India Has Most Top Global Outsourcing Cities, with Asia Coming on Strong

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As I've written before, there is no lack of offshore alternatives to giants such as China and India. And new options are emerging all the time.


Yet India still remains the primary locale for offshoring, as seen in a list of the top eight global outsourcing cities compiled by Global Services magazine and Tholons Advisory. Indian cities take six of the eight spots, with an entry from Europe (Dublin) coming in at No. 4, and the Philippines (Makati City) at No. 6, according to a Business Standard report.


India is also represented in the list of 50 emerging global outsourcing cities, taking four spots. Nineteen of those 50 cities are in Asia, while another 13 are in Central and Eastern Europe. Cebu City in the Philippines earned the top spot, followed by China's Shanghai and Beijing.


As noted in a ZDNet Asia report, this list is interesting because it stresses the importance of looking beyond a country's general strengths and weaknesses to the attributes of specific cities. Says Ed Nair, editor of Global Services:

The concept of an individual location being a "one-stop-shop" has given way to 'smart, multi, selective sourcing' models, wherein selected processes are outsourced only to the most appropriate destination.

Among the criteria used for the list: availability and quality of workforce, availability and costs of infrastructure, and the fuzzy quality of "long term potential in fulfilling demand for specific services." There's an apparent tradeoff between the complexity of a service and cost. So companies offshoring more sophisticated services can, logically, expect to pay more.


Another interesting trend: Tholons CEO Avinash Vashistha notes that client demand (and government interest, I'd add) is leading to the creation of regional "centers of excellence" such as Manila National Capital Region in the Philippines. Its BPO revenues are already half of those in India, despite the fact that its population is less than one-thirteenth of India's.


In June, I wrote about India's efforts to create 43 self-contained cities devoted to the needs of the IT outsourcing and BPO industries. The government hopes to lure workers to the cities with residential housing, education, health care, retail and recreational facilities. The cities will likely be located near airports and larger metropolitan areas.


India's government wants to shift 40 percent of the country's outsourcing business, which is currently concentrated in seven cities including Chennai and Bangalore, to the new cities by 2018. All together, it hopes the cities will create employment for some 3.5 million people. Based on a Times of India article about the initiative, it sounds as if private investors will provide much of the funding, with state governments expected to provide services such as sewage, drainage and utilities like water and electricity.