Top Outsourcing Trends for Q2 2010 - Slide 8

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In contrast to Q2-2009 and the quarterly average for 2009, Q2-2010 saw a higher share of Tier-1 cities as compared to Tier-2 cities.

Tier-2/3 cities in India have become increasingly credible and are maturing rapidly. Over half of total delivery center setups during July 2009-June 2010 were in Tier-2/3 cities. Lower operating costs, incentives being offered by state and local governments, and lower competition for talent make these cities attractive.

However, the majority of delivery centers being established in these cities are by third-party providers. Captives tend to be more risk-averse and thus prefer to stay within more proven locations, where they have access to broader and larger talent pools.

India has long been a dominant outsourcing destination and that hasn’t changed, based on recent research from the Everest Group, which tracks the relative maturity of different global services destinations. Latin America and Africa saw increases in outsourcing activity in 2010’s second quarter, while activity in Eastern Europe slowed.

Click through for further insights based on Everest’s heatmaps, which look at the number of captive delivery centers and third-party delivery centers established across the globe. The heatmaps are published in Everest’s quarterly Market Vista reports, which include additional data about outsourcing activity.

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