Asia dominates global outsourcing list

By Lynn Tan, ZDNet Asia
Tuesday, October 07, 2008 04:51 PM

Asian cities have bagged the first three spots in a study of top emerging destinations for global outsourcing.

Cebu City in the Philippines was ranked No. 1 on the Top 50 Emerging Global Outsourcing Cities list, followed by the Chinese cities of Shanghai and Beijing at second and third places, respectively.

Of the top 50 destinations polled, more than half, or 19 cities, are from Asia, while the rest, comprising 13 cities, are from Central and Eastern Europe.

According to the survey released Monday by IT outsourcing and business process outsourcing (BPO) media company Global Services and investment advisory firm Tholons, choosing the right city has become "more important" than choosing the country when setting up an outsourcing center.

Considerations such as the availability of resources, in terms of the quality and type of workforce, cost and the availability of infrastructure, as well as the city's "long-term potential in fulfilling demand for specific services determine its attractiveness as an outsourcing center".

"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," said Ed Nair, editor of Global Services.

The report noted that "increasing competition in the global outsourcing will make the cities more focused in identifying appropriate service lines and in developing their service-delivery capabilities".

China's rising stars
In addition to Shanghai and Beijing, the list featured four other Chinese cities (Shenzhen at 10th, Dalian at 16th, Guangzhou at 23rd and Chengdu at 37th), with three of the six cities making it to the top 10.

"Shanghai is already known as a mature destination for providing offerings such as F&A (finance and accounting), product development, R&D (research and development) and testing, and Guangzhou is known for engineering-services," the Global Services study noted. "Outsourcing services such as application development and maintenance and business analytics are now being offered from Shenzhen and Shanghai respectively."

According to the survey, Tianjin, a second tier city, has the "potential" of moving into the top 50 list.

China is "home to numerous IT and BPO services providers", including global companies such as Accenture, Infosys, IBM and Satyam, as well as globally-known local providers Augmentum, Bleum, Dextrys and Neusoft, the report noted.