China poised to overtake India as top outsourcing destination
China poised to overtake India as top outsourcing destination
Mar 24, 2005: The latest Global Outsourcing Report has tipped China to eventually become the most popular outsourcing destination, knocking India off the top spot.
The Report was compiled by Frank-Jürgen Richter, President of Horasis: The Global Visions Community, a Geneva-based strategic advisory firm that develops scenarios related to issues of globalisation, and Mark Minevich, an international strategic advisor and principal at Going Global Ventures, a U.S.-based international consulting and venture advisory firm.
Outsourcing has become a supercharged issue, thanks to fears of job loss, but despite the political difficulties, the report says the strategy can provide huge corporate benefits in terms of productivity, prices, profits and wages.
But companies need to be able to assess the risks and benefits of each country they are considering as an outsourcing destination.
“The Report makes an important intellectual and practical contribution to addressing one of the most dramatic business trends in current history - outsourcing and offshoring - as we attempt to enact visions for a sustainable future,” said Frank-Jürgen Richter. "This report is a catalyst for identifying the next wave of winners in technology outsourcing, even before trends and problems can emerge,” added co-author Mark Minevich.
Twenty countries have emerged as the leading technology outsourcing destinations in 2005. China, Costa Rica, the Czech Republic and Hungary round out the top five countries. Australia, which is still comparatively in its infancy as an outsourcing destination compared to many of the other countries listed, does not figure in the top twenty. The Report predicts that in 2015 the top five outsourcing destination will be China, India, the U.S., Brazil and Russia.
Using two different indexes - the Global Outsourcing Index (GOI) and the Future Outsourcing Rank (FOR) - the Global Outsourcing Report 2005 contains an analytical country profile for each of the 20 economies in the study, providing a comprehensive summary of the overall IT outsourcing position. The ranking is as following:
GOI FOR 1 India China2 China India3 Costa Rica USA4 Czech Republic Brazil5 Hungary Russia6 Canada Ukraine7 Russia Romania8 Latvia Belarus9 Chile Philippines10 Romania Canada11 Ireland Ireland12 Singapore Malaysia13 Philippines Armenia14 Poland Chile15 Brazil South Africa16 Armenia Thailand17 Bulgaria Vietnam18 Ukraine Moldavia19 Israel Mexico20 Mexico Poland
The Global Outsourcing Index (GOI) is a weighted index made up of three separate ratings: the cost of doing business in each country; seven risk factors (including geopolitical, human capital, IT competency, economics, legal, cultural and IT infrastructure); and market opportunities.
The Future Outsourcing Index (FOI), which assesses the long-term (10 years) competitiveness of the top 30 future outsourcing countries, is determined from GDP growth, population growth, the quality of the labour pool and analysis from leading entrepreneurs, economists and other experts.
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