| Asia's
Top Outsourcing Cities
A survey and interview
study, "The Top 50 Emerging Global Outsourcing Cities", was
conducted recently by Global Services-Tholons Study
(http://www.tholons.com/pages/global50.asp) to identify which cities
are set to be the next hotspots for the international outsourcing
industry. Asian cities, large and smaller in size, made the cut
in the top 50 Outsourcing Cities list. The Tholons survey
examines a wide range of criteria, including scale and quality of the
workforce, education, cost, infrastructure, risk profile and quality of
life. Tholons is a leading full-service Strategic Advisory firm
for Global Outsourcing and Investment. It offers a full range of
services related to developing and executing outsourcing and
globalisation strategies.
Even though Asian cities are the ones that occupied many of the top 50 cities chart, the interesting thing is that not only the tier-1 cities in the Asia-Pacific region are ruling the outsourcing industry but also there are many tier-2 and tier-3 Asia-Pacific cities that are fast emerging as outsourcing destinations. Of the top nine emerging cities, six are from Asia: Cebu City (The Philippines), Shanghai (China), Beijing (China), Ho Chi Minh City (Vietnam), Kolkata (India) and Shenzhen (China). The new entrants from Asia are Quezon City, The Philippines (21), Jaipur, India (31), Singapore City, Singapore (36), Chengdu, China (37), and Mandaluyong City, the Philippines (45). 2008 ASIAN CITIES
IN THE TOP 50 GLOBAL EMERGING OUTSOURCING COUNTRIES
(SOURCE:
http://www.tholons.com/pages/global50.asp, October 2008)
(Table by: www.Business-in-Asia.com)
ASIA OUTSOURCING
CITIES BY FUNCTION
(SOURCE: http://www.tholons.com/pages/global50.asp, October 2008) (Table by: www.Business-in-Asia.com)
Mega Cities VS Smaller-sized Cities: As you can see from the lists above, the top outsourcing cities do not necessarily imply that the advantage is exclusive to mega cities. Smaller cities such as Ho Chi Minh City, Vietnam, has made inroads in high-value ITO and engineering services, for example. According to the survey, outsourcing to Ho Chi Minh City, which came in fourth place, generally falls into application development and maintenance, product development and testing. Key outsourcing service providers in the city include FPT Software, IBM, Harvey Nash, Luxoft and Viet Software Outsourcing. The outsourcing companies are drawing most of their staff from graduates of HCM City National University and the University of Technical Education. Vietnam's capital Hanoi was also ranked eleventh in the top 50 Emerging Global Outsourcing Cities, up one place from 2007. The report noted that the ongoing slowdown in the U.S. economy, the continuing maturation of the outsourcing model, the rise of tier-2 and tier-3 cities as delivery centers, the heightened level of competition and emergence of “global Business Process Outsourcing (BPO) providers” are some of the key ecosystem movements that all of us need to continue to closely monitor. The report also reflects the fact that today a single provider can have centers in multiple countries and cities, with each city having the optimal conditions to fulfill specific service lines. For example, software development can be done in HCMC; while customer service can be done out of Bangalore, and engineering service are delivered out of Shanghai. The one-stop-shop country model has in fact given way to the more efficient, multicity, best-of-breed city model. Further, this also reflects the increased responsibilities, which local government units now have in developing their respective cities. City officials, infrastructure providers and local stakeholders are often better able to promote, stimulate and market their city’s specific capabilities to potential out-sourcing service providers, the report noted. Therefore, the role of the city with regards to outsourcing should not be viewed as a static issue but rather as the evolution of the city the country's inherent capabilities as an outsourcing provider. Referring to HCMC for IT Outsourcing (ITO) processes, for example, highlights the coutry's strengths. One thing to note in looking at the above list both the list of established and emerging players in this industry is the failure of some countries and cities to develop, organize and market their inherant capabilities. One example here is Bangkok, Thailand, which despite its low-costs in salaries, rents, and utilities and relatively better infrastructure has not scored as high as it might on the list. Although there are many factors that drove this decision, a key deficiency has to lie with the government and to a lesser extent industry which have failed in building the necessary conditions for Thailand to at least so far build in this sector. Further, it is necessary to note that cost factors such as relatively higher rents and utility charges and rising labor costs could do much to decrease many of the current higher listed cities unless the global financial crisis and determined cost cutting helps to deflate these costs in places such as Shanghai, Bangalore, Ho Chi Minh City and Hanoi. More of our useful articles: |
