa- sold to providers looking to win a
work is easily movable from one bilities and a beachhead for potential new customer.
location to the other, and get future expansion should the situation n Portfolio diversification/Disaster
skilled at capturing the right skills change. Recovery. Companies that find
in the right cities This is probably the more difficult themselves too heavily invested in
n Make the cultural similarities strategy to execute, because it requires a single region may find it attrac-
and the physical proximity part making riskier choices about location tive to conduct some business
of the differentiated advantage. and focus. Amongst service buyers, activity in Latin America, taking

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advantage of its labor arbitrage investment away. In truth, the parts of the industry but not oth-
while managing business risk. security situation is far better than ers. Most countries, even as they
n Marketing and Sales: Ultimately, it has been, not just in Colombia attempt to attract foreign invest-
service companies cannot call but throughout the region. The ment, trip over their own bureauc-
themselves global if they ignore concerns over security are, in HfS’ racy. Fortunately they have all set
22 million square kilometers of opinion, overblown. Philadelphia, up government-sponsored devel-
the earth’s surface, with a popula- Washington D.C. and Baltimore opment agencies skilled in help-
tion of 600 million. Establishing are just three of the cities in the ing new entrants get established.
a presence in Latin America is United States with higher murder
critical to service providers and rates than Sao Paulo. Buenos Aires Service Provider Landscape:
consumers that need to compete is safer than Dallas. Approaches to the market
globally. 3. Population/Scale. The main prob- Different service providers have taken
lem with single-country strategies different approaches to Latin America,
The Challenges of the Region is that no one country in the and even within a category, the strate-
While there are many more reasons region, with the possible excep- gies have differed
to invest in Latin America than there tions of Brazil and Mexico, has a Traditional Western outsourcing
are reasons to avoid it, there are some huge population, therefore limit- providers such as Accenture and IBM
challenges for business service have long had a presence serv-
providers and their customers in ing the local market. Because of
the region: Cultural alignment is the their country-specific organiza-
1. Politics. Led and funded tion structures though, it has
by Hugo Chavez’s regime strongest calling card for the only recently become possible
in Venezuela, leftist, anti- companies wishing to provide for them to offer the services of
business and anti-American/ their Latin American delivery
European governments have services from the region, but centers to non-Latin American
been elected in places like they must resist the tempta- clients. CapGemini has perhaps
Bolivia, Ecuador, Nicaragua, the most aggressive investment
and Argentina. While the tion to “sell against India.” program in the region and has
threat to foreign businesses backed it up with acquisitions,
is real, it is also overstated. like the recent CPMBraxis
All of these countries require for- ing the actual and potential edu- transaction, and leadership to make
eign investment, and still actively cated workforce capable of pro- it happen. All of these have local lead-
pursue it in spite of the politi- viding services. Costa Rica, which ers running the operation, generally
cal rhetoric their leaders promote. has the most educated population reporting to the home office in the
Brazil has grown economically, on the continent, has just four US or Europe.
grown its middle class, expanded million inhabitants, 300,000 of Contact Center Providers were
capitalism and foreign investment, them already working in the serv- early and heavy in the region, for
and gained more influence in the ices-for-export industries. Chile, reasons mentioned earlier. Sykes,
region and the world in the last with a stable democracy, strong for example, operates in Argentina,
eight years, ostensibly under the infrastructure, and the highest Brazil, Costa Rica, El Salvador, and
leftist leadership of the Worker’s per-capita income in the Americas Mexico. Sitel is in Brazil, Chile,
Party, which was just re-elected to after the US and Canada, has just Colombia, Nicaragua, and Panama.
the presidency for another four- 16 million inhabitants. Both of West is a relative laggard with just one
year term. the above have proven difficult large Mexico operation. Call Center
2. Brand. Colombia has some of places to recruit in for recent cor- management is a highly poached job
the best professional talent in porate multi-national arrivals. category in the region, but because of
the world, available at reason- 4. Regulation. Latin America has their prevalence and experience, there
able wages and within a short not helped itself with a consistent are plenty of local managers running
flight from the United States. But policy for services exports. While these contact centers.
Colombia has a terrible repu- Brazil taxes them, Nicaragua offers The largest Indian ITES provid-
tation as a violent, dangerous a 15-year tax holiday. Panama ers have all established a presence in
place that keeps a lot of foreign offers similar holidays for some Latin America, generally following an

61   GS Destinations Compendium 2010 www.globalservicesmedia.com


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either build or buy strategy, but not brands mentioned previously. They executives of larger firms could not
both. Wipro has made some strate- have had the opposite problem of give them. More than any other con-
gic investments in which it acquired the India-based firms. They know stituency, this group of providers has
both desirable assets and marquee and serve their home-market very an interest in promoting the region as
customers. TCS moved early and has well, but they have struggled with a destination of choice, particularly
mostly built. Infosys has been charac- enterprise-level selling in the US and for high-end software services.
teristically cautious and opportunis- Europe. For obvious reasons, all of
tic. HCL and Cognizant arrived late these firms have chosen a “destination The bottom line
and do not have as large a presence as of choice” strategy. They have a com- Outsourcing in Latin America will
the others. Both WNS and Genpact pelling near-shore value story to tell, continue to grow, in part because the
have built and bought in the region. but are far behind in awareness and region can serve many different types
Those India-based providers that don’t market share. HfS Research sees the of demand. Cultural alignment is the
already have a presence are talking immediate challenge for these firms as strongest calling card for the compa-
about it, with commitment to getting sales and marketing, but longer term, nies wishing to provide services from
established sooner rather than later. they must also establish themselves as the region, but they must resist the
HfS has observed that the India-based true global providers, meaning they temptation to “sell against India.” The
firms are having difficulty engaging too will have to come to places like business services industry is, at this
local clients, perhaps in part because India, The Philippines and China stage of globalization, much less a
they have largely failed to hire local if they are going to be a full-service competition amongst countries than
leaders to run their shows. One senior provider. They will also have to invest it is a competition amongst compa-
executive from a large and successful in BPO capabilities, as they are largely nies. Consumers of business services
provider recently remarked to HfS IT focused and HfS Research sees a have a choice of locations and provid-
Research that “Portuguese/Spanish slow but consistent swing towards ers, and as they seek to both diversify
language skill and cultural under- bundled, end-to-end services over the risk and integrate services, Latin
standing” were not that important next few years. America will continue to be a key
to lead the Latin America business. Yet another category of provider is ingredient in the recipe. Whether the
This sounds a lot like the American the smaller, high-end Latin American region plays a dominant or secondary
globalization failures of the 1960s software development outfit—compa- role in the sourcing strategies of enter-
and 70s, in which US corporation nies like Hexcta, Avantica, and PSL, prises and providers, expect to see
dispatched ex-pats to run far-flung with deep expertise, smaller project continued, paced, growth in both the
operations with little regard for local based work as their main offering, local and export markets. And why
language, customs, preferences, cul- and more midsize than enterprise- not harness the energy of a culture
ture and regulation. class clients. Their clients find work- that prides itself on providing a serv-
Large local providers, like Softtek, ing with them easy, for the nearshore ice?  GS
Neoris and Politech, have established advantages described elsewhere in this
businesses in the US, but their pen- report, but they also tend to get Esteban Herrera is Senior Vice President,
etration is small relative to the the a lot of personalized attention that HfS Research

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

62   GS Destinations Compendium 2010 www.globalservicesmedia.com


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xperts by H.Karthik and Nikhil Rajpal, Everest Group

Africa: The emerging fron-


tier for services offshoring
Africa’s growth in offshoring has been primarily driven by its low-cost
proposition and talent availability in meaningful scale. However, Africa is
often perceived as ‘high-risk’ by foreign investors.Here, the continent is
analysed across key decision drivers in location selection.

T
he offshoring of global servic- selection, namely talent availability, constitute the majority of the
es is an established phenom- costs and operating risks. Francophone offshoring market.
enon. In 2009, over $90B of Most offshore operations in these
services were sourced across Meaningful scale of talent countries support clients and cus-
BPO and IT through ~4 M people available in many countries tomers in France and pan-Euro-
from offshore locations. Everest analysis suggests that at least pean multinationals having signif-
As demand grows, the offshore four countries in Africa provide icant French-language needs. For
location landscape is evolving rapidly, talent in meaningful scale to sup- example, Capgemini has a ~1,500
with over 150 cities that are potential port large operations (in excess of FTE strong operation in Morocco
location options for companies. Africa 1,000 FTEs). Egypt, South Africa, providing French-centric IT appli-
is a relatively recent entrant to this list Morocco and Tunisia each produce cation development, transactional
of potential destinations. The region more than 50,000 graduates annually. BPO and contact center services
has witnessed significant uptick in South Africa, for example, produces to its customers.
offshoring activity in the past 24-36 350,000 graduates annually and is n English language belt in sub-
months. Recent investments by lead- among the Top 3 global locations Saharan Africa: Primarily com-
ing global companies (e.g., Amazon that can provide English language prising South Africa with Kenya
in South Africa) are likely to favorably skills at scale. While the size of tal- also starting to gain traction,
influence interest in the region as a ent pool in these countries is smaller these countries primarily deliver
global sourcing destination. than the established offshore locations English language BPO services.
Among the African destinations, (India, Philippines), it is comparable South Africa is one of the lead-
Egypt, Morocco, South Africa, and to that of emerging offshore locations ing destinations to serve the UK
Mauritius are the leading countries in in Central and Eastern Europe, Latin market, given its preferred accent
terms of scale of direct employment America. Other African countries and cultural affinity with the UK.
in the offshore services sector. Each of such as Kenya, Ghana and Mauritius Five of the top 10 global contact
these countries has more than 10,000 can support moderate-scale centers. center players are already leverag-
offshore jobs in this sector and host Historical influences from the ing South Africa to deliver voice
delivery centers for a number of lead- colonial era have provided these coun- work for the UK market.
ing global suppliers and captives. tries with a pool of language skills n Multi-lingual destinations
Africa’s growth in offshoring has that are a key driver towards growth for Europe: Some countries in
been primarily driven by its low-cost in offshoring. Given the diverse lan- Africa can support service deliv-
proposition and talent availability in guage skills in the region, we see three ery across multiple languages.
meaningful scale. However, Africa “belts” emerging: Mauritius offers an attractive bi-
is often perceived as ‘high-risk’ by n Francophone belt in North- lingual proposition for French
foreign investors. In this article, we Africa and Mauritius: Primarily and English work. Egypt is well
explore key African countries across comprising Morocco, Tunisia positioned to support multiple
three key decision drivers in location and Mauritius, these countries European languages at moderate

63   GS Destinations Compendium 2010 www.globalservicesmedia.com


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scale and has witnessed credible infrastructure). Whilst perceptions violence and unrest in Nigeria and
success to the effect. of risks in some areas are exagger- Senegal.
ated, there are some challenges that Governments are making concerted
Costs significantly lower investors need to consider and man- efforts and strong commitments to
than source markets; age effectively. Also, these risks vary improve the attractiveness of the oper-
however, costs vary across across countries and investors need ating environment. Initiatives include
locations to make conscious risk-reward trade- skill development (e.g., ITIDA-led
Locations in Africa offer significant offs in making location choices in the programmes in Egypt, Monyetla pro-
arbitrage potential from source mar- region. gramme in South Africa) and acceler-
kets. For example, costs in South ating infrastructure development
Africa are 50-60 percent lower through technology parks (e.g.,
than the UK. Also, most loca- While the size of talent pool Casanearshore parks in Morocco,
tions in Africa offer lower costs Ebene Cybercity in Mauritius).
than the Central and Eastern in these countries is smaller Most countries offer incentives
European region. than the established offshore for the offshoring sector; howev-
However, costs vary signifi- er, the nature of these incentives
cantly across locations. Whilst locations (India, Philippines), and their financial impact varies
Kenya, Mauritius and Egypt are it is comparable to that of across countries.
among the lowest cost destina- On the whole, the outlook on
tions in the region, Tunisia and emerging offshore locations the offshoring opportunity for
Morocco are among the more
expensive ones. Some countries
in Central and Eastern Europe, Africa is positive. We expect that
growth will continue to acceler-
offer attractive incentives that Latin America ate as both suppliers and buyers
make a significant difference build global delivery networks
to the cost of operations. For and diversify into newer loca-
example, the recently announced From a relative risk standpoint, the tions. In addition to growth from
(Nov 2010) incentives in South Africa region can be segmented into three international markets (e.g., UK),
help reduce costs by 20percent. groups locations in Africa are also likely to
Whilst payroll and facility costs n Egypt, Morocco, Tunisia and witness growth from regional shared
in African countries are in general Mauritius are stable locations services operations (i.e., leading com-
competitive to India and Philippines, on account of a favorable geo- panies consolidating their back-office
telecommunication costs are higher. political climate, socio-economic operations for the African region).
This is largely driven by historical regime and investor-friendly busi- Furthermore, the expected improve-
telecom bandwidth constraints. On ness environment ments in infrastructure augur well for
an average, the cost of telecommu- n South Africa offers a “First- the future of this region.
nications in African countries is 5-7 World” environment in terms of Most of the work delivered from
times higher than that in India and its infrastructure and quality of African markets is currently transac-
Philippines. However, telecoms costs life. Investor confidence in South tional in nature. While this is expected
have reduced considerably over the Africa has grown in recent years to continue, some countries offer
past 3-4 years. Going forward, the and the success of the FIFA 2010 opportunities to deliver complex work
advent of new cables (e.g., SEACOM) World Cup has further strength- in certain areas (e.g., South Africa for
is expected to further reduce telecom ened the country’s reputation. complex BPO in financial services,
costs and strengthen cost competi- However, there are some concerns Morocco in applications outsourc-
tiveness of several countries in the on security that can be managed ing). The political and security envi-
region. with appropriate investments ronment may continue to remain a
n Instability of the political and concern in few countries but investors
Concerns on risks are a macro-economic environment is a are finding ways to manage risks as
blend of real issues and concern in some countries such as they enter these markets.  GS
perceptions; risks can be Kenya, Nigeria and Ghana (e.g.,
managed unstable coalition and burgeon- H.Karthik is Vice President, Global Sourc-
Investors are often concerned with ing economic debt in Kenya). In ing, Everest Group. Nikhil Rajpal is Partner,
risks in Africa (e.g., stability, security, addition, there are concerns with Everest Group

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xperts by Jehil Thakkar and Shailesh Narwaiye, KPMG Advisory Services, India

Location Selection
Best Practices
There is no ‘one-size-fits-all’ strategy for organizations to choose but
they need to follow a planned and scientific exercise of location selection

T
he recent financial crisis gave cities is well established and quality of stakeholders need to ask few impor-
a big set-back to the world life is also better. However, such cities tant questions to themselves before
and a lot of companies are have higher costs of operation and finalizing the location to see if they
still grappling to recover. higher attrition rates. are moving in the right direction.
One big lesson that companies have
learnt is that they can no longer exist Emerging Tier II locations are cities 1.  Is a clear Sourcing strategy
in isolation. The world is getting clos- which started little late after watch- defined?
er and every global phenomenon will ing the success of some of the leading Organizations that are planning to
be impacting companies. Companies destinations. These Tier II cities have explore new/alternate destinations
which had never considered outsourc- large talent pool with relatively lower need to have a clear sourcing strategy
ing are opening up to offshoring wages. Overall cost of operations is defined. Having a detailed sourcing
/ outsourcing to rationalize costs also low in these cities. However, strategy not only gives a business case
and delivery models. On the whole, infrastructure in these cities may not and a plan for the next few years for
access to global opportunities is get- be sufficient to cater to the demands offshoring but also gives a complete
ting easier. Offshoring not only helps of the companies, but attempt is idea of the requirement. It also out-
in cost rationalization but also gives being made to improve the situa- lines future plan as to which processes
access to a diversified talent pool. If tion. Governments are focusing on are ideal to offshore, how to offshore
companies move to a relatively less development of city infrastructure and when to offshore them. This is a
explored location, they can leverage and providing suitable incentives to very important aspect from location
many additional benefits of being the set-up IT-BPO companies in these selection point of view because it gives
“first-mover” like acquiring various locations. a clear idea about the scale and scope
incentives such as government grants Considering the gamut of choices of services. It also helps to choose a
due to a heavier hand at the negotia- in terms of cities that are available, it location by keeping in mind about
tion table. becomes difficult for organizations to the future expansion plans.
Globally, several destinations are choose the right city. Organizations
attracting IT-BPO players to set-up are increasingly looking at parameters 2.  What kind of time-zone
their delivery center. Depending on beyond cost arbitrage. Both Tier I and proximity and support is expected
the strategic priorities, companies can Tier II cities will have their own pros from the new location?
choose between two types of cities, and cons and companies want be sure Organizations should also be clear on
Leading Tier I or Emerging Tier II. that they have chosen the best city to nature of support they are expecting
fit the bill. Ultimately, location selec- from the offshore location. Depending
Leading Tier I locations are early tion is a scientific exercise and should on the requirement, the center can be
bloomers in IT-BPO sector and are be done with utmost care otherwise a near-shore or an offshore center.
quite mature in service offerings. one may end up in a place where If there is a good amount of time
Moreover, due to presence of large one gets a few advantages but does overlap with the parent office then for
number of service providers and cap- not meet overall objective of moving the work to be carried out smoothly a
tive units in the city, skilled talent offshore. Location selection should near-shore center within time differ-
pool is large. Infrastructure of these be done with extreme caution and ence of 3-4 hours can be ideal. E.g.

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Mexican and Chilean cities can be a be executed from the location, one nearby markets. E.g. Chinese cities
good option for US head-quartered should look for suitable talent pool. like Changsha and Hangzhou can be
companies. Offshore centers can be For some of the transactional work, a natural choice to support Japanese
considered for large scale operations overall graduates’ pool can be consid- market due to their linguistic and
with minimal/no overlap with par- ered, but for certain high end com- cultural similarities. The Central and
ent offices. In such cases, Indian and plex processes, looking at specific East European cities are good to
Chinese cities can be a good option talent pool becomes essential. E.g. support Western Europe; the Latin
for US head-quartered companies. Commerce graduates can be consid- American cities are good for North
Companies can also go for regional ered for accounting process related America, etc. However, there are some
centers under ‘Follow the Sun’ strate- work. Apart from the proportion of interesting anomalies. E.g. Buenos
gy. In which case regional centers will graduates, other factors which could Aires (Argentina) can tap both North
take support charge during regional impact the availability of talent pool American and European business due
office’s ‘office hour’ timings. Other are out-migration of talent and com- to linguistic similarities with both
choice can be ‘24*7 offshore support’ petition available from other/compet- regions (Spanish, Portuguese and
model in which the offshore center ing industries. E.g. The call center English). Similarly, accent similarities
always supports the required with the US mean that cities in
services. the Philippines are well suited
Some cities have set up areas to serve the US market.
3.  Will an unexplored
emerging Tier II location be for promoting specialized 6.  Is there a dedicated
a good choice for operations? services – like the Gujarat IT-BPO Infrastructure
Typically, moving to unexplored available within the city?
Tier II cities will have all the International Finance Tech- Availability of dedicated zones
advantages of being ‘first-movers’ City in Ahmedabad (India) and for IT-BPO companies with
for large transactional work cent- ready basic infrastructure and
ers. State and local Governments the Tunis Financial Harbor facilities (such as power and
will be ready to provide incen-
tives for new set-ups. Talent pool
in Tunis (Tunisia) are to be telecommunication) can be of
good help while deciding on a
will also be easily available and dedicated for financial serv- delivery location. Large number
at a lowest possible cost in initial of cities have Free trade zones
years. Although, in those initial
ices, Changsha (China) has a (FTZs) or special economic
years infrastructure may not be “Cartoon City” to house ani- zones (SEZs), which can be
adequate but over the period if ideal for IT-BPO companies.
few good companies set-up in
mation companies Some cities have gone a step
the city, infrastructure would be further and set up areas for pro-
automatically improved to sus- moting specialized services – for
tain the growth. Hence, if companies industry faces competition from instance, the Gujarat International
are ready to compromise a few aspects the tourism industry in some cit- Finance Tech-City in Ahmedabad
of location, their ‘High Risk – High ies. Moreover, if there are industry (India) and the Tunis Financial
Return’ strategy surely can provide clusters in nearby areas, typically a Harbor in Tunis (Tunisia) are to
them better benefits in the unexplored higher level of professionalism can be be dedicated for financial services.
tier II location. But if companies are expected from the talent pool and can Changsha (China) has a “Cartoon
looking at setting-up a center for be employable. City” to house animation companies.
niche skills, a careful decision needs For companies which are looking for
to be taken between established Tier I 5.  Does the location have niche services, cities with dedicated
city verses unexplored Tier II city. linguistic and cultural proximity? infrastructure and specific talent avail-
Services which largely require cus- able can be of natural choice
4.  How good is the talent pool tomer interaction, possessing linguis-
availability within the city? tic and cultural proximity really helps. 7.  Are Government incentives
Talent pool is one of the most Typically, near-shore emerging cit- being carefully evaluated?
critical aspects of location selec- ies have strong linguistic similarities Different locations have different
tion. Depending on the services to and cultural compatibility with the incentives for IT-BPO company set-

66   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

ups these days. Even the govern- issues like cost of living, provisions, organizations to choose but they need
ments are taking active interest in etc. may have a direct impact on an to follow a planned and scientific
marketing their cities to IT-BPO employee’s life style. Additionally, rec- exercise of location selection.
companies. Competitive monetary reation facilities are also quite impor- We wish you all the success in this
and non-monetary incentives such as tant to judge quality of life within exciting journey!  GS
quicker clearances, facilitation with the city.
real estate and recruitment are some Jehil Thakkar is Executive Director, KPMG
incentives on offer. For instance, in 9.  Is site visit done before Advisory Services, India. Shailesh Narwaiye is
Guadalajara (Mexico), the time taken finalizing the city? Manager, KPMG Advisory Services, India
to set up business has gone down Site visit is one of the most important
considerably in recent years. Port aspects which should not be missed.
Louis (Mauritius) provides easy work Even though all the important aspects
permits to encourage expatriates to of a city have been considered, com-
work in the otherwise small coun- panies will gain the planned benefits
try. Other efforts include encour- based on the final site chosen within
aging technical education (such as that particular city. Therefore, once
in Santiago, Chile) or the study of the final two-three cities are decided
languages (such as English in the upon, a visit to the actual sites with
Chinese cities) to better prepare the these cities is critical before finalizing
talent pool. Hence, it is very impor- the offshore destination. One should
tant for organizations to evaluate not underestimate the value of a site
these benefits carefully before final- visit and conversations with other
izing the location to get maximum 27 January, New York
experienced business groups conduct-
benefits from the location. ing business in that location. For
example, local business groups, pro-
8.  How is the quality of life in the fessional associations and chambers of
“Other outsourcing conferences
selected location? commerce.do not have a good mix of Buyers and Sellers.
Mostquality
Typically, of the of
timelifeit isis lot
anof sellers.
A wideSorange
I think, it’s a are
of choices good mix, you get to hear from
avail-
the buyers prospective
untouched aspect of the city selection which
able is very
today, important”
for companies . in many
process. Cost of living, crime rate, parts of the world with the similar Know More
-Global Services Conference 2010 Attendee
pollution and ease of commuting basic advantages offered by these cit-
are few important parameters while ies (E.g. lower costs, qualified tal-
analyzing a location for the quality of ent and aggressive incentives). But
life it offers. Although pollution and depending on organizations’ strategy
ease of commuting may not have an and project requirement, each city
immediate and direct impact on the becomes unique in its own way. There
quality of life a city offers, but other is no ‘one-size-fits-all’ strategy for

27 January, New York

“Phenomenal & an Excellent platform to meet lot of clients and other people from same
industry. Good exchange of thoughts and ideas. I would definitely come back year after
year and would highly recommend people out there to come and participate”.
-Global Services Conference 2010 Attendee Know More

67   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts by Stan Lepeak, Managing Director, EquaTerra Global Research

Global Sourcing for FAO:


Strong, Successful and Growing
Despite the pressure for increased service trade protectionism among
many in Western governments and general anti-globalization saber rattling,
the use of global sourcing and service delivery models remains strong.

Global Sourcing Market increased service trade protectionism one-to-five scale where one represents
Overview among many in Western governments “strongly disagree” and five means
The use of global or offshore resourc- and general anti-globalization saber “strongly agree”. The only trend with
es to support outsourcing efforts is rattling, the use of global sourcing consensus agreement, and it scored
nothing new. The market has grown and service delivery models remains just above the mid-point, was that
and matured over the past 10 years strong. outsourcing buyers are growing more
with most medium and large end-user The quarterly Pulse surveys poll interested in offshore services deliv-
organizations now engaging in some the top global business and IT service ered from locations other than India.
form of global sourcing, and all top providers and EquaTerra senior advi- This trend is natural as the number
service providers possessing diversified sors on what impact various market of quality and viable global sourcing
global service delivery capabilities. conditions are having on buyers’ glo- locations expands and India-based
There is ongoing debate in the bal sourcing preferences and patterns service providers themselves diver-
market on both the overall merits of (see Figure 1 for 3Q10 results). sify delivery capabilities beyond their
offshore or global sourcing and its The advisors and service provid- home market. Neither advisors nor
future growth. Some pundits predict ers described to what degree they service providers see buyers pulling
(or hope) that global sourcing, like agreed or disagreed with five positions back from global sourcing in general
globalization, has peaked and, due related to trending in global sourc- or their use of India-based service pro-
to shifting buyer preferences, more ing. They ranked their responses on a viders as major trends.
restrictive trade and tax policies, con-
verging wage ranges, etc., the growth
of global services sourcing will slow or
perhaps begin to contract. However,
the reality of the market for global
services sourcing is much different.
While models, preferences and poli-
cies are always shifting, overall growth
in global services delivery continues
unabated.
EquaTerra recently released the
result of its 3Q10 global advisor
and service provider Pulse survey.
While the results were mixed to posi-
tive relative to the overall growth of
business process and IT outsourcing,
they were clear on continued strength Coopyright © Equa Terra 2010. All rights reserved
of the offshore and global servic-
Market Conditions: Impact on Global Sourcing
es market. Despite the pressure for

68   GS Destinations Compendium 2010 www.globalservicesmedia.com


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Results were similar in EquaTerra’s the Philippines and China are also
2009 – 2010 European ITO popular offshore locations, with 19
Service Provider Performance and percent, 18 percent and 14 percent,
Satisfaction Study. This market study respectively, again more heavily uti-
analyzed over 1,600 IT outsourcing lized by buyers in North America.
(ITO) contracts across Europe, and While only eight percent of respond-
found that over 50 percent of all ITO Coopyright © Equa Terra 2010. ents cited South America, it is on a
All rights reserved
buyers (with a high of more than 70 solid growth trajectory from a small
percent in the U.K.) are currently Global Sourcing Models base. Location selection and prefer-
utilizing near or offshore outsourcing. to Support FAO ences are a function of buyer prefer-
Among these users of global sourcing ence, language needs and require-
services, over one-half plan to increase the expansion of global service deliv- ments, and the footprint of leading
near and offshore usage going forward ery footprints by multinational and FAO providers.
and less than 10 percent plan to do regional FAO providers, and the
less global sourcing. growth of offshore captive F&A oper- Future FAO Global Sourcing
ations, some of which have been spun Plans
Global FAO Provisioning off into successful FAO providers. As noted above, nearly three quarters
While these findings reinforce that the of respondents in this market study
use of global service delivery models is Top Global FAO Service plan to increase their overall usage of
well established for IT its growth also Delivery Locations FAO. Buyers are also bullish on their
continues in other non-voice busi- Not surprisingly, India is the domi- future use of global sourcing to sup-
ness process areas. EquaTerra client nant offshore destination (see Figure port their FAO needs (see Figure 4).
engagement experience and research 3). Seventy-eight percent of market Sixty-eight percent of the buyers
consistently find that the use of near study respondents are using India to using offshore resources for Record
and offshore resources to deliver fulfill at least some of their global to Report plan to expand efforts, as
finance and accounting (FAO) serv- sourcing needs, while 43 percent are do 60 percent of the buyers using off-
ices is increasingly prevalent in today’s using processing centers in Central shore for Order to Cash. For Procure
market as part of a coordinated and and Eastern Europe. The usage of to Pay, 51 percent of the respondents
comprehensive sourcing strategy. Central and Eastern Europe was expect to increase offshore efforts, but
EquaTerra explored this trend in the much stronger for buyer organiza- it is important to note that much of
recently completed, inaugural edition tions located in Western Europe than this work is already offshored. While
of its Global FAO Service Provider in the North America, while India was the use of near and offshore service
Performance and Satisfaction Study. a top destination for North American models is common across all FAO
This FAO study investigated 110 buyers as well as those in the United process areas, it is most frequent-
FAO contracts held by more than Kingdom. ly utilized to support transactional
90 of the top finance and accounting Central America, the Caribbean, activities. More strategic work like
(F&A) spending organizations world-
wide. The total annual contact value
(ACV) of the contracts included in
this study exceeds $1 Billion.
Eighty-six percent of the organiza-
tions that participated in this research
study are currently utilizing near
and/or offshore resources (see Figure
2). Forty-eight percent of these are
employing both, 34 percent are using
only offshore, and four percent are
using just nearshore resources. This
growth of global FAO provisioning
has been facilitated by the increase Coopyright © Equa Terra 2010.
All rights reserved
of service capabilities of India-based
service providers with ITO roots, Top Global FAO Service Deliver Locations

69   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

drivers.
• For buyers using both offshore
and nearshore FAO service deliv-

Coopyright © Equa Terra 2010. All rights reserved


ery models, 33 percent were sig­
nificantly positive and 53 percent
were moderately positive that FAO
has met its original drivers.
• For buyers using just an onshore
FAO service delivery model, 24
percent were significantly positive
and 56 percent were moderately
positive that FAO has met its
original drivers.
Future Global FAO Sourcing Plans
While all models overall support-
ed the achievement of FAO drivers,
analytics is increasingly moving off- of respondents were significantly posi­ the relatively highest levels of suc-
shore, albeit on a much smaller scale. tive and 46 percent moderately posi­ cess came via offshore and nearshore
There are no signs that FAO buyers tive. Equally important, 20 percent of delivery models.
are pulling back from their global respondents were very satisfied and 48 Finally, relative to general service
sourcing efforts, and protectionism, percent satisfied with the performance provider satisfaction, buyers that are
quality concerns, language challenges of their FAO service providers, with using offshore and nearshore FAO
and other issues cited by some market zero respondents very unsatisfied with provisioning registered higher scores
pundits are having no material impact service provider performance. Further than buyers just using onshore service
on global FAO demand. reinforcing these positive findings, delivery. Nineteen percent of buyers
The ongoing, increased use of over 70 percent of respondents plan using offshore provisioning were very
near and offshore FAO resources is to increase their usage of FAO going satisfied with their service providers
one important means to help buyers forward. and 38 percent were satisfied. Buyers
achieve the cost reduction and other Several deal attributes, including using both nearshore and offshore
goals they seek from their FAO efforts. deal size, age, geographic scope and scored providers at 22 percent for very
Global FAO can increasingly deliver complexity, affect these satisfaction satisfied and 53 percent for satisfied.
on drivers such as access to skills, levels. The strongest direct positive Buyers using just onshore delivery
for example, to support more KPO correlation to service provider satis- scored providers at just eight percent
-centric FAO efforts. Global service faction was with buyers’ self-assessed satisfied and 46 percent satisfied. So
delivery across a broad spectrum of sourcing management capabilities, while overall all buyers were generally
markets is increasingly the norm for highlighting the importance of good satisfied with their service provider’s
FAO services, whether for global, outsourcing governance to outsourc- performance, those using offshore
regional or local buyer organizations. ing success. The use of offshore or delivery were the most satisfied.
nearshore FAO service delivery mod- Global sourcing has become a core
Global FAO Sourcing = Global els also contributed positively to FAO means to deliver F&A services. While
FAO Satisfaction? results. the nature and mix of buyers’ global
Regardless of the usage levels of global Buyers using both offshore and F&A service delivery models will con-
sourcing to support FAO efforts, the nearshore FAO services were more tinue to evolve over time, global
most important questions are how likely than buyers just using onshore sourcing will continue to play a criti-
satisfied buyers are with their global resources to indicate that FAO has cal role. And as the bar on the benefits
FAO efforts and how satisfied they are achieved the original drivers sought buyers’ seek from FAO is continually
with the performance of their FAO in its usage. raised, so too must their capabilities
service providers. The answers here are • For buyers using offshore FAO to design, execute and manage their
affirmative on both counts. service delivery models, 41 per- global service delivery models.  GS
When asked to what degree FAO cent were significantly positive and
had delivered on the original drivers, 38 percent were moderately posi­ Stan Lepeak is Managing Director, Equa-
buyers sought in its usage, 40 percent tive that FAO has met its original Terra Global Research

70   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts by Mario Tucci, Senior Global Business Consultant

Why Latin America is Still a BUY


If you combine lower risks, a better cultural fit and an appetite
for investments, you will recognize a pattern for a BUY market
in Latin America

I
recall six years ago when Tata zones, as well as functional testing will provide precious feedback that
Consultancy Services was and descriptions. In general, Latin will bring innovation to your proc-
expanding from India to open American people live in environ- esses, balancing the costs with better
Global Delivery Centers around ments that are very similar to those of and faster outcomes. Also, we have
the World. Latin America and China the US or Europe. Americans drink welcoming governments. Almost all
began almost at the same time. The Corona. They fly Embraer«s jets. They Latin American countries are luring
latter was promising great opportuni- give Colombian flowers. They drink IT companies (regional and global) to
ties, large amount of people, fantastic Chilean wine. They travel to Uruguay. establish centers there. You will come
costs. Now fast forward to 2010. upon Free Trade Zone regimes,
TCS has around 8500 people in investment promotion activities,
Latin America, but only 1500 in Latin American people under- tax vacations, research benefits
China. It has gained new cus- and probably a special perk if
tomers within Latin America and
stand US business, culture you ask for it. You will also find
shows an accelerated growth rate and preferences.In IT projects improving abilities with regards
as this region is being “discov- to infrastructure (internet, air-
ered” by large US and European that means less conflicts, ports, security, electricity).
countries. So, how come you accurate functional aspects So, if you combine lower
grow faster in a region with so risks, a better cultural fit and an
many different countries, much and better testing appetite for investments, you
less people and more distance will recognize a pattern for a
to your main location? Investors BUY market. But move fast.
know that the obvious is not always That means, Latin American peo- More and more people are discovering
the best deal. ple understand US business, culture Latin America’s hidden treasures.  GS
Welcome to cheap Latin America. and preferences. And in IT projects
Or should I say Right Latin America. that means less conflicts, accurate Mario Tucci is a Senior Global Business
Do you need to lower your risks? functional aspects and better testing. Consultant. He is also a principal partner at
Even with higher wages than India Please also consider the ‘Follow The Hemistion a Globalization Consulting com-
or China or some parts of Africa and Sun’ approach in which projects move pany. He leads several consulting and business
Eastern Europe, incorporating Latin from Latin America to Europe to activities including support to Government
America in your portfolio will signifi- Asia in a round-the-clock, non-stop Agencies, Free Trade Zone Parks, BPO start-
cantly lower your risks. If you are a US environment. ups and IT Companies.
or European company, just imagine But is Latin America ready and
calling your vendor or team during available? Firstly, let’s think people.
regular hours. Imagine talking about Yes, there are some issues (shortages,
cultural issues that are much similar. attrition, language abilities, strong
Think in flying over there in less than local currencies) in some countries.
5 hours average. But in exchange, most Latin America
And what if you need to speed IT people have a lot of working
things up? Agile development is much experience as they are graduates from
easier to execute from similar time universities. That means they can and

71   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts

by Dr. P.K.Mukherji, President & Managing Partner, Avasant Asia

       





Africa- The Next Outsourcing
    





Frontier
     
     
      
  
 
 Countries across Africa are trying to position themselves as competitive

destinations for IT/ BPO by promoting low-cost labor and nurturing
        
conditions for a build-up of world class IT infrastructure.
    

        


F
         
 ollowing in the footsteps of opportunities and to gain consider- elecommunication rates; training
 India and the Philippines, able marketshare. funds; and marketing aid.
 countries across Africa are A number of African nations
   

trying to position themselves are regaining traction as emerging
 Vast Talent Availability,
as competitive destinations for IT/ IT/BPO destinations. While South Untapped The Next Billion
 BPO by promoting low­cost labor and Africa leads Africa’s BPO sector; per- Second only to Asia, Africa provides
nurturing conditions for a build­up of forming call center services and all access to a large pool of youthful

world class IT infrastructure. These types of backoffice operations, in workers. The continent, in its entirety,

nations 
are leveraging 
their 
advaan- thecontinent,
  
other nations across has a favorable demograpphic wherein
     

tage of younger demographics, popu- the continent are 
emerging as favo- majority of the population is in the less
lation

with good 
  
English   
and Frenchl rable   destinations.
outsourcing than 25 years age group. To illustrate,
          
anguage skills, a high degree of cul- Countries like Kenya, Ghana, Egypt, South Africa and Egypt are the lead-

tural alignment to Western countries Mauritiuus, Tunisia and Morocco ing nations, each contributing a labor
coupled with a similar timezone to are using outsourcing as a key tool force of over 20 million. Following
         
Europe and a shared business culture. to alleviate themselves from the cur- them are nations like Ghana, Kenya
   
    
The countries are realigning their rent situations to achieve Economic
       
and Morocco, each with an available
focus to address the paradigm shift in Proogress and prosperity. Most of
 workforce at or around 11 million
the outsourcing arena and are devel- the African nations are using their
 workers.

oping comprehensive strateggies to differentiated version of the “four­
 However, inspite of the availability
rapidly position themselves as attrac- pronged approach” to attract BPO of a reasonably large labour pool, a
tive destinations for IT/BPO services companies: taxbreaks; competitivet
 very small percentage of the pool is
        directly deployable in the industry.
 Challenge for most of these countries
People & is to provide traiining to the labour
Rank Country Finan cial Business Total Score
 Skills pool to increase the level of skill for
1 India 3.13 2.48 1.3 6.91 deployment in the induustry. It is


2 China 
2.59 2.33 1.37 6.29 thus imperative for them to bring a
6 Egypt 3.07 1.2 1.37 5.64
larger cross section of the population
into the labor force
7 Philippines 3.19 1.17 1.24 5.6
and transition to a global services­
15 Ghana 3.26 0.7 1.36 5.32
centric model. In this evolution,
17 Tunisia 2.86 0.91 1.45 5.22
these countries are investing in skills
25 Mauritius 2.32 0.95 1.77 5.04 development and enhancement to
26 Senegal 3.06 0.88 1.08 5.03 enable their vast young population
30 Morocco 2.62 0.93 1.42 4.97 to take up jobs in the growing serv-
39 South Africa 2.28 1.02 1.44 4.74 ices sector.
Source: AT Kearney Global Services Location Index 2009

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Total <14 51–64


Labor Force
they become destinations of choice
Population years years for providing best in class global serv-
Morocco 34,343,220 31% 64% 11.39 million (2007 est.) ices and making them conducive to
South Africa 48,782,756 29% 66% 20.49 million (2007 est.) do business.
Mauritius 1,274,189 23% 70% 574,000 (2007 est.)
A positive case for outsourcing is
built not just with labor cost arbitrage
Kenya 37,953,840 42% 55% 11.85 million (2005)
but coupled with multiple key drivers
Ghana 23,382,848 38% 59% 11.29 million (2007 est.) such as a nation’s ability to provide
Egypt, Arab Rep. 81,713,520 32% 64% 22.1 million (2007 est.) and sustain a host of catalysts, such
Tunisia 10,383,577 23% 70% 3.593 million (2007 est.) as a sustainable output of industry
Source: CIA Factbook 2008, July 2008 estimates
ready talent pool, availability of qual-
ity infrastructure, a risk free macro­
econnomic environment, financially
Vast Continental Market As per International Monetary attractive incentives and business
Opportunnity Fund (IMF), the gross domestic prod- structures, employment laws, quality
Africa also has the fastest growing uct (GDP) of the African region has of life etc. Investors in Africa today,
telecommunications industry. The been growing 5 to 6 percent annually, are finding considerable benefits from
total number of mobile subscribers since 2001. In parallel, foreign direct leveraging the vast multi­lingual talent
in Africa is expected to reach500­ pool, competitive cost struc-
6600 Million by 2013. Nigeria tures, proximity to European
alone, being the most populous As per IMF, GDP of the African and Middle East markets and
country in Africa, has over 74 the growing domestic markets.
million subscribers and is grow- region has been growing 5 to 6 Hence there is a need for a
ing at the rate of 23 percent each percent annually, since 2001. concentrated effort by regional
year. governments to analyze inter-
South Africa and Egypt lead In parallel, FDI into the region nal strengths and weaknesses to
the banking sector in Africa, with has shown significant growth build a specific niche. In paral-
both these nations succcessful in lel, countries need to undertake
attracting foreign banks to oper- since the turn of the century macrolevel development across
ate in the local market. In 2008, sectors to enhance available
Egypt attracted FDI of $13B, out- skills, brand and position their
passing South Africa’s $8.5B. Kenya’s investment into the region has shown respective countries and put in place
45 commercial banks posted a 14 significant growth since the turn of the necessary incentives to boost further
percent growth, while Nigeria grew at century. Governments of a number of investment in the region.  GS
15 percent in 2009. With a low rural countries with support from interna-
penetration, Kenya, has less than 10 tional organizations like the World Dr. P.K.Mukherji is President & Managing
percent of its population utilizing Bank and The Commonwealth Trade Partner, Avasant Asia
banking facilities. This offers a great Development have been proactively
opportunity for growth in the African working towards attracting invest-
banking system. These are expected to ment into the IT& BPO sectors.
further propel the growth of the BPO
industry in the region because of the Conclusion
need for better customer service in the While the world still views Africa as
growing industries. a region marred by conflicts, corrup-
tion and health issues, governments
Africa-Outsourcing Market Drivers in many countries are taking the
lead on branding their countries, by
•  Multi-lingual Delivery Capability
•  Near Shore advantage for Europe and putting out right positive messages
•  proximity to Middle East Markets and countering the negative percep-
•  Access to local market economies which tions. Countries in the region are tak-
•  is growing at 5–6 percent ing the lead to make the infrastructure
•  Improving infrastructure and connectivity
in the leading cities world class so that

73   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts by Don Jones, Partner, Technology & Life Sciences Practice, BDO USA

Latin America Emerges as a


Key Outsourcing Destination
for 2011
As countries in Latin America become more developed they are also
becoming more attractive as potential IT outsourcing jurisdictions

H
istorically, the top four multinationals, such as Politec Global China’s strong IT infrastructure, the
criteria for selecting an IT Services (based in Brazil) and language barrier in China and the lack
IT outsourcing location DBAccess (based in Venezuela). Even of adequate legal protection for intel-
include cost (both initial Indian outsourcing giant Tata has lev- lectual property continue to hinder
and ongoing), education and skill eraged its presence in fourteen coun- China when companies are selecting
level of the local workforce, scalability tries in Latin America with offshore a jurisdiction to place outsourced IT
(i.e., the ability of an IT outsourc- centers in Brazil, Uruguay, Mexico operations. These issues are not as
ing provider to handle growth), and and Chile to serve emerging organ- relevant in Latin America as the local
political stability. The values placed izations with local and global IT workforce is generally proficient in
on these criteria may vary based on resources. both Spanish and English and a better
the need of the company seeking to China and India continue to be atmosphere for protecting intellectual
outsource its IT. As countries in Latin the major players in the IT outsourc- property.
America become more developed they ing market; however, Latin America Other important factors that
also become more attractive as poten- is poised to take market share from may sway U.S. companies to choose
tial IT outsourcing jurisdictions based both of these respective countries. Latin America over China or India
on these four criteria. include time zone similarities
2010 saw Latin America offi- and geographic proximity. Time
cially emerge as a new destina- Indian outsourcing giant Tata zone similarities may not affect
tion for IT outsourcing. Based 24/7 customer support (as these
on recent surveys Latin America has leveraged its presence in lines will be staffed at all times),
is number three overall in jobs fourteen countries in Latin but for general research and
outsourced from the U.S. The development outsourcing hav-
strategy implemented by U.S. America with offshore centers ing employees that work in the
companies that outsource IT
functions to Latin America is
in Brazil, Uruguay, Mexico and same time zone is a definite
benefit both for the main team
often referred to as “near-shor- Chile to serve emerging organ- and outsourced team. Similar to
ing.” This near-shoring trend is China and India, with the pri-
expected to continue as South
izations with local and global mary exception of Mexico and
and Central American econo- IT resources a few other countries, the politi-
mies have been growing stead- cal climate in Latin America is
ily over the last decade and are stable for the most part. Finally,
poised to become business and although a minor factor, there
IT outsourcing forces in 2011. We In 2010, while China was able to are fewer cultural differences between
have seen local companies in these gain market share from India in the the U.S. and Latin America versus
emerging markets quickly become global IT outsourcing business due to the U.S. and China or India. These

74   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

factors have paved the way for Latin China is not encountering these issues When it comes to outsourcing
American IT outsourcing service pro- as costs remain low for IT outsourc- strategy however, company’s set of
viders to shine. ing purposes and the Chinese Yuan unique needs should be considered
In response to China and Latin has not appreciated against the U.S. before selecting a country to place
America’s outsourcing growth, India dollar (as it is generally fixed to the outsourced IT operations. In order to
has sought to establish a stronger U.S. dollar). Thus, from a cost per- maximize the cost benefit of IT out-
infrastructure to facilitate IT con- spective China remains attractive but sourcing, companies may want to
tracts in Bangalore as well as other is still subject to the previously dis- consider seeking the help of qualified
parts of the country in order to quell cussed limitations with respect to lan- experts when selecting an IT out-
concerns that India may not have the guage and IP protection. These cost sourcing jurisdiction. These experts
technology or the ability to meet the considerations and other factors may can assist the company in navigating
growing demands of large U.S. com- push more companies towards Latin regulatory and local customs of which
panies. For some companies operat- America over China and India when the company may otherwise by una-
ing on a smaller scale, the issue of IT companies are looking to relocate ware. The cost of good advice is argu-
infrastructure may not be a top prior- their IT infrastructures. ably much less than the cost of relo-
ity when choosing an IT outsourc- In 2011, we can expect this trend cating IT operations to a more favora-
ing service provider. These companies to continue as new firms located ble jurisdiction. Once a company has
may be uninterested in a stronger throughout Latin America bring determined its IT outsourcing needs,
Indian IT infrastructure and may innovative, new IT and business-fo- it is crucial to address the possibilities
choose Latin America over India for cused solutions to companies looking that lie ahead.  GS
other reasons. Regardless, with proper to outsource IT functions. Moreover,
planning, high speed data centers they are expected to do this all with Don Jones is a Partner in the Technology &
and other IT functions can be moved a cheaper price tag than other tra- Life Sciences Practice of BDO USA, LLP, a
rapidly to anyplace in the world with ditional outsourcing powers such as national accounting firm providing assur-
little impact on the bottom line. China or India. ance, tax, financial advisory and consulting
India continues to be a major With the increasing cost of doing services.
player in the IT outsourcing market business in the U.S. from a both a
due to the education and skill of its regulatory and an overall tax perspec-
workforce as well as its politically sta- tive, more and more U.S .companies
ble government; however, the overall will continue to turn to IT outsourc-
cost of outsourcing to India has been ing as a means to lower overall IT
slowly rising as the country becomes costs and increase global profitability.
more developed and the U.S. dol- We can expect to see U.S. companies
lar continues to weaken against the look to Latin America in the near
Indian Rupee (since 2009 the Rupee future to satiate this demand for low
has appreciated by approximately cost and effective IT outsourcing
9 percent against the U.S. dollar). solutions.

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

75   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

xperts by Pumela Salela, BPO/ITeS expert Consultant, World Bank

Africa as an
Outsourcing Destination
Africa has the essential ingredients to be a force to be reckoned with
in the global BPO space, and addressing the challenges it faces will
enhance its value offerin

I
n the past Africa, with its 53 coun- by 2040 about 1.1 Billion Africans strategy are: Talent Development,
tries, was known as a continent of will be of working age. This is signifi- Infrastructure, Business Environment,
starvation, disease, war, conflict, cant, in an era where the working age Incentives and Marketing. In the dis-
famine and hunger inhabited by population amongst other countries cussion that follows, we will illustrate
those which Franz Fanon called “The is shrinking. Furthermore, 128 mil- how Africa fares in each of the pillars
Wretched of the Earth”. Today, Africa lion African households are predicted identified.
presents a different face to the rest to be having discretionary income by
of the world. A face characterized 2020. Finally, 50 percent of Africans Talent
by economic growth, regulatory and will be living in cities by 2030. What As indicated above, Africa is home
political reform. To date, Africa is esti- does this mean for the Globalization to 1 Billion people, the majority of
mated to have one Billion inhabitants, of Servic es in the form of Business which are of working age. Africa has a
the majority of which are of working Process Outsourcing & Off shoring? highly educated workforce, both with-
age population group. A recent study in the continent and in the Diaspora.
by McKinsey Global Institute (MGI) Hope in BPO African Countries are investing in
indicates that today, Africa’s collec- Part of Africa’s growth can be attribut- training and skills development initia-
tive GDP is $1.6 Billion, roughly ed to the growth of the Services Sector tives, to ensure that a readily available
equal to Brazil’s or Russia’s. Tomorrow within Africa. The Services sector pool of labor is at hand to feed into
(year 2020) Africa’s collective GDP contributes to more than 60 percent the global services model. Egypt, for
is estimated to reach $2.6 Trillion. of the GDP in those African coun- example, has a system of converting
Real GDP rose 4.9 percent per year tries wherein it is developed. In these graduates from other fields of study,
from 2000 through 2008, more than countries, Services sector accounts for be BPO sector ready and provides
twice its pace in the 1980’s and ‘90s. the majority of employment creation. subsidies for the training and conver-
Telecom, banking, and retail are Business Process Outsourcing and Off sion thereof. Nile University, which is
flourishing. Construction is booming. shoring, presents a new hope for housed within Egypt’s Smart Village
Foreign investment is surging. South Africa, whereby the continent will no (A BPO Park) also, trains students
Africa recently hosted the first FIFA longer be seen as a continent for aid, in the areas of ICT Enabled Services.
Soccer World Cup to be hosted on the but rather a continent ready for trade Talent development is seen to be relat-
African soil and delivered a spectacular in services. If we look at the necessary ed to job creation, whereby African
world class event. Africa surprised all ingredients of a country strategy for countries have specific targets to the
in the area of mobile phone subscrip- building the BPO&O sector, we will number of jobs they wish to create
tions, as its subscribers have increased realize that Africa is making significant in the sector, within stipulated time
steadily since year 2000 to reach 316 strides in developing its BPO sector. A frames.
million to date. Interesting to note summary Gartner’s Top 10 Criteria,
that African countries are seen to be AT Kearney Global Services Location Infrastructure
equally competing with other emerg- Index, McKinsey Location Readiness Across Africa, changes in broadband
ing markets and are as productive Index and Hewitt’s International connectivity are underway. A number
as other countries such as India and Benchmarking Model reveals that the of undersea cables are scheduled to
China. The MGI study estimates that top five building blocks of a country be completed by 2011 (see before

76   GS Destinations Compendium 2010 www.globalservicesmedia.com


Expert Speak

and after diagrams). On the West countries involved in the outsourcing of hardware and software is charged at
side of Africa, in addition to the sector are doing everything possible 2.5 percent. On the other hand Egypt
existing SAT3 cable, there shall be to lessen the burden of starting up offers a corporate tax of 20 percent
the WACS (Q2 2011), MaIN OnE a business, thus improving the ease and customs duty of 6.2 percent.
(Q4 2010), ACE (2011), GLO-1(Q4 of doing business in the respective Countries which do not offer tax
2009). On the East side of Africa, countries. breaks, for example South Africa and
in addition to the SAFE cable, the Kenya, offer capex, opex and talent
EASSy (Q2 2010), Seacom (2009) Incentives development tailor made incentives
and TEAMs (Q3 2009) cables have Countries in Africa have woken up to
recently been launched. This signals a the need for incentives as “sweeteners” Marketing
positive change from a continent that to outsourcing deals. These vary from Increasingly African countries are seen
was only served by the SAT3 cable on capex, opex, talent through to tax as key exhibitors and participants in
the West and the SAFE cable on the breaks. Morocco for example offers a the global BPO conferences, summits
East. This will improve not only the tax exemption of 5 years and imports and seminars. Each country involved
quality of telecommunications in the
continent but also the costs thereof,
as some of these providers promise
to slash telecommunications prices
by up to 80 percent of the current
market price.
African governments are engaging
the private sector to develop other
critical infrastructure such as ener-
gy including electricity, water sup-
ply, roads, rail, air connectivity, hotel
amongst others. Real Estate is becom-
ing a big draw card as governments,
together with private sector, are build-
ing readily available “plug play” facili-
ties for BPO Operators. Examples of Africa Telecommunications before
these can be found in Kenya, South
Africa, Mauritius, Egypt, Morocco,
and Tunisia.

Business environment
On a macro-level, the 2009 Africa
Competitiveness Report came out
amid the most significant financial
crisis in generations. In this context,
the state of Africa’s financial markets
figures was among the main topics
analyzed in the Report. The analysis
finds that some African countries—
namely South Africa, Algeria, Nigeria,
and Egypt—are well poised to bounce
back from the crisis. This is because
these large economies enjoy competi-
tive banking systems and have func-
tional regulatory systems, the con-
sequence of financial-sector reforms
adopted since the early 1990s. On
Africa Telecommunications after i.e. by 2011.
a micro-level, the rest of the African

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in the BPO space is creating aware- top BPO investors in the form of makers, potential private sector inves-
ness about its value proposition, dem- Genpact, Aegis, Teleperformance, tors, and development partners.
onstrating its readiness to take on amongst others. Recently (October The note addresses the following
outsourcing of off shoring work from 2010) a new value proposition was questions: what can Nigeria do to take
global clients. Ghana is amongst those launched which positions the coun- advantage of the benefits of global
countries. Through, the leadership try as a gateway and delivery center trade in services; how can the country
of Avasant, a global sourcing advi- for the rest of sub-Saharan Africa, brand itself as an off shoring destina-
sory firm, Ghana is making strides in a near shore destination to Europe- tion for international investors; and
showcasing itself as a viable outsourc- particularly the United Kingdom and what government policies are required
ing country, within Africa. a Dutch language outsourcing hub to ensure that Nigeria plays a role in
due to its history and Dutch language the growing ICT off shoring sector.
BPO Country Developments capabilities. According to the Global In the same paper, Nigeria’s main
Sub-Saharan Africa Competitiveness Index, South Africa’s strengths as a potential off shoring
Ghana education is ranked higher than that destination are identified to lie in its
An industry association called of India and China. A research con- relatively low-wage and cost structure.
GASSCOM was formed. An arti- ducted by Everest in 2009 indicated The country’s large size and youthful
cle by Lewis (2010) indicates the that South Africa has three times population are also seen as assets for
Secretariat of Ghana’s Information (3x) the number of qualified actuarial companies wishing to establish large-
Technology Enabled Services (ITES) scientists than India. South Africa has scale call centers and similar opera-
wants to establish e-governance and mature service offerings in Banking, tions. Along the same vein, Nigeria’s
electronic voting in his country. The Financial Services, Insurance, Retail, good record on contract enforcement
Secretariat has even disclosed that Telecommunications, IT Outsourcing, and flexible labor market regulations
BPO would be contributing millions Knowledge Process Outsourcing and are viewed as having a potential to
of dollars to the country’s economy. Legal Process Outsourcing. South increase its competitiveness, as do
He anticipated that it would help Africa prides itself of having an English recent steps to streamline business
Ghana to become fastest developing language whose accent is neutral and ­registration.
nation in the world. It is mentioned augers well with the countries cultural
that English is the official language and product affinity with Europe and Mauritius
in Ghana which means that “the the United States. Mauritius prides itself for ease of
people of Ghana won’t be facing doing business as the country states
any problem dealing with US or UK Malawi that a new business can be set up
based service buyers”. The country Malawi is new in the game but is set within 3 days. The country indicates
sees itself as having the right kind to make its mark. In September 2010 that it has 15,000 available bilingual
of resources for attracting all sorts of the country held a workshop facilitat- talents (English and French) from
French BPO jobs including French ed by the Commonwealth Secretariat, Knowledge Worker to Cadre level.
call centers. In addition to that the with the aim of developing a roadmap It cites a low fiscal regime as one of
country sees huge potential in the for the country to grab a slice of the its strengths (15 percent harmonized
areas of graphic design, business BPO Global space. In its initial offer- personal and corporate tax, 0 percent
enquiry and legal processes outsourc- ing, the country will focus in the tax on dividends, free repatriation of
ing among ­others. lower end of the value chain, focusing profits). In terms of Service offerings,
on English and its Customer service Mauritius is strong in the follow-
South Africa capabilities. ing CRM (Telemarketing, helpdesk),
South Africa was one of the first Application Development ( Software
movers into the BPO space within Nigeria Design and Development, Website
Africa. As early as 2006, the country The World Bank has recently development, IT Consulting),IT
had identified BPO as a priority sec- (November 2010) published a paper Services ( Data Centers including
tor for development. As a result, all titled: Developing an African Off hosting, IT Help Desk, Disaster
the necessary strategic pillars were shoring Industry-The case for Nigeria. Recovery ), BPO / KPO (Finance
put in place to position the country The purpose of the policy note is to & Accounting, HR Outsourcing,
globally as a contender in the BPO raise awareness of Nigeria’s potential Publishing and content developme
space. To date, the country has man- as an African off shoring hub, and nt,Procurement,Architectural &
aged to attract some of the world’s it is aimed primarily toward policy Engineering Design, Legal). The

78   GS Destinations Compendium 2010 www.globalservicesmedia.com


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Top 10 Things that Make Africa an Attractive


BPO Destination
n Low attrition
African countries report low rates of attrition. Explanations given have centerd on the notion that
when an African gets a job, they hold on to it. This is usually attributed to the fact that one work-
ing African person may be responsible for ten others, who may be members of a household and/or
dependants. Some countries report attrition rates that are as low as 14 percent.
n Multilingual workforce
As indicated above both North and sub-Saharan Africa offer multiple languages which could sup-
port the United States, Middle East and the European markets. These range from Spanish, French,
Dutch, German, English, Italian and Arabic
n Near shore location for Europe
The maximum time difference between the African countries and Europe is four hours. The time
zones similar to Europe offer a near shoring opportunity to Europe, for the region.
n Improved telecommunications infrastructure
African Nations are formulating policies that encourage the development of ICT infrastructure and
BPO services. By 2011 the telecommunications infrastructure in the continent will have improved
three-fold.
n Cost competitiveness
In some parts of Africa, setting up BPO Operations in Africa can cost 10–20 percent less than
India. Other countries are willing to match the prices that potential BPO investors get in India, the
Philippines or any other countries competing with Africa.
n Strong Government Support
Governments at the national, provincial and local levels are supporting BPO initiatives through
adding their own broadband initiatives to those offered by the continent, supporting marketing
initiatives, approving incentive policies, providing infrastructure at reduced rates. Another trend
is for the governments to have a BPO ambassador at a high level in government, to represent the
respective countries during international marketing awareness engagements. In essence, govern-
ments have put pillars in place that provide a solid foundation for the BPO sector in Africa.
n Emerging local market opportunities
International BPO operators and other Multinational Corporations who set up shop in Africa can
benefit from penetrating the domestic market in the said countries, arising from an untapped rising
consumer market which demands goods and services that can be provide by the companies with
the global experience. In some cases, international companies have come up with innovative ways
to service the local market as evidenced by Safaricom who cut the boundaries between banking,
financial services and telecommunications through a mobile phone.
n Offshore destination for the United States
Africa lies in between the United States and India and thus provides an evening shift for US offshor-
ers versus India’s night shift. This further enhances the low attrition value proposition for Africa.
n Availability of Labour
Africa has a high population of a young work force, which is talented and educated. This provides
a readily available labor pool for investors to draw from.
n Continued GDP growth
Despite the Economic Recession, African markets have grown at a rate of 5–6 percent in some cases
outperforming most global economies.

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country is positioning itself as the


regional hub of Disaster Recovery and
Business Continuity planning infra-
structure and services for the global
service provider community.

Kenya
The country has a world class cap-
tive in the form of Safaricom and a
well known BPO third party service
provider, KenCall. Kenya is driving
innovation. Safaricom launched the
world’s first mobile phone service
that allows money transfers by phone:
MPESA. According to the Kenya ICT
Board website(www.ict.go.ke) Kenya’s
BPO strengths lie in Call Centers (
inbound customer services & support, A new world class BPO Park in South Africa called Coega.It offers
outbound sales +marketing, market readily available infrastructure and ‘plug&play’ facilities.
research, event management, print
media); Back office processing (online
database management, email & forms power, telecoms and internet. According penetration and telecommunications
processing, data entry & conver- to Datamonitor, Egypt’s Outsourcing networks, foundations which are
sion, corporate communications and sector is expected to grow rapidly due to solid for the BPO sector. Morocco
graphic design); Software develop- increased offshore interest from Western has been included in the Gartner
ment (website development and ani- Europe as well as the United States and list of the Top 30 Outsourcing des-
mation).Kenya purports that the cost Canada. BPO country studies by A.T. tinations. The country’s strategy was
of operating a 1000 seat BPO center Kearney (2009) place Egypt in the 06th developed by McKinsey through
in Kenya is lower than in competing position globally, out of the 50 coun- the so called McKinsey 2006 -2012
destinations such as India and the tries surveyed. Itida reports that “Egypt Impact Plan. Morocco has a number
Philippines largely because an average is proving to be an attractive location of BPO Parks for example, Morocco
FTE cost is $300 in Kenya as opposed for world leaders in the ICT industry, Techno park, Casashore, Rabat, and
to $425 per month in India). One of surpassing its competitors in the devel- ForeShore. Two additional techno
Kenya’s key competitive strengths is oping world – India and the Philippines parks are going to be created in the
that it has a well developed financial – and attracting the attention of major near future. There are strong incen-
services sector, and is developing into corporations in the developed world, tives for start ups. The government
a regional (East Africa) hub. As one of notably Orange, Vodafone and SQS. ensures that it receives a Return
the indicators of this strength, ATM These corporations are investing heavily on Investment (ROI) on projects.
numbers in Kenya have grown by in Egypt as a coveted ICT outsourcing Companies normally pay 40 per-
41 percent per annum. location.” Egypt has a number of initia- cent salary taxes. If they are BPO
tives to support the BPO sector, from operators, they pay 20 percent. This
North Africa smme incubation, through eduEgypt means that it gets cut into half.
Egypt (training initiative) to international Morocco has Spanish language capa-
itida is the agency responsible for Egypt’s marketing support for established BPO bilities which allowed it to attract a
BPO sector. Over the past few years, operators in the country. Egypt has vari- bpo service provider Atento and Dell
Egypt has been striving to enhance its ous language capabilities which include established helpdesks in Morocco to
ICT infrastructure through national French, German, Arabic, English and serve its French and Spanish custom-
initiatives and projects implemented Spanish. ers, creating about 1,500 jobs. The
jointly by the public and private sector. country currently has about 200 call
Egypt has extensive availability of high Morocco centers, including 30 of significant
quality and low cost/subsidized sup- Morocco is seen as the African coun- size, that employ a total of over
port infrastructure and services such as try that is leading in broadband 18,000 people.

80   GS Destinations Compendium 2010 www.globalservicesmedia.com


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Tunisia Challenges that there is outward migration


A website (www.bpovoice.com ) indi- n In sub-Saharan Africa the first to the European Countries and
cates that in Tunisia, ICT & out- challenge worth highlighting is that the labor pool is tightening
sourcing of services are the beneficiar- Perception! Perception! Perception! sharply. The outsource backlash
ies of a significant level of investment, A number of countries in the is seen to be a hindrance together
amounting to some 3.5 Billion Euros developed world still see Africa with the concern over lost domes-
for the period 2007-2011, compared as backward and underdeveloped. tic jobs in Western Countries.
to just 230 million Euros for the peri- My belief has always been that n Corruption. Western Business
od 1992-1996. Tunisia, as a country, “Seeing is Believing”. I would practice is something that is
is strategically positioned as a gateway encourage each Executive that relatively new in North Africa,
to Africa, Europe and the Middle East. is exploring location options to according to Data Monitor.
Its population has French, Arabic and book a flight to Africa and touch
English speaking capabilities. the ground. The reality is defi- Across Africa (North Africa and sub-
Many European companies have set nitely different from what Africa Saharan Africa), the similarity of value
up BPO operations in Tunisia to capi- has been perceived. Many parts propositions has made it difficult to
talize in order for Tunisia to serve their of Africa are on par with west- differentiate one location from anoth-
French speaking customers. Tunisian ern standards from a professional er. The volatility of the currency is also
engineers are said to be 80 percent business point of view, to world cited as one of the challenges that make
lower than Europe cost wise. Alcatel’s class infrastructure. investors feel uneasy, however, inter-
R&D center in Tunisia was first tasked n Education Linkages could be cited viewing current BPO investors reveals
with assisting the company’s Paris and as another challenge, in the sense that they are able to mitigate the risks
Milan centers in the development of that some school leavers and uni- and make the necessary profits.
products. It evolved later into an inde- versity graduates have the qualifi-
pendent design and implementation cations yet at times, these qualifi- Conclusion
center. SR Teleperformance, a multi- cations are not directly suitable to The key reasons behind Africa’s growth
national call center, currently employs meet the needs of the outsourcing surge as highlighted in the MGI report
about 1,000 workers in Tunisia that sector. A process of training and are improved political and macroeco-
serve French clients. skills development is sometimes nomic stability and macro economic
With 200 call centers, Tunisia is required before the school leavers reforms. African governments increas-
one of the leading call centers and and graduates can be absorbed ingly adopted policies to energize mar-
outsourcing destinations in Africa and into the workforce. kets. They privatized state-owned
in the Arab world. There are proce- n Lack of tax breaks is seen as a hin- enterprises, reduced trade barriers, cut
dures adopted by the government to drance by potential investors. The corporate taxes and strengthened regu-
strengthen investment in call centers Tier 1 BPO destinations such as latory and legal systems. As a result, six
and remote support centers, through India offer tax breaks. Potential of the African countries mentioned
the activation of the network structure investors usually assume that all above ( Egypt, Ghana, Tunisia,
of the Internet Protocol (MPLS) at the other countries follow suit. Yet, Mauritius, Morocco, and South Africa)
national level in addition to the exten- there are African countries that are are in the AT Kearney 2009 top 50
sion of the El Ghazala (a pool of more vehemently opposed to tax breaks, Global Services Location Index. This
than 3900 people: 2000 engineers, who would not mind giving other signals that Africa has the essential
140 teachers & researchers and 1700 incentives which could take the ingredients to be a force to be reckoned
students) which specializes in ICT place of tax breaks and have the with in the global BPO space. The
activities and research. Tunisia seeks same effect on the bottom line. challenges identified are something
to attract 2,000 new outsourcing jobs that the various African stakeholders
by the end of 2010. It is envisaged The inhibitors, in North Africa, are engaging robustly on, ensuring that
that Tunisia could become a regional according to Data Monitor are the they are addressed in order to enhance
business hub for companies operating following: the Africa value offering.  GS
in the space and aeronautic sector as n Perceived regional instability. There
there are already 20 foreign companies are misconceptions revolving Pumela Salela is a BPO/ITeS expert and a
that are currently operating in the around certain locations in North Consultant for the World Bank
sector, including major names such as Africa and Eastern Europe.
Latecoere, Zodiac and Sogema. n Labour Availability. There is belief

81   GS Destinations Compendium 2010 www.globalservicesmedia.com


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xperts by Pradeep Udhas, Executive Director, IT/ITeS Sector, KPMG

Offshoring in the Latin


American Region
Some key factors that make Latin America attractive today

E
merging economies across the a Chiliean IT major is a key exam- only the U.S. but also for markets in
world are trying to emulate ple of consolidation in the domestic Europe. The number of non-indigenous
the success India has achieved market. The company has acquired European languages spoken in Brazil,
in providing outsourcing serv- Telsinc - a Brazilian IT services pro- Mexico, Argentina and Chile is very
ices. What started with the millen- vider, NextiraOne – a Mexican IT high.These include Spanish, Portuguese,
nium bug, led to India being one company; and Bogota-based software English, French, and even some German
of the top outsourcing destinations developer Red Colombia. It plans to (in Argentina). It is also noteoworth that
in the world. Availability of talented further invest USD 500 million in many Japanese and Chinese migrated to
resources, a large pool of people speak- acquisition till year 2012. Peru in the late nineteenth century as
ing English, government support in rural labourers, and now form an inte-
the form of tax breaks and relatively Local Talent Pool grated part of Peruvian society.
strong IP/Data security related laws A Heidrick & Struggles report indi-
are some of the factors that worked in cates that of the ten LAM countries Wages
India’s favor. Countries in the Latin analyzed, for the report, Brazil, Chile Latin American countries such as Brazil,
American (LAM) region namely Brazil, and Costa Rica would be the leaders Mexico, Chile and Argentina, have
Argentina, Chile, Mexico, etc are being in terms of availability of local talent competitive wages and a good educa-
increasingly recognized as alternate des- pool in 2013. Similarly, a TMC.net tional system. A KPMG-NASSCOM
tinations to India and China primarily report indicates that Colombia’s call study titled “Emerging Destinations for
due to the increasing demand for near center and outsourcing industry is Indian IT / ITES Industry” (2007)
shore outsourcing service providers. one of the fastest growing industries revealed that the minimum wage in the
The blend of LAM’s geographi- in the country - a testament to the region was pretty low and rose from
cal proximity to the US and existing availability of local talent. A majority USD 2.8 per hour in 2005 to USD 3.2
cultural similarities between the two of the countries in the region have a per hour in 2006, with Brazil being the
has increased the importance of the good education system in place with highest at USD 5.6 per hour. However,
region. In recent times, leading BPOs/ the top few countries having a literacy the IT wages were significantly higher
outsourcing companies like Capgemni, rate of over 90 percent. Currently, at USD 8.7 per hour, with Chile and
TCS, Aegis BPO etc have expanded in Mexico, Chile and Brazil have the Mexico paying more than two times the
the region not only with an aim to hedge best talent pool in the region. Chile is rates paid in India. As wages keep rising
their operations but also to exploit the widely regarded as the most attractive in India, they could soon be at par with
local market. Some of the key factors environment for talent while Brazil those in the LAM region, thus making
that make the Latin American region has the best universities in the region. it a much more level playing field.
attractive are as follows: In conclusion, Mexico, Costa Rica,
Language Skills Brazil and Chile are the main countries
Domestic Market Spanish and Portugese are the two main to watch for offshoring related activities
The LAM region is a significantly large languages spoken in the region which in the LAM. These countries have large
market with 20 countries, 550 million abodes well for companies that aim number of investments coming in, a
people, 4.4 Trillion dollars of GDP, to target non English speaking clien- good availability in terms of local talent
and 8000 dollars per capita income. tele. For e.g.: the US has a fairly large and enjoy the increasingly important
Brazil alone is expected to account for Hispanic community, which can be tar- near shore advantage.  GS
an estimated USD 128 Billion worth of geted through this near shore alternative.
IT end-user spending in 2013, accord- The multilingual workforce in Argentina Pradeep Udhas is Executive Director with
ing to IT research firm Gartner. Sonda, can also be effectively tapped for not KPMG, heading IT/ITeS sector.

82   GS Destinations Compendium 2010 www.globalservicesmedia.com


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xperts by Sumeet Chugani, Associate Attorney, Diaz Reus & Targ

India’s Global Expansion:


Eyeing Latin America

I
ndia-based corporations and Agreement in May, 2007. undeniably benefit from this upsurge
entrepreneurs are carrying their Indian companies continue to set of Indo-Latin American trade and
economic goals and didactic tal- up operations in Latin America in investment. As Latin America and
ents abroad, with an emphasis everything from technology, pharma- India strive to reach their respective
in entering other emerging markets. ceutical manufacturing, energy and potential, businesses within each
Latin America, which has displayed mining. India’s top software service region will discover golden opportu-
a steady spirit during the recent eco- exporter, Tata Consultancy Services nities.  GS
nomic crisis and a strong potential Ltd., which currently employs over
for long term growth, has ascended 7,500 Indian professionals in Uruguay, Sumeet Chugani is Associate Attorney at
to the top of India’s radar. Thousands Argentina, Chile, Ecuador and Diaz Reus & Targ, LLP, a full-service inter-
of Indian-born companies seeking to Mexico, expects its Latin American national law firm focusing on trade, finan-
expand their global footprint, while sales to double to upwards of $1B cial, commercial and corporate transactions,
obtaining needed commodities to sus- within the next three years. Jindal tax, immigration, litigation, and arbitration
tain India’s one Billion plus popula- Steel & Power Ltd. has already spent matters.
tion, recognize the value of Latin more than $3 B to develop more iron-
America. ore mining within South America,
India’s total investment into Latin with strong interest stemming towards
America and the Caribbean reached the agricultural front. As well, Tech
upwards of $10B in 2009, while Mahindra’s Chief Executive Sanjay
imports from the region hinged Kalra has repeatedly stated his firm’s
around $9.2B. Although this figure strong interest in merging or acquir-
is minimal compared to Sino-Latin ing Latin American companies.
American trade, it illustrates that a This is just the beginning. India
bridge has been built between these eyes Latin America as the next frontier
two emerging regions. for growth and expansion. For exam-
The Indian government is encour- ple, just this month Ashok Leyland,
aging movement into Latin America a leading Indian commercial vehi-
through the signing of multiple cles manufacturer, declared its desire
regional Trade Agreements. India is to gain new opportunities in Latin
currently a member of Mercosur, a America. Moreover, Tata Consultancy
trading block including Argentina, Services Ltd. continued to expand in
Brazil, Paraguay, and Uruguay. As the region by opening new offices in
well, India has entered into a PTA Lima, Peru to increase its IT, BPO
with Chile to further trade between and consulting services in Central and
the nations. The Indian Government, South America.
with a continuing view to promote India’s entrance into Latin America
economic cooperation between the will obviously present challenges.
regions, has set up Joint Commissions Different languages, local taxation,
with other important trading partners complex laws, and political dynamics
in Latin America. For example, India will pose risks to uninformed Indians
and Mexico signed a ten year Bilateral entering the region. Those players
Investment Promotion and Protection which balance risk and reward will

83   GS Destinations Compendium 2010 www.globalservicesmedia.com


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xperts
The 2010 Legatum InsideInside
cover cover v1 25/10/10
v1 25/10/10 10:24 10:24
Page 1Page 1

Prosperity Index™
The Scope of the 2010 Legatum Prosperity Index™

The 2010
The 2010
Legatum
Legatum
Prosperity
Prosperity
IndexIndex
™ Rankings
™ Rankings

T
he Prosperity Index™ assesses Top 110 Countries in the 2010
110 countries, accounting Strong ranking
Strongcountries
ranking (Top
countries
Legatum
30) (Top 30)
Prosperity
Average ranking
Averagecountries
Index™
ranking (Middle
countries
Rankings
50)(Middle Low
50) ranking
Low
countries
ranking (Bottom
countries30)
(Bottom 30)

for over 90 percent of the


world’s population, and is

Personal Freedom

Personal Freedom
Entrepreneurship

Entrepreneurship

Safety & Security

Safety & Security


Opportunity

& Opportunity
based on 89 different variables, each

Social Capital

Social Capital
Overall Rank

Overall Rank

Governance

Governance
Education

Education
of which has a demonstrated effect

Economy

Economy
Country

Country

Health

Health
on economic growth or on personal

&
wellbeing. 1 1
Norway Norway 1 6 1 12 6 4 12 4 4 2 4 2 2 1 2 1
2 2
Denmark Denmark 4 1 4 2 1 5 2 17 5 6 17 66 26
The Index consists of eight sub-3 3
Finland Finland 9 4 9 7 4 3 7 10 3 3 10 12 3 7 12
2
7
indexes, each of which represents a4 4
Australia Australia 8 13 8 8 13 2 8 15 2 13 15 4 13 4 4 4
5 New 5 ZealandNew Zealand 17 14 17 4 14 1 4 19 1 7 19 3 7 3 3 3
fundamental aspect of prosperity: 6 6
Sweden Sweden 7 2 7 6 2 10 6 9 10 8 9 58 11 5 11

1. Economy 7
8 8
7
Canada
Switzerland
Canada
Switzerland
5
2
10 5
11 2
5 10
1 11
12 5
29 1
11 12
3 29
16 11
12 3
1 16
1912
8 1
6 19
8
6
2. Entrepreneurship & Opportunity 9 9
Netherlands Netherlands 3 12 3 10 12 13 10 13 13 18 13 13 18 5 13 5
10 10 StatesUnited States
United 14 3 14 3 3 9 3 1 9 25 1 9 25 12 9 12
(E&O) 11 11
Ireland Ireland 22 7 22 14 7 15 14 14 15 4 14 7 4 10 7 10

3. Governance 12
13
12
Iceland
13 Kingdom
United
Iceland
United Kingdom
38
18
9 38
5 18
17 9
9 5
6 17
22 9
2 6
2022
1 2
2320
8 1
1523
14 8
9 15
14
9
4. Education 14 14
Austria Austria 12 16 12 13 16 17 13 8 17 15 8 23 15 15 23 15
15 15
Germany Germany 13 15 13 15 15 25 15 6 25 20 6 1420 1614
5. Health 16 16
Belgium Belgium 16 21 16 16 21 18 16 12 18 19 12 1019 1910
16
19
6. Safety & Security 17 17
Singapore Singapore 6 8 6 11 8 30 11 2430 5 24 36 5 5436 54
18 18
Japan Japan 11 19 11 20 19 2420 5 24 11 5 4211 3142 31
7. Personal Freedom 19 19
France France 19 2019 19 20 14 19 7 14 27 7 1727 4217 42

8. Social Capital 20
21
20 Kong Hong Kong
Hong
21
Slovenia Slovenia
10
34
17 10
2634
18 17
2726
5318
16 27
3453
16 16
14 34
9 16
1614
22 9
2416
3822
24
38
Each of the sub-indexes provides two22 22
Taiwan Taiwan 25 2225 37 22 7 37 26 7 1026 2810 5228 52
23 23
Spain Spain 33 2733 22 27 11 22 25 11 3825 1838 3518 35
important analyses: first, an economic24 24 Republic
Czech Czech Republic 26 2926 3029 2730 21 27 2821 3028 3230 32

assessment, and second, an assessment2625 25


Italy
26
Portugal
Italy
Portugal
29
40
3029
2840
3230
2428
19 32
2024
18 19
2720
3018
17 27
2730
2417
3027
6324
30
63
of a country’s subjective wellbeing, or27 27 KoreaSouth Korea
South 15 18 15 31 18 8 31 30 8 3330 6433 5964 59
28 28
Uruguay Uruguay 46 5246 2952 3729 4037 2240 1122 34 11 34
happiness. 29 29
Poland Poland 37 3837 35 38 2635 3226 21 32 3221 2532 25
30 30 Arab United
United Emirates
Arab Emirates 30 2430 3824 3438 3534 2435 5424 3654 36
31 31
Kuwait Kuwait 20 3120 36 31 5536 3655 2936 3429 2834 28
Key Findings from the 2010 32 32
Chile Chile 39 3339 21 33 52 21 4652 3746 2637 6426 64

Legatum Prosperity Index 33


34
33 Rica Costa Rica
Costa
34
Hungary Hungary
36
48
4436
4248
2644
33 42
5826
31 33
4158
2831
4841
2628
2048
5026
4520
5550
45
55

n Entrepreneurship and opportunity 35


36
35
Estonia
36
Israel
Estonia
Israel
59
27
2359
2527
23 23
2825
3623
2828
3936
2328
3639
9023
6836
8990
4368
1789
43
17
correlate more closely to a nation’s 37 37
Slovakia Slovakia 47 3647 39 36 3239 2932 3229 6332 4063 40

overall prosperity than any other 38


39
38
Croatia
39
Greece
Croatia
Greece
53
41
3753
35 41
4837
46 35
4448
2146
3344
2221
34 33
31 22
3834
8631
4138
10086
41
100
factor. While other foundations 40 40
Panama Panama 50 4150 52 41 5052 6350 41 63 3941 3739 37
41 41
Argentina Argentina 42 4642 8646 3986 31 39 42 31 3742 4737 47
such as health and education, are 42 42
Lithuania Lithuania 76 3976 45 39 3545 3835 3538 7035 4970 49

critical, levels of entrepreneurship 43


44
43
Malaysia
44
Trinidad
Malaysia
and Trinidad
Tobago and Tobago
21
58
3421
4058
34 34
5440
4534
6754
4445
6167
5244
4961
9052
2949
9090
7229
90
72
and access to new opportunities 45 45
Brazil Brazil 32 4932 6049 7560 5575 7655 2576 5625 56
46
actually provide the best proxy to 46
47
Bulgaria
47
Latvia
Bulgaria
Latvia
75
81
5575
3281
57 55
47 32
4857
3347
4548
4233
4045
4542
4040
6745
8040
9267
80
92
understanding how prosperous a 48 48
Tunisia Tunisia 49 4549 5045 4150 5041 4450 9144 6991 69
49 49 Arabia Saudi Arabia
Saudi 28 4828 4948 6549 4965 71 49 10371 18103 18
society can be. 50 50
Kazakhstan Kazakhstan 51 72 51 8772 4687 5646 4756 5347 3353 33

n It pays to be a democracy. Twenty- 51


52
51
Romania
52
Thailand
Romania
Thailand
67
23
5067
5423
6550
53 54
4365
4753
5343
6447
4353
7564
4943
10675
9449
20106
94
20
three out of the top 25 societies in 53 53
Mexico Mexico 31 5931 6659 6966 5469 7954 7279 3972 39
54 54
Belarus Belarus 74 6774 10467 23104 3723 6037 7660 2376 23
55 Jamaica
55 Jamaica 79 4779 6747 7667 6876 5368 4553 5145 51

84   GS Destinations Compendium 2010 56


57
Belize
56
Botswana
57
Belize
Botswana
61
73
51 61
6473
www.globalservicesmedia.com
77 51
2564
8077
8525
5880
9685
5758
5996
4757
2159
5047
6021
50
60
58 China
58 China 24 6024 6460 5964 6659 9266 10292 27102 27
59 Sri59Lanka Sri Lanka 84 7684 4376 5643 7256 10172 52101 2952 29
34 34
Hungary Hungary 48 4248 33 42 31 33 2831 2628 5026 5550 55
35 35
Estonia Estonia 59 2359 23 23 3623 3936 3639 6836 4368 43
36 36
Israel Israel 27 2527 2825 2828 2328 9023 8990 1789 17
37 37
Slovakia Slovakia 47 3647 39 36 3239 2932 3229 6332 4063 40
38 38
Croatia Croatia 53 3753 48 37 4448 3344 34 33 3834 4138 41

The 2010
The 2010
39
40 Legatum
Legatum
Prosperity
Prosperity
39
Greece
40
Panama IndexIndex
™ Rankings
™ Rankings
Greece
Panama
41
50
35 41
4150
46 35
52 41
2146
5052
2221
6350
31 22
41 63
8631
3941
10086
3739
100
37
Expert Speak
41 41
Argentina Argentina 42 4642 8646 3986 31 39 42 31 3742 4737 47
42 42
Lithuania Lithuania 76 3976 45 39 3545 3835 3538 7035 4970 49
43 43
Malaysia Malaysia 21 3421 34 34 4534 4445 5244 9052 9090 90
Strong
44 ranking
Strong
44 countries
Trinidad ranking
and Trinidad
Tobago(Top
countries
and30) (Top 30)
Tobago Average ranking
Averagecountries
58 ranking (Middle
4058countries50)(Middle
5440 6754Low50) 61
ranking
67
Low
countries
ranking29(Bottom
4961 countries
49
30)
7229 (Bottom7230)
45 45
Brazil Brazil 32 4932 6049 7560 5575 7655 2576 5625 56
46 46
Bulgaria Bulgaria 75 5575 57 55 4857 4548 4045 4040 8040 80
47 47
Latvia Latvia 81 3281 47 32 3347 4233 4542 6745 9267 92 emotions. “Soft issues”, such

Personal Freedom

Personal Freedom
Entrepreneurship

Entrepreneurship

Safety & Security

Safety & Security


48 48
Tunisia Tunisia 49 4549 5045 4150 5041 4450 9144 6991 69
as people’s perceptions of each

Opportunity

& Opportunity

Social Capital

Social Capital
49 49 Arabia Saudi Arabia
Saudi 28 4828 4948 6549 4965 71 49 10371 18103 18
Overall Rank

Overall Rank

Governance

Governance
50 50
Kazakhstan Kazakhstan 51 72 51 87 72 4687 5646 4756 5347 3353 33 other’s trustworthiness, have a

Education

Education
Economy

Economy
Country

Country

51 51
Romania Romania 67 5067 6550 4365 5343 4353 4943 9449 94
strong positive correlation with

Health

Health
52 52
Thailand Thailand 23 5423 53 54 4753 6447 7564 10675 20106 20
53 53
Mexico Mexico 31 5931 6659 6966 5469 7954 7279 3972 39
economic performance and simi-

&
541 54
Belarus
1
Norway Belarus
Norway 74
1 67
6 74
1 104
12 67
6 23
4104
12 37
4 23
4 60
2 37
4 76
2 60
2 23
1 76
2 23
1
552 55
Jamaica
2
Denmark Jamaica
Denmark 79
4 1 79
47 4 2 47
67 1 5 67
76 2 17 76
68 5 6 68
53 17 6 53
45 6 51
2 45
6 51
2 larly “hard issues” such as higher
563 56
Belize
3
Finland Belize
Finland 61
9 4 61
51 9 7 51
77 4 3 77
80 7 5880
10 57 58
3 10 1257
47 7 47
50 50
574 57
Botswana
4
Australia Botswana
Australia 73
8 13 73
64 8 8 64
25 13 2 25
85 8 96
3
15 85
2 13 96
59 15 21
3
4 59
13 60
12
4 21
4 60
7
4
levels of GDP per capita, have
585 New58
China
5 ZealandChina
New Zealand 24
17 1424
60 17 4 60
64 14 1 64
59 4 19 59
66 1 7 66
92 19 3 92
102 7 3102
27 3 27
3 a strong impact on people’s life
596 Sri59
6Lanka
Sweden Sri Lanka
Sweden 84
7 2 84
76 7 6 76
43 2 5643
10 6 72 56
9 10 8 72
101 9 5101
52 8 11 52
29 5 29
11
607 60
Mongolia
7
Canada Mongolia
Canada 88
5 1088
58 5 5 58
81 10 12 81
49 5 11 49
85 12 39 85
16 11 87 39
1 16 26 87
8 1 26
8 satisfaction.
1 77 8162 81 12 74 1946 6 66
n Choice and opportunity matter
61
8 61
Vietnam
8
Switzerland Vietnam
Switzerland 62
2 1162
77 2 62 11 29 1 74
3 29 46 3 66 12 68 19 68
6
629 62
Morocco
9
Netherlands Morocco
Netherlands 35
3 1235
68 3 6368
10 12 93 63
13 10 13 93
70 13 18 70
69 13 1369
100 18 5100
13 13 13
5
63
10 63
Russia
10 StatesRussia
United United States 64
14 3 64
56 14 3 56
101 3 9 101
38 3 1 38
47 9 25 47
82 1 88 82
9 25 1288
53 9 53
12 more to happiness than making
64
11 64
Philippines
11
Ireland Philippines
Ireland 52
22 7 52
69 22 5569
14 7 60 55
15 14 8160
14 15 85 81
4 14 7 85
56 4 1056
82 7 82
10
65
12 65
Colombia
12
Iceland Colombia
Iceland 55
38 9 55
57 38 17 57
59 9 6 59
68 17 2 68
62 6 1 62
107 2 8107
57 1 1457
62 8 62
14 a lot of money quickly. Being free
66
13
67
14
66
South
13 Africa
United
67
Paraguay
14
Austria
South
UnitedAfrica
Kingdom
Paraguay
Austria
Kingdom 77
18
54
12
5 77
43
74
18
54
16 12
9 43
40
91
5
74
13 16
7840
22
86
9
91
17 13
20
75
78
8822
86
8 17 55
88
9720
23
75
15 8 59
97
5123
15
55
2315
71
61
51
9 15
59
1523
71
9
61
15
to choose the course of your life
68
15 68
Dominican
15
Germany Republic
Dominican
Germany Republic 80
13 1580
62 13 7562
15 15 7715
25 75 80 77
6 25 2080
80 6 33 80
1420 66 33
1614 66
16 and experiencing the satisfaction
69
16 69
Ukraine
16
Belgium Ukraine
Belgium 96
16 2196
73 16 16 73
98 21 1898
40 16 12 40
48 18 19 48
58 12 7158
10 19 19 71
7310 73
70
17 70
Indonesia
17
Singapore Indonesia
Singapore 43
6 8 43
82 6 11 82
70 8 7070
30 11 24 70
8430 56 84
5 24 3656
96 5 4496
54 36
19
44
54
that comes from pursuing new
71
18
72
19
71
Namibia
18
Japan
72
Macedonia
19
France
Namibia
Japan
Macedonia
France
68
11
98
19
1968
78 11
6198
20 19
4478
20 19
61
7120
19
24 44
8720
71
71 19
14
93
43
87
5 24
71
7 14
11 93
67
50
5
27 43
3567
42
81
11
1750
70 35
3142
4281
86
70
31
86
opportunities matter more than
7 27 17 42
73
20 73
Peru Peru
20 Kong Hong Kong
Hong 57
10 66 57
17 10 69 66
18 17 62 69
5318 82 62
3453 72 82
14 34 62 72
1614 98 62
2416 98
24 quickly making a lot of money.
2693 4270 42 42 51 2265
n Two Europes are emerging. In the
74
21 74
Jordan
21
Slovenia Jordan
Slovenia 93
34 70 34 27 26 4227
16 5116
16 65
9 16 105 9 83105
38 22 83
38
75
22 75
Venezuela
22
Taiwan Venezuela
Taiwan 56
25 2256
65 25 37 65
96 22 7 96
54 37 7854
26 7 78
9526
10 80 95
2810 4680
52 28 46
52
76
23 76
Uzbekistan
23
Spain Uzbekistan
Spain 108
33 27108
85 33 8485
22 27 64 84
11 22 5964
25 11 38 59
6125 61
6138
18 61
2218
35 22
35 overall rankings, the Baltic coun-
77
24 77 Republic
Ecuador
24
Czech Ecuador
Czech Republic 60
26 7560
29 26 30 75
9729 27 97
7330 21 73
7327 88 73
2821 60 88
3028 3260
96 30 96
32
78
25 El 78
Salvador El
25
Italy Salvador
Italy 89
29 8189
30 29 32 81
6130 84 61
19 32 6584
18 19 65
7018
30 58 70
2730 3058
104 27 104
30 tries are rapidly falling behind
79
26
80
27
79
Algeria
26
Portugal
80
Turkey
Algeria
Portugal
27 KoreaTurkey
South South Korea
45
40
69
15
28 45
7940
1869
53 15
90 79
2428
51 53
31 18
7290
20
82
24
51
8 31
27 72
6720
5782
30 8
93
83
33
67
17 27
57
30
2493
101
95
64
17
83
33
74101
63
108
59
24
95
64
74
63
108
59
the rest of the EU. Additionally,
81
28 81
Guatemala
28
Uruguay Guatemala
Uruguay 65
46 7165
52 46 29 71
8852 88 88
3729 7788
40 37 84 77
2240 83 84
1122 3483
48 11 48
34 none of the four original so-called
82
29 82
Bolivia
29
Poland Bolivia
Poland 63
37 3863
87 37 9387
35 38 26 93
6135 86 61
3226 86
91 32
21 91
5521
32 55
7832
25 78
25
83
30 83 Arab Syria
Syria
30
United United
EmiratesArab Emirates 71
30 92 71
2430 7992
38 24 34 79
7438 35 74
5234 86 52
2435 5486
99 24 7599
36 54 75
36 PIGS (Portugal, Italy, Greece, and
84
31
85
32
84
Lebanon
31
Kuwait
85
Honduras
32
Chile
Lebanon
Kuwait
Honduras
Chile
70
20
97
39
3170
83 20
3397
80 39
9283
36 31
2180
83 33
55 92
5136
7983
52 21 46
51
7955
36
79
7652
89
62
79
2936
76
3746
82 89
3429
62
7937
26
9982
28 34
79
8126
64
99
28
81
64
Spain) score higher in prosper-
86
33 86
Moldova
33 Rica Moldova
Costa Costa Rica 104
36 44104
63 36 8963
26 44 58 89
6626 66
7158
41 71
74 41
48 74
9748
20 97
7620
45 76
45 ity than the remaining Western
87 87
Nicaragua Nicaragua 102 42102
94 33 94
85 31 85
83 8383 83
6828 68
4126 41
8750 87
34
88
35
34
Hungary
88
India
35
Estonia
Hungary
India
Estonia
48
44
59 93
48
2344
59 23
42
4193
23
33
8923
36 41
28 31
89
9536
39
26
95
7839
36
50
78
7436
68
55
105 74
4368
55
105
43
European nations.
89
36
90
37
89
Egypt
36
Israel
90
Ghana
37
Slovakia
Egypt
Israel
Ghana
Slovakia
72
27
109
47
2572
84 27
36109
89 47
7884
28 25
5689
39 36
28
32
78
6328
56
9539 29
63
6928
23
95
8932
69
7723
90
89
5129
32
109 77
8990
51
3132
63
17109
95
101
89
31
4063
95
17
101
40
n Improved governance is emerging
91
38 91
Nepal
38
Croatia Nepal
Croatia 100
53 37100
96 53 9496
48 37 44 94
9248 33 92
8744 87
8733
34 87
4434
38 84 44
4138 84
41 as a key driver of prosperity in Sub-
92
39
93
40
92
Iran
39
Greece
93
Mali
40
Panama
Iran
Greece
Mali
Panama
78
41
85
50
3578
86 41
4185
108 50
4686
105 35
76108
52 41
57105
21
109
5052
46
76
60 57
2221
63109
103 50
99 60
31 22
41103
54 63
8699
108 31
3954
48 41
106
100
37
108
86
5748
39
106
100
57
37
Saharan Africa. The index shows
94
41 94
Senegal
41
Argentina Senegal
Argentina 101
42 46101
99 42 7399
86 46 104
398673 31104
97 39 63 97
42 31 43 63
3742 43
6737
47 67
47 that the most successful African
95
42 95
Cambodia
42
Lithuania Cambodia
Lithuania 92
76 3992
100 76 72100
45 39 90 72
3545 9890
38 35 66 98
3538 9866
70 35 98
9770
49 97
49
96
43 96
Bangladesh
43
Malaysia Bangladesh
Malaysia 66
21 3466
95 21 9595
34 34 45 95
9134 44 91
9045 90
9444
52 94
4652
90 109 46
9090 109
90 countries owe their success to radi-
97
44
98
45
97
Tanzania
44
Trinidad
98
Rwanda
45
Brazil
and Tanzania
Trinidad
Tobago and Tobago
Rwanda
Brazil
95
58
94
32
4095
104 58
4994
97 32
74104
54 40
5897
60 49
9954
67
75
74
58
9660
101
105
99
6167
96
5575
98101
49
64
61
76105
55
98
7849
29
2564
84 76
58 78
7229
5684
107 25
58
72
107
56
cal improvements in the quality
99
46 99
Uganda
46
Bulgaria Uganda
Bulgaria 91
75 98 91
5575 5798
80 55 4880
100 57 102
45100
48 106
40102
45 75
40106
40 65
80 75
40 65
80 of their governance, particularly
100
47 100
Sudan
47 Sudan 83 9183 109 91 33109
107 92107 108 92 92108 92
2167 21
92
101
48
Latvia
101
Zambia
48
Tunisia
Latvia
Zambia
Tunisia
81
103
49
32
102
81
45103
49
47 32
68102
50 45 94
47
68
4150
42
5094
106
33
41
4542
81106
44 50
67
73
45
81
9144
92
73
9191
69 91
69
in establishing confidence in the
Copyright © 2010 Legatum Limited

Copyright © 2010 Legatum Limited

102
49 102
Cameroon
49 Arabia Cameroon
Saudi Saudi Arabia 87
28 4887
107 28 49107
107 48 97107
65 49 100 97
4965 71100
100 49
73109
65100
103 71
73
102 65
18103 102
18 military and in the judicial system.
103
50 103
Mozambique
50
Kazakhstan Mozambique
Kazakhstan 82
51 7282
101 51 82101
87 72 105 82
4687 56105
109 46 47 56 85
5347 3385
93 53 93
33
104
51 104
Kenya
51
Romania Kenya
Romania 107
67 50107
90 67 6590
100 50 43100
9865 98
9943
53 109 99
4353 109
7743
49 77
7749
94 77
94 n It’s hard to be prosperous as a
94 96
105
52
106
53
105
Yemen
52
Thailand
106
Nigeria
53
Mexico
Yemen
Thailand
Nigeria
Mexico
99
23
90
31
106 99
5423
5990
103 31
103106
53 54
66103
108 59
102103
4753
69108
106 66
94102
6447
54106
104 69
96
7564
79104
104 54
107
10675
72104
94 79
79107
20106
3994
89 72
79
20
89
39
large country. Of the 10 countries
107
54 107
Ethiopia
54
Belarus Ethiopia
Belarus 106
74 67106
109 74 99109
104 67 108 99
23104 37108
108 23 60108
103 37 93103
76 60 85 93
2376 85
23 in the world with more than 125
108
55 108
Central
Jamaica
55 African
Central
Republic
Jamaica African Republic 105
79 47105
105 79 67105
106 47 76106
110 67 68110
110 76 53110
102 68 45102
69 53 5169
103 45 103
51
109
56 109
Pakistan
Belize
56 Pakistan
Belize 86
61 5186
88 61 7788
102 51 80102
103 77 91103
58 80 105 91
5758 47105
110 57 50110
110 47 110
50 million people, only the United
110
57
58
110
Zimbabwe
Botswana
57
China
58
Zimbabwe
Botswana
China
110
73
24
64110
110 73
6024
25110
110 64 85110
101
6460
25 96101
107 85 59107
110
5964
96 104110
2159
6659
88104
60 21
9266
88
60
10292 27102 27
States ranks among the top 10
59 Source:
Sri59Lanka The 2010 Legatum Prosperity
Sri Lanka 84 Index™
7684 4376 5643 7256 10172 52101 2952 29 countries in the Prosperity Index.
60 Mongolia
60 Mongolia 88 5888 8158 4981 8549 3985 8739 2687 26
61 Vietnam
61 Vietnam 62 7762 6277 8162 74 81 46 74 6646 6866 n Economic growth is not enough
68
62 the Prosperity Index are electoral
Morocco
62 Morocco 35 6835 direct implications on100
6368
national
9363
69 7093
4738
6970 13100 13 for the BRICs. Despite being
63 Russia
63 Russia 64 5664 10156 888238101 8247 5388 53
64 democracies, and the other two
Philippines
64 Philippines 52 6952 prosperity.
5569 6055
5685 8160 85 81 8256 82 regarded as leaders among
65
66
(Singapore and Hong Kong) are
Colombia
65
South
Colombia
66 Africa South Africa
55
77 n Prosperity is about balance.
5755
4377
5957
4043
6859
57107
7840
5197
All of 6268
8878
10762
9788
6257
71 51
62
71
emerging economies, in order
67 semi-democratic societies.
Paraguay
67 Paraguay 54 7454 the top ranking countries
91 74 5955 in the
8691 7586 55 75 6159 61 to develop into prosperous
68 Dominican
68 Republic
Dominican Republic 80 6280 7562 7775
3380 8077 8080 6633 66
69 n Changes in the “social fabric” of
Ukraine
69 Ukraine 96 7396 Index perform well across7158all eight
9873 4098 4840 5848 7371 73 nations, the BRICs will have to
70
71
a country can lead to big changes
Indonesia
70
Namibia
71
Indonesia
Namibia
43
68
8243
7868
sub-indexes.
7082
4478
7070
9656
8744
3567
8470
9387
5684
6793
4496
7035
44
70
foster improvements in areas
72 in national prosperity. Shifts in
Macedonia
72 Macedonia 98 n Material wealth cannot
6198 71 61 71 71
8150 be 43 71 5043 8681 86 beyond economic factors.  GS
73 Peru
73 Peru 57 6657 6966 6269
6272 8262 7282 9862 98
74 tolerance, satisfaction with free-
Jordan
74 Jordan 93 7093 explained only by economic
4270 4242
10565 fac- 51 42 65 51 83105 83
75
76
dom of choice and other social
Venezuela
75
Uzbekistan
76
Venezuela
Uzbekistan
56
108
6556
85108
tors, and happiness cannot
9665
8485
80955496
6484
6161
be 7854
5964
9578
61 59
4680
2261
Source: The 2010 Legatum Prosperity Index
46
22
77 attitudes and practices clearly have
Ecuador
77 Ecuador 60 7560 explained only by subjective
9775 60887397 73 73 8873 9660 Brochure
96
78 El 78
Salvador El Salvador 89 8189 61 81 8461 6584 7065 5870 10458 104
79 Algeria
79 Algeria 45 7945 9079 7290 6772 93 67 10193 74101 74
80 85   80GS Turkey
Turkey Destinations Compendium 2010 69 5369 51 53 8251 5782 83 57 9583 10895 108 www.globalservicesmedia.com
81 Guatemala
81 Guatemala 65 7165 8871 8888 7788 8477 8384 4883 48
82 Bolivia
82 Bolivia 63 8763 9387 6193 8661 91 86 5591 7855 78
83 Syria
83 Syria 71 9271 7992 7479 5274 8652 9986 7599 75
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RELEASING NOVEMBER 2011


Inviting countries, cities, associations to take part in this initiative
For more details, write to satishg@cybermedia.co.in
� Beijing  88 � Ho Chi Minh  109 � St. Petersburg  133
� Belfast  90 � Johannesburg  111 � Toronto  134
� Brno  91 � Kolkata  113 � Warsaw  136
� Budapest  92 � Krakow  115 � Ahmedabad, Bangkok,
� Buenos Aires  96 � Kuala Lumpur  117 Bhubaneswar, Brasília  137
� Cairo  98 � Mexico City  119 � Bucharest, Cape Town,
Dubai, Glasgow City  138
� Chandigarh  98 � Prague  120
� Guadalajara, Istanbul,
� Coimbatore  100 � Rio de Janeiro  122
Jakarta, Kyiv  139
� Colombo  101 � San José  124
� Montevideo, Moscow,
� Curitiba  103 � Sao Paolo  126
Mysore, Nizhniy
� Dalian  104 � Santiago  128 Novgorod  140
� Guangzhou  106 � Shenzhen  130 � Penang, Perth, Seoul,
� Hanoi  107 � Singapore  132 Taipei  141

* This section contains information about cities which have been extensively sourced from various published sources,
government sites, and other Internet resources and their factual accuracy needs to be independently ascertained.
Beijing Financial Street
City Profile  n Beijing (Source: Wikipedia)

Beijing
China

The Birthplace of China’s IT Industry

B
eijing, a metropolis in northern China, is the Quick Facts
capital of the People’s Republic of China. This City Beijing
city has the advantage of a government that Region East Asia
is enthusiastic about modern technology and Country China
supports software industry.
City Population 22,000,000
Beijing is very much advanced and modernized, in
City Average Monthly Entry Level $7,000
terms of infrastructure, as most of China has a rich and Salary (in US$) per month (BPO)
authentic (power and telecommunications) base. The City Average Monthly Entry Level $7,350
growth of Changping Software Park, Zhongguancun Salary (in US$) per month (ITO)
Software Park (zPark), and Beijing Industry University City Real-Estate Cost US$21.66 per square meter per
Software Park reflects this support. zPark, lodging some month
130 companies, is one of the prominent national software Major Service Providers in the Microsoft, IBM, Sun, BEA,
industry bases in China. City Oracle, Infosys, Wipro, Satyam,
As regard to tax incentives, Beijing has some local facili- Bearingpoint, Accenture,
ties to encourage the software industry in the city (distin- Capgemini, HP, TCS, Unisys, and
CapGemini
guished from those offered on a national basis):
Primary Language Spoken Mandarin Chinese
• Tax refunds on one-time investments, for the purchase
of cars or accommodations, when hiring senior soft- Other Languages Spoken English, Japanese, Korean
ware management or senior technical personnel. GDP US$173.7B
• Exemption from individual income tax on govern- Time Zone China Standard Time (UTC+8)
ment-funded awards given to senior software talent. Currency Yuan
Beijing has around 1 million software support staff. The Exchange rate $1= 6.65 CNY
employee supply is plentiful and is expected to increase Unemployment 4.1 percent
further as the Chinese government is upgrading its IT edu-
cation. This destination has 18 universities with engineer- higher than the rest of China. Approximately, 70 percent
ing courses and ten with specific courses on programming. of the employees in the outsourcing industry have gradu-
Importantly, it’s also home to Peking University (also ate degrees. Most of the university students choose their
known as Beijing University) and Tsinghua University (the second language as English.
Harvard and MIT of China, respectively). Both universi- Beijing has vantage over other cities in the areas of scale
ties have engineering departments that produce outstand- and technical expertise of the workforce, infrastructure,
ing university graduates. In short, Beijing is literally the risk profile, and lower attrition; but its labor cost com-
birthplace of current and future software engineers. pared to other Chinese cities like Shanghai or Guangdong
With a total number of 165,000 graduates, Beijing and Indian cities is 10-15 percent higher.
boasts of being headquarters of around 200 IT compa- Contributing 30 percent of the total Chinese out-
nies focused on global outsourcing. There are around sourcing revenue, Beijing attracts revenue of $580M in
26,600 employees working in ITOs, 34,200 in BPOs, IT and BPO sector from Japan (49.8 percent), United
and 15,200 in KPOs excluding domestic outsourcing States and Europe (45.5 percent), India, Hong Kong,
resources. Its been seen that quality education in Beijing is and others (4.7 percent). In regard to the financial

88   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Beijing

industry, Beijing is looked up as one of the most devel- encourage the outsourcing industry. According to the gov-
oped cities in China. ernment policy, a company can benefit 0 percent income
Also, this city is host to the country’s IT indus- tax for the first two years and 50 percent income tax for the
try, which was born in Beijing’s designated industri- following three years after authorization. The authorized
al park, Zhongguancun, near company can deduct employee’s
Peking University and Tsinghua salary and training cost by 100
University. Known as China’s Contributing 30 percent of the percent from the revenue before
Silicon Valley, this park con- total Chinese outsourcing rev- income tax.
tinues to be a major center for enue, Beijing attracts revenue According to the Tax Law of
electronics and computer-related China, the maximum deduct-
industries and pharmaceuticals- of $580M in IT and BPO sector ible salary is $144.291 per per-
related research. from Japan, United States and son and maximum deductible
Some of the notable com- Europe, India, Hong Kong,etc. training cost is 1.5 percent of
panies based in Zhongguancun the employee’s salary. The com-
Software Park are Microsoft, Sun pany is allowed to deduct its
Microsystems, BEA, IBM, Oracle, Accenture, Lenovo, R&D cost by 150 percent from its taxable income of this
P&G Process Design Center, BeyondSoft, Neosoft, year. For the self-developed software products, the VAT
ComFrame, TCS, Infosys, Wipro, and Reuters. rate was 17 percent before 2010. However, the authorized
Regardless of a drop in the country’s overall foreign company will get 14 percent VAT refunded immediately
direct investment amid the global slowdown, Beijing rose when the VAT is paid. The imported equipments for the
7.7 percent year-on-year in January, 2009, according to the company’s own use is tariff free.
Beijing Municipal Bureau of Commerce. The capital city’s The State Council of the Chinese government has
foreign direct investment arrived at $700M in January, created 19 software parks under its ‘Torch Program’.The
up from the $650M during the same period of last year. 2,100 companies within these parks account for over 80
A total of 90 overseas invested enterprises were approved percent of China’s total software sales.
in January. Beijing not only has excellent connectivity to major
The city also confronted with the collision of recession. global destinations, but also has one of the best telecom
Most of the export-oriented outsourcing units have seen connectivity/bandwidth.
reasonably big slowdown in new client deals this year. This is why the city is a major hub of China’s IT indus-
Beijing government has framed certain policies to try and is considered a Tier 1 city for outsourcing.  GS

Snapshot

➤ A company can avail the benefit of 0 percent income


tax for the first two years and 50 percent income tax
for the following three years after authorization. The
authorized company can deduct employee’s salary and
training cost by 100 percent from the revenue before
income tax.
➤ According to the Tax Law of China, the maximum
deductible salary is $144.291 per person and maxi-
mum deductible training cost is 1.5 percent of the
employee’s salary.
➤ Beijing rose 7.7 percent year-on-year in January,
2009, according to the Beijing Municipal Bureau of
Commerce. This city’s foreign direct investment arrived
at $700 M in January, up from the $650 M during the
same period of last year.
➤ This city is host to the country’s IT industry, which was born in Beijing’s designated industrial park,
Zhongguancun.

89   GS Destinations Compendium 2010 www.globalservicesmedia.com


Belfast
Northern
Ireland

The FDI Magnet of UK

T
raditional sourcing locations, which have been Quick Facts
at the forefront of the outsourcing boom, City Belfast
will sooner or later reach a saturation point. Region Western Europe
Companies are now looking at different loca- Country United Kingdom
tions to consider for their outsourcing activities, and City Population 268,323
Belfast is a well-placed outsourcing destination amongst
City Real-Estate Cost US$19.0884
other places.
Major Service Providers in Microsoft, Citigroup, Bombardier
Belfast, capital city of the Northern Ireland, is the most the City Aerospace, Fujitsu, HCL BPO,
successful region in the UK at attracting Foreign Direct L&T Infotech, MindEye Inc., TCS,
Investment. The city attracts largest number of software Supervalu, SAP Research Center.
development projects in UK. Belfast is home to strong Primary Language Spoken English
software, financial services, and telecom sectors. Other Languages Spoken Spanish, French, Italian, or German
Students achieving first-class or upper second-class hon- Literacy Rate 98 percent
ors degree, have increased by 29pecent over the last decade GDP US$12.1306782B
from 4,012 to 5,165. The literacy is 99 percent in Belfast. Time Zone GMT/BST
This indicates that there is enough talent pool in Belfast.
Currency British pound (sterling)
Also, labor costs are 15 percent lower than the UK average, Exchange rate $1=£0.627625
while labor turnover is less than 8 percent. The unemploy- Unemployment 6.5 percent
ment rate for Belfast currently stands at 6.4 percent (the
Northern Ireland rate is 6.6 percent). This compares with
the UK average of 7.9 percent (December 2009). medium-sized enterprises (SMEs).
The GDP growth rate is 6 percent and the inflation is In addition to government support, ready access to a
4.8 percent. Gross Value Added (GVA) per capita provides a highly skilled and loyal workforce and the existence of an
good comparative measure of productivity. It is compulsory already thriving local industry has encouraged major com-
for the UK businesses to register for VAT (value added tax), panies such as Nortel Networks and BT to choose Belfast as
if sales of taxable goods and services provided in the previ- a location for their software operations. Belfast’s ICT sector
ous 12-month period exceed £67,000 ($106,857.36). The has grown rapidly over the past years. The principal areas
number of VAT-registered businesses was 8,730 in 2009. of focus have been in the fields of software development,
New businesses can benefit from a variety of tax allowances mobile communications, Internet, and e-commerce.
and reliefs that cut tax bills. These include capital allowances The rapid growth of this sector owes much to a number
for investment in equipment and premises and tax relief and of indigenous companies who have successfully tapped
credits for spending on research and development. Corporation into international markets as well as the academic research
and personal taxation are among the lowest in Europe. and support that encourages further innovation and devel-
Capital allowances of up to 100 percent in the first year opment in the sector.
for small-to-medium sized enterprises (SMEs) are available, In 2009 over £500M ($797,327,654.98) worth of
for expenditure on environmentally friendly plant and developments were unveiled, including a number of land-
equipment. Also, tax credits for research and development mark buildings that opened their doors to the public again
are available to stimulate scientific innovation for small following extensive refurbishments. GS

90   GS Destinations Compendium 2010 www.globalservicesmedia.com


(Source: www.kelioniumanija)

Brno
Czech Republic

The Growth Engine of Southern Moravia

B
rno—Czech Republic’s second-biggest city by Quick Facts
economic activities and third-largest city by City Brno
area—is the capital of the South Moravian Region Eastern Europe
Region. It is situated in the central part of Country Czech Republic
Europe and within its 200-kilometer radius lie other impor- City Population 1,151,500 (Dec 2009 est.)
tant European capitals: Prague, Vienna, and Bratislava.
City Average Monthly Entry Level US$1,118
As the growth engine of the Southern Moravian region, Salary (in US$) per month (BPO)
this city hosts a wide range of universities and institutions, City Average Monthly Entry Level US$1,574
and is the second-largest center of education in the Czech Salary (in US$) per month (ITO)
Republic. The large number of universities here attracts grad- City Real-Estate Cost US$11–21
uates who prefer to remain here rather than move to Prague. Major Service Providers in the IBM, Accenture, Infosys,
This region’s highly qualified workforce -talented information City Microsoft Innovation Center,
technology professionals- is fluent in multiple languages. Red Hat, Grisoft, Atento, Czech
In recent years, Brno has become an investors’ base with Technical center, IBA Group,
relatively new types of foreign investments such as technol- SDE, Monster Worldwide,
Progeon, DSG International, IDS
ogy parks, developmental and shared service centers, and Scheer, AVG Technologies
voice service centers. This capital offers advantageous state Primary Language Spoken Czech
and city support for investment and a qualified and adapt-
Other Languages Spoken Czech, German and Yiddish
able workforce at favorable labor costs.
Literacy Rate 97percent
Brno achieves the second highest amount of FDI in the
Time Zone GMT +0100
country, after Prague. With the arrival of foreign investment,
there has been a marked expansion in strategic services. Currency Czech Koruny (CZK)
Exchange rate $1= 18 CZK
Czech Technological Park of Brno is a joint invest-
Unemployment 11.35percent (Jan 2010)
ment by the City of Brno and the British multinational
firm P&O, in close cooperation with Brno Polytechnic
University. It provides home to a number of leading com- intensifies with some locations becoming expensive and
panies, including Honeywell Controls, Siemens, Star 21 some getting saturated, the Czech Republic has managed
Networks, Bobst Eastern Europe, SGI, Bovis Lend Lease, to maintain its position as one of the world’s most attrac-
Southern Moravia Center for Innovation, Timken Czech tive locations for FDI.
Republic, Vodafone Czech Republic, As per Ernst & Young European
IBM Global Services Delivery Center Attractiveness Survey from 2009,
Czech Republic, Control Techniques With the arrival of for- Central and Eastern Europe is consid-
Brno, FEI Czech Republic, Phoenix eign investment, there ered to be the most attractive business
Contact, ENERGO-PRO Czech, has been a marked locations and rank ahead China, India,
CSC Computer Sciences, and Symbol
expansion in strategic Russia, and Western Europe. The Czech
Technologies. market of information and communi-
As competition between countries services here. cation technologies (ICT) recorded a
and regions for cross-border investment turbulent growth in recent years. GS

91   GS Destinations Compendium 2010 www.globalservicesmedia.com


Budapest
Hungary

Europe’s City of the Future

T
he global ICT sector is presently undergoing Quick Facts
a rash of mergers and acquisitions, and the City Budapest
Hungarian ICT sector is no exception to this Region Eastern Europe
trend. The main strengths of Hungary are its Country Hungary
low employment costs, good IT and communication infra- City Population 3271110
structure and the profile of its capital city Budapest.
Major Service Providers in Convergys, InfomatiX, Genpact,
Budapest is split into two distinct sides: Buda and Pest. the City TCS BPO, Getronics, EPAM, Unisys,
Buda side is more peacefully residential and quieter than Siemens, Synergon, Ericsson and
the Pest side. Almost 60 percent of Hungary’s industry are Nokia, Cognizant, IBM, Sykes,
focused around Budapest. GE, Diageo, IT Services EDS,
ExxonVodafone, Mobil, GE, Dell,
As per Financial Times’ fDi Magazine, Budapest ranks
Capgemini, and Morgan Stanley
third in European Cities and Regions of the Future
Primary Language Spoken Hungarian
2010/11. This ranking is on the basis of cost effectiveness,
Other Languages Spoken English, German
quality of life, economic potential, infrastructure, business
friendliness, human resources and FDI promotion strategy. Time Zone CET (UTC+1)
As a result of its liberalized investment policy, Budapest has Currency Hungarian forint (HUF)
Exchange rate
a conducive economic environment. However, there is a
Unemployment 9 percent
substantial number of trained work force and highly quali-
fied employees, still the employee compensations are low.
Hungary upholds a healthy economic growth through region (Budapest).
this post-EU accession period. In recent times, it has wit- Some of the notable companies based in Budapest are
nessed a changeover from central economy to a market- Convergys, InfomatiX, Genpact, TCS BPO, Getronics,
oriented economy. Its inflation figures have also dropped EPAM, Unisys, Siemens, Synergon, Ericsson and Nokia,
in this period. Hungary continues to show a healthy eco- Cognizant, IBM, Sykes, GE, Diageo, IT Services EDS,
nomic growth through this post EU accession period. ExxonVodafone, Mobil, GE, Dell, Capgemini, and
Budapest offers a highly skilled and diverse workforce, Morgan Stanley.
with broad language skills and technical and customer fac- LogMeIn - with its headquarters near Boston and its
ing skill sets. This city has relatively low property costs and engineering base in Budapest- plans to tackle giants like
has the reputation for strong technical/R&D skills. But, Cisco Systems, Microsoft, and IBM, with an easy-to-use
the increasing labor cost is one of the major factors that has product for holding meetings and exchanging information
become headache for most of the companies. over the Web.
In a recent survey by According to a report pub-
Mastercard Worldwide, Budapest lished late last year, 10,000
ranked third in the economic Almost 60 percent of Hungarians were engaged in
and commercial environment
Hungary’s industry is focused call centers in the Budapest
categories. Moreover, unemploy- region. Besides research centers,
ment rate is the lowest (7.5 per- around Budapest. technological parks also facili-
cent) in the central-Hungarian tate the clustering of high-tech

92   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Budapest

For the city of Budapest, GDP


9000
per head (based on PPP) stood
8000 at approximately $35,000 in
7000 2008. As per Prices an Earnings,
Budapest has one of the lowest
6000
gross earnings. The average gross
5000 monthly salary is $1,264.33. The
4000 average pre-tax wage in 17–24 age
group is approximately $851.878.
3000
In the past 15 years, Hungary
2000 has become a major address for for-
1000 eign capital. Cumulative FDI has
reached over $79,867,831,745.73,
0
whereas investment growth has
Czech Slovakia Hungary Bulgaria Poland Romaina
Republic risen year after year. The figure
below shows FDI stock per capita
Source: wiiw, FDI statistics, 2009, ICEG, 2010 in the CEE region, 2009.
Budapest also boasts of the
companies such as: T-Online, IBM, HP, Compaq, Black infopark, which is the first innova-
Hole Software, Ericsson, Tata Sons, Canon, GraphiSoft, tion and technology park in Central and Eastern Europe.
Microsoft, Thales Nanotechnology, Zalaegerszeg, Komárom Encompassing the 2007–2013 fiscal years, government is
– Foxcom, Nokia, etc. exploiting different measures to promote broadband access
The information, communications, and technology in the second national development plan in Hungary.
(ICT) sector in Hungary has grown in recent years, and Hungary has made steady progress in eradicating
the country has come forth as one of the most developed pirated IT materials from the marketplace since 2003-
outsourcing markets in the region. This destination has a when Hungary was placed on the Priority Watch List for
service-based economy, with industry and agriculture con- IP violations-composing primarily of patent and data
tributing less than 35 percent of GDP. exclusivity issues. GS

Snapshot
➤ As per Financial Times’ fDi Magazine, Budapest ranks third in European Cities and Regions of the Future 2010/11.
This ranking is on the basis of cost effectiveness, quality of life, economic potential, infrastructure, business friendli-
ness, human resources and FDI promotion strategy.
➤ Budapest boasts of the infopark, which is the first innovation and technology park in Central and Eastern Europe.
➤ In the past 15 years, Hungary has become a major address for foreign capital. Cumulative FDI has reached over
$79,867,831,745.73, whereas investment growth has risen year after year.
➤ Hungary has made steady progress in eradicating pirated IT materials from the marketplace, since 2003-when
Hungary was placed on the Priority Watch List for IP violations.

93   GS Destinations Compendium 2010 www.globalservicesmedia.com


Buenos Aires aerial view

Buenos
Aires
Argentina

The Frugal Man’s Outsourcing Paradise

B
uenos Aires is the capital of Argentina. One Quick Facts
of the largest cities in South America, it is the City Buenos Aires
financial, industrial, commercial and cultural Region South America
center. Also one of the world’s leading ports, Country Argentina
it lies on the Parana River, near where the river enters the City Population 14,400,000
Atlantic Ocean.
City Real-Estate Cost US$65 per square foot
Buenos Aires is the second-largest metropolitan area in
Major Service Providers in the Microsoft, Intel, Motorola,
South America, after São Paulo. The city’s service sector is City IBM, Hewlett Packard, Wipro,
diversified and well-developed by international standards TeleTech, TCS, Latin3, Sabre,
and accounts for 76 percent of its economy (compared to Ceitech, Google, MCI, etc.
59 percent for all of Argentina’s). Primary Language Spoken Spanish
With 14.4 million inhabitants, it has 38 percent of the Other Languages Spoken English, Portuguese, Italian,
nation’s population and 35 percent of the country’s eco- German, French
nomic activity. In the city, the workforce numbers about Literacy rate 96 percent
1.4 million people, with about 36 percent involved in serv- GDP $245B
ices, 18 percent in trade, 17 percent in manufacturing and Time Zone GMT -0300
about 12 percent in finance, insurance, and real estate. Currency Argentine peso (ARS)
Buenos Aires, a recognized player on the global BPO Exchange rate ARS1.00 = USD 0.251889
scene, continues to be a frugal man’s paradise. This des- Unemployment 9.1 percent
tination is growing at double-digit rates in terms of both
volume and value of the electronic commerce and payment are becoming stronger, as education in English is being
business. encouraged. The city has low attrition rates.
Currently, it is ranked 269 overall, most expensive place As regards office space, Buenos Aires posseses Class A
in the world for expatriates to live, out of 300 interna- office space. However, vacancy rates are on the decline
tional locations. However, electricity is 30–60 percent less because of high demand leading to rising sales and lease
expensive than United States - the average cost for power is rates.
US$0.04 per kilowatt per hour. Property is affordable; the The city can serve US markets effectively as Argentina
median sale price per square meter of office space is around lies in the same time zone as the East Unite States. When
$65 per square foot. speed of response and deadlines become an issue in projects,
Buenos Aires has a large talent pool and a number of working with people in a similar time zone becomes a cru-
reputed educational institutions, capable of supplying cial component to a smooth and effective work process.
workforce to the IT–BPO industry. Argentina’s cultural This city’s time zone offers the added advantage- it is one
closeness and linguistic similarity with Europe is an added hour ahead of Eastern Standard Time (EST-USA), 4-5
advantage, as it allows the country to additionally tap busi- hours ahead of Pacific Standard Time (PST-USA), and 3
ness from markets in Europe. hours behind Greenwich Mean Time (GMT-UK).
Spanish is the official language, but Portuguese and The IT–BPO industry (high-tech sector in general) is
English are also spoken in the city, which provides multi- growing rapidly and has been prioritized and encouraged
lingual services. English language skills of the population through incentives by government. The Software Law

94   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Buenos Aires

establishes that software production is to be considered as a This complex, energetic, and seductive port city, which
productive transformation activity and accorded the same stretches south-to-north along the Rio de la Plata, has been
priority and incentives as other industrial activities. the gateway to Argentina for centuries.
Buenos Aires, one of the main markets in Latin America The growth of Argentina’s IT-BPO industry during
and in the world, is the ninth most populated urban con- recession was adversely affected. However, in the last few
glomerates in the world. It is the 13th urban center with years, a large number of multinational companies have set
the largest income in dollars in the world, ahead of cities up their operations in Buenos Aires. This industry has been
like Hong Kong, Miami or Sao growing rapidly since then, mak-
Paulo, and its growth prospects ing it one of the fastest grow-
are excellent. Class A office space is on ing sectors in the economy. The
Unlike much of the rest of the decline because of high prominent services from Buenos
the country, this city has a varied Aires include software develop-
economy, which helps it main- demand leading to rising sales ment, call center, back-office
tain a degree of stability, despite and lease rates. operations (such as data process-
the rampant inflation that has ing) and creative services (such
often burdened the entire coun- as design and media services).
try. This region maintains low debt levels and debt service Buenos Aires has seen a lot of movement and change
requires less than 3 percent of the total budget. due to the arrival of multinational companies establishing
Known as the Paris of South-America, its GDP (Gross their regional hubs and offices in the city. Global giants
Geographic Product) almost triples the average income per with the likes of Google and MCI have set up shop in this
capita in Argentina. region. GS

Snapshot
➤ The prominent services sourced from Buenos Aires
include software development, call center, back-office
operations (such as data processing) and creative serv-
ices (such as design and media services).
➤ The Software Law establishes that software produc-
tion is to be considered as a productive transformation
activity and accorded the same priority and incentives
as other industrial activities.
➤ Some of these incentives encapsulate: lower turnover
tax rates and exemption from provincial taxes, benefits
in municipal fees, access to financing with preferential
terms and discounts on services such as electricity, gas,
water and communications.
➤ Known as the Paris of South-America, its GDP (Gross
Geographic Product) almost triples the average income
per capita in Argentina.
➤ This city can serve US markets effectively as Argentina lies in the same time-zone as the East Unite States.

95   GS Destinations Compendium 2010 www.globalservicesmedia.com


Cairo
Egypt

“The Victorious City” of the Middle East

C
airo—the capital of Egypt and the largest Quick Facts
city in Africa—means “the victorious city”. City Cairo
The economy of Cairo was ranked first in Region North Africa
the Middle East, and 43rd globally by Foreign Country Egypt
Policy’s 2010 Global Cities Index. City Population 78,866,635 (2009)
It is the chief commercial and industrial center of
City Real-Estate Cost $1,322 per square meter
Egypt. The majority of the nation’s commerce is generated
Major Service Providers in Oracle, Orange, Microsoft, C3,
here, or passes through the city. Majority of publishing the City Convergys, EDS (HP), Raya Contact
houses and media outlets and nearly all film studios are Center, Tamima, Xceed, Unisys, IBM,
settled in Cairo, as are half of the nation’s hospital beds Vodafone, Alcatel-Lucent
and universities. Primary Language Spoken Arabic
Increase in population of Cairo shows an upward trend. Other Languages Spoken English, French, Italian, German,
One-third of the total population is under 15 and nearly Spanish
three-fifth is under 30. The positive implication is that Literacy rate 71percent
the population is relatively young. The most populous GDP $328.1B
metropolitan area in Africa, it ranks 16th among the most Time Zone GMT + 2
populous metropolitan area in the world. Majority of the Currency Egyptian pound (EGP)
population is Egyptians, with less number of foreigners. Exchange rate $1= 5.77 EGP
Cairo is the economic center of Egypt, with two-thirds Unemployment 11.4percent
of the country’s gross national product generated in the
greater metropolitan area. Today, the majority of its work cities. This destination’s multilingual workforce, business
force is employed in service sector jobs, especially in gov- analytics, and testing services act as its strongest key func-
ernment, financial services, and commerce. English and tions. In addition, allure of this city is that it is a low- cost
Arabic are commonly spoken in this destination along base, embraces the large supply of skilled multilingual
with German, French, Spanish, and Italian. agents, has an amazing geographical position and it is eco-
Egypt is one of the world’s fastest growing locations nomically and politically stable.
for global outsourcing and services, and has seen huge Egypt hopes to see a tenfold increase in exports from
investments in the last year, with companies such as EMC, its growing outsourcing industry by 2020. It will boost its
Stream Global Services, and Sykes Enterprise, collaborat- focus on information technology (IT) entrepreneurship
ing with Information Technology Industry Development and co-ownership of intellectual property. Egypt’s econo-
Agency (ITIDA) and outsourcing their business in Egypt. my, buoyed by rising exports, could grow by 5.5 percent
It should be noted, Egypt is fast becoming one of the in fiscal 2010/11 and attract $10B in foreign direct invest-
world’s most attractive locations for global outsourcing. ment (FDI) as it recovers from the global economic crisis.
Currently, most foreign companies -locating IT and BPO There are also extremely attractive tax breaks and associ-
positions- in Egypt use Cairo as their base. ated financial incentives available to foreign companies, so
Industries in Cairo have developed fast, churning out Egypt looks attractive on price, too. The typical per-seat
new job opportunities for the natives. This city has been cost for a call center is around $15,000—a highly competi-
recognized as one of the world’s top ranking offshoring tive figure.

96   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Cairo

From its inception, Cairo’s economy has been based on around 40 employees, but plans to expand to 300.
governmental functions, commerce, trade, and industrial One business park, designed for BPO and ITO deliv-
production. It is an outsourcing haven, with its vast dedi- ery, is currently being built-in downtown Cairo. Maadi
cated technology and outsourcing park in Smart Village, Park will have the capacity for 45,000 employees in over
and the development of Maadi Park, which will house in 40 buildings in 2 million square meters. Operations
excess of 135,000 employees. Smart Village, the Egyptian are expected to begin there later this year, with comple-
ICT hub located in the suburbs of Cairo, offers facilities tion scheduled for 2012. As well as expanding capacity,
for more than 35,000 people and Maadi Park offers a more con-
is home to a growing number venient location, being closer to
of regional and international central Cairo and having better
technology vendors including Smart Village, the Egyptian transport links—it will be near
Vodafone, Ericsson, Microsoft, ICT hub located in the suburbs the city’s metro network. While
and Oracle. Additional Smart of Cairo, offers facilities for there are plans to build business
Village offices are being planned more than 35,000 people and parks in other cities in Egypt,
for Alexandria to accommo- currently nearly all ITO and
date the countries fast-growing is home to a growing number BPO work is located in Cairo’s
ICT industry. Mobile phone of regional and international Smart Village.
network operator Vodafone has technology vendors Some major names, such as
800 contact center agents in Oracle, Orange, and Microsoft
Cairo serving the domestic, UK, have set up captive operations in
Australian, and New Zealand Cairo, while major IT outsourc-
markets. Network technology provider Alcatel-Lucent has ers such as IBM and EDS (HP) have had presence here for
300 technical support staff in Cairo. Local contact center many years.
outsourcing provider Xceed has 1,900 employees in Cairo The largest expansion plans are also Cairo centric, with
supporting customers across Europe, the United States, the previously discussed Maadi Park location, which is
Canada, and the Gulf. Satyam opened a center in Cairo in being developed currently. The options of where to locate
July 2007, from where it does some application develop- are limited outside Cairo’s Smart Village, while there are
ment. Wipro gained a presence in Egypt with the acquisi- plans to build other parks in other Egyptian cities, these
tion of development center New Logic. Currently, it has are still in the planning phase.  GS

Snapshot

➤ Cairo is the economic center of Egypt, it generates two-thirds of the country’s


gross national product.
➤ Extremely attractive tax breaks and associated financial incentives are avail-
able to foreign companies. The typical per-seat cost for a call center is around
$15,000—a highly competitive figure.
➤ The largest expansion plans are also Cairo centric such as Maadi Park location.
Maadi Park will have the capacity for 45,000 employees in over 40 buildings in
2 million square meters.
➤ Egypt hopes to see a tenfold increase in exports from its growing outsourcing
industry by 2020 and will boost its focus on information technology (IT) entre-
preneurship and co-ownership of intellectual property.

97   GS Destinations Compendium 2010 www.globalservicesmedia.com


Chandigarh
India

Building Social Infrastructure

C
handigarh is the first ‘planned’ city of India. Quick Facts
Known for its architecture, urban planning, City Chandigarh
and ambient environment, it is one of the best- Region South Asia
managed cities in India. It is very well-con- Country India
nected to all major centers of the region and New Delhi, City population 1.297 million (2009)
capital of India. With a population of about $1.297M
Major service providers in the Dell, Infosys, Quark, Ranbaxy,
(2009), Chandigarh’s per capita income is the highest in city Reliance, and Satyam
India at $2,430.73 in 2007–08. Software exports $182,371,022.91 (2009–10)
Chandigarh’s strength lies in its social infrastructure,
Software exports from RGCTP $159,385,089.56 (2009–10)
which has led to the growth of major IT companies in this
Primary language spoken Hindi, Punjabi
city. Apart from infrastructure, its proximity to Delhi and
Administrative languages English, Hindi
lucrative IT talent pool attracts IT business centers. Major
Literacy rate 81.94 percent (2001)
multinational corporations and Indian firms such as Dell,
Infosys, Quark, Ranbaxy, Reliance, Satyam, IBM Daksh, GDP USD 2,177 Million (2006–07)
ICICI Prudential (for software development), Taurus Agile, Time zone GMT/UTC + 05:30 hour
IndiWork Software Solutions Private Limited, Netgains Currency Rupee (INR)
Network Solution, Promatics Information Services, Exchange rate 1USD = 45.3100INR
UniSolsInfosyatems, Voicepack Infotech Private Limited,
Chandigarh Infotech center, Inde-Dutch System India and Administration has been working on the development of
SmartData have offices in this destination. Infosys, one human resources and has set up bodies like the Chandigarh
of the largest IT companies in India and the world, was Training On Soft Skills (CTOSS) Programme and Society
amongst the first to set up operations in the city. for promotion of IT in Chandigarh (SPIC).
In the last one decade, this destination has seen rapid In Chandigarh, companies are mainly engaged in
growth and has been emerging as the “Knowledge Hub” services such as Information Technology (IT), IT Enabled
of the north. Services (ITES) consisting of inbound and outbound
Developed land, dedicated telecom bandwidth and BPO and training center, search engine optimization and
telephone exchange, and other pivotal facilities such as Internet marketing solutions, global IT solutions like soft-
banking and public transport makes it a highly suitable ware development and consultation (viz. delivering cost-
office space for MNCs and corporate alike. Chandigarh, effective software solutions and web services to small and
“The Silicon Valley of North India,” has all the trap- medium enterprises), E-Commerce, website designing &
pings of being a technology city—good living standards, development and CMS programming solutions to clients
cosmopolitan outlook, skilled manpower, and excellent in USA and Europe and sale and maintenance of server
infrastructure. These factors attract IT/ITES/BPO invest- and desktops to customers from defense, banks, research
ments in the city. institute, and central government offices.
Chandigarh houses many institutes of higher learn- The IT companies in Chandigarh are mainly located
ing, such as the Punjab Engineering College, Chandigarh in Rajiv Gandhi Chandigarh Technology Park (RGCTP)
Engineering College, Punjab University, and the and at the DLF campus. RGCTP is a major step in the IT
Postgraduate Institute of Medical Research. The Chandigarh industry of Chandigarh. Several national and multinational

98   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Chandigarh

IT companies are generating investment and employment invest into Chandigarh. They aim to create an appropriate
opportunities to the region by setting up shops here. industrial setup, improve the quality of the life of people,
Now more than 10,000 professionals are working in set up the right kind of business climate for various sectors
RGCTP and an investment of more than $ 219,466,300.10 of Chandigarh and contribute to the overall development
has poured in. It is estimated that once completed, phase of the economy.
I and phase II would provide direct employment to more In order to develop the requisite talent for Knowledge
than 30,000 professionals, and an equivalent number Industry, a new state-of-the-art Education City is coming
would be directly employed in phase III taking the fig- up in Chandigarh, which will have world-class educational
ure of direct employment from RGCTP to more than faculty and excellent infrastructure. Following are other
60,000 professionals. Accordingly, the total investment for initiatives which will support Chandigarh is being an ideal
RGCTP will cross $1.3B. outsourcing destination.
In 2009–10, the total export value of Chandigarh’s soft- A Cyber Security Research Center (first of its kind
ware industry reached $182.2M, which is $18.2M (about in the country) has been set up in collaboration with
11 percent) more than $163.8M posted in 2008–09. NASSCOM and Punjab Engineering College for con-
Software exports from RGCTP ducting high-quality research on
alone aggregated $159.1M in cyber security issues involving
2009–10 against $135.2M in Chandigarh, ‘The Silicon Valley the academia, IT Industry, and
2008–09, up 18 percent. Exports of North India,’ has all the government security agencies.
from the units located in other Apart from research on cyber
parts of Chandigarh, declined
trappings of being a technology security threats, it will also aid
by about 25 percent to $ 22.9M city— developed land, dedicat- and advise the State Police of
from $28.6M ed telecom bandwidth and tel- the neighboring states in cyber
Sanjay Kumar, IT-cum- ephone exchange, skilled man- security matters.
finance secretary, UT Society for Promotion of IT
Administration was quoted,
power, excellent infrastructure in Chandigarh (SPIC) has estab-
“Defying the meltdown, the IT and proximity to Delhi. lished centers of excellence in
units located in RGCTP regis- collaboration with Microsoft and
tered a growth of more than 18 IBM. The students are trained
percent in software exports in fiscal 2008–09. But those in Microsoft Certified programmes which help the IT
located outside the technology park, registered a fall of Industry get trained manpower.
more than 25 percent, pulling down the total growth C-TOSS, a programme for upgrading youths soft skills
rate to about 11 percent. It is estimated that the software and make them suitable for employment by the IT-BPO
exports from RGCTP will cross $987.1Mby the end of industry has been started. Free training is provided in all
2011.” government schools both in urban and rural areas enhanc-
“The best year for the industry was 2008–09 when it ing employability of students. Free training is also being
registered an increase of 48 percent in software exports. imparted to school drop-outs from underprivileged sec-
In fiscal 2008–09, total software exports of IT companies, tions of the society under CITROP (Chandigarh IT Reach
located in the RGCTP as well as outside, had risen to Out Programme).
$164M from $110.5M in fiscal 2007–08, registering an All these policies by the government have made
increase of 48 percent,”stated Mr. Sanjay Kumar. Chandigarh a preferred location for the IT/ITES/BPO
Chandigarh Administration has been framing several companies.  GS
policies, from time to time, so as to motivate investors to

99   GS Destinations Compendium 2010 www.globalservicesmedia.com


Coimbatore
India

Set to Scale New Heights

C
oimbatore is the second-largest city in the Quick Facts
South Indian state of Tamil Nadu. This city is City Coimbatore
the second-largest software producer in Tamil Region South Asia
Nadu, next only to Chennai. It is also the high- Country India
est revenue-earning district in Tamil Nadu. Major service providers in the Tata Consultancy Services, Wipro,
Coimbatore is emerging as a IT/ITES destination due city Cognizant Technology Solutions,
to an ideal combination of good business infrastructure Robert Bosch GmbH, Tata Elxsi,
that includes telecom, power, quality of life, highly skilled KGISL, and CSS Corp Pvt Ltd
workforce, low-cost of living, low pollution, and rapid Primary language spoken Tamil, English
pace of infrastructure development. Other languages spoken Telugu, Kannada, and Malayalam
Tata Consultancy Services (TCS), Cognizant Literacy rate 78 percent
Technology Solutions, Robert Bosch GmbH, Tata Elxsi, Time zone GMT/UTC + 05:30 hour
KGISL, and CSS Corp. Pvt Ltd have set up centers in the Currency Rupees (INR)
city. IT major Cognizant was one of the first major players Exchange rate 1USD = 45.3100INR
to start a development center in this destination, opened a
techno-campus in 2009 with a capacity to employ 6,000 are three universities, five deemed universities, 25 engineer-
professionals. Its vice president, Vishnu Potty, admits to ing colleges, 14 polytechnics, more than 65 arts and science
Coimbatore being a strong sourcing base for its operations colleges, 44 MBA institutions, and other colleges. It produc-
across India. es more than 30,000 engineering graduates every year, thus
In August 2010, Tidel Park -a 56-acre IT park- was boasting of an excellent human resources pool. Retention of
inaugurated in Coimbatore. IT and ITES companies talent pool has been a strong point for most of the players
would occupy nine lakh sq ft space in Tidel Park. It is establishing a presence in Coimbatore. The IT majors hire 10
expected to provide employment to over 12,000 profes- percent–15 percent of their total recruits from Coimbatore.
sionals in one shift. This campus would house three major Also, it has the entire infrastructure required for an
IT companies—Wipro, TCS, and HCL, while more than industrialized economy. Many airlines connect Coimbatore
40 companies have shown interest to start operating out with metros namely Chennai, Bengaluru, Mumbai, Delhi,
of this IT-SEZ campus. In addition, Tidel Park holds a lot Hyderabad, and overseas cities such as Sharjah, Singapore,
of importance for small and medium enterprises (SMEs) and Colombo. The city is also well-connected by train to
intending to conduct business from here, as operating major parts of India.
from an SEZ will make them entitled to tax exemptions. Coimbatore looks all set to scale new heights as a pre-
This city has a high literacy ferred destination for corporate
rate of around 78 percent which firms to expand their business
is even higher than the national By 2014–15, the highest rev- presence. By 2014–15,
average of 59.5 percent. One of enue-earning district in Tamil Coimbatore is likely to add close
the major reasons for this high
Nadu is likely to add close to to 100,000 jobs, which will in
literacy rate is the strong educa- turn contribute to the growth in
tional policy of the government 100,000 jobs the per capita income of the
and its world-class facilities. There city.  GS

100   GS Destinations Compendium 2010 www.globalservicesmedia.com


Colombo
Sri Lanka

The Backbone of Sri Lanka’s Economic Structure

C
olombo, former capital of Sri Lanka, serves as Quick Facts
a major port and the largest financial center of City Colombo
the country. It is the backbone of Sri Lankan Region South Asia
economic structure. Country Sri Lanka
Colombo has most of the amenities that a modern City population 656,000 (2007)
city possesses. Compared to other parts of the country,
Major service providers in the HSBC, WNS Global Solutions,
Colombo has the highest degree of infrastructure. This city RR Donnelley, John Keells
destination embraces considerably good stansards of elec- Computer Services, Just in Time,
tricity, water, transport,road network, etc. Virtusa, and Astron
Majority of the city population possess good English Primary language spoken Sinhalese, English
language skills, which makes it ideal for financial, telecom- Other languages spoken Tamil
munication, and healthcare sectors. Colombo now has Time zone UTC/GMT +5:30 hours
the world’s largest pool of UK qualified English-speaking Currency Sri Lankan rupee (LKR)
accountants.It has 90,000 graduates, according to Census 1 USD = 111.6196 Sri Lankan
and Statistics Dept. 2008. Exchange rate rupees
This destination offers a rapidly growing niche work-
force which is low-cost, highly adaptable and loyal. quality talent pool.
Currently, over 50,000 are employed in IT and BPO In September 2010, MphasiS opened their global deliv-
industry and the workforce is growing at over 20 percent ery center in Colombo. “There were three main reasons
year-on-year. The workforce is stable with very low attri- to select Sri Lanka apart from other countries. One of
tion rates ranging from 10 percent to 15 percent. A recent the main reasons was the educational IT institutions and
World Bank study revealed that the country’s labor costs to build deeper roots with the talent supply chain in Sri
ranked the lowest, in comparison to many other outsourc- Lanka. The other reason was that the Government of Sri
ing destinations. Its labor cost is 15 percent to 20 percent Lanka has much enthusiasm for a sustainable economic
lower than India. The total cost per associate can be as growth. The keenness of the Board of Investment (BOI)
much as 30 percent lower in many cases. Also, there is a played an important role in redefining the IT landscape
lower upward wage pressure than many established global in the country. This caused MphasiS to set up the global
sourcing destinations. delivery center in Sri Lanka,” MphasiS CEO Ganesh
In addition, this city’s geographical location, infra- Ayyar was quoted.
structural facilities, direct access to Indian market, high “We want to surprise MphasiS by showing the capabili-
quality standard of workforce, open economy, and various ties of the Sri Lankan talent. The country s exports will be
free-trade agreements make this place an attractive out- measured in Billions of dollars and replace the millions
sourcing destination. HSBC, WNS Global Solutions, RR very soon. The employees that joined the company today
Donnelley, John Keells Computer Services, Just in Time, should also focus on providing their best to prove that Sri
Virtusa and Astron are some of the companies which have Lanka can,” Board of Investment chairman Jayampathi
invested in this city. The growing IT-BPO industry in Bandaranayake was quoted.
Colombo offers a unique advantage for small and medium The IT-BPO industry has been identified as a thrust
enterprises (SME) to enjoy premium access to a high industry by the government of Sri Lanka. Recognizing

101   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Colombo

the potential of this industry, the government has taken As part of a new FDI policy expected to be included
a number of positive steps - providing fiscal and other in the country’s 2011 budget, Sri Lanka may scrap some
incentives and concessions- to fast track the development tax concessions which had been offered to attract foreign
of this sector. investors during the protracted war.
The national level competency development programs Sri Lanka had targeted $1B in FDI in 2010, an opti-
focus on building Sri Lanka as a Center of Excellence mistic aim over the economy after the end of a 25-year
(COE) for key domain areas. Software services sec- war. But the Board of Investment has said it may reach
tor focuses on Telecommunication, Banking Financial only around $600M, almost the same amount that came
Services and Insurance (BFSI) and Software Testing. The in 2009.
BPO sector focuses on financial and accounting services, Sri Lanka’s BOI said that it will prioritize approvals
investment research, engineering services, and UK-based of investment into specific sectors, as part of its thrust to
legal services. revive the country’s economy,
Earnings from exports of after the end of a three-decade
IT-BPO sector of Sri Lanka have The city’s geographical loca- war. Foreign investments into
shown a steady upward trend tion, infrastructural facilities, IT, outsourcing, tourism, agri-
during the past decade. The culture, fisheries, education,
industry has set a target of $ 2B direct access to the Indian mar- infrastructure, ports, and avia-
in export revenue from IT-BPO ket, high quality standards of tion will take precedence over
sector by 2012. the workforce, open economy, all others. “For these particular
Foreign direct investment and various free-trade agree- sectors, we will give highest
(FDI) into Sri Lanka fell 16.8 possible importance. We want
percent to $208M in the first six ments make it an attractive to develop these sectors,” BOI
months of 2010, compared to outsourcing destination. spokesman Dilip Samarasinghe
$250M in the first-half of 2009. was quoted.
In 2008, the country’s FDI hit According to World Bank,
a record $889M, but fell in 2009 to $602M due to the Sri Lanka’s investment climate must be improved and cost
global downturn. of doing business reduced, to attract the private invest-
Sirimal Abeyratne, a senior economics lecturer at the ment needed to speed up growth. Sri Lanka has been
University of Colombo was quoted saying, “War was one ranked at 105 out of 183 countries in the World Bank’s
part of a problem. Uncertainties are still there, and the latest cost of doing business index. It has been sliding
economic policies are not favorable to foreign investments. down the ranking scale. So, the country needs to increase
(Foreigners) are not certain about the macro economy in private investment to about 27 percent of Gross Domestic
the long run. The reform process has not yet started, and Product, from the current 19 percent, to speed up eco-
the government policy document itself is against foreign nomic growth to the levels needed to improve the lives of
investments, blaming the open economic policies.” most people.  GS

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

102   GS Destinations Compendium 2010 www.globalservicesmedia.com


Curitiba
Brazil

One of South America’s Rising Hotspots

C
uritiba, capital and largest city of Brazilian Quick Facts
state of Parana, is an outsourcer’s dream. With City Curitiba
a population of approximately 1.8 M (2009) Region South America
people, Curitiba is the seventh-largest city in Country Brazil
Brazil.
City population 1,851,215 (2009)
Favorably located among sourcing hotspots Sao Paulo,
City real estate cost Apartment for buying: US$
Buenos Aires, and Santiago, it has been making a name 1,105.39 per square meter
as a growing IT hub. In last two years, several large off- Apartment (1 bedroom) for rent:
shore outsourcing operations were established in Curitiba US$ 295.67per square meter
such as Accenture, HSBC Global Technologies, Siemens, Major service providers in the Accenture, HSBC Global
ExxonMobil, Atos Origin, and Wipro. These outsourc- city Technologies, Siemens,
ing centers were attracted by the high quality of life, ExxonMobil, Atos Origin, and
Wipro
low wages, and excellent infrastructure support from the
Primary language spoken Portuguese (official)
city.
In March 2010, Wipro Technologies opened its Other languages spoken German, Italian
new global delivery center, Curitiba Center, in the Literacy rate 96 percent
city. This destination was chosen for Wipro’s Latin Time zone UTC-3 (UTC-3)
America operation due to the available talent pool and Currency Real (BRL)
the excellent infrastructure support that the city offers. Exchange rate 1 USD = 1.67964 Brazilian Real
Mayor of Curitiba, Beto Richa, made a statement that
the city embraces best in life quality and infrastructure. percent literacy rate. It has 55 higher education institu-
“Wipro Technologies is an innovation company and a tions, with five universities. About 157 technical courses
great employer brand, and its investments in Curitiba are given by 88 institutions. Curitiba has the highest per-
will bring even more knowledge to our city and state,” centage of English schools per capita in Brazil. Thus, there
Beto was quoted. is a sizeable talent pool.
Curitiba is known for its strong infrastructure, attrac- This destination is famous as an IT-friendly city. The tax
tive economy, and savvy urban planning. “You can get incentives and support from the city really helps to build a
anywhere in the city in less than 25 minutes by car. And good business environment. The Curitiba Offshore Center,
the quality of life is so good that we can attract profession- an association of the local IT companies in Curitiba, pro-
als even from Sao Paulo and Rio, who often don’t mind vides valuable support and information for US firms con-
the lower wages here,” Jacques Depocas, Global Head of sidering setting up there. In addition, municipal govern-
Center Operations at HSBC Global Technologies was ment has established the Curitiba Technopark—specific
quoted. According to Depocas, Curitiba also has one of regions in the city, that integrate and interconnect univer-
the best banking and financial service systems in the world, sities, IT companies, and R&D institutions in both public
one of the reasons that HSBC is set up here. The cost of and private sector. There are incentives for larger compa-
living is also estimated at up to 30 percent lower than in nies to locate in the Technopark such as a reduced sales tax
larger Brazilian cities. to 2 percent and a 10-year exemption of real estate and
Curitiba has a very educated workforce, with a 96 other municipal taxes.  GS

103   GS Destinations Compendium 2010 www.globalservicesmedia.com


Dalian
China

Handling 80 percent of Japan’s Outsourcing Business

T
he beautiful coast city of Dalian is located in the Quick Facts
southern tip of China’s northeast region. Dalian City Dalian
has a population of about 6 million (2009). It is Region East Asia
the most developed city in the northern region Country China
of China, where the most talented of the 130 million
City population 6 M (2009)
Chinese citizens seek jobs.
City average entry level salary Average annual salary is $7,056
Dalian boasts of the largest concentration of software (in US$) per month (ITO) (2009)
outsourcing enterprises in China. This destination was Major service providers in the Fortune 500’s Intel, Starbucks,
established by the Ministry of Commerce of China, as city Volkswagen and Bosch GROUP,
the service-outsourcing base of the country. In 2009, total Toshiba, Panasonic, LG, STX,
industrial output of software industry in Dalian exceeded and BT
$60.2B and export value of service outsourcing industry Software and service outsourcing RMB 17.7 B (2009)
amounted to US$1.4 B. revenue of Dalian HIDZ
Dalian’s software industry has developed rapidly. From Export value from the software US$ 510 M (2009)
1999 to 2009, the annual growth rate was 53.32 percent. and service outsourcing sector
in Dalian HIDZ
Sales profits are 72 times higher than a decade ago and
Primary language spoken Standard Mandarin
export volumes too are 41times higher than a decade ago.
Dalian is a well-suited destination for both BPO and Other languages spoken Dalian dialect
IT outsourcing for the following reasons : it is the finan- GDP USD 55.5 B (2008)
cial center of northeast China and has a large number of Time zone UTC/GMT +8 hours
foreign banks; it offers a good engineering education at Currency Renminbi (RMB or CNY)
the well-known Dalian University of Technology, which is Exchange rate 1 USD = 6.64151745 Chinese
yuan
especially useful for software companies looking for new
employees, it is close to Japan and Korea and its geographic
location gives it an advantage in attracting good outsourc- Oracle Corporation, etc.
ing opportunities. • C
 hinese companies: China Software & Service (CS&S),
Dalian Hi-Tech Zone and Dalian Software Park are Neusoft Group, Neusoft Institute of Information, New
the two areas where IT and BPO companies have setups. Touch, DHC, Hisoft, etc.
There are over 500 enterprises in the Dalian Software • European companies: British Telecom (UK), SAP
Park, 41 percent of which are foreign-funded. Thirty-seven (Germany), Oostsourcing (A joint venture of Akyla
Fortune 500 companies including IBM, HP, Accenture, 40 percent, Better Be 40 percent, Insight 20 percent,
Panasonic, Sony, Hitachi, NTT, Oracle, AVAYA, NEC, Netherlands)
Fidelity, BT, etc. have established bases in Dalian. Many • Japanese companies: Alpine, Fujitsu Device, Hitachi,
Japanese and Korean companies have also set up centers NEC, Panasonic, OMRON, Sony, Sumitomo Wiring
due to the language capabilities. Systems, Yokogawa Electric, HAL Film Maker, Jtekt,
Major IT companies based in the software park are: MI Communication, etc.
• US companies: BearingPoint, Citibank, Dell, • Other companies: Satyam (India), Wistron (Taiwan),
Accenture, Fidelity Investments, Genpact, HP, IBM, Konica Minolta, DHC, Lüshun South Road Software

104   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Dalian

Industry Belt Demonstration Room, etc. outsourcing industry in Dalian. Most of the IT work-
As the core area of software and information service ers come from the numerous engineering schools of the
industry in the city, Dalian Software Park is now progress- universities in Dalian and other cities in the area, includ-
ing toward the ‘Service Outsourcing Center of Northeast ing Dalian University of Technology, Dalian Liaotong
Asia.’ University, Northeast University, etc.
“The rapid growth of our software park in the past dec- Dalian now handles 80 percent of Japan’s outsourcing
ade can be attributed to effective government support, the business. Dalian also is unique among similar Chinese
concentrated industrial cluster, the internationalized qual- cities in the software industry business because of its busi-
ity system, and improvements in our training system,” Gao ness operations model. Instead of operating strictly as a
Wei, president of Dalian Software Park Co Ltd (DLSP) state-owned business, Dalian Software Park operates as a
was quoted. government-facilitated, privately run enterprise.
Dalian High-tech Industrial Development Zone The Software School at the Dalian University of
(Dalian HIDZ) consists of six areas including the Software Technology is China’s biggest software demonstration
Park. It is surrounded by universities and other educational engineering school. The Dalian Neusoft Institute of
institutions. The fact that a large number of universities are Information is among the earlier software institutes estab-
located near Dalian HIDZ has proven useful for software lished at the university.
development companies looking to recruit new employees However, this city is still not at par with top outsourcing
who can speak Japanese, Korean, or English. The pil- destinations like India and Philippines. It faces some chal-
lar industries of Dalian HIDZ lenges in outsourcing. Though
include software and informa- running an outsourcing business
tion services, biotechnological In July 2010 the Finance in Dalian is cheaper overall, the
research and production, and city struggles with providing a
medicine and new materials. Ministry of China, announced competitive labor pool and still
In the first-half of 2009, business tax exemption of lacks infrastructure compared
the software and service out- 5 percent for outsourcing com- to other locations. Investment
sourcing industries of Dalian panies in 21 cities in China, costs in Dalian, especially labor
HIDZ generated revenue of costs, are relatively high when
$266,445,877.84 accounting for that will extend to the end of compared to those of other cit-
90.3 percent of Dalian’s total. 2013 ies in Liaoning. Also, the area
The export value from the soft- surrounding Dalian is less devel-
ware and service outsourcing oped than the coastal areas of
sector in Dalian HIDZ rose 34.9 percent year-on-year and China in the east and south.
exceeded US$ 510 M. Dalian still lags behind Beijing and China in software
With an aim to expanding outsourcing business and research and development (R&D) capabilities. Dalian’s
compete with India’s dominance in outsourcing indus- outsourcing business still is mostly focused on Japan,
try, in July 2010 Finance Ministry of China, announced while its share of the global outsourcing industry is much
business tax exemption of 5 percent, for the outsourc- smaller.
ing companies that extend to the end of 2013.These tax Still, Dalian is well on its way to a stronger competitive
exemptions apply to all companies offering information position. “In the near future, the best opportunity for
technology outsourcing (ITO), business process outsourc- development in China lies in technology and services out-
ing (BPO) and knowledge process outsourcing (KPO) in sourcing. We will make good use of our solid foundation
21 cities in China. and geographic advantage in our efforts to make Dalian
In June 2010, the 8th China International Software the leading city of the global outsourcing industry,” Xia,
and Information Service Fair (CISIS) was held at Dalian Dalian’s mayor, was quoted.  GS
World Expo Center, attracting more than 700 companies
and over 20 countries and regions from around the world.
The fair held six theme forums on the service outsourcing,
software innovation, industrial trends, patent protection,
project management and project innovation, of which the
IT project management forum and the project innovation
forum was held for the first time this year.
More than 60,000 people are working in the software

105   GS Destinations Compendium 2010 www.globalservicesmedia.com


Western-style buildings on Shamian Island
(Source: Wikipedia)

Guangzhou
China

China’s Software Export and Innovation Base

A
s the capital city of Guangdong Province, Quick Facts
Guangzhou is the political, economic, science, City Guangzhou
technology, educational and cultural hub of Region East Asia
the province. It is the prominent coastal city Country China
in South China.
City Population 10,334,500 (2009)
Guangzhou’s location is advantageous; it has a wide
City Average Monthly Entry Level $6,000
service range, complete infrastructure and good city envi- Salary (in US$) per month (BPO)
ronment, which are desirable for the business development City Average Monthly Entry Level $10,000
of software enterprises and software professionals. Salary (in US$) per month (ITO)
The major industries promoted in the zone include City Real-Estate Cost US$3014
logistics, international trade, computer software and Major Service Providers in the IBM, Guangdong Visoinsky, HSBC
processing industry. In 2009, Guangzhou’s GDP touched City Software, BEA, Cagemini, PCCW,
¥911.28 B ($133.5 B), and the per capita income was TWO Group, China Elite Info,
¥89,498 ($13,111). HDPG, Sierra Atlantic
Guangzhou is a national software industry base and a Primary Language Spoken Cantones, Putonghua,
national software export and innovation base. Out of the Other Languages Spoken English
top 500 companies, 35 have established software enter- Time Zone CST
prises in Guangzhou in the fields of data treatment and Currency Renminbi (RMB)
embedded software development, banking, insurance, Exchange rate $1= 6.65 CNY
telecom, etc. This destination enjoys a superior position
in the development of application software and system function as the software and hardware environment suit-
integration in addition to basic software (including system able for the software industry concentration. The manu-
software and supporting software). The investment attrac- facturing industry has a big demand for software and IT
tiveness of Guangzhou has led to the setting up of IBM’s services, which helps software industry to develop fast.
software innovation center, Microsoft’s (China) industrial It is anticipated, that the software industry will have
base, Intel’s international security data solution center, over 2000 software enterprises with an annual growth of
Baishigao’s design center, etc. here. Besides the German 35 percent for software export and with an export value
RIB Group and Trans Cosmos from Japan have established of $1.2 B.
software R&D, outsourcing, and training programs in Guangzhou Software Park has been a national outsourc-
Guangzhou. ing base since 1999 and is the second-largest software
In 2008, there were 385 direct investment projects in industry base in the nation, after Beijing. The city’s ties with
Guangzhou. The total investment amounted to $16 B with its southern neighbor, Hong Kong, has made Guangzhou a
FDI totaling $5.9 B. The amount of FDI China received prime outsourcing center for Hong Kong’s IT demands,
climbed up for the fifth consecutive month in the end of customer service, and call centers.It is anticipated, that the
2009, up 103 percent year on year to $12.1 B. software industry will have over 2000 software enterprises
In recent years, Guangzhou annually invested over with an annual growth of 35 percent for software export
RMB500 M in the construction of software parks, which and with an export value of US$1.2 B.  GS

106   GS Destinations Compendium 2010 www.globalservicesmedia.com


Hanoi
Vietnam

Promising Destination for Domestic


and Foreign Investors

H
anoi, the capital of Vietnam, is the national Quick Facts
political and administrative center, the hub City Hanoi
of culture, science, education, economy and Region Southeast Asia
international relations. Because of its geo- Country Vietnam
economic and political significance, it is regarded as a
City population 6.5 million (2009)
promising destination for both domestic and foreign inves-
City real estate cost Land to buy: $5,000 per sq m
tors. Hanoi and Ho Chi Minh City account for over 90 (2008)
percent of the outsourcing revenues of Vietnam. Apartment space to buy:
According to Hanoi Department of Planning and between $300 and $1,000 per sq
Investment, in the first nine months of 2010, the city’s m (2008)
GDP growth rate was estimated at 10.6 percent, about Major service providers in the IBM, GEMALTO, Teleperformance,
1.86 times higher than the same period in 2009. Hanoi city Deloitte,
Siemens, FPT Software
is expected to gain 2010 GDP growth rate of over 10.5
Primary language spoken Vietnamese
percent. Therefore, the city is trying to reach the economic
growth rate of 11 percent–11.5 percent. Other languages spoken Northern Vietnamese
Figures by the General Statistics Office (GSO) of Literacy rate 97.9 percent (2009)
Vietnam showed that in the first nine months of 2010, GDP growth rate 10.6 percent (Jan–Sep 2010)
Hanoi’s trade gap reached nearly $10M, a two-fold Time zone ICT (UTC+7)
increase from the city’s export turnover. Specifically, over Currency Dong (VND)
the first nine months of 2010, total export value of Hanoi Exchange rate 1 USD = 19,655.7 Vietnamese
dong
businesses reached an estimated $5.59B, a 19.5 percent
rise compared to the same period last year. The GSO stated Unemployment 3.24 percent (2009)
that Hanoi’s export turnover of the whole year of 2010 will
likely hit $ 7.644B, up 20.8 percent. Hanoi. FPT Software had announced in October 2010
Pham Quang Nghi, secretary of the Ha Noi Party that it would invest $57M in a software park at the Hoa
Committee, articulated that Hanoi would take the lead in Lac Hi-tech Zone in Hanoi. The project is expected to
luring foreign investment and that there have been more generate 8,000 jobs, mainly in the software sector. FPT
than 8,000 projects worth a total committed capital of Software said that within the next 4 years, 80 percent of its
$18B in the last few years. production will be conducted under outsourcing contracts
Vietnam’s Ministry of Information and Communications and the remaining will focus on products, services and
has drafted a plan to develop the country’s IT industry. The solutions for the domestic market.
plan envisages that Vietnam would be among countries The city of Hanoi has a population of 6.5M. Vietnam’s
with the most attractive outsourcing industry and Hanoi large population shows a developing and potential market.
would be in a group of 10 emerging cities for outsourcing. Besides, cheap production costs combined with the gov-
The plan also aimed to attract over $5B in foreign invest- ernment’s support have been making Vietnam the most
ment for the information technology industry. outstanding competitor in terms of price.
IBM, GEMALTO, Teleperformance, Deloitte, Siemens, It is a center of abundant intellectual and talented
and FPT Software are among the key companies based in human resources. Here, there are more than 80 percent

107   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Hanoi

of scientists and managers in the country. According to Institute of Technology) have educational collaboration
a recent report by Ministry of Science and Technology, with well-known universities all over the world.
Vietnam has about 3,000 to 4,000 new IT students Vietnam has advantages over other countries in the
every year, of which half are software developers. Known region due to its low labor costs and good location for
for their skills and diligence, Vietnamese IT students transporting products to other countries in Southeast Asia
emphasize potential of the future software industry in and other parts of the world.
Vietnam. The business environment in Vietnam has become
With its advantageous geographical position and more friendly. This has been affirmed by chairman and
because it is an intersection of many land roads, railways, CEO of the Japan External Trade Promotion Organisation
and air routes -from and to many provinces and localities (JETRO), Yasuo Hayashi. After India and China, Vietnam
in Vietnam, as well as many other countries in the world- is Japan’s biggest outsourcing software partner. Hayashi
Hanoi is becoming a national transaction center and an stressed that more and more Japanese enterprises pay
important international transaction center. attention to Vietnam when they expand their operations
Over the past 20 years, Foreign Direct Investment overseas.
(FDI) in Hanoi has recorded enormous encouraging Vietnam now stands sixth among the economies Japanese
achievements, making funda- businesses want to expand their
mental changes in the city’s socio- sale activities in the next 3 years.
economic life. Yet, a number of Hanoi and Ho Chi Minh City It has also jumped two places to
problems have also emerged in account for over 90 percent stand at fifth place among the
FDI attraction and realization, markets where Japanese partners
particularly the risk of unbal-
of the outsourcing revenues of wants to expand research and
Vietnam.
anced economic development,
overloaded infrastructure, envi-
27 January, New York
development (R&D) activities.
However, Hayashi said, that sev-
ronmental pollution, unhealthy eral Japanese enterprises are still
competition and business, conflicts between employers concerned about business risks in Vietnam, especially risks
and employees.
“Other outsourcing conferences do not have froma good
the country’s
mix ofpoor infrastructure
Buyers and incomplete
and Sellers.
In 2008, the registered FDI reached a record high of legal system.
Most of the time it is lot of sellers. So I think, it’s
$5,091M, of which $1,456M was realized. In 2009, given
a good mix, you get to hear from
Vietnam needs to create the most favorable conditions
the buyers
the negative impactsprospective which
of the global crisis, is very
Hanoi, important”
like many . corporations so that they can produce and
for foreign
other-Global
cities and provinces,
Services saw a sharp2010
Conference decrease in the export hi-tech products here.
Attendee Know More
amount of projects, committed and realized capital. Vietnam faces some obstacles such as Internet connec-
The first ones who recognized this potential and started tions, sometimes, can be painfully slow since there is no
outsourcing to Vietnam were small- and medium-sized fiber-optic broadband network. Another drawback is the
software companies in the United States. Vietnam realized lack of fluent English speakers, though this problem can
that to receive such attention and to build a dedicated be tackled as most communication is via e-mail.
core of IT experts, there many things have to be done to Helping balance out these deficiencies are the country’s
support IT education in Saigon, Hanoi, and other cities low wages -programmers earn about one-tenth what com-
with potential in IT development. The famous universi- puter programmers make in the United States -, a young
ties in Hanoi (Hanoi University of Technology, Vietnam and highly motivated workforce and low staff turnover
National University Hanoi, Post & Telecommunications rates of about 5 percent.  GS

27 January, New York

“Phenomenal & an Excellent platform to meet lot of clients and other people from same
industry. Good exchange of thoughts and ideas. I would definitely come back year after
year and would highly recommend people out there to come and participate”.
-Global Services Conference 2010 Attendee Know More

108   GS Destinations Compendium 2010 www.globalservicesmedia.com


Ho Chi Minh City Hall

Ho Chi
Minh City
Vietnam

Home to Vietnam’s Software Parks

H
o Chi Minh City (HCMC) is the largest city Quick Facts
of Vietnam. It has a population of 7.163 mil- City Ho Chi Minh City
lion with a literacy rate of 97 percent. With a Region Southeast Asia
rising economy, well-educated populace, and Country Vietnam
modern facilities, it is considered the economic, cultural,
City population 7.163 million (2009)
scientific, and technological hub of Vietnam. It is the saf-
Average annual salary of US$15,000– US$20,000
est, fastest-growing city in Southeast Asia and is quickly software programmer (in US$)
becoming an important hi-tech center of the region. Major service providers in the IBM, Intel, France
The economic growth of the city is apparent in the city Telecom,Telstra, Compaq,
increase of GDP per capita: in 2006 the GDP per capita Siemens, Fujitsu, Acer, Hewlett
of the city was $730, in 2007 it was $ 2,100, and in 2009 Packard, Oracle, Paragon
it was $2,800, compared to Vietnam’s average level of Solutions, Cyrus Intersolf
$1,042 in 2009. Total revenue from QTSC US$100 Million
software park
Although the economic growth of the city between
2005 and 2010 averaged just 11 percent, lower than the Primary language spoken Vietnamese
set target of over 12 percent, because of the global financial Other languages spoken Chinese, English, French
crisis and economic recession, it is still a high growth rate Literacy rate 97.9 percent
compared to the general context. GDP per capita $2,800 (2009)
Outsourcing to Ho Chi Minh City generally falls into Time zone UTC/GMT +7 hours
application development and maintenance, product devel- Currency Vietnamese Dong (VND)
opment and testing. Major IT companies operating in Ho Exchange rate 1 USD = 19,565.44 Vietnamese
Chi Minh City include IBM, Intel, France Telecom,Telstra, Dong
Compaq, Siemens, Fujitsu, Acer, Hewlett Packard, Oracle, Unemployment 5.45 percent
Paragon Solutions, Cyrus Intersolf, etc.
It is home to 3 successful Export Processing Zones, 15 total revenues amounting to $100M.
industrial parks, 2 software parks, and 1 hi-tech park. These The QTSC software park is working towards attract-
parks—the Quang Trung Software Park (QTSC), Saigon ing more local and foreign companies to invest. Chu
Hi-Tech Park, and the Tan Thuan Export Processing Tien Dung, general director of QTSC, said the company
Zone—include software enterprises, dot.com companies, would make use of their experience acquired over the
and software training schools. In addition, these parks years to map out a long-term development strategy. “Our
provide residencies and favorable taxation for workers. three main goals are to attract the biggest enterprises and
The QTSC software park has been in operation for 9 nurture small ones to turn the park into Vietnam’s biggest
years with a total area of 430,000 square meters designated software producer; supply high-quality human resources
for software production, research, training, development, to help the sector take off; and create a favorable business
and distribution. When it was established in 2001, QTSC environment to help firms thrive,” Dung said.
attracted about 20 companies. Now more than 100 QTSC has become a well-known software park brand
companies are in the park with 57percent of them being in the country. “As for future development plans, I think,
foreign-invested companies. In 2009, the park reported it’s necessary to build a chain of Quang Trung Software

109   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Ho Chi Minh City

Cities in other cities and provinces or even in foreign Lack of fluent English-speaking professionals is another
countries to further promote the QTSC brand,” Le Manh problem.
Ha, director of the HCMC Department of Information While corruption remains a matter of concern in
and Communications, said. “When the QTSC brand Vietnam, government leaders say they are working to
is well developed, it will certainly attract multinationals reduce red-tapism and bureaucratic processes. Most large
whose satellite companies can follow suit by setting up companies that outsource to India and the Philippines,
shop at QTSC.” however, know how to handle this hurdle.
The largest software park in Vietnam, the Thu Thiem Vietnam may still be some years away from gaining
Software Park, is scheduled to come up by 2012 in Ho the prominence of an India, Philippines, or China, but it
Chi Minh City. has definitely emerged as a serious player in outsourcing
These IT parks will help the city in particular and market.
Vietnam in general to be an outsourcing place for other The Vietnamese government plans to invest about
enterprises in developed countries. $58M in developing the software technology and digital
Ho Chi Minh City boasts the best infrastructure in the industry by 2012. This plan will create favorable condi-
nation, including modern transportation and telecommuni- tions for domestic IT companies to develop.
cation systems. It is also the country’s center of higher edu- Vietnam hopes its information and communications
cation. There are over 80 univer- industry will comprise 8–10 per-
sities and colleges with a total of cent of the gross domestic prod-
over 400,000 students. The out- The largest software park uct in the next 10 years, accord-
sourcing companies draw most in Vietnam, the Thu Thiem ing to the government’s ICT
of their staff from graduates of Software Park, is scheduled to Development Strategy. Under
HCM City National University the strategy, Vietnam will strive
and the University of Technical come up by 2012 in Ho Chi to become one of the world’s top
Education. Ho Chi Minh City Minh City. 10 high-tech outsourcing desti-
has a young population with 65 nations for software and digital
percent of people below 35 years content production. Vietnam
of age. Salaries and cost of living in the city are lower than plans to develop 15 information technology parks to
capital Hanoi. support the country’s developing information and com-
However, foreign direct investment (FDI) flows into the munication technology industry by 2020, according to the
city have declined in 2010. According to the Department Ministry of Information and Communications.
of Investment and Planning of Vietnam, FDI into Ho Chi The software industry of Vietnam experienced a 40
Minh City in the first 4 months of 2010 is estimated at percent surge with revenues of $880M in 2009. The gov-
$526M, a drop of nearly 17 percent compared to the same ernment is also implementing a plan to improve human
period in 2009. resources in the sector. The government aims to have 30
The 4-month figure only accounted for 6.26 percent of percent of Vietnamese students ready to meet the out-
the full year’s target, the department said. The city has tar- sourcing demands of foreign markets by 2015.
geted $8.4B in FDI for 2010, or one-third of the national Deputy Minister of Vietnam, Tran Duc Lai, said the
FDI target. new information technology will offer special prefer-
The global outsourcing business relies largely on the ences to investors, in addition to offering specific tax
quality of service that is provided, rather than the talent incentives under legislation that took force in September
pool, and in this respect Vietnam has still a long way to go. 2009.  GS

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

110   GS Destinations Compendium 2010 www.globalservicesmedia.com


(Source: www.aroundaboutcars.com)

Johannesburg
South Africa

Corporate Headquarter of South Africa

J
ohannesburg is the epicenter of South Africa’s Quick Facts
financial services industry. The city is one of the City Johannesburg
40 largest metropolitan areas in the world. It Region South Africa
produces 16 percent of South Africa’s GDP and Country Middle East and Africa
accounts for 40 percent of Gauteng’s (one of the nine prov-
City Population 7,550,000
inces of South Africa) economic activity. The service and
City Average Monthly Entry Level $1,000–$1,100
other industries include IT, real estate, transport, banking, Salary (in US$) per month (BPO)
broadcast, print media, private health care, transport, and City Average Monthly Entry Level $1,500–$1,600
a vibrant leisure and consumer retail market. There exists a Salary (in US$) per month (ITO)
large skill base that can be absorbed into growing the BPO City Real-Estate Cost $125 per square feet
skills base. Johannesburg generates 16.5 percent of the Major Service Providers in the Microsoft, Call Center Nucleus,
country’s wealth and employs 12 percent of the national City IBM Innovation Centers,
workforce. Accenture, Mahindra Satyam,
More than 70 percent of South African companies SAP, Lenovo, P&G, BeyondSoft,
have their headquarters here. Many global companies TCS Design House, Direct
Channel Holding, etc.
such as Microsoft, Call Center Nucleus, IBM Innovation
Primary Language Spoken Afrikaans
Centers, Accenture, Mahindra Satyam, SAP, Lenovo,
P&G, BeyondSoft, TCS Design House, Direct Channel Other Languages Spoken English, Ndebele, Pedi, Sotho,
Swazi, Tsonga, Tswana, Venda,
Holding, etc. have set up their strategic business units Xhosa, and Zulu
here. According to DIT (Durban Institute of Technology), Literacy Rate 82 percent
ITeS-BPO export is expected to reach $12.4B by 2010
GDP Johannesburg alone accounts for
from $11.7B in 2009. 16 percent of South Africa’s GDP.
South Africa has gradually established itself as a viable Time Zone BST (UTC-3)
player in the global BPO market. Although South Africa
Currency South Africa Rand
is not competing against tier-one players such as India, $1 = 6.98 ZAR
China, and the Philippines at present, it is increasingly Unemployment 25.3 percent
becoming more attractive as a tier-two destination. With
strong industry leadership and government support, this
position can be strengthened in a significant manner. This can be ascribed to the dominance of the fast-growing
Outsourcing activity within the local market is increas- financial and business services sector in Johannesburg’s
ing. This is attributed to the increased awareness of cost economy, which has consistently outperformed average
savings and improved efficiencies associated with outsourc- growth rates. When Johannesburg’s growth is compared
ing. South Africa unlike other locations such as India and to that of other metros, the city consistently outperforms
Philippines has a well-established domestic outsourcing its counterparts. Its economy is much larger than any of
market. As a result, the country is considered to be a new the others and its Gross Value Added in 2004 was R204
player in the global offshore outsourcing market. B. The financial and business services sector, which has
Since 1996 Johannesburg has shown positive real GDP always been the cornerstone of the city’s economy, has
growth, which has outpaced the national growth rate. become relatively more important. Its economy is growing

111   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Johannesburg

faster than the population growth rate. Johannesburg is Johannesburg is a city in economic transition and it has
creating a substantial number of new jobs in the right sec- grown from a mining town into a financial and manufac-
tors. Factors that will improve the distribution of income turing capital, and later into a financial and services capita
include a steady and strong growth in employment in the and it now faces the toughest challenge of all—becoming
right sectors such as permanent formal sector jobs in sec- a knowledge capital. There is a transition underway in the
tors that pay above-average salaries and have retirement, economy of Johannesburg, away from low-skilled work,
medical and other benefits; and an increase in broad-based and towards high-skill, service-based enterprise—which
Black Economic Empowerment to increase the owner- requires access to advanced services such as telecommu-
ship of wealth. Johannesburg has nications, and high reliability
1.5-million economically active of basic services such as electric-
people out of a total population Unlike India and Philippines, ity. Johannesburg is the largest
of close to 3 million. South Africa has a well- single metropolitan contributor
An underconstruction to national economic product.
24-hour center coming up in ­established domestic National average growth in gross
Johannesburg will provide ­outsourcing market. domestic product has been 1.8
another 3,000 new jobs. The percent over the last 10 years,
new project in Johannesburg will and Johannesburg has marginal-
be operational in the ensuing 12 to 14 months, giving the ly outpaced that growth with an average 2 percent growth
country’s BPO sector the much-needed boost and help it per annum over the last decade.
to generate revenues worth over R7.4 B during 2010. The The city’s economy is dominated by four sectors, three
City of Johannesburg has the highest number of call cent- of which are service sectors. The four key sectors are as
ers - more than 360- employing some 35,000 call center follows:
agents in outsourced and captive (in-house) call centers in • financial and business services;
ICT, financial services, banking, tourism, hospitality and • retail and wholesale trade;
business-to-business. • community and social services; and
The use of wireless technology for data and communi- • manufacturing sector.
cations is on the increase. It is cheaper, easier to use and
costs less in infrastructure set up as well as maintenance. All taxation is handled through the South African Revenue
For this Johannesburg needs to offer broad bandwidth in Service (SARS). South African residents have been taxed on
conjunction with wireless technologies. It should be noted their worldwide income. This includes the income of a for-
that about two-thirds of South African companies use SAP eign-controlled company. Certain types of income from
software. outside South Africa are exempt and credit is allotted for
During recession, South Africa’s Johannesburg Stock foreign taxes paid. The tax year is 1st March to 28th (or 29th)
Exchange fell by 31 percent last year in mid-November. February. Employees’ tax is deducted at source (pay-as-you-
As a result, a lot of investors withdrew their investments. earn) and paid by employers to the authorities monthly. The
Since then South Africa’s currency has depreciated touch- tax thus deducted is a credit against the employee’s total tax
ing R9/$ for the first time in 6 years. liability as assessed by his or her annual tax return.  GS

Snapshot

➤ Johannesburg produces 16 percent of South Africa’s GDP and accounts for 40 percent of Gauteng’s (one of the nine
provinces of South Africa) economic activity.
➤ This city has the highest number of call centers - more than 360- employing some 35,000 call center agents in
outsourced and captive (in-house) call centers in ICT, financial services, banking, tourism, hospitality and business-
to-business.
➤ According to DIT (Durban Institute of Technology), ITeS-BPO export is expected to reach $12.4B by 2010 from
$11.7B in 2009.
➤ During recession, South Africa’s Johannesburg Stock Exchange fell by 31 percent last year in mid-November. As a
result, a lot of investors withdrew their investments. Since then South Africa’s currency has depreciated.

112   GS Destinations Compendium 2010 www.globalservicesmedia.com


(Source: www.infobengal.com)

Kolkata
India

IT Hub of Eastern India

K
olkata, formerly known as Calcutta, is the Quick Facts
main business, commercial, and financial hub City Kolkata
of eastern India. The capital of the state of Region South Asia
West Bengal, the city has in recent times been Country India
transformed to a major information technology hub in
City population 4,580,544 (2001)
India.
City real estate cost Commercial office space for
More and more businesses are setting up office in (US$ per sq. ft) sale: US$ 226.46–US$ 294.39
Kolkata, including international giants such as IBM, Texas per sq ft
Instruments, Cisco Systems, Intel Asia Electronics Inc, Major service providers in the Pricewaterhouse Coopers,
Deloitte, Sun Microsystems, Honeywell, PwC, HSBC city IBM, TCS, Cognizant, Skytech,
Global Technology, Capgemini, Atos Origin, Foster Lexmark, AIG, and HSBC
Wheeler, Siemens, Novell, AIG, Skytech, Lexmark, and GDP USD 150 Billion (2009)
ABN AMRO Bank. Leading the way in growth have been Primary language spoken Bengali
the Kolkata-based companies such as Serenus Infotech, Other languages spoken English, Hindi
Intelliant Technologies, Alumnus Software, Metalogic Time zone UTC/GMT +5:30 hours
Systems, TCG Software, Data-Core, UshaComm, RS Currency Rupees (INR)
Software, among numerous others. Exchange rate 1 USD = 45.3100  INR
Other big Indian software firms have already made
Kolkata their hub of operations for the eastern region living expenses it is one of the world’s major centers of
of India. Of these Wipro, TCS, Tech Mahindra, ITC business in GDP PPP (purchasing power parity) terms.
Infotech, HCL Technologies, Cognizant, Genpact, Tata Several IT-SEZ and IT parks have come up in the
Interactive Systems, CMC Limited, NIIT Technologies, city, attracting software corporations and foreign direct
Moser Baer Ltd., Aditya Birla Minacs, and Sonata Software investment in Kolkata. Kolkata today boasts of 3 Software
leading the way. Technology Parks (STP), with more coming up. The
Kolkata, being the dominant metropolitan city of east- 2,50,000 square feet standard design factory with modular
ern India, has attracted major software and telecom firms Software Technology Park I and the 100 percent export-
across India and abroad to set up their development center oriented 60,000 square feet, state-of-the-art Software
here. The Eastern Region Council of NASSCOM, the Technology Park II house some key IT players from
premier trade body and the chamber of commerce of the Europe and the Silicon Valley. Privately-owned IT facili-
IT-BPO industries in India, is situated in Kolkata. ties, like Infinity and Bengal Intelligent Park, have attract-
Owing to the recent boom in the economy of Kolkata ed big IT companies too.
and also the state as a whole, West Bengal is now the third At the operational level, the government has ensured
fastest growing economy in the country and the city’s IT ease of operations in Kolkata through Webel (West Bengal
sector is growing at a rate of 70 percent per year—twice Electronics Industry Development Corporation), which
the national average. acts as a single-window support center for all IT inves-
In 2009, Kolkata’s GDP grew to $150B, the third high- tors in the state. Webel helps companies obtain built-up
est among Indian cities. With its huge economy and cheap space on rent/lease and in the purchase of land. It also

113   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Kolkata

interacts with government bodies to help procure last- park,” Buddhadeb Bhattacharjee said.
mile connectivity, to get power connections and interacts “Ten thousand high-end jobs will be created in
with the local municipality to reduce the company’s Kolkata when the park becomes operational,” said the
exposure to bureaucratic problems. Webel has set up an CM. “We are trying to set up more such IT parks at
IT “Incubation Center” to properly utilize the huge pool Durgapur, Siliguri, and Kharagpur that will generate
of human resources and knowledge competencies that the more software jobs for fresh graduates in the state,” added
state possesses. This center provides a platform for aspiring the chief minister.
and talented software and telecom professionals in Kolkata West Bengal IT minister, Debesh Das said, “The Park
to float their own IT-start ups. The IT incubation center is a key milestone in the progress of the state’s indus-
helps turn viable ideas from talented professionals into trial development especially given that it will lead to the
business propositions. creation of 50,000 indirect jobs over and above the 10,000
In October 2010, the chief minister of West Bengal direct ones.”
Buddhadeb Bhattacharjee laid the foundation stone of East HCL Infosystems would set up a center of excellence
Kolkata IT Park at Nonadanga, in the IT Park that would serve
Kolkata, with an aim to attract as the company’s regional head-
more IT biggies and gener- quarters. Over 1,500 are expect-
ate more employment in West
With its huge economy and ed to be employed at the hub.
Bengal. cheap living expenses Kolkata Rolta chairman K.K. Singh said,
The East Kolkata IT Park is one of the world’s major “We are going to set up a soft-
will be the fourth such endeav- centers of business in GDP ware research and development
or of the West Bengal govern- unit here. We will invest Rs 250
ment. The earlier ones include
PPP terms. crore ($55.02M) and expect to
IT hubs at Salt Lake, Rajarhat generate 5,000 jobs.”
and Bantala. “Our largest IT West Bengal has been one of
companies are in Salt Lake, where 80,000 people work. the fore-runners among Indian states in attracting FDI in
Around 10,000 employees are working in the Rajarhat recent years. FDI flow into West Bengal has led to devel-
area. Then there is the IT park in Bantala. Now we have opment of infrastructure in the state. The IT companies
one in Nonadanga,” said the CM. in the state have been given special status so that they can
Approximately 1 million square feet of space would improve the infrastructure. FDI has also boosted the real
be developed in the East Kolkata IT Park. The IT Park is estate industry in West Bengal. Unemployment had been
expected to be fully operational within 2 years. The park a major area of concern for West Bengal. With the inflow
would have a Regional Skill Development Center and an of FDI, vast opportunities of employment have opened up
Infrastructure Management Center, along with network- in this state.
ing, hardware, and telecom laboratories to help generate Kolkata houses 12 universities and numerous colleges
more employment. affiliated to them. The city is home to many nationally and
“Several top IT companies, like Rolta, HSBC Electronics internationally reputed colleges and institutions aimed at
Data Processing Limited, and HCL Infosystems have supplying a highly-skilled workforce. Kolkata also has the
already evinced interest in setting up their facilities in the lowest attrition rates.  GS

Snapshot

➤ Kolkata and also the state as a whole, West Bengal is now the third fastest growing economy in the country and the
city’s IT sector is growing at a rate of 70 percent per year—twice the national average.
➤ In 2009, Kolkata’s GDP grew to $150B, the third highest among Indian cities. With its huge economy and cheap
living expenses it is one of the world’s major centers of business in GDP PPP (purchasing power parity) terms.
➤ In October 2010, the chief minister of West Bengal Buddhadeb Bhattacharjee laid the foundation stone of East
Kolkata IT Park at Nonadanga, Kolkata.
➤ HCL Infosystems would set up a center of excellence in the IT Park that would serve as the company’s regional
headquarters. Over 1,500 are expected to be employed at the hub.

114   GS Destinations Compendium 2010 www.globalservicesmedia.com


Krakow
Poland

Europe’s “Silicon Valley”

K
rakow, the second-largest city of Poland, is one Quick Facts
of Poland’s most important economic centers. City Krakow
Krakow is the technology hub for Central Region Central Europe
and Eastern Europe. It is sometimes referred Country Poland
as Europe’s “Silicon Valley.” The city is the corporate seat
City population 755,050 (2008)
of international banks, associations supporting business
Major service providers in the IBM, Capgemini, HCL, Hewitt,
activities, and chambers of commerce. city LogicaCMG, Philip Morris
Krakow is perceived as an appropriate place to conduct International, AES, Microsoft
investment and economic activity. Key service providers in Primary language spoken Polish
the city are IBM, Capgemini, HCL, Hewitt, LogicaCMG, Other languages spoken English, Japanese
Philip Morris International, AES, Microsoft. In total, Time zone UTC/GMT +1 hour
firms from the outsourcing sector employ 16,000 workers
Currency Polish Zloty (PLN)
in 50 centers within the city. Outsourcing specialties of Exchange rate 1 US Dollar = 2.87936 Polish
Krakow are: business analytics, finance and accounting, Zloty
human resources, and multilingual contact centers. Unemployment 2.8 percent (2008)
Krakow offers attractive business opportunities and the
amount of direct foreign investments is constantly increas- zero income tax over the first 6 years and 50 percent reduc-
es. The largest foreign investments in Krakow are in bank- tion thereafter till 2009. At the same time, investments
ing, industry, and trade sectors, and over the recent years under 2 million Euros warrant income tax exemptions
in IT, financial and telecommunications services. Apart matching expenditures. There are also other incentives
from the European companies, there is also considerable such as bigger depreciation write-offs. 
US investment. The largest investments in Krakow and the KTP is the city’s high-tech powerhouse providing
region include those from Affiliated Computer Services, industrial base for Krakow’s 15 higher education institu-
CapGemini, PwC Polska, IFS Poland, Airline Accounting tions and over 140 research centers. Investments pertain-
Center (Lufthansa Group), IBM BTO Business Consulting ing to IT, electronics, communications, software and
Services, Hewitt, Centrum Finansowe Tesco, Electrolux, hardware, material engineering, biotech, genetics, etc. are
Shell, Philip Morris, Exult, KPMG, Google, Motorola, encouraged in the Park.
IBM Krakow Software Laboratory, Delphi Polska, and The Krakow Technology Park consists of 4 separate
ComArch. areas: the 36-hectare Jagiellonian University Technology
Kraków Technology Park  (KTP) is one of the signifi- Park, the 30-hectare Technology Park of the Krakow
cant determinants of Krakow’s investment attractiveness. University of Technology, the 35-hectare Sendzimir
KTP  was established in 1998 as a special economic Steelworks Technology Park, and the youngest 21-hectare
zone covering a total area of 122.35 ha. Main investors Tarnow Industrial Cluster.
in the Kraków Technology Park are: Motorola Inc., RR Krakow metropolitan area is an attractive place as a
Donnelley, AMS, ComArch SA, AZ-Soft SA, Alcro- labor market with approximately 1.5 million residents.
Beckers AB, ABM SOLID SA. Entrepreneurs investing Highly motivated people with excellent qualifications are
in the KTP can avail of income tax exemptions. Capital on the job market and are ready to work immediately. The
expenditures above 2 million Euros ($2.6M) used to entail employment costs are lower in Krakow than elsewhere (for

115   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Krakow

example, 30percent less than in Warsaw). Compared to the firms. Google, IBM, Motorola, ABB, SABRE, Delphi,
other parts of the country Krakow has many advantages Fujitsu all have R&D centers in the city.
for businesses wanting to locate here, like high availability There’s a lot of offshore BPO from CapGemini,
of IT specialists and executive staff, high productivity at IBM, Motorola, Shell, ACS, Fortis Bank, UBS, Comarch,
low labor costs and flexibility and excellence, advanced Unicredito Bank, Tesco, International Paper, HSBC,
foreign language competence, friendly environment for Lufthansa, StateStreet, HCL, Philip Morris, Hewitt,
science and research and strong business connections. Alexander Mann, Hitachi, Accounting Plaza, EDF Energy,
Another advantage of Krakow is its convenient geo- UPM-Kymenne, etc.
graphic location, on the crossroads of important transporta- IBM is one of several large corporations massively
tion routes. Transportation accessibility of the city is being building its presence in the city. Since 2002, IBM has
constantly improved by the executed infrastructural invest- boosted staff in Krakow ten-fold, to more than 900 people,
ments. Convenient train connections with Warsaw and at a facility that provides finance and accounting services
other major cities and an international airport with numer- to business customers. Another 200 people work at an
ous domestic, European, and Pan-European connections are IBM software lab founded in 2005.
all very significant to the efficient conducting of business. Many European IT companies outsource their software
The intellectual potential of Krakow is created by 22 development to Poland because no communication, cul-
universities, nearly 20,000 academic lecturers (includ- tural, territorial, or quality issues occur there. Most Polish
ing approximately 1,800 pro- companies are much closer than
fessors), and 210,000 students their Asian counterparts—geo-
in higher education, more than Krakow has many advantages graphically, culturally, and in the
30,000 new graduates a year, for businesses wanting to way they do business. Poland is
8,000 IT sciences students, and only an hour ahead of the UK,
5,000 mechanical engineers. locate, like high availability of so communication is quicker,
Major universities of Krakow are IT specialists and executive simpler, and more reliable than
AGH University of Science & staff, high productivity at low it is with a country in another
Technology, Cracow University labor costs and flexibility and time zone. Wages are significant-
of Technology. There are 8 uni- ly lower in Poland than in the
versities in Krakow with IT excellence, advanced foreign UK and Western Europe. And
degrees. Krakow has a plentiful language competence,etc. Polish IT professionals have very
group of highly skilled person- strong academic background
nel in all modern sectors of the which guarantees the highest
economy, and it attracts investors that represent various level of IT developers’ education.
industries. The unemployment rate in Krakow ranks A further advantage is that Poland is now a well-estab-
among the lowest in Poland and it had slipped below 3 lished member of the EU, meaning there are no legal
percent in 2008.  obstacles to cooperate with Polish IT companies both
“We chose Krakow because of the multiplicity of tal- remotely and on site.  GS
ents and resourcefulness of knowledge, which the city can
offer,”Kristof Kloeckner, vice-president of IBM Software
Group was quoted as saying.
“We see an objective in opening similar centers in
places where there is an opportunity to employ top spe-
cialists in their fields. Krakow is such a location,” Artur
Waliszewski, Director of Google Polska, was quoted as
saying about the opening of the research and development
center in Krakow.
The economic significance of Krakow is reinforced by
the demographic potential of the region—approximately 8
million people live within a 100 km radius of the city. This
constitutes an accessible potential market. An additional
advantage is the fact that 60percent of the inhabitants of
the city are people under age 45.
Krakow is emerging as a key R&D center for many US

116   GS Destinations Compendium 2010 www.globalservicesmedia.com


KL’s symbol, the Petronas Twin Towers
(Source: wikitravel)

Kuala
Lumpur
Malaysia

The Gateway to the ASEAN Market

T
he Malaysian business process outsourcing Quick Facts
(BPO) industry would be worth roughly US$ 2 City Kuala Lumpur
Billion by the year 2012 at current pace. Kuala Region Southeast Asia
Lumpur and its surrounding urban areas form Country Malaysia
the most industrialized and economically, the fastest grow-
City Population 1,809,699 (2009)
ing region in Malaysia.
City Average Monthly Entry Level US$800–1,000
Kuala Lumpur is the capital and second-largest city of Salary (in US$) per month (BPO)
Malaysia in terms of population. Malaysia’s strong talent City Average Monthly Entry Level US$1,200–1,600
pool and advantages have placed it among the top three Salary (in US$) per month (ITO)
Shared Services Outsourcing (SSO) destinations in the City Real-Estate Cost RM720 per square feet
world. Kuala Lumpur is an ethnically diverse city with Major Service Providers in the IBM, Oracle Corporation,
a well-educated, multicultural, multilingual population. City Ericsson, Samsung, DiGi, Intel,
Even if the official language is Bahasa Malay, most people Hewlett Packard, Accenture,
speak good English. Malaysia’s outsourcing and shared Nokia, etc.
services (SSO) industry is likely to undergo a consolida- Primary Language Spoken Bahasa Malaysia
tion of sorts as it seeks to reinvent itself in the face of stiff Other Languages Spoken Cantonese, Mandarin,
competition in the global market. and Tamil. English
The city remains the economic and business center of Literacy Rate 97.5 percent
the country. Kuala Lumpur is a center for finance, insur- GDP Kuala Lumpur along with other
ance, real estate, media, and the arts of Malaysia. Kuala cities contributed 62.7 percent
to the national GDP
Lumpur is rated as an alpha world city, and is the only
global city in Malaysia, according to the Globalization and Time Zone MST (UTC+8)
World Cities Study Group and Network (GaWC). Currency Malaysian ringgit (RM)
$1= 3.1 MYR
The total current employment in Kuala Lumpur is
Unemployment 2.8 percent
estimated at around 838,400. The tertiary or service
sector forms the largest component of employment in
Kuala Lumpur, representing about 83 percent of the total corporations, Kuala Lumpur is a highly competitive manu-
compared to 71 percent in the KLC (entire Klang Valley facturing and export base. The 2011 budget has been
Region, also known as Greater Kuala Lumpur or Kuala announced against the backdrop of a robust growth of 7
Lumpur Metropolitan Area). The tertiary sector comprises percent expected for this year from 6 percent forecast ear-
finance, insurance, real estate & business services, whole- lier and set to expand by 5-6 percent next year, buttressed
sale & retail trade, restaurant and hotel, transport, storage by a superlative showing of the ringgit regionally.
and communication, utilities, personal services, and gov- Incentives have been given to boost the capital mar-
ernment services. ket through issuance of three new stockbroking licenses
Being strategically positioned as the gateway into the to eligible local, foreign, or joint-venture companies to
ASEAN market and having market-oriented economy, raise retail market participation. As for the East Coast
supportive government policies, and a large local business Economic Region (ECER), RM178 million ($57.3M) has
community that is ready to do business with international been allocated to develop industrial parks and other areas.

117   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Kuala Lumpur

The Gross Domestic Product (GDP) for Kuala Lumpur is projects in the IT field and provides incentives and grants
estimated at RM73,536 million ($23.7B) in 2008 with an for relevant projects.
average annual growth rate of 5.9 percent. The per capita Insofar as Kuala Lumpur is the capital of the nation, its
GDP for Kuala Lumpur in 2008 was RM48,556 ($15,650) economic catchments encompass the entire country. The
with an average annual growth rate of 5.9 percent. present range of human activities in the city, its infrastruc-
The city has a large number of foreign corporations and ture and buildings, its parks and monuments, its spectrum
is also host to many multinational companies’ regional of social, spiritual, recreational and entertainment facili-
offices or support centers, particularly for finance and ties, and its concentration of governmental and non-
accounting, and information governmental institutions are
technology functions. Moreover, manifestations of the city’s func-
most of the countries’ largest Malaysia’s outsourcing and tion as the capital of the nation.
companies have their headquar-
shared services (SSO) industry With the relocation of federal
ters based here. government administrative func-
Other important economic is likely to undergo a consoli- tions to Putrajaya, some diminu-
activities in the city are educa- dation of sorts as it seeks to tion of this role is likely to be
tion and health services. Kuala reinvent itself in the face of felt, but the city will remain the
Lumpur also has advantages
stemming from the high concen-
stiff competition in the global economic and business center of
the country. This is due to the
tration of educational institu- market. fact that Kuala Lumpur and its
tions located within its bounda- conurbation (KLC) form a
ries, providing a wide range of region that is the most industri-
courses. There has been growing emphasis to expand the alized and economically the fastest growing in the country.
economic scope of the city into other service activities such Furthermore, the development of the Kuala Lumpur
as research and development that supports the rest of the International Airport at Sepang, the creation of the MSC,
economy of Malaysia. The tourism sector also plays an which includes Putrajaya and Cyberjaya, and the expan-
important part in the city’s economy, providing income, sion of Port Klang have reinforced the national and inter-
employment and expanding business opportunities. As national economic significance of the city. As an interna-
an extension of this, many large worldwide hotel chains tional business center, Kuala Lumpur vies with cities such
have presence in the city. Kuala Lumpur is the fifth most as Singapore, Bangkok, Manila and Hong Kong for pri-
visited city in the world, with 8.94 million tourist arrivals mary position in the Asia Pacific Region. In realizing its
in 2008. vision to become A World-Class City, Kuala Lumpur must
Multimedia Super Corridor, Malaysia (MSC) is an address the regional, national and international perspec-
important component of the Malaysian e-strategy. It is tives, embrace the opportunities presented and define its
a dedicated 15 x 50 km corridor outside Kuala Lumpur specific role.  GS
that aims to attract global ICT companies to undertake
research, develop new products and technologies, and
export from this base. Conceptualized in 1996, the
MSC is envisioned to become a global test bed for ICT
applications. It is also intended to be the ideal growth
environment for Malaysian ICT small and medium
enterprises (SMEs) seeking to transform themselves into
world-class companies. To attract the targeted companies,
the Malaysian government has committed to the following
four promises: a Bill of Guarantees, world-class infrastruc-
ture, a suite of cyber laws, and incentives.
Some of the notable companies based in Kuala Lumpur
are IBM, Oracle Corporation, Ericsson, Samsung, DiGi,
Intel, Hewlett Packard, Accenture, Nokia, etc..
Kuala Lumpur is a very attractive place for foreign
investment due to its high infrastructure and human
capital standards, as well as the robustness of its internal
market. The city welcomes investments and productive

118   GS Destinations Compendium 2010 www.globalservicesmedia.com


(Source: media.photobucket.com)

Mexico
City
Mexico

BPO Boom Causing Ripple Effect


Throughout Mexican IT Industry

M
exico City is the capital and largest city of Quick Facts
Mexico. Known for being the most populat- City Mexico City
ed Spanish-speaking country in the world, Region Central America
Mexico boasts of a free market economy. It Country America
is the world’s 12th largest economy and has the highest per
City Population 112,468,855 (July 2010 est.)
capita income within Latin America.
City Real-Estate Cost US$5.31 per square feet (Class A) and
The recent boom in business process outsourcing US$4.79 per square feet (Class B)
(BPO) is not only creating much-needed jobs, but is also Major Service Providers in Tata Consulting, MindTree, NoShore
having a ripple effect throughout Mexico’s IT industry. the City Group, Indra, Genpact, Neoris,
Mexican IT firms are suddenly flexing their muscle on a Softtek, ACS
global stage. Primary Language Spoken Spanish (92.7percent)
Mexico has enviable human capital with respect to Other Languages Spoken Spanish and indigenous languages
BPO services such as contact center. Moreover, there (5.7 percent), indigenous (0.8
is active support from the Mexican government. Huge percent), unspecified (0.8 percent)
government incentives to set up contact centers may Literacy Rate 91.4 percent (2009)
touch all the right buttons with the contact center GDP $1.465 Trillion (2009 est.)
outsourcers companies and in-house shared services Time Zone CST (UTC-6)
organizations. Currency Mexican Pesos (MXN)
As an “alpha” global city, Mexico City is one of the $1 = 12.26 MXN
most important financial centers in North America that Unemployment 5.5 percent (2009)
is located in the Valley of Mexico. Mexico’s GDP plunged
6.5 percent in 2009 as world demand for exports dropped
and asset prices tumbled. However, with Mexico’s econo- have more limited tax powers and are not authorized
my and GDP per capita both growing at high rates now, in to levy general corporate income taxes. The federal cor-
which Mexico City’s GDP is set to at least double within porate income tax rate is 35 percent. There are no state
the 2010–2020 decade according to numerous economic taxes on corporate net income. A value-added tax (VAT)
reports. at the general rate of 10 percent is payable on sales of
Mexico’s trade regime is among the most open in the goods and rendering of services, rents, and imports of
world, with free trade agreements with over 50 coun- goods and services.
tries, including the United States, Canada and the EU. Some of the notable companies based in Mexico City
Mexico City is responsible for generating 21 percent of are Tata Consulting, MindTree, NoShore Group, Indra,
Mexico’s Gross Domestic Product, and the metropoli- Genpact, Neoris, Softtek, ACS.
tan area accounts for 34 percent of total national GDP. Mexico City is a very attractive place for foreign invest-
Government officials expect the economy to grow 4–5 ment due to its high infrastructure and human capital
percent in 2010. The principal taxes payable by individu- standards, as well as the robustness of its internal market.
als and by corporations operating in Mexico and, in cer- The city welcomes investments and productive projects in
tain cases, by foreign companies, are those levied by the the IT field and provides incentives and grants for relevant
federal government. State and municipal governments projects. GS

119   GS Destinations Compendium 2010 www.globalservicesmedia.com


(Source: media.photobucket.com)

Prague
Czech Republic

The IT Capital of Central Europe

P
rague is indisputably becoming the capital of Quick Facts
Central Europe. Many large companies have City Prague
their regional headquarters here and the city Region Eastern Europe
is an enticing investment location, despite Country Czech Republic
being more wealthy (and therefore expensive) than many
City population 1,212,097 (2007)
Western counterparts.
Major service providers in the Accenture, Cap Gemini, Siemens,
Prague is the capital of Czech Republic (CR). Prague city Honeywell, Sun Microsystems.
has a strategic location in Europe; it’s centrally located and Primary language spoken Czech
has easy transport links. Prague is often considered the
Literacy rate 99 percent
heart of Europe.
GDP per capita (recalculated - in € 42,800 (PPS) (2007)
The capital city of Prague is the largest city of the Czech purchasing power standards)
Republic. Its area is 496 sq km, which is only 0.6 percent
Time zone UTC/GMT +1 hour
of the CR’s territory, but with the population of 1,212,097
Currency Czech Koruna (CZK)
inhabitants (2007) it represents 11.7 percent of the total Exchange rate 1 USD = 18.1970375 Czech
population of the CR. Prague then markedly dominates Koruna
the population structure in the Czech Republic. Prague has
a well-developed transport and telecommunications infra- making up about 18 percent of the workforce, up from
structure. It has a highly skilled and educated workforce. 131,132 in 2008. Approximately one-fifth of all invest-
Much of the working population is qualified to degree ment in the Czech Republic takes place in Prague city.
level or higher. Prague’s economy accounts for 25 percent of the
Prague ranks among important and developed regions Czech Republic’s GDP making it the highest performing
even within the entire EU. After the 1990s a very fast regional economy of the country. According to Eurostat
transformation in a wide range of socio-economic areas (statistical office of the European Union), in 2007, its
has taken place in Prague. The city has become an attrac- GDP per capita in purchasing power standard was 42,800
tive territory for investors especially among foreign eco- € ($58,380). Prague was ranked the fifth best-performing
nomic entities, for whom it is a mark of good reputation European NUTS 2 level region at 172 percent of the
to acquire residencies within Prague. EU-27 average.
There has been a substantial improvement in the quality The city boasts skilled IT workforces and centers of
of connection of Prague to European and the worldwide excellence set up by major multinational corporations such
communication network. There is a stable and manifold as Accenture and Cap Gemini.
labor market and potential of labor force with above Extraordinary advance of Prague in economic perform-
average qualification. Quality background of educational, ance per capita is due to several key factors, namely, high
scientific, and research institutions plays an important role rate of commuting to work (in 2008 amounted to 18.5
too. percent of all employees in Prague), the concentration of
There are 800,000 employees in Prague. The number gross value added generated by the government sector,
of foreign residents in Prague has been increasing in spite the concentration of most of the services sector (banking,
of the country’s economic downturn. As of March 2010, insurance, telecommunications), a higher price level which
there were 148,035 foreign workers living in the city is not reflected in the regionally different conversions of

120   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Prague

GDP at purchasing power parity and high compensations mounting crime, bad environment, overloaded transport,
of employees. and increased costs of living for the population.
Accenture’s Europe Business Process Outsourcing Prague is still a little cheaper than most European
Delivery Center in Prague was established in 2001. capital cities for essentials such as food and transport. But
Currently, the Prague Center employs more than 1,500 for luxury goods like electrical appliances, cosmetics and
accounting, HR, and administration professionals and fashion, prices are higher here than elsewhere. 
plans call for expanding the facility in phases. Some In 2008 inflows of foreign direct investment in Czech
well-known multinational companies have established Republic were roughly $10.73B. By U.S. Embassy esti-
research and development facilities in Prague, among them mates, the United States is among the top 5 investors in
Siemens, Honeywell, or Sun Microsystems. the Czech Republic. FDI have contributed significantly
In October 2010, Cisco announced the opening of its to the CR’s economy’s strength. The stock of FDI in the
Prague Center of Excellence, which uses the latest technol- country amounts to around 50 percent of GDP.
ogy in providing sales and partner coverage to 27 countries Despite broadly favorable economic performance, long-
in Central and Eastern Europe and the Commonwealth term unemployment remains high. Thus, the Czech
of Independent States (CIS). Republic must continue to
The center is serving some 350 address the structural problems
partners and 2,500 custom- in the labor market.
ers in 27 countries. According Prague is an enticing invest- Important remaining issues
to Alexander Winkler, general ment location, despite being that still need to be addressed
manager, Cisco Czech Republic, more wealthy (and therefore include: restoring the long-term
“Cisco is investing in the Czech more expensive) than many sustainability of public finance
Republic as part of our long-term through reforms in health and
commitment to the country. We Western counterparts. pension systems; improving the
have been present in the Czech functioning of the labor market
market since 1995, and over the to increase labor mobility; and
past 15 years have established several regional functions in continually improving the business environment.
Prague. We have chosen the Czech Republic, and in partic- According to the medium-term state budget for 2012
ular Prague, for the Center of Excellence activity due to the and 2013 of the Czech government, the Czech economy
availability of educated talent, excellent communications could grow by almost 4 percent in 2013. In 2009 the
infrastructure, and the fact that it is an attractive location Czech economy fell by 4.1 percent and the average year-
for team members, both local and international.” on-year inflation was 1 percent. Unemployment calcu-
Prague has a lower unemployment rate than the rest of lated by the International Labour Organisation (ILO) was
the country. Even though jobs have declined in the manu- 6.7percent on average in 2009.
facturing sector, Prague still holds the largest industrial For 2010, the Finance Ministry expects the economy to
center in the Czech Republic. expand by 1.6 percent. The year 2010’s growth should
However, what cannot be forgotten are weaknesses: mainly be pulled by foreign trade.  GS

Snapshot

➤ Approximately one-fifth of all investment in the Czech Republic


takes place in Prague city.
➤ Prague’s economy accounts for 25 percent of the Czech Republic’s
GDP making it the highest performing regional economy of the
country.
➤ In October 2010, Cisco announced the opening of its Prague
Center of Excellence, which uses the latest technology in providing
sales and partner coverage to 27 countries in Central and Eastern
Europe and the Commonwealth of Independent States (CIS).
(Source: www.gumbopages.com)
➤ According to the medium-term state budget for 2012 and 2013 of
the Czech government, the Czech economy could grow by almost
4 percent in 2013.

121   GS Destinations Compendium 2010 www.globalservicesmedia.com


Rio de
Janeiro
Brazil

Attractive for High-value Services

B
razil has Rio de Janeiro—this seems to be one Quick Facts
of the important selling points for outsourcing City Rio de Janeiro
to the country. Region South America
The political situation in Rio is favorable Country Brazil
for outsourcing. The services sector constitutes the promi-
City Population 14,392,106
nent portion of GDP (65.52percent). Especially after
City Average Monthly Entry Level $330–$360
the discovery of oil in the Campos Basin, Rio has been Salary (in US$) per month (BPO)
pulling in more companies and investments. Rio stands City Average Monthly Entry Level $420–$440
second nationally in the financial and services sector. Rio Salary (in US$) per month (ITO)
de Janeiro has 8 out of 10 of the country’s top science and City Real-Estate Cost $500 per square foot
technology schools; it produces a large number of post- Major Service Providers in the Telemar, BR Distribuidora,
graduates and PhDs every year. This enhances Rio’s attrac- City Embratel, etc.
tiveness for high-value services. It has expertise in BPO Primary Language Spoken Brazilian Portuguese
and call centers; there are science and technology business Other Languages Spoken English, French, Spanish, and
parks; there are government financing, R&D credits, etc. Russian
The state has internationally recognized research cent- Literacy Rate 90 percent
ers, which form highly skilled technicians. The Fund for GDP US$ 46.9 Billion
Social and Economic Development (Fundes) is aimed at Time Zone BST (UTC-3)
funding working capital for new businesses or expansion
Currency Reais (BRL)
of enterprises already installed. Rio’s economy boasts of a $1 = 1.71 BRL
respectable number of IT professionals and highly quali- Unemployment 9.5 percent
fied workforce.
A new employment and income generation plan is the
recent approval of the bill establishing the Ecological and professionals are the major strengths of Rio. The average
Economic Zoning (EEZ) in Rio de Janeiro. The presence price of commercial rent in Rio is around one-third of the
of a large number of universities and research centers of price in Mumbai and Moscow. Key service providers oper-
excellence and a basic infrastructure (major telecommuni- ating in Rio are Telemar, Petrobras, AES Communications,
cations hub in the country) makes the capital a major pole Light, Furnas, InfiNet Wireless, Comtex, DBA Engenharia
of Information Technology. Brazilian currency in recent de Sistemas Limited, etc.
years has become a stable currency, and is strong against As regards call center and eBPO services, Rio is the
the US dollar and the Euro. headquarters of three of the six largest telecom companies
Chinese companies have been investing in Brazil by in Brazil. It should be important to note that application
building telecommunications and infrastructure projects. development and maintenance is the specialty of Brazilian
China continues to fuel Brazil’s economic growth. The IT programmers. The main outsourcing center in Brazil,
economic slowdown seems to have brought the two coun- other than Rio de Janerio, is Sao Paulo. The National IT
tries closer together. organization is the Sociedade de Usuários de Informática
Time zone, U.S. like culture, and an expanding e Telecomunicações.
software industry with a more than ample supply of IT Brazil is the largest economy in South America and is

122   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n Rio de Janeiro

fast emerging as a prominent player in the services globali- companies has been part of the country’s economy for
zation arena, on account of its huge technical talent pool decades. As a result, the country has a strong IT labor
and nearshore advantage. Brazil has accomplished excel- pool with deep industry specific expertise. Revenue comes
lence in applications management, infrastructure managed mainly from IT services, with 73 percent related to
services, and security technology development along with development, a higher proportion than in other coun-
multilingual BPO capabilities. tries. The Brazilian government has its aim set to become
Rio de Janeiro has the second-largest GDP in Brazil, one of the three key global IT centers in the world. Its
behind São Paulo and is the 30th goal- to increase IT-BPO exports
richest city in the world with a from $2.2B in 2008 to $3.5B by
GDP of $152B. Time zone, U.S. like culture, 2010- is close to being achieved.
It has a comparatively smaller To help drive development they
pool of educated English speak- and an expanding software have implemented numerous
ers than India or Canada. The industry with a more than initiatives, including favora-
2016 Olympic Games are com- ample supply of IT profession- ble tax reductions, government
ing to Rio de Janeiro and is als are the major strengths sponsored venture capital funds
expected to generate about $40B and IT education support.
of investments. Rio is also one of of Rio. As of 2014, there will be
the host cities of the 2014 FIFA about $200M worth of tax gen-
World Cup. eration in Rio. The expected
As per Brasscom, IT-BPO sector in Brazil comprises investment in the city by 2010–2012 is $91B. Due to the
about 7 percent of Brazil’s GDP and it is still growing at a upcoming international sporting events to be held in the
good pace. After more than four decades of development, city, besides investments from the private sector, there will
Brazil has grown to become the eighth largest market in be significant improvements in security. All this demon-
the world. Growth forecasts for the IT-BPO segment have strates that there will be a great future ahead for the city in
remained high despite the global economic crisis, turning terms of professional growth and economic develop-
over $v59.1B in 2008. Large Brazilian and multinational ment.  GS

Snapshot

➤ Rio de Janeiro has the second-largest GDP in Brazil and is


the 30th richest city in the world with a GDP of $152B.
➤ Rio stands second nationally in the financial and services
sector.
➤ The Brazilian government aims to become one of the three
key global IT centers in the world. Its goal- to increase
IT-BPO exports from $2.2B in 2008 to $3.5B by 2010- is
close to being achieved.
➤ As of 2014, there will be about $200M worth of tax gen-
eration in Rio. The expected investment in the city by
2010–2012 is $91B.

123   GS Destinations Compendium 2010 www.globalservicesmedia.com


San Jose
Costa Rica

Bridging the US and Latin America

S
an Jose is Costa Rica’s capital and the larg- San Jose – Quick Facts
est metropolitan city. It is the seat of national City San Jose
government, the focal point of political and Region Central America
economic activity, and the major transporta- Country Costa Rica
tion hub of Costa Rica. The population of San Jose is
City population 346,000
346,000.
Major service providers in the Intel, Hewlett-Packard, ArtinSof
The majority of the IT activity and free trade zones in city
Costa Rica takes place in the San Jose metropolitan area Primary language spoken English
and the adjacent cities located in the provinces of Cartago,
Other languages spoken Spanish, Vietnamese, Chinese,
Heredia, and Alajuela. and Tagalog
San José has been able to attract FDI in IT-enabled Time zone UTC/GMT -6 hours
services because of the country’s location; the legacy of
Currency Costa Rican Colon (CRC)
past investments in human capital and infrastructure, a Exchange rate 1 US Dollar = 520.253 Costa
stable political system, attractive tax and tariff conditions Rican Colon
in the Free Zones (FZs) combined with pro-active foreign
investment promotion through CINDE (foreign invest- among the cities of the Americas; the cost of goods and
ment promotion agency). services is among the lowest in the world. San Jose’s cost
San Jose has a strategic location, as a bridge between the of living ranks close to the middle when compared to 118
United States and Latin America, as well as the Atlantic cities worldwide. The cost of living in Guatemala City
and the Pacific. Proximity to the United States reduces the or Pamama City is about 14 percent higher than in San
delivery time for goods exported to the United States, and José.
it is a strategic asset for near-shoring of IT-enabled services, In 2009, 29 foreign companies entered or enhanced
especially given similar time zones. operations in the country, accounting for more than
San Jose is known for its labor force, its business envi- $304 Million in investment and creating 5,729 jobs,
ronment and the lifestyle it offers resident executives and according to the CINDE.
investors. The city’s strategic location, political stability, Costa Rica is the safest place in Central and South
and business incentives, have all contributed to millions of America for multinational companies to conduct business.
dollars in investment from multinational companies such Foreign investors remain attracted by Costa Rica’s political
as Intel, Hewlett-Packard, and ArtinSof. stability and high education levels. Costa Rica’s major eco-
Intel has the most significant technology park in San nomic resources are its fertile land and frequent rainfall, its
José. Intel’s decision to build a microchip assembly and well-educated population, and its location in the Central
testing facility in San José played a huge role in the mag- American isthmus, which provides easy access to North
nitude and nature of foreign investment flows to Costa and South American markets and direct ocean access to the
Rica, as it put the country on the map for transnational European and Asian continents.
corporations in the high-tech sector. After experiencing positive growth over the previous
San José is among the least expensive cost-of -living several years, the Costa Rican economy shrank slightly in
cities in the world and second only to Quito, Ecuador 2009 (-2.5 percent) due to the global economic crisis. The
in the Americas. San José’s prices are the second lowest economy has experienced a rebound in 2010 with a 3.6

124   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  San Jose

percent GDP growth rate. Costa Rica enjoys the region’s Rica, Foreign Trade Promotion Office (PROCOMER) of
highest standard of living, with a per capita income of the country organized the “Costa Rica Investment World,”
about U.S. $10,569 (2010 est., PPP), and an unemploy- an international investment promotion fair, in April 2010
ment rate of 6.7 percent. in San Jose. The event attracted more than 105 foreign
According to AACCLA (Association of American investors and provided networking and education through
Chambers of Commerce in Latin America), Costa Rica’s a series of panels focused on Costa Rica’s investment envi-
labor force has been rated as the most productive and ronment and target sectors.
fast learning in Latin America. Costa Rica’s workforce is Despite its many advantages, Costa Rica is not a perfect
also extremely well trained and IT-proficient. Education sourcing destination. One criticism is that its workforce
is mandatory and free until (2.1 million) is too small for the
the ninth grade, and strongly multinational IT and BPO mar-
emphasizes computer and tech- Intel’s decision to build a ket it’s targeting. San Jose with a
nology skills. The result is that population of 346,000 is the
Costa Rica has one of the high-
microchip assembly and testing only city in Costa Rica that can
est literacy rates in the American facility in San José played a support a decent-sized outsourc-
continent (95.8 percent), and is huge role in the magnitude and ing operation, as compared to
a great value proposition for IT nature of foreign investment other cities none of which have
outsourcing firms. A considera- populations over 70,000. “It’s a
ble number of people have some
flows to Costa Rica small country and that doesn’t
knowledge of English, a result work well for a growing compa-
of the introduction of foreign ny,” Mario Chaves, CEO of
language instruction in primary schools in 1994 and the Avantica Technologies, an IT services provider, was quoted
prevalence of English-speaking tourists. as saying “We didn’t want to rely on our ability to grow
Costa Rica also provides stability- economic, political only in Costa Rica, so we looked at outside locations.” His
and with respect to capital-labor relations, again mostly company Avantica currently has around 200 employees.
due to the social democratic model and strong institutions He’s looking to hire another 200, which he admits is dif-
developed in the past. Costa Rica’s main universities are ficult in Costa Rica. “Not that it can’t be done. Intel’s
the University of Costa Rica, in San Jose and the National operation has around 4,000 workers in Costa Rica, HP has
University of Costa Rica, in Heredia. Costa Rica also has 6,500 and Procter & Gamble has 1,350 – but you need
several private universities. those kind of hefty resources to attract that talent,” he had
To attract more foreign companies to invest in Costa said.  GS

27 January, New York

“Other outsourcing conferences do not have a good mix of Buyers and Sellers.
Most of the time it is lot of sellers. So I think, it’s a good mix, you get to hear from
the buyers prospective which is very important”.
-Global Services Conference 2010 Attendee Know More

125   GS Destinations Compendium 2010 www.globalservicesmedia.com


São Paulo

The “Brazilian locomotive”

S
ão Paulo is Brazil’s bustling economic and São Paulo – Quick Facts
financial center. São Paulo has a metropolitan City São Paulo
population of about 20,500,000 (2009 est.). It Region South America
is the world’s third-largest city and the largest Country Brazil
in South America. This city is also the most prosperous
City population 20 million (2009)
in Brazil, with the highest per capita income and overall
Cost of renting office space $100 per sq ft
standard of living. (Annual rent)
São Paulo has evolved from a small village into one of Average programmer’s salary R$ 1,000–R$1,800
the world’s top cities. Its proximity to the United States (in BRL)
makes it distinctly more accessible than more distant Asian Graduate’s salary (in BRL) R$2,500–R$4,000
locations. São Paulo, therefore, qualifies as a “near-shore” Major service providers in the HP, Accenture, Unisys, TCS, EDS,
location for the US market, along with Canada and vari- city Deloitte, Motorola, Intel, Nortel
ous Caribbean countries. Networks, TIBCO, Stefanini IT
São Paulo is Brazil’s most important business center. Solutions, Kaseya
With the country’s best infrastructure and a highly skilled Primary language spoken Portuguese
labor force, it can be called the “Brazilian locomotive,” Other languages spoken Japanese, Spanish, Korean
that drives the national economy. Almost every major Time zone UTC/GMT -3 hours
industry in Brazil is based there, and 15 percent of Brazil’s Currency Brazilian Real (BRL)
gross national product is generated in here. The city cur- Exchange rate 1 USD = 1.71996 Brazilian Real
rently has almost 60 percent of call center positions in the Unemployment 15.5 percent
country.
São Paulo with its ideal location and growing economy highest concentrations of software university graduates in
has become a big draw for many foreign investors. The Latin America.
Economic Commission for Latin America (ECLAC) says Brazil—with its 250,000 IT professionals, 23,000
Brazil is the top recipient of FDI in Latin America. annual IT graduates, and infrastructure capable of sup-
In November 2010, Capgemini, one of the world’s fore- porting double-digit growth—is at the heart of the IT
most providers of consulting, technology and outsourcing services supply chain in the Southern Hemisphere.
services, announced that it is growing its BPO footprint in In fact, most major U.S. players including HP,
Latin America with the expansion of its delivery centers in Accenture, and Unisys have an escalating presence in
the Campinas region of São Paulo. Brazil, which has been largely unaffected by the recent glo-
São Paulo has the greatest number of higher education bal economic slump. In June 2010, IBM announced plans
and research institutions in the country. The city has 3 for its first South American research center in Brazil, as
state and 3 federal universities, aside from a number of part of its strategy to sell technology and services to large,
private institutions. As a result, São Paulo features a great fast-growing emerging nations.
number of skilled and highly qualified professionals capa- Indian outsourcers such as Satyam, Infosys and Wipro
ble of developing the most complex applications. The city’s have been aggressively expanding in Latin America. Tata
solid technological base also enables professionals to deal Consultancy Services (TCS), for example, has 3 global
with technological innovations. São Paulo has one of the delivery centers, including an Oracle center of excellence

126   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  São Paulo

and more than 1,500 employees working in Brazil. EDS, are companies that are stopping exports because they are
Deloitte, Motorola, Intel, Nortel Networks, TIBCO, unable to find skilled labor,” says Rafael Moreira, from
Stefanini IT Solutions, Kaseya, Politec, and Nokia have the Ministry of Development, Industry and Overseas
offshore centers in São Paulo. Commerce (MDIC).
Intel’s Latin American headquarters, Intel Brazil, is The country’s objective is to increase its income six-fold
located in São Paulo and is primarily focused on sales and from software exports and tech services that amounted to
marketing. The Intel office in São Paulo is the largest Intel $3B in 2009. That means an increase in the IT contribu-
sales office in Latin America. tion to national GDP from 3.5 percent in 2010 to 5.3
According to the Brazilian Association of Information percent.
Technology and Communication Companies In 2008, IT-BPO market of Brazil turned over $59.1B,
(BRASSCOM) Brazil’s offshore outsourcing market hit including exports and in-house IT. Brazil’s IT-BPO sector
$1.4B in 2008, rising 75 per- is among the strongest and most
cent in a single year. Brazil’s mature in the world. Combined
recognition as one of the most In November 2010, Capgemini with the communications sector
promising and rapidly emerging it accounts for about 7 percent
economies makes it a natural
announced that it is growing its of Brazil’s GDP. Large Brazilian
destination to evaluate for IT BPO footprint in Latin America and multinational companies
services. with the expansion of its deliv- have been part of the country’s
By 2020 Brazil hopes to be ery centers in the Campinas economy for decades. As a result
one of the world’s top 4 in off- the country has a strong IT labor
shore IT, turning over $20B. But
region of São Paulo. pool with deep industry spe-
to achieve that goal the country cific know-how. Revenue comes
will need to overcome a number 27 January, New Yorkmainly from IT services, with 73
of challenges—one of which is to train 300,000 IT special- percent related to development, a higher proportion than
ists in the next 10 years to reduce the cost of labor. in other countries.
High rate of student dropouts from IT graduate courses The Brazilian government aim to increase IT-BPO
and “Other
high taxesoutsourcing conferences
are other barriers. There is an do not have
imbalance a good
exports frommix ofinBuyers
$2.2B 2008 toand Sellers.
$3.5B by 2010 is close
Most
between of the
supply andtime it is The
demand. lot of sellers. So
professional I think,
graduate toit’s a good
being mix,
achieved. To you
help get
driveto hear fromthey have
development
does the
not buyers prospective
meet company demands, which
because is
hevery
entersimportant” .
the implemented numerous initiatives, including: favorable
work market unprepared. “We need to produce profes- tax reductions, government-sponsored venture capital
-Global Services Conference 2010 Attendee
sionals on a large scale and quickly with a curriculum funds, and IT education support.
Know More
that meets company needs. Today firms are in great need Brazil’s economy boomed at a 9 percent annual rate
of programmers costing less. As they are unable to find in the first quarter of 2010, its fastest pace in at least 14
them they hire specialized graduates, which in turn drives years. Economists now see Brazil’s gross domestic product
up labor costs. An average programmer earns between R$ expanding more than 7 percent this year, putting it among
1,000 ($576.5) and R$1,800 ($1037.5) while a graduate the fastest-growing in the world.
earns between R$2,500 ($1,441) and R$4,000 ($2,305.6). With brisk growth and considerable natural resources,
Training capacity is a large bottleneck of Brazil. There the country is becoming a global heavyweight.  GS

27 January, New York

“Phenomenal & an Excellent platform to meet lot of clients and other people from same
industry. Good exchange of thoughts and ideas. I would definitely come back year after
year and would highly recommend people out there to come and participate”.
-Global Services Conference 2010 Attendee Know More

127   GS Destinations Compendium 2010 www.globalservicesmedia.com


Santiago
Chile

The Magnet for Americans

C
hile’s steady economic growth has transformed Quick Facts
Santiago into one of Latin America’s most City Santiago
modern metropolitan areas, with extensive Region South America
suburban development, dozens of shopping Country Chile
centers, and impressive high-rise architecture. It has very
City real estate cost Apartment for sale: US$1,720
modern transport infrastructure. per sq m
Santiago has the attributes that have made emerging Major service providers in the Polaris Software Lab, Politec,
markets attractive to outsourcers, such as cheap wages, city Evalueserve, TCS, Accenture,
dependable, state-of-the-art infrastructure, and govern- Capgemini, Equifax, Citigroup
ment incentives. Santiago contributes around 45 percent Combined IT-BPO export $300–$350 Million (2008)
to the total GDP. Primary language spoken Spanish
Santiago is the capital and the largest city of Chile. It Other languages spoken English
is considered as the administrative, industrial, commercial, Literacy rate 95.7 percent
financial, and cultural nerve center of Chile. The city has Time zone UTC/GMT −4 hours
a population of 5,822,316 with 95.7 percent literacy rate. Currency Chilean peso (CLP)
Chile has a workforce of about 7.2 million, 3.1 million of Exchange rate 1 USD = 476.8 Chilean pesos
which is in Santiago, Unemployment rate 10.8 percent (2009)
In addition to the United Nations offices, Santiago is
home to many international company headquarters for
Latin America, and the city is often the first choice for Other companies that have set up their operations in
Latin American investment. Santiago are: the Brazilian IT company Politec for SAP
In recent years, due to the strong growth and stability solutions; Evalueserve for market research, equity and
of the Chilean economy, many multinational companies IT analysis; TCS for back office functions and software
have chosen Santiago as the place for their headquarters application development; Accenture for IT consulting;
such as HP, Reuters, Procter & Gamble, Intel, Coca-Cola, Capgemini for financial services, BHP Billiton, and Shell.
Unilever, Nestlé, Kodak, BHP Billiton, IBM, Motorola, In 2009, US company Equifax opened a software lab in
Microsoft, Ford, Yahoo! among others. Santiago. Equifax selected Santiago because of the “safety
Polaris Software Lab, a specialist in Information of the city and country, political and economic stability,
Technology (IT) for the financial sector, opened a new and the knowledge of its young professionals,” says Mario
Latin American development center in Santiago in 2009. Godoy Zanni, CEO of Equifax Chile. Santiago also is a
Polaris has identified Latin America as an integral growth magnetic place for Americans, he adds. “There’s always
market for its expansion strategy. “Santiago offers quali- someone from Atlanta visiting.”
fied professionals at competitive (salaries),” said Cristian Andre Schenkel, the director and senior vice president
Basauri, the company’s senior vice president for Latin of Citigroup’s Chile Technology Services Center says
America. “We are going to recruit local talent to under- Santiago is “extremely safe by South American standards.”
stand the market. On this basis, we will implement our It’s a livable city. Citigroup has clients in New York who
products and insert ourselves into the local system,” spend 2 hours on a train to get to work. “I have a 7-minute
explained Kartik Kaushik, CEO for America. walk,” Schenkel notes. Citigroup recently expanded its

128   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Santiago

workforce there to 125; most are developing new financial literacy levels and strong educational system make these
software tools. Oracle has a 200-person IT office, with 75 graduates well suited for the IT and KPO industry. The
working on software development. It plans to double its government has introduced various programs to improve
staff in Chile before 2011. English language skills that include mandatory English
Costanera Center is a mega project in Santiago’s languages from 5th grades in the school to university
financial district. This includes a 280,000-square-meter level. On the other hand, CORFO, the investment pro-
(3,000,000 sq ft) mall, a 300-meter (980 ft) tower, 2 office motion agency of Chile has created a national register of
towers of 170 meters (558 ft) each, and a hotel 105 meters English speakers where interested individuals are evaluated
(344 ft) tall. When completed in 2012 it will be the tallest on “Test of English for International Communication”
building in Latin America. (TOEIC) score, a test that measures the capability to per-
The city has good infrastructure for the IT-BPO indus- form in a bilingual working environment.
try. It offers a large and ready talent pool. A large number There are over 130 IT-BPO companies in Santiago.
of companies source Spanish language call centers and The major IT-BPO services sourced from Santiago include
BPO services from the city. The government of Chile pro- IT services, customer support, finance and accounting,
vides financial and other support for high-end industries human resources, marketing, and technical support. The
and setting up an IT-BPO business in Chile is fairly easy. combined IT-BPO export from the city was between
The city is very well situated for $300M and $350M in 2008.
near-shore business due to simi- The World Economic Forum
lar time zone and cultural affin- ranks Chile highest among all
ity with the United States.
IT salaries are lower in Chile Latin American countries in its
Favorably located in the mid- than they are in Mexico, anoth- Global Competitiveness Index,
dle of the country, Santiago is a er near-shore option for out- citing such factors as the avail-
short distance from 2 major ports sourcing engineering work ability of scientists and engi-
and has an international airport neers. Chile has a wide business
offering departures to 187 desti- network of free trade agreements
nations. In addition, the city has with countries in Asia, Latin
efficient transport infrastructure, major banking institu- America, the European Union, and the United States
tions, and highly regarded universities. Santiago’s telecom which provides Santiago with a great opportunity as an
infrastructure is the best in Latin America with high speed outsourcing destination.
connectivity. In 2008 Chile’s outsourcing industry brought in $843M
Santiago offers significant cost advantage in terms of in revenue, of which $169M were from ITO and $198M
competitive wage-rates, and lower operating and living were from  BPO services. Chile will be exporting $5B in
costs compared with other cities in the Americas. On aver- services by 2015 according to current projections.
age, IT salaries are lower in Chile than they are in Mexico, While Chile is rising, there is little fear of it toppling
another near-shore option for outsourcing engineering India or its Latin American neighbors as an IT hub. The
work. Wages tend to be on par with those in Brazil, but software services sectors in Brazil, Mexico, and Argentina
rent averages 40 percent less in Santiago than in São Paulo. are much larger than Chile’s $820M sector. Tech centers
The Chilean government also offers incentives, including elsewhere in Latin America are expanding rapidly because
grants for IT outsourcers. of their much larger labor forces—Chile’s entire workforce
Santiago is the educational hub of the country and over of 7 million is smaller than the metropolitan populations
22,000 graduates enter the workforce each year. The high of São Paulo or Buenos Aires.  GS
Snapshot

➤ There are over 130 IT-BPO companies in Santiago. The major IT-BPO services sourced from Santiago include IT
services, customer support, finance and accounting, human resources, marketing, and technical support.
➤ Santiago offers significant cost advantage in terms of competitive wage-rates, and lower operating and living costs
compared with other cities in the Americas. On average, IT salaries are lower in Chile than they are in Mexico.
Wages tend to be on par with those in Brazil, but rent averages 40 percent less in Santiago than in São Paulo.
➤ Santiago is the educational hub of the country and over 22,000 graduates enter the workforce each year.
➤ The World Economic Forum ranks Chile highest among all Latin American countries in its Global Competitiveness
Index, citing such factors as the availability of scientists and engineers.

129   GS Destinations Compendium 2010 www.globalservicesmedia.com


Shenzhen
China

The China- Hong Kong Link

S
henzhen is a coastal city in southern Quick Facts
China.  Shenzhen is fourth on the Chinese City Shenzhen
mainland in terms of economic power and one Region East Asia
of the cities that has generated the biggest eco- Country China
nomic returns.
City population 14 million
In 2009, Shenzhen’s economy maintained a healthy
GDP per capita USD 13,581
momentum of development. GDP grew by 10.7 percent
Major service providers in the IBM, Oracle, HP, Microsoft,
to $120B, according to the city’s development and reform city Siemens, Zensar
commission. Its per capita GDP grew to $13,581, topping
Primary language spoken Mandarin
the country. Due to the global economic crisis, Shenzhen’s
Other languages spoken Cantonese, Chinese, English
foreign trade volume dropped 10.4 percent compared
Time zone UTC/GMT + 8 hours
with the previous year to $270.155 B, but still ranked first
among the nation’s large and medium-sized cities. The Currency Chinese yuan (CNY)
Exchange rate 1 U.S. dollar = 6.63979762
city has set a goal of 11 percent GDP growth for itself in Chinese yuan
2010. Unemployment 2.6 percent (2009)
Shenzhen hosts 15 percent of China’s IT industry. More
than 400 of the world’s 500 largest companies have their
offices in the city. Shenzhen is a huge software and IT serv- well-known domestic and international technology compa-
ices outsourcing base. The city is already well recognized nies. Many of them, such as King Dee, Kingdom, Tencent,
internationally as a software and IT city and companies MCM, Kejian, Oaking, Guanri, Liming, Aspire-Tech have
worldwide see this region as a place to locate when looking become tenants of the Park. Bank of China, China Mobile,
at China outsourcing. ChinaSoft, NeuSoft, Powerise, HuaSheng, QiMing, as
A number of domestic and foreign outsourcing service well as IBM, Oracle, HP, Microsoft, Siemens, Zensar,
companies take Shenzhen as an international business base Bank of Switzerland, and Orange Communications have
to accelerate the expansion of business such as IBM, Evans, invested in research and development facilities within the
Da Zhan, Peng Kai, Freeborders, CS&S, Huawei, ZTE, Software Park.
and Tencent. The Shenzhen Software Park and its member compa-
Shenzhen Software Park is an important vehicle estab- nies have targeted 3 major segment of the software export
lished by the government to support the development of market: software exporting and outsourcing, embedded
software industry of the city. The Park was founded in software, and IC design. Many multi-national software
1996 with an area of 11.5 sq km. The Park is integrated companies have used the Park for their software and IC
with Shenzhen Hi-tech Industry Park in the Nanshan design outsourcing needs. IBM operates a global services
district of Shenzhen. delivery center along with its global procurement center
The Shenzhen municipal government has also built the there. Oracle created the Oracle Technology Resource
necessary ancillary infrastructure required to support the Center in the Park to perform integration to the Oracle
Software Park, including housing, hospitals, training and platform. More than 1,500 software enterprises are settled
education facilities, libraries, and recreational facilities. in the Shenzhen Software Park, collectively employing over
This, in turn, has attracted to the Park a large number of 100,000 engineers.

130   GS Destinations Compendium 2010 www.globalservicesmedia.com


City Profile  n  Shenzhen

Shenzhen Software Park’s offshore Development Center 50,000 students on campuses citywide. The area has been
focuses on the high-end of ITO and BPO projects in the a magnet for IT engineers from all over the country. There
areas of BFI (banking, finance, insurance), TWU (telecom, are about 800,000 engineers working in IT/high-tech
wireless & utilities), and MRD (manufacturing, retail, and related areas.
distribution). The average age in Shenzhen is less than 30. About 88
The city has well-developed communication infra- percent of the total population is between the ages of 15
structure, including designated trunks for international and 59, thus forming one of the youngest labor forces in
gateway. Shenzhen is a link between the Chinese mainland the country. Labor costs are also substantially lower than in
and Hong Kong and a transport neighboring Hong Kong.
hub in coastal southern China. During the first 8 months of
Shenzhen is located less than 45 The Shenzhen Software Park 2010, China’s software business
minutes away from downtown achieved revenue of CNY828.6
and its member companies
Hong Kong. The city has an Billion ($124.7B), a year-on-
international airport that con- have targeted 3 major segment year increase of 29.8 percent
nects to 18 international cities. of the software export market: and the growth rate was 8.8
Shenzhen is the terminal sta- software exporting and out- percent higher than the same
tion for the important Beijing-
sourcing, embedded software, period of 2009, according to
to-Shenzhen railway route. In China’s Ministry of Industry and
order to attract more businesses and IC design Information Technology.
and accommodate the growing During Jan–Aug 2010,
demand of the population, new China’s software export was
roads and railways projects such as the Guangzhou- $14.4B, a year-on-year increase of 26.4 percent. The
Shenzhen Coastal Expressway and the Shenzhen-Hong growth rate was 14.6 percent lower than the same period
Kong Express Rail Link are under construction and are of last year, but 3.7 percent higher than that in the first-
expected to be completed in 2012. half of 2010. Its export of software outsourcing services
The city leads in high-tech, financial services, foreign was $1.75B, a year-on-year increase of 30.4 percent and
trade, shipping, and creative cultural industries. the growth rate was 6.7 percent lower than the same period
There are 10 universities located in Shenzhen, with of last year.  GS

Snapshot

➤ Shenzhen hosts 15 percent of China’s IT industry.


More than 400 of the world’s 500 largest compa-
nies have their offices in the city.
➤ About 88 percent of the total population is
between the ages of 15 and 59, thus forming one
of the youngest labor forces in the country. Labor
costs are also substantially lower than in neighbor-
ing Hong Kong.
➤ In 2009, Shenzhen’s economy maintained a healthy
momentum of development. GDP grew by 10.7
percent to $120B, according to the city’s develop-
ment and reform commission. Its per capita GDP
grew to $13,581, topping the country.
➤ Due to the global economic crisis, Shenzhen’s
foreign trade volume dropped 10.4 percent compared with the previous year to $270.155 B, but still ranked first
among the nation’s large and medium-sized cities.

131   GS Destinations Compendium 2010 www.globalservicesmedia.com


The Merlion, a national symbol of Singapore
(Source: Wikipedia)

Singapore
City
Singapore

Growing Into the “Trusted BPO Hub of the Region”

S
ingapore is a country that is often mentioned Quick Facts
for outsourcing. Singapore is growing at double- City Singapore
digit rates in terms of both volume and value of Region East Asia
the electronic commerce and payment business, Country Republic of Singapore
and is closest to its clients in a region that has highest
City Population 5,076,700 (2010)
growth potentials.
City Average Monthly Entry Level $1,500–$1,900
The nation is thinking big in terms of being a BPO hub Salary (in US$) per month (BPO)
in Asia. The Singapore government as well as its lead strategy City Average Monthly Entry Level $2,300–$3,300
planning and executing agency, the Economic Development Salary (in US$) per month (ITO)
Board, are hard set to push the small island nation in Asia City Real-Estate Cost $859 per square foot
to develop into a “trusted BPO hub of the region”. The Major Service Providers in the Citibank, Credit Suisse First
Singapore government has committed to develop the nation City Boston, Hewlett-Packard, IBM
into a high value-added BPO hub. Singapore recently leapt and Microsoft,
into first place in the global IT economy rankings produced Primary Language Spoken English
by nonprofit Tech-Economy.org, surpassing the United Other Languages Spoken Malay, Mandarin Chinese, Tamil
States and Sweden. Singapore earned top marks for its free- GDP S$74,925M (2010)
trade policies and visionary government. Time Zone SST (UTC+8)
Singapore boasts of a well-educated population with a Currency Singapore dollar (SGD)
highly skilled workforce and a strong pool of senior man- $1 = 1.29 SGD
agers. It has a world-class telecommunications infrastruc- Unemployment 3 percent
ture and very stable political and economic environment.
Singapore is competitive for high-end requirements. Because international trade and finance. After a contraction of 6.8
its infrastructure is so strong and its business environment is percent in the 4th quarter of 2009, Singapore claimed the
so favorable, it has fared well as an outsourcing location for title of fastest-growing economy in the world, with GDP
data center operations and network management. growth of 17.9 percent in the first half of 2010.
Although labor rates are relatively high, they are lower Singapore has great IT infrastructure and has been
than those in the United States. Singapore is recognized often used for a regional data center hub. With its available
by international agencies such as World Economic Forum, talent pool, infrastructure, and environmental advantages,
Political and Economic Risk Consultancy and Business Singapore is rapidly transforming into one of the favorite
Environment Risk Intelligence as one of the most condu- cities for investment in the Southeast Asia region. Singapore
cive places in the world to do business. To date, over 7,000 will continue to focus its efforts towards attracting high-
multinational corporations (MNCs) have established a end vertical-focused activities such as those in the financial
presence in the country, of which 60 percent have chosen services industry, IT operations and business continuity
to make Singapore their regional headquarters. Many and disaster recovery functions. With all these qualities,
have also chosen to site their global or regional IT hubs Singapore is well positioned to be the trusted hub for stra-
in Singapore. tegic IT-enabled activities such as global and regional CIO
Singapore is the world’s fourth leading financial center functions, innovation centers, and technology develop-
and a cosmopolitan world city, playing a key role in ment centers.  GS

132   GS Destinations Compendium 2010 www.globalservicesmedia.com


Palace Square, as the main square of the Russian Empire it
was the ­setting of many events of great historical significance
(Source: Wikipedia)

St. Petersburg
Russia

New Entrant into Product Development Sector

O
ften called the Northern Capital of  Russia, Quick Facts
St. Petersburg is one of the country’s major City St. Petersburg
business centers. Its close location to Western Region Eastern Europe
Europe also makes it attractive for foreign Country Russia
businesspeople. The fourth-largest megapolis of Europe, its
City Population 4,596,000 (2010 est.)
geopolitical, intellectual, economical, cultural, and histori-
City Average Monthly Entry Level $6,000
cal advantages are unique. Salary (in US$) per month (BPO)
In the product-development sub category, the city of City Average Monthly Entry Level $10,000
St. Petersburg has figured as a new entrant in the emerging Salary (in US$) per month (ITO)
city space. Unlike IT-BPO companies, product-develop- City Real-Estate Cost $96.87 per square feet
ment companies have a very niche market. The educa- Major Service Providers in the Luxoft, Intel, Sun Microsystems,
tional structure of St. Petersburg is capable of generating City Sovkomflot, Petersburg Fuel
skills required to make the city one of the most potential Company and SIBUR
outsourcing cities for product development. The strong Primary Language Spoken Russian, English
presence of offshored product-development companies Other Languages Spoken Estonian or Finnish
such as Reksoft and DataArt displays the growing activities Literacy Rate 99.4 percent
in this space. The city is known as an established destina- Time Zone MSK/MSD (UTC+3/+4)
tion for engineering and R&D services. St. Petersburg also Currency Russian Ruble (RUB)
has expertise in areas such as R&D, health-care services, $1 = 31.05 RUB
engineering services, etc. Unemployment 9 percent
Local governments provide additional incentives to IT
companies. For example, St Petersburg allows IT compa- the coming years. St. Petersburg is a strong leader in the
nies that have invested more than $1.8M in the city to ratings of the most investment-attractive regions of Russia.
enjoy a reduced profit tax rate of 20 percent (normal rate Its great intellectual, scientific, and personnel potential
24 percent) and companies whose investment in the city and stable development in the previous years gives the city
exceeds $5.6M additionally enjoy 50percent concession a comfortable atmosphere for business start-up and devel-
on property tax. opment. The government is trying to encourage economic
St. Petersburg is well ahead of the other regions of growth and assist the business community in the city.
North-West Federal Region by the basic indices of social With an increasing amount of foreign interest and
and economic development, especially in civil construc- investment in St. Petersburg, the city is fast becoming
tion and trade. A lot has been rich along with its inhabitants.
done for the development This has a great effect on property
of the transport complex, St. Petersburg has expertise prices, which has driven skywards
improvement of the industry in areas such as R&D, health- over the past few years. As per the
structure, attracting tourists, World Bank, Russia’s economy
care services, engineering
and culture development. All will see a robust recovery in 2010,
these actions have set the base services, etc. but unemployment will remain
for steady economic growth in high.  GS

133   GS Destinations Compendium 2010 www.globalservicesmedia.com


Toronto’s skyline from the island
(Source: http://pages.interlog.com/~gilgames/toskyln.htm)

Toronto
Canada

The ICT Hub with Depth and Variety

T
oronto is the technological heart and soul Quick Facts
of Canada. The city’s vital Information and City Toronto
Communication Technology (ICT) bunch has Region North America
been providing more than $20B annually to the Country Canada
economy.
City Population 2,503,281
Toronto is the commercial, distribution, cultural, finan-
City Average Monthly Entry Level $2,000–$2,400
cial, entertainment, and industrial center of Canada, as Salary (in US$) per month (BPO)
well as the banking and stock exchange center of Canada. City Average Monthly Entry Level $2,200
It should be noted that many world-leading high-tech Salary (in US$) per month (ITO)
companies are drawn to Toronto to invest and grow their City Real-Estate Cost $2 to $3 per square feet.
operations. It is the country’s main wholesale and distribu- Major Service Providers in the Accenture, Cognizant, EDS,
tion point. Ontario’s wealth of raw materials and hydro- City Infosys, LogicaCMG, TCS, Unisys,
electric power has made Toronto a chief center of industry. etc.
According to the Branham300 (2009), of the top 250 Primary Language Spoken English
Canadian ICT companies, 40 percent are headquartered Other Languages Spoken French
in the Toronto region. GDP $248 Billion
Over the past few years, the City of Toronto together Time Zone EST (UTC-5)
with other orders of government, has been working in close Currency Canadian dollar
association with ICT industry stakeholders to produce a $1=1.01 CAD
strategy for this strategic sector with the aim to become and Unemployment 9.44 percent
be recognized globally, as one of the five most advanced,
creative, and fruitful locations in the world for ICT
research, education, business, and investment by 2011. Canada. The city is an important center for the media,
ICT Toronto, a multi-stakeholder partnership was pro- publishing, telecommunications, information technol-
duced to function as an advisory and reference group and ogy, and film production industries; it is home to major
potential ICT think tank to carry out the ICT Strategy. companies such as Research In Motion, BCE, Thomson
Toronto’s leading economic sectors include aerospace, Corporation, CTVglobemedia, TELUS, Celestica, Nortel
transportation, media, arts, film, television production, Networks, CGI Group, Softchoice, MTS Allstream,
publis