Offshore outsourcing statistics for services in 2007
February 22nd, 2008 by 
Chris Harris
A.T. Kearney compiled the Global Services Location Index (GSLI) for 2007.
Perhaps surprisingly, most of the 50 countries in the index rated comparably well on financial attractiveness. What really set India and China apart from the rest of the pack was primarily their people and skills availability scores. The two mainstay outsourcing destinations were 
the second and third rated countries for people and skills availability trailing only the US, with Germany and France filling out the top 5.
This is the fourth year the top 50 countries providing IT services and support, contact centers, and back-office support were ranked on 43 measurements that determine financial attractiveness, people and skills availability, and business environment.
This year saw the addition of two additional measurements critical to determining global competitiveness: compensation costs and relative experience of BPO analysts. The experience of IT professionals and contact center agents were already part of the index.
I decided to dig into the numbers a bit more, why is it that people and skill availability are determining the winners? It sure seems like having favorable financial & business terms should be super valuable as well. The answer is that these two other factors tend to cancel each other out. If you look at the chart below, you can see that countries who have relatively strong cost advantages tend to have less favorable business environments. In fact, the correlation between financial attractiveness and business environment was -0.81!
This tendency for the business environment & financial environment to cancel each other out, seems to be what tips the balance in favor of abundant supply of skilled people & processes. The risk of unfavorable business environment obviously impacts the overall financial opportunity for a company looking abroad. This study seems to support the idea that as policy leaders decrease the barriers for business to be conducted in their country (free trade restrictions, reliable contract enforcement, etc.) the financial incentives to go offshore tend to catch up and offset that gain.
Given the tradeoff between these two dimensions, the smart money seems to be on the countries with abundant talent supply.
Posted in Globalization, Outsourcing | 
February 24th, 2008 at 7:26 am
Great article!
What I would also happy to see in the article is a report broken by type of outsourcing services: BPO, Call Center, IT, etc.
For instance, for IT sector Russia would have much better index, I believe.
For instance, Russia is placed on the top of “resource and efficiency driven economy” countries by recent London Business School and LEGG report: http://ipolyakov.blogspot.com/2008/02/russia-is-on-top-by-it-market-growth.html .
March 2nd, 2008 at 10:55 am
[…] Harris presents Offshore outsourcing statistics for services in 2007 posted at New venture outsourcing blog. What really set India and China apart from the rest of the […]
March 5th, 2008 at 7:37 pm
[…] New Venture Outsourcing Blog had an insightful report about AT Kearney’s study on the competitiveness of various countries in shared services such as IT- and Business Process Outsourcing, call centers and the like. Chris Harris, author of the blog, digs beneath the numbers and observes, “… you can see that countries who have relatively strong cost advantages tend to have less favorable business environments.” […]
March 18th, 2008 at 1:12 am
Cost, people and their skills keep India ahead in the outsourcing business.
March 26th, 2008 at 5:51 pm
Great article!
Does this mean that most of Asian countries have much skill than other country? Or maybe just because in a Asia the labor is not that expensive? But I believe that Asians have the skills to compete in terms in outsourcing.
March 30th, 2008 at 7:13 pm
I didn’t agree about the result of top 50 countries in the index rated.,because philippines is actually at the top 3 position together with india and china.
March 30th, 2008 at 9:30 pm
Igor: Russia’s biggest problem is governmental influence. No one knows what Putin or his henchmen are going to do next. They’ll just nationalize your business if it makes too much money. They also selectively enforce property rights & contract disputes, making working there much more challenging than in other countries.
24/7: Actually, this chart says that the regulatory framework has a lot to do with it. For example many of the tax breaks, revisions in IP legislation, and property rights have had a big impact on India’s success.
va: No, this chart actually only showed that the attractiveness of the business climate (such as regulatory requirements, etc.) were anti-correlated with the labor costs. This indicates that the less favorable the external business conditions, the less businesses are willing to pay people there to work (presumably because the other conditions are causing them grief elsewhere).
riza: On what information do you think the philippines is in the top 3?
April 30th, 2008 at 12:33 am
Whereas I agree that China and India have a large number of manpower compare with the Philippines and other Southeast Asian Countries, I could not agree that India and China are better in terms of skills. Perhaps the highlight came from the fact that they are overpopulated.
April 30th, 2008 at 1:30 am
Philippines is actually the 3rd leading country in outsourcing. It’s because Filipinos are hard worker and well educated people and are capable to cope up with the new standards of this business has to offer.
May 4th, 2008 at 9:52 pm
Good day! You have a good post.Asian really have talented individuals that will able to help the IT world in growing their standards. Filipinos are hardworking and this is the best tool to improve the business well
May 7th, 2008 at 3:41 pm
[…] fact that India is a global behemoth of IT outsourcing (see link) does little to explain the culture behind the technology. After spending 3 months in India, this is […]
May 13th, 2008 at 3:24 am
Nice post!Showing the the top ten most dominating countries in the world of outsourcing. Now i have an idea who really top in business outsourcing. Thanks for a wonderful information.
June 18th, 2008 at 8:15 am
Hey there
thanks for sharing this statistics
I wonder if there’s any initial statistics for the beginning of 2008 ?
thanks anyways
June 19th, 2008 at 6:33 am
Really outstanding statistics. You may also visit our blog for news and views on the latest in outsourcing.
July 9th, 2008 at 1:05 am
I would like to know from whcih country India get maximum business it would be great if %age wise if i can get
Thanks