India tops global outsourcing nations list

India continues to top the list of outsourcing nations, with six Indian cities in the top 8 outsourcing destinations, according to a global study.

The findings released Wednesday by CyberMedia's Global Services and advisory firm, Tholons, pegged India's IT-BPO (business process outsourcing) export services revenue at US$40 billion in 2008, and listed the six Indian cities as Bangalore, Delhi NCR (national capital region), Mumbai, Chennai, Hyderabad, Pune. The other two cities are the Philippines' Manila NCR and Ireland's Dublin City.

In the list of top outsourcing nations, India came out top, with the Philippines and China among the top 5.

The study found there were minimal shifts in rankings this year compared to last year, with the global recession slowing down the pace of outsourcing activity.

Despite decrease in global FDI (foreign direct investment) from US$1.9 trillion to US$1.7 trillion, India's FDI inflow posted the largest increase globally at 46 percent in 2008, it added.

However, Ed Nair, Global Services editor, said emerging destinations are also vying for a share of the outsourcing pie. He added: "The dynamics between these destinations is ultimately determined by a host of factors, which forms the basis of this study. Also, in many ways, this study is a study in globalization at its most granular level."

Avinash Vashistha, CEO of Tholons, said the search for an outsourcing destination is not just about lower cost: "[A CIO] must consider location, risk mitigation for business, cultural affinity and scalability of the skilled workforce.

"The service providers need to think through their offerings so as to differentiate as competitive advantage is rapidly vanishing, due to cut throat competition and market saturation."

According to the report, the global outsourcing landscape has evolved significantly in the last five years. An increase in complexity and wide-scale expansion in both locations and outsourced processes has brought about differences between perceptions of offshore destination and actual location assessments, it said.