Everest Research Institute: India Still Preferred Offshore Destination

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There are always new offshore destinations offering themselves as the "next India," countries offering less-costly labor, more specialized skill sets or other features that make them attractive alternatives to India.


While many companies are exploring new options as they increase their offshore operations, for most of them, India remains the top offshore choice.


According to a new white paper from Everest Research Institute, a majority of companies with existing offshore operations plan to expand them in the next two years. Seventy-two percent of companies with fewer than 500 FTE positions plan to add up to 500 more positions. Those with larger offshore operations plan even larger expansions, with 93 percent of companies with more than 2,500 FTEs planning to add more than 500 positions.


More than 75 percent of the survey respondents already have some offshore operations in India, and 70 percent of them plan to further expand that presence. Among the country's attractions: low cost of operations, a large labor pool and a mature outsourcing industry.


According to the white paper, other locations that should experience growth in the next two years include the Philippines, China, Malaysia, Mexico, Singapore and Brazil. After India, the Philippines is the most popular choice for expansion. Twenty-one percent of companies with existing operations there plan to expand them, and 17 percent of companies plan to establish new operations there, either with a captive operation or an agreement with a third-party outsourcer.


Buyers are worried about operational risks such as attrition levels and wage inflation in India and the Philippines. Structural risks such as the regulatory environment are a bigger concern in China.


Buyers' perceptions of Mexico as an outsourcing destination have apparently suffered due to the growth of drug-related violence in the country over the past two years. While 21 percent of buyers with an existing presence in Mexico plan to expand operations in the next two years, no companies surveyed by Everest planned to enter the country during this time frame. The white paper says this is due to enhanced security concerns, even though violence has been restricted to a few border cities and has not affected any foreign business operations.


You can check out the white paper and related research on the Everest site.