Global Competition Is Heating Up

Today’s business decisions reflect an increasingly complex set of choices. As offshore services create new opportunities for growth, they also raise new and difficult questions: issues such as the trade-offs involved and the consequences of linking together companies from very different local environments. More than ever, it becomes necessary to see beyond the fray and gain clear insights into what distinguishes the large number of offshore locations.

With this in mind, we created the A.T. Kearney Global Services Location Index TM (GSLI). It offers a snapshot for business leaders who must choose among a growing number of locations as well as the policy makers who seek to influence their decisions. Now in its fourth year, the 2007 GSLI comprises more than 40 metrics comparing the financial structure, people skills and business environment of 50 countries worldwide.

The big news from the 2007 Index is that competition is heating up: The gap between developed and emerging nations continues to narrow, as downward wage pressures in the one meet improved people skills and business environments in the other. However, it is expected to take at least 20 years before emerging markets reach the same cost levels as developed economies.

Other highlights from the 2007 GSLI include the following:

India and China continue to lead the Index. India and China continue to offer the most attractive locations for offshoring. These countries have offset rising wage costs by improving their supply of skilled workers and quality indicators. India remains the clear front-runner, but China has been catching up in several areas. University enrollment is up by more than 25 percent, and its offshore centers are adopting more international certifications.

Southeast Asian countries solidify their rankings. All six major ASEAN markets (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) now rank among the top 20 locations. These countries have improved their quality indicators, and are competing with India and China in terms of niche capabilities.

Latin American nations are on the rise. Reflecting new policy initiatives, Latin America performs well, with all five major contenders (Argentina, Brazil, Chile, Mexico and Uruguay) rising in the rankings. Brazil has surged to 5th place on the strength of its IT sector. Chile and Mexico have risen to 7th and 10th place respectively, and Uruguay makes its first appearance on the Index at 22nd place.

Newcomers outshine established players in Central and Eastern Europe. Newer contenders in Central and Eastern Europe are leaving more established countries behind. Bulgaria, Slovakia and the Baltic states are moving ahead in the Index, while the Czech Republic, Hungary and Poland have slipped or are stagnating in the rankings.

The Middle East and Africa continue to shine. Despite perceived challenges in the regions, the Middle East and Africa are becoming increasingly viable as offshore locations. Egypt, Jordan and the United Arab Emirates all place in the top 20, while Mauritius, Tunisia, Morocco and Senegal are attracting an increasing number of companies seeking francophone capabilities.

Implications from the Study

The clear message from the 2007 Global Services Location Index is that short-term cost advantages should not be the primary driver of location decisions. The key differentiator in the future will be the talent base and future projections of skilled labor—both will be imperative for companies making long-term location decisions.

Consulting Author

For more information about the study findings and the complete rankings, see www.atkearney.com or contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it .