Top 50 Emerging Global Outsourcing Cities - Tholons

globalservicesmedia.comThe gateway to the global sourcing of IT and BPO servicesSpecial ReportThe gateway to the global sourcing of IT and BPO servicesOctober 2009TOP50CITIESEMERGINGGLOBALOUTSOURCINGSponsorsPlatinumSilverA Global Services-Tholons StudyThe right delivery starts with the right serviceslocation. Watch out for this year’s top 50emerging global outsourcing cities, top 8 globaloutsourcing cities, top 5 offshore nations, next5 offshore nations, top 10 aspirants, the lists ofemerging and emerged cities by functionsAssociateOctober 2009 www. globalservicesmedia.com Research Partner GlobalServices 1

ContentsTOP50CITIESEMERGINGGLOBALOUTSOURCING04The right delivery starts with theright services location. Watch out forthis year’s top 50 emerging globaloutsourcing cities, top 8 globaloutsourcing cities, top 5 offshorenations, next 5 offshore nations, top10 aspirants, the lists of emerging andemerged cities by functionsTop 5 Offshore NationsIndia.......................................................................................................11The Philippines....................................................................................11China......................................................................................................11Ireland..................................................................................................18Brazil.....................................................................................................18Next 5 Offshore NationsCanada..................................................................................................18Russia..................................................................................................20Mexico..................................................................................................20Vietnam...............................................................................................20Poland..................................................................................................20Top 8 Global Outsourcing CitiesBangalore, India................................................................................24Delhi (NCR), India..............................................................................25Mumbai, India....................................................................................26Manila NCR, The Philippines..........................................................27Dublin, Ireland...................................................................................28Chennai, India....................................................................................29Hyderabad, India..............................................................................30Pune, India...........................................................................................31Top Established and EmergingGlobal Outsourcing Cities by Functions....... 32Top 10 Aspirants.......................................... 34Methodology............................................... 35The 2009 Destination Coverage inGlobal Services............................................37October 2009 www. globalservicesmedia.com GlobalServices 3

Special ReportThe gateway to the global sourcing of IT and BPO services4 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportTOP50CITIESEMERGINGGLOBALOUTSOURCINGA Global Services-Tholons StudyThe right delivery starts with the right services location. Watch out for thisyear’s top 50 emerging global outsourcing cities, top 8 global outsourcingcities, top 5 offshore nations, next 5 offshore nations, top 10 aspirants, thelists of emerging and emerged cities by functionsOctober 2009 www. globalservicesmedia.com GlobalServices 5

Special ReportThe gateway to the global sourcing of IT and BPO servicesBy Avinash Vashistha, Chairman and CEO, Tholons, andImrana Khan, Global ServicesThough there is no discounting the effects of thecurrent global economic downturn, the outsourcingand offshoring industry has continued to showsigns of evolution and maturity—with the industryremaining relatively dynamic and established offshore locationsshowing pronounced stability. For instance, the Philippinesincreased outsourcing revenues by 25 percent from$4.8 billion in 2007 to $6 billion in 2008 while increasing industryemployment by 33 percent to an estimated 400,000employees. On the other hand, India posted 35 percent YoYgrowth rates in revenues over the last five years reaching $40billion in IT Outsourcing (ITO) and Business Process Outsourcing(BPO) export services in 2008. In a parallel view,while a number of developing economies struggled to acquireinvestments from client nations, India’s FDI posted thelargest increase globally at 46 percent in 2008—from $25 billionto $46 billion even as global FDI flows decreased from$1.9 trillion to $1.7 trillion.The general movement of outsourcing destinations in2009 will remain minimal compared to previous years whendrastic movement across different service and value lineswere observed.With increased competition among service providersoffering similar value propositions, distinction and categorizationhas indeed become difficult. Location assessmenthas, hence, become increasingly complex and important.Today, the need to understand the delivery capability ofa potential investment site is determined and based on aplethora of ecosystem variables.Services globalization went through a turbulent phase in2008, combating the fear of losing major client markets toprotectionism and ravaged by the debilitating effects of theglobal downturn. Moreover, the impact of such movementsin the industry is expected to induce long-lasting changes.These changes are not only in the way the stakeholders in theindustry approach offshoring but also a significant paradigmThe general movement ofoutsourcing destinations in 2009will remain minimal comparedto previous years when drasticmovement across different serviceand value lines were observedshift toward the way emerging destinations are viewed.The convergence of offshore nations into regions isviewed as a possibly significant trend in the near future dueto its potential impact on global offshoring delivery models.Although a region provides a common converged areafor the services globalization industry, there is a clear needto further understand this convergence on a more granularlevel.Dropouts and New EntrantsThis year, we noticed a few cities coming in and goingDropoutsRank (2008) City Country15 Pasig City The Philippines21 Quezon City The Philippines47 San Antonio The U.S.45 Mandaluyong City The PhilippinesNew EntrantsRank (2009) City Country43 Tianjin* China44 Casablanca Morocco47 Montevideo Uruguay48 Alexandria Egyptout of the list which is a sign of the tested industry duringthe global economic crisis. Three Philippine cities were removedfrom the list as they were clustered this year withManila NCR – which remains one of the Top 8 destinations.Losers & GainersThe only city that has fallen down by more than fiveTop Gainer(s)Rank (2008) Rank (2009) Change City27 20 7 San José26 21 5 Rio de Janeiro44 39 5 GudalajaraTop Loser(s)Source: Global Services and Tholons*Tiajin: Last year, the city was identified as an aspirant city.Source: Global Services and TholonsSource: Global Services and TholonsRank (2008) Rank (2009) Change City6 15 -9 KolkataSource: Global Services and Tholons6 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportLocation Before Service ProviderBy Karen Tillyer and Stephen Bullas, eCodeWhat became apparent after viewingthe results of a recent poll on theGlobal Services Website, was theimportance for companies to seekfurther advice and direction when embarkingupon a long-term outsourcing strategy. At lastcount 70 percent of respondents were of theopinion that choosing the “outsourcing serviceprovider” should take priority over “location.”In this short article we will discuss whythis, in our opinion, is not a logical decisionand why pivotal providers such as eCODE andindeed industry research giants, such as Gartner,have been advocating an opposing viewfor many years.In these times of financial instability, it isincreasingly important to think about the costsinvolved in outsourcing a particular businessfunction. Different countries and indeed differentregions will have certain price bracketsfor overheads such as rent and labor. Certainskill sets will demand more or less in the wayof wages depending on the supply and demandfor the region. Choosing a perfect service provideris all very well, but if your chosen serviceprovider is situated in somewhere like WesternEurope or the U.S., this could bring withit a significant price tag. Furthermore eachcountry will offer different labour skill sets;for example, Malta is a prominent location forhousing multilingual outsourced functions. Itis important to look at the total availability ofyour desired skill set as well as the attritionrate before selecting a service provider. Whilstyou may find that your chosen service providerhas ample staff for your current needs, if youwanted to ramp up your operation in future,you might find that there is simply not enoughof the desired skill set in the region to enablethis, or that the cost is prohibitive comparedwith other suitable locations.Another financial consideration to look atis shipping costs and methods; do you want tobe near a port, main roads or an airport? It isall very well choosing the perfect provider butif you cannot get your goods to your customersor cannot visit your offshore team in timesof crisis, then major problems can occur andFinal Poll ResultsShould you first choose outsourcing location or partner?(%)LocationService Provider34to sort these out can be an ongoing and costlyprocess. Choosing the right environment cannot only be crucial when looking at logistics butalso many other issues such as governmentalfactors; FDI incentives, transfer fees, taxation,TUPE or other similar directives, future development,infrastructure and ICT capabilities, politicalissues and potential clash with client CSRpolicy. All such issues exist outside of a sin-gleservice provider and therefore must be consideredin the context of location.We do not dispute the importance of choosinga service provider that is compatible withyour company, but for the most part they arein abundance. We do concede, however, that ifyou are outsourcing a niche process, which requiresspecific skills, then perhaps you shouldbe looking at the service provider first as thereis a smaller chance of a service provider with theexpertise needed being situated in the desiredlocation; but even in this situation, the issuesconcerned with location should not be ignored.Expanding upon the issue of cultural fit, itmust be stressed that it is not only the businessculture that must be considered. Youcertainly need a strong relationship with theservice provider but it may also be importantthat you find a company that understands notonly your language but also the sensitivity ofyour culture and vice versa. Various regionswill denote a closer cultural affinity to yourown, and, therefore, it is important to thinkabout your business needs in the context oflocation. The same can be said for linguistics:Some countries will have a greater degree offluency / articulation / clarity in your chosen66Total Votes Polled: 143Source: Global Services Pollslanguage than others. It is particularly importantto think about this when outsourcing helpcenter or call-center operations.Time-zone differences are also locationdependant and may represent something thatcould impact your operations considerably. Forexample, if you are situated in the U.K., yourhead-quarters is in the U.S. and your serviceproviders in India it could potentially causecommunication issues between various teammembers and, in some cases, certain vitalmembers might be unobtainable at a pivotalpoint in the project. Further to this,different cultures celebrate differentholidays and have alternateworking hours. For example, many ofthe Muslim countries have a workingweek of Sunday through Thursday orSaturday through Wednesday leavingFriday for religious observance.However, sometimes the differencesin time zones can be advantageousas companies can position themselvesto have out-of-hours staffingand therefore problems such as software bugsmay be fixed overnight.All of the issues mentioned must be consideredwhen looking into outsourcing anybusiness operation and, as you can clearly see,many of the fundamental strategic issues arelocation dependant. Despite, therefore, indicationfrom the recent poll results, we wouldurge all those thinking of outsourcing to lookat location as a key factor, and if necessary toseek further guidance before embarking uponan outsourcing strategy. GSKaren TillyerStephen BullasKaren Tillyer, BusinessProcess Researcher, andStephen Bullas, ManagingPartner, eCODE, a leadingindependent advisor onnearshore and offshoreoutsourcing, with customersthroughout Western Europeand the U.S.October 2009 www. globalservicesmedia.com GlobalServices 7

Special ReportThe gateway to the global sourcing of IT and BPO servicesRegion-wise breakup of the top 50 emerging globaloutsourcing cities 2009(%)14268 4101010414Top & Next 5 Offshore NationsEstablished offshore nations with a high degree of maturityand record of successful delivery capabilities are categorizedas the Top 5 Offshore Nations. These countries typicallyhave centers of excellence across multiple outsourcingsegments and rank highly in a number of location-assessnnnnnnnnnCentral AmericaEast AsiaEastern EuropeMiddle East and AfricaNorth AmericaSouth AmericaSouth AsiaSoutheast AsiaWestern EuropeTotal Votes Polled: 143Source: Global Services and Tholonsplaces from the last year’s ranking is Kolkata. The city hasrolled down by 9 places to reach the 15th position in the2009 Top 50 Emerging Global Outsourcing Cities list.Kolkata was considered to have the potential to becomeanother hub in India, but due to the recent developmentsthere is a cognizable alteration in the way the city is perceived.Significantly increased concerns about labor risk, sociopoliticalrisk, bureaucracy and corruption have hinderedthe progress of Kolkata and the entire state of West Bengal asa whole. Some of the incidents that have contributed to this.The land problem of tech companies such as Wipro and Inofsys.Number of strikes (bands) during the last year, at leastone major strike every month. Tata plant at Singur receivedthe attention of the international media, that was the reasonfor the drop in rank last year. Apart from the deterioratingbusiness environment, the major factor is that due to therecent sequence of events and negative publicity—no customeror service provider is looking at Kolkata seriously.The rankings of other cities were more or less the same,except for San José, which ranked at the 20th position thisyear (up by seven places from the previous year) followedNearshore has become an importantcomponent of outsourcing andLatin America has become the hotspot. The region has attracted a lotof attention during the last year.However, most of its part suffers dueto the high risk componentby Rio de Janeiro (up by five places) and Guadalajara (upby five places).Nearshore has become an important component of outsourcingand Latin America has become the hot spot. Theregion has attracted a lot of attention during the last year.However, most of its part suffers due to the high risk component.San José, however, is perceived as one of the safest destinationsto do business. Costa Rica ranks as one of the safestcountries for investment in Central America, as risk ratingfirms and the Central American Monetary Council confirm.Majority of the population is fluent in English, making itthe only country in the region, which is low risk, and offersrelatively improved scalability. Other advantages like multilingualcapabilities, proximity to the U.S., Central Time Zone,good infrastructure, Spanish language capability and incentivesprovided by the government are added value, which arenow considered almost basic requirements when making animportant choice on BPO. Low corruption, exchange ratestability and geopolitical conditions in the city of San José,Costa Rica is another value proposition. Successful expansionby firms like HP, People Support, Sykes, Teletech and toan extent by IBM, Fujitsu during the last couple of years issignificant, now employing over almost 20,000 people in theoutsourcing industry. The effects of Intel locating in San José(1996) has been very significant, as the center for assembly,testing and other similar processes was established and expandedin the capital. This has had a positive ripple effect onother businesses and industries. This has also ‘upgraded’ theskills capabilities of the local labor pool.8 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportOutsourcing CityClustersWe noticed an interesting trend this year: Some of the cityclusters have started to surface. They also have some futurepossibilities to emerge as outsourcing city clusters. Theseclusters are based on the seamless nature of talent pool in theirgiven region, and the availability of talent pool in the proposedclusters are not limited or restricted to individual city limits, administrationand/ or national and international boundaries. Thefollowing are the basic qualitative and analytical factors consideredfor identifying a cluster:>> Time to Travel>> Means and Ease of Transportation>> Affinity (Economic-Social-Political-Cultural)>> Future convergence due to outsourcing activities/capacities.This is a significant development due to the fact that servicesglobalization has now reached a level of maturity where it hasDelhi NCRthe capability to influence the development of cities—this is aclassic case of globalization and its impact on the offshore landscape.Some of the city clusters categorized by regions are:>> Southeast Asia: Manila NCR>> South Asia: Delhi NCR>> Southeast Asia: Kuala Lumpur-Cyberjaya>> South Asia: Hyderabad-Secunderabad>> South America: Greater São Paulo. GSment scenarios. These five countries offer the strongestvalue propositions to clients based on the Location AssessmentPlatform and are considered as prime locations whenconsidering specific outsourced processes. These emergeddestinations will most often also have the unique advantageof scale and capacity as compared to smaller or emerginglocations.The difference between the Top 5 and the Next 5 offshorenations is most pronounced in the service-level maturity.In terms of potential, the Next 5 are not far behind, howeverthis potential is considered to be still unrealized dueto specific inhibiting factors. It also must be stated that theservice-level maturity has been taken into considerationfrom the client point of view, as client nations look at offshorenations in a distinct manner. This has been taken intoconsideration when categorizing locations. This customerperception may change or alter over time, but takes significanteffort and time on a destination’s operational front.Successful service delivery is the most significant factor inaltering customer perception.About the StudyGlobal Services and Tholons have been conducting thisstudy titled “Top 50 Emerging Global Outsourcing Cities” forthe fourth year in a row.In the first study, which was conducted in 2006, we hadidentified top 50 emerging global outsourcing, withouthaving them ranked. In the very next year, we dedicated afull team to identify and rank top 50 emerging outsourcingcities as well as top 5 global outsourcing cites. Besides themain top 50 list, the Global Services and Tholons team extendedtheir top outsourcing global cities’ list from top 5 totop 10 and also named top emerging and established outsourcingcities by functions.This year again, we have introduced a new categorynamed “Top 10 Aspirants.” The cities mentioned in this categoryare the ones that have potential to enter into the mainlist in the coming years and are being supported by theirgovernments to develop and facilitate outsourcing sectors.In addition, we have not only identified three to six establishedand emerged cities by functions but also haveintroduced three new sub categories—Animation / GameDevelopment, Health-care Services and InfrastructureManagement Services. Other categories are: ApplicationDevelopment and Management (ADM), Business Analytics,Contact Center (English), Contact Center (Multilingual),Engineering Services, Finance and Accounting (F&A), HR,Legal Services, Product Development, Research and Development(R&D) and Testing.In addition, we have also analyzed the way buyers ofservices (or client nations) look at offshore nations, and forthat purpose, we also have identified the Top 5 and the Next5 Offshore Nations. While the Top 5 are considered as matureor established outsourcing nations, the Next 5 are greatalternatives for specific types of processes and are seen asdestinations with considerable near-term potential. GSOctober 2009 www. globalservicesmedia.com GlobalServices 9

Special ReportThe gateway to the global sourcing of IT and BPO servicesTop 50 Emerging Global Outsourcing CitiesRank 2009 City Country Region Rank 2007 Rank 20081 Cebu City Philippines Southeast Asia 4 12 Shanghai China East Asia 8 23 Beijing China East Asia 10 34 Kraków Poland Eastern Europe 16 55 Ho Chi Minh City Vietnam Southeast Asia 6 46 Buenos Aires Argentina South America 14 97 Cairo Egypt Middle East and Africa 11 78 São Paulo Brazil South America 15 89 Shenzhen China East Asia 13 1010 Hanoi Vietnam Southeast Asia 12 1111 Curitiba Brazil South America 17 1312 Dalian (Dairen) China East Asia 18 1613 Chandigarh India South Asia 9 1214 Prague Czech Republic Eastern Europe 20 1415 Kolkata India South Asia 5 616 Santiago Chile South America 19 1817 Colombo Sri Lanka South Asia 7 1918 Coimbatore India South Asia 21 1719 Johannesburg South Africa Middle East and Africa 25 2020 San José Costa Rica Central America 29 2721 Rio de Janeiro Brazil South America - 2622 Budapest Hungary Eastern Europe 28 2523 Toronto Canada North America - 2224 Guangzhou (Canton) China East Asia 22 2325 Belfast U.K. Western Europe 24 2426 Mexico City Mexico Central America - 3027 Kuala Lumpur Malaysia Southeast Asia 31 3328 Warsaw Poland Eastern Europe 26 2829 Jaipur India South Asia - 3130 Brno Czech Republic Eastern Europe 27 2931 St. Petersburg Russia Eastern Europe 32 3232 Accra Ghana Middle East and Africa 33 3433 Chengdu China East Asia - 3734 Bucharest Romania Eastern Europe 41 3835 Bratislava Slovakia Eastern Europe 38 3536 Singapore Singapore Southeast Asia - 3637 Monterrey Mexico Central America 44 4138 Moscow Russia Eastern Europe 40 3939 Guadalajara Mexico Central America - 4440 Sofia Bulgaria Eastern Europe 39 4041 Brasília Brazil South America 42 4342 Glasgow City U.K. Western Europe 30 4243 Tianjin China East Asia - -44 Casablanca Morocco Middle East and Africa - -45 Halifax Canada North America 34 4846 Tallinn Estonia Eastern Europe 45 4647 Montevideo Uruguay South America - -48 Alexandria Egypt Middle East and Africa - -49 Ljubljana Slovenia Eastern Europe 47 5050 Kyiv Ukraine Eastern Europe 46 49Source: Global Services and Tholons10 GlobalServices www. globalservicesmedia.com October 2009

AdvertorialInterview of Country RepresentativeWe need to continue to invest in humancapital development programsHow is the Philippines economy growingpresently, and what are the projections forthe immediate future?The Philippine economy is faring better thanmost in the ongoing global financial crisis.Remittances from overseas Filipino workerscontribute to this resiliency.The continuedgrowth of the IT-BPO industry also helpssustain economic activity and makes up forzero growth in other major export sectors,such as semiconductors and electronics. Astrong and prudent banking sector, followingreforms after the Asian financial crisis of thelate 1990s, with minimal exposure to failedglobal financial institutions also kept thebusiness environment stable in the face ofglobal uncertainty.The World Bank has projected a GDP growthof 1.9 percent in 2009 and 2.8 percent in 2010.Business Monitor International projections forPhilippine GDP are 1.5 percent for 2009 and2.6 percent for 2010.Do you observe scaling up of BPOoperations in the country?There are over 600 IT-BPO companies in thePhilippines. Some of the notable new entrants(within the last year) are Startek, Stream(recently merged with eTelecare), andCognizant. Surveys show that mostcompanies expect to expand within the yearby about 10-15 percent. Some smallercompanies are planning growth of up to 200percent within the year. Among the largecompanies that have announced expansionplans are Convergys,TeleTech,Teleperformance, Sitel, and StarTek.In what areas is the country improving theexisting infrastructure?Real estate developers have either completedor are building world-class BPO structures,providing adequate office space in majorlocations. Telecommunications companiescontinue to upgrade and expand theirnetworks to ensure reliability, redundancy,and to provide more location options tooperators.The government (national andlocal) continues to upgrade and expandtransport infrastructure.People are a key asset in this industry.What measures are the industry and thegovernment taking to ensure quality oftalent?The industry and government work togetherto spread awareness of the benefits of acareer in the IT-BPO sector.The governmentprovides subsidies for short-term trainingwhich industry distributes and monitors.Minimum employment rates after trainingby training companies or industry playersare tracked and only those who maintainhiring rates of 60 percent or more are givenadditional subsidies.This $8.4 millionprogram has resulted in 43,000 traineesbeing hired in the industry in 2008 and 2009.What about talent building at theuniversity level?Industry works with universities and collegesto incorporate short-term training programsin the curriculum.This program, called theAdvanced pre-Employment TrainingProgram, makes tertiary graduatesimmediately employable on graduation.From a pilot program involving five schoolslast year, the program is scaling up to reach50 tertiary institutions by next year. Industryis also working with top-tier universities topromote post-graduate courses in BPOmanagement to address the demand formid-level managers.Industry and government are also workingto roll out a national competencyassessment test that prospective employeesOscar Sanez ~CEO, BPAPcan take to gauge their readiness to applyfor a job in the industry.This test is aimed atstreamlining the recruitment process.What measures do you think the sectorneeds to adopt to stay competitive inthe global market today?We need to continue to invest in humancapital development programs andincrease investment in campaigns toaddress negative perceptions of doingbusiness in the Philippines. We need tourge and support the telecommunicationsindustry in its efforts to upgrade andexpand its networks.We need to educatelegislators and other government officialson regulatory requirements for theindustry to remain globally competitive.Weneed to advocate for reforms that wouldstrengthen the business environment forthe industry and reduce risks for operatorsand investors.Global Services / www.globalservicesmedia.com

The Republic of the Philippines, anarchipelago of over 7,000 islands, is areservoir of natural resources.AdvertorialThe Philippines FactfileThe fertile lands and rainforests have been a source of revenue for the Philippines.In the 1980s, the country realized that away from the verdant countryside, therelies another big resource - the city-based large pool of English-educated people.With this talent base, the IT-BPO sector was born in the ’80s.The Philippines has all the ingredients that go into making a country an outsourcing destination ofchoice.The demographic profile is the country’s main competitive advantage with a literacy rate of92.6 percent (The CIA World Factbook 2007). It is one of the highest among competing countriesin the IT-BPO space.The Social Weather Stations (SWS) , a highly credible research company,reported in 2008 that 60 percent of Filipino college graduates think in English, 72 percent speak inEnglish and 83 percent write in English. However, in terms of graduates of science and technologyinstitutes for IT-related work, the Philippines has some catching up to do with India and China.Theservice orientation, work ethics, and cultural adaptability in this multi-ethnic country have gone along way in building the outsourcing industry.Besides people, the Philippines offers investors an enabling business environment with world-classinfrastructure in terms of office space, telecom network, power, connectivity, and transportation.The cost competitiveness that the country offers global clients makes the Philippines a compellingoutsourcing destination. The Philippines is the most competitive in English-language customerservice; for non-voice services, the industry is currently seeing rapid growth.The back-office andKPO sector more than doubled in 2008, from US$ 400 million to US$ 830 million, and is continuingto expand especially in F&AO, HRO, and LPO. IT, animation, transcription, engineering, gamedevelopment, publishing, creative, and other niche services are attracting attention from bothestablished and new markets.at a glanceCurrency: Philippine PesoMain industries: Agriculture, food processing,textiles and garments, manufacturing of electronicsand automobile parts, mining, tourism, IT-BPO and fishingLiteracy rate: 92.6%Languages spoken: Filipino, English and eightmajor dialectsInternational airport: Metro ManilaGDP growth (World Bank): 1.9 % in 2009 and2.8 % in 2010Quick look at the IT-BPO sectorGrowth: One customer service contact centerin 1997 to 600+ companies in 2008Total number of employees: 400,000Countries that outsource business to the Philippines: NorthAmerica, Europe, Australia and New Zealand, Japan, the MiddleEast, Korea, and other countriesKey verticals: Healthcare, energy, telecommunications andentertainmentSome big players: TeleTech, Accenture, Convergys, SPi, Sitel,Stream/eTelecare, Sykes Asia, Aegis PeopleSupport,Teleperformance,TELUS, IBM Daksh, IBM Business Services, HSBC,Hinduja TMT, Infosys, Wipro, Deutsche Knowledge ServicesKey competitive advantages: Large pool of English-speakinggraduates, domain expertise, service orientation, work ethic,cultural adaptability and fit, infrastructure and connectivity, costcompetitiveness, and supportive environmentMain cities: Metro Manila, comprising 16 cities, plus over 30 citiesand towns outside Metro Manila.Emerging locations: Next Wave Cities outside Metro ManilaGlobal Services / www.globalservicesmedia.com

AdvertorialOpportunities and Future Potentialsa bright futureThe foundation that was built in the ’80s has begun to offer rich dividends. The contribution of the IT-BPO sectorto the country’s GDP is growing. The knowledge industry is creating jobs for thousands of Filipinos and hasstimulated growth in many other sectors, leading to the overall development of the country. The buoyancy inthe Philippines IT-BPO sector is slated to continue in the years ahead.By end-2008, the IT-BPO export industry inthe Philippines had contributed US$ 6.061billion in revenues, which accounted for fourpercent of GDP.The number of peopleemployed in this sector was 372,000. Everydirect job in this sector has helped create anestimated 2-3 indirect jobs.There are over 600companies exporting services toorganizations around the world.The industryhas helped in the development of othersectors such as telecomm-unications, realestate, consumer services and retail, food,transportation, training and education,insurance, banking, and industry-supportsectors.In the short term, the Business ProcessingAssociation of the Philippines (BPAP) has settargets of 20 percent growth by end-2009,followed by 26 percent growth in 2010, and27 percent in 2011. Growth targets are both interms of revenue and employment, thoughrevenues will grow faster as the sector shiftsto higher-value services.The Philippines willsustain its position as a preferred offshorelocation for English-language services,particularly in customer service. Companieswill use this leading global position to expandinto non-voice, complex, and higher-valueoutsourced services. In the medium andlong-term, the Philippines will provide awhole range of IT-BPO services. In the next 5-10 years, non-voice services may overtakevoice services in terms of market share.So far, Metro Manila, which comprises 16cities, has been the hub of IT-BPO activitiesin the Philippines. Outside Metro Manila, thesector has significant presence in over 30cities and towns. The government, workingclosely with the private sector, is developingwhat it call the Next Wave Cities as ideallocations for IT-BPO companies outsideMetro Manila. Government and otherstakeholders are working on building thehuman resource and infrastructurecapabilities of these cities.The government has declared IT-BPO apriority industry and has brought inprograms and policies to boost investment,like income-tax holidays and formation ofeconomic zones.The government is helpingindustry build and sustain its keycompetitive advantages, whether it’s inexpanding the telecom network, subsidizingtraining to increase employability of theexisting talent, supporting the marketing ofthe IT-BPO sector, or running investorassistanceprograms.To channelize theefforts, the government has created theCommission of Information andCommunications Technology (CICT) as thelead agency to ensure government supportfor the IT-BPO sector.The future of the sector looks bright.Theindustry hopes to grow in all fields—voicecustomer service, IT, animation,transcription, engineering, and gamedevelopment. Back-office and KPO arelikely to lead in terms of growth rates andwill eventually become as large as thecurrent voice-BPO field—with the potentialto eventually surpass the voice sub-sector.Oscar R. SanezPresident and CEOBusiness Processing Association of the PhilippinesThe umbrella association of the IT-BPO industryin the PhilippinesContact: info@bpap.orgGlobal Services / www.globalservicesmedia.com

Global Services / www.globalservicesmedia.comB&M Global Services Manila, Inc.AdvertorialClient TestimonialsBaker & McKenzie has been a pioneer in theuse of offshoring to reduce the overall cost ofservice delivery to clients and to maintainoperational efficiency. In 2000, the firmestablished the first law firm captive BPOcenter in the Philippines, Global ServicesManila (GSM), to initially provide documentmanagement and administrative support tothe firm’s 68 offices.Today, around 500 GSM employees are anintegral and growing part of our firm.Theteam provides a broad range of back officeand front line services, with many suchservices operating on a 24/7 basis.This is byfar the largest captive offshore service centerof any global law firm. Our GSM staff workfrom attractive offices in the heart of Manila’smain business district, and they are directlyconnected to the rest of our firm throughtechnology, firm culture and reporting lines.Not only are services delivered typicallyassociated with a BPO setting (IT support,finance support, document support), but thecenter is seen as an ideal location to sourcespecialized staff (law graduates, financialmanagers, and project managers) whobecome individual contributors to theworldwide organization.As a law firm, it is important that our servicecenter staff are Baker & McKenzieemployees, not independent contractorsand/or employees of third-party vendors.This was we are able to maintainconfidentiality and the highest standards ofquality control.The creation of the captive service center inManila has been highly successful becauseof the nature of the Manila labor market.Young and skilled employees are availablein abundance. Moreover, the level ofEnglish proficiency is extremely high.Weare able to source other language skills(currently five languages supported).University trained employees are eager tobuild a career with a professional servicesfirm that offers a global perspective andcareer opportunities. Invariably our localoffices are impressed with the dedicationand energy brought to the table by ourManila service center colleagues.Joeri J. TimpExecutive DirectorB&M Global Services Manila, Inc.StarTek, Inc.StarTek, Inc. is a New York Stock ExchangelistedBPO firm that selected the Philippinesas the first operations site in Asia. StarTekspecializes in high value customer caresolutions for the communications andtechnology sectors. Headquartered in Denver,Colorado (US), the company provides theseservices from 19 operational facilities.Wewere impressed with the level of governmentsupport for investors in the Philippines.StarTek completed the construction of a78,000 square-foot facility in Makati City inSeptember 2008.The delivery center has acapacity of 1,100 customer carerepresentatives.We selected the Philippinesfor the state-of-the-art delivery centerbecause of the country’s highly educatedtalent pool, world-class telecominfrastructure, and competitive labor rates.By opening a facility in the Philippines, weare able to provide our clients with theflexibility of a new quality delivery channelfor customer management solutions andback office support. Our Philippine facilityhas been highly successful and is held inhigh regard by our clients.Larry JonesPresident and CEOStarTek, Inc.Wipro BPO, PhilippinesThe Philippines has emerged as a topoutsourcing destination due largely to itsstrong higher education system.Theuniversities supply the industry with highquality human resource whose education is inline with industry needs, spoken English skillsand customer service orientation issignificantly better than other Asianoutsourcing hotspots. Additionally, thePhilippines has a cultural affinity to US clients.The strategic direction of government isanother key factor.The priority and focusaccorded to this industry nationally and theincentive package offered through thePhilippine Economic Zone Authority (PEZA)are significant investment magnets. Mostimportantly, the one-stop facilitation for allregulatory issues through the PEZA isextremely helpful for new entrants.The presence of internationally competitivereal estate, telecom and professionaleducation sectors has been another keycatalyst for the emergence of Philippines asan outsourcing hotspot.The well-structured,transparency and high standards ofprofessional ethics, not to mention, theefficiency and responsiveness, I encounterin my everyday dealings with all ourexternal stakeholders make doing businesshere truly a pleasure.Romit GuptaCountry HeadWipro BPO, Philippines

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Special ReportThe gateway to the global sourcing of IT and BPO services4IrelandIreland has established itself as one of the premier shared servicescenters in the world, delivering value for locators with itsexcellent infrastructure and various shared services expertise (andplatforms). The country has evolved from being a regional supportcenter to becoming a regional hub for shared service centers in thelast decade. Its proximity and affinity to the U.K. (its second-largestclient market) has helped the country establish as a nearshore centerfor many European customers.Business and Technology park, IrelandBrazil 5Brazil is the largest economy in South America and is fast mergingas a major player in the services globalization arena, duein part to its huge technical talent pool and nearshore advantage.Brazil has achieved excellence in Applications Management, InfrastructureManaged Services and security technologies developmentalong with multilingual BPO capabilities. The high concentration ofpost-graduates and PhDs also enhance the county’s attractivenessfor high-value services such as R&D and engineering services outsourcing.As the strongest member of the MERCOSUR, Brazil alsohas a dominant role in the macroeconomics of the region. GSIT and BPO park, BrazilNext 5 Offshore NationsHi-tech nation Canda1CanadaAn interesting characteristic of Canada’s outsourcing industryis evidenced in the fact that despite its relatively higher costscompared to other nearshore destinations south of the U.S., such asMexico and Costa Rica—Canada remains an attractive investmentsite for service providers. This is due to the wide array of outsourcedservices the country provides which includes low-end services incustomer support to high-value shared services centers. However,the country’s niche service continues to be of high-value servicesin FAO, engineering services as well as ITO-related processes in applicationsdevelopment and management, testing and R&D. Severalarea clusters in the country house outsourcing hubs such as Toronto,Halifax, Calgary, Montreal and Vancouver.Montreal, Quebec, Canadauu page 2018 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportOctober 2009 www. globalservicesmedia.com GlobalServices 19

Special ReportThe gateway to the global sourcing of IT and BPO servicesTower, RussiaNestle Duilding, MexicoOffice Duilding, VietnamKWK Promes Poland2RussiaRussia continues on the path of becoming one of the leaders for hitechR&D outsourcing in the world. Russia’s deepening service deliveryexpertise and rich talent pool have made the country a researchfactory for top organizations like Intel, IBM, Motorola, Samsung andGoogle. Being a part of the Eastern European outsourcing region hasalso enabled Russia to collectively share the niche service characteristicfor the offshoring and outsourcing industry. The country, however,stands out in the region due to its capacity to fulfill large-scale, highvalueservices, though the processing of such services are coming atan increasingly higher cost (as compared to smaller Eastern Europeandelivery locations).Mexico 3With a business landscape centered on manufacturing and historicallycatering to the U.S. market, Mexico has slowly addedoutsourced services into its business portfolio. The country is consideredto be one of the Next 5 offshore destinations—an attribute owedto its favorable nearshore characteristics. Outsourced services in thecountry started with voice-based services catering to both English andSpanish speaking customers. This attribute—the provision of multilingualcapabilities—distinguishes it from Asian competitors such asIndia and the Philippines.4VietnamVietnam’s economic growth over the last several years has been invaluabletowards its emergence as a Next 5 Offshore Nation. Forinstance, net FDI inflow to Vietnam reached $6 billion in 2007, up from$2.3 in 2006. Further, even as the global economic crisis took full swingtowards the end of 2008, Vietnam’s GDP grew by a decent 6.2 percentby year-end, just down from 8 percent posted in 2007. The country’seconomic dynamism is also attributed to its rapidly maturing businessenvironment. Vietnam is perceived as one of the more vibrant destinationsfor engineering services outsourcing and software developmentservices in the Asian region.Poland 5Poland is emerging as a premiere nearshore shared services centerfor Western European and Scandinavian client markets. With itscapabilities in serving the full spectrum of services in both ITO andBPO spaces—Poland has emerged as arguably the strongest competitorin the region for a spot in the Top 5 Offshore Nations list. Whileother countries in the region struggle to develop and build a scalable/employable talent pool, Poland’s population of almost 40 million andworld-class education system—has successfully positioned its placeamong the top offshore nations. GS20 GlobalServices www. globalservicesmedia.com October 2009

Special ReportThe gateway to the global sourcing of IT and BPO servicesTop 8 Global Outsourcing CitiesDespite the tremendously changed global economic dynamics, the Top 8 Global OutsourcingCities list notices no change this year. It continues to be dominated by Indian outsourcinglocations, with only two non-Indian locations (Dublin and Manila)Rank 2009 City Country Region Rank 2007 Rank 20081 Bangalore India South Asia Top 5 Top 82 Delhi NCR India South Asia Top 5 Top 83 Mumbai India South Asia Top 5 Top 84 Manila NCR The Philippines Southeast Asia Top 5 Top 85 Dublin Ireland Western Europe Top 5 Top 86 Chennai India South Asia 1* Top 87 Hyderabad India South Asia 2* Top 88 Pune India South Asia 3* Top 8Source: Global Services and TholonsRanked among 2008 top 50 emerging global outsourcing cities22 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportOctober 2009 www. globalservicesmedia.com GlobalServices 23

Special ReportThe gateway to the global sourcing of IT and BPO servicesQ&AMukesh Aghi, Chairman and CEO, Steria (India)“Awesomecosmopolitan city”How do you perceive Bangalore as anoutsourcing destination?Even when outsourcing hadn’t taken offin India, Bangalore was known for itsexcellence in education and infrastructure.Moreover, the city has an added advantageof defense support. The presence ofinstitutions like IIS (Indian Institute ofScience) and DRDO ( Defence Research andDevelopment Organization) adds value tothe talent pool in the city.What are the other factors that signifythe city as a “talent and IT hub”?The cosmopolitan culture in Bangalore isincredible. It’s an awesome cosmopolitancity. The youth is attracted to the citybecause of its lively pub culture andamazing weather, any time of the year. Ibelieve that the people in the city are moreadaptable as compared to big cities likeDelhi. It would be unfair not to mention thesafety of women in Bangalore. The femaleworkforce is more than willing to do nightshifts in a city like Bangalore because of thelow crime rate. Thus, highly efficient laboris easily available and enthusiastic to work.However, the city needs to keep pacewith the increasing crowd by handling itsinfrastructure carefully. Otherwise, it isanticipated that there will be a trend toinvest in smaller Indian cities instead. GS— By Diksha DuttaBangalore, IndiaBangalore needs no introduction in the global outsourcing community. Thecity continues to be in the top slot of the Top 8 Global Outsourcing Citieslist for the fourth consecutive year. Despite changed economic and outsourcingdynamics, the city continues to be as charming as ever.Amidst the after effects of Satyam scam, low and stagnant pay packages ofIT professionals, and the not-so-improving infrastructure problem, Bangalorestill survives as the Silicon Valley of India. Big three service providers—Infosys,TCS and Wipro—in the city continue to attract major chunk of global buyers.The city came into focus way back in 1991 as an IT hub with the support ofSoftware Technology Parks of India and soon developed its BPO capabilitiesas well. Bangalore has grown from low-end ITO and BPO such as coding anddata-entry processes to now doing high-end ITO and BPO such as embeddedsystems and voice-based technical support respectively.Many global firms have also set up their outsourcing capabilities in the city.For example, Simbiosys Bio, the U.S.-based biotechnology firm, opened a centerin Bangalore in 2006. HP’s subsidiary Global E-business Operations in thecity provides finance accounting solutions with a focus on HR, supply chainand business analytics. Blue Vector is a radio frequency identification technologymanagement appliances provider with an engineering and design centerin Bangalore. Visionet has a mortgage-processing center in the city catering totop banks in the U.S.However, the attrition rate in the city is a concern. The ball park numberfor ITO companies in Bangalore is around 15 to 30 percent. BPO has a higherrange due to the large spectrum of services, around 40 to 80 percent.The city is the technical hub for semiconductors due to the presence ofa large number of semiconductor companies, design and engineering firms,research facilities, and such. It now has the headquarters for one of the leadingsemiconductor consortiums – Indian Semiconductor Association. Theprominent Global semiconductor companies in Bangalore are Intel, Samsung,Toshiba, Texas Instruments and ST Microelectronics.Magma,SpringSoft, Icon Design, D’gipro and CMR are the main EDA vendors.In addition, firms like Wipro, TCS, Patni, Larsen & Tubro eEngineeringSolutions, Infosys, Infotech, Quest, Mahindra Satyam, ABB, HCL, GeometricSoftware, NeilSoft, IBM, Cadence Design Systems, to name a few have competenciesin design automation / CAD and other engineering services.Bangalore could undoubtedly claim tohave the highest number of captives acrossThe city came intofocus in 1991 asan IT hub with thesupport of SoftwareTechnology Parksof India and soondeveloped its BPOcapabilities as wellthe globe. Intel, Microsoft, Oracle, SAP, Cisco,Google, Yahoo, HP, Motorola, Siemens, Samsungare among the ITO sector. BPO / KPOwould cover Citi, Reuters, HSBC, GoldmanSachs, Dell and JP Morgan.There have been noticeable changes in theattitude of service providers after the economicdownturn shaking. Their emphasis has shiftedfrom FTE-based (Full-time Employees) pricingto output-based pricing, which gives clientsmore worth for the work they outsource. Mostrecently, Mahindra decided to pay the savingsfor the entire project upfront to retain theirlargest and most critical client BT.GS24 GlobalServices www. globalservicesmedia.com October 2009

Delhi (NCR), IndiaThe gateway to the global sourcing of IT and BPO servicesTill the time outsourcers’ destination search remains at the country level,undoubtedly India is their top of mind choice. And when their searchgets deeper and reaches to the next level, which is finding best locationwithin India, Delhi (NCR) emerges as their second choice after Bangalore.These two Indian cities have different outsourcing advantages to offer.If Bangalore’s strength lies in high-tech talent pool due to abundance ofeducational institutions in the city, Delhi is far better in terms of its BPOcapabilities, especially contact centers. Delhi (NCR), the national capitalregion, which is formed of three cities Delhi, Noida and Gurgaon, offer aconducive eco-system for business analytics, finance and accounting, softwaredevelopment, product development, engineering services and contactcenter services in English.According the Nasscom (National Association of Software and ServicesCompanies) figures, software and services exports contributed $40 billionto Indian revenues in 2008. Of which Delhi NCR contribution stood from17 to 18 percent.The major advantage of Delhi is its fast growing educational setups,which attract graduates from all over the country giving access to 400,000technical graduates in India.The city’s entry-level labor cost is $320 in the IT sector and $22 to $240in the BPO sector. It is home to prominent firms like IBM, Microsoft, Intel,Oracle, Accenture, HP, Amdocs, Capgemini, SAP, Siemens, Motorola, Delland Indian players such as Infosys, TCS, Wipro.However, the city faces problems of political disturbances from time totime, although it has a stable state government. The law and order and securityfor women are its major concerns. Like any other Indian city, realestate in the capital city became very expensive. BPOs faced high attritionrates due to recession. Hiring was frozen for a long time but the situationhas improved drastically during the last couple of months. The city is stilltackling with huge traffic jams, which creates a lot of chaos.Harsh Singh Lohit, Chairman, National Association of Software and ServicesCompanies (Nasscom) Regional Council NCR and MD, Headstrongadds, “Nasscom has taken up five initiatives in Noida for which we are goingto the government of UP to ask fortheir help to develop strong infrastructureas we are the significant contributorto the economy. Noida’s positioning isso powerful that its design and embeddedservices are after Bangalore in India.Product development and BPO are itsother strong areas.”The city has a large contact-centerindustry, which is in competition withthe Philippines. Nasscom is confidentthat the city has a lot of potential to growand become the best outsourcing destinationin India due to massive amountof investment going into the developmentof infrastructure. With metro joiningNCR region by the end of next yearwould be a boon to the city. GSThe major advantageof Delhi is its fastgrowing educationalsetups, which attractgraduates from allover the countrygiving access to400,000 technicalgraduates in IndiaSpecial ReportHarsh Singh Lohit, Chairman, Nasscom RegionalCouncil NCR and MD, Headstrong“An attractivedestination”Q&AHow did Delhi NCR develop over time?There was a time when all IT was in Delhi,and there was nothing in Noida andGurgaon but over a decade, it emergedas an attractive destination. At present,it has got a lot of strength.What has been the impact of recessionon the city’s business environment?The impact of recession was largelypositive. There were excess ofexpectations, compensations, demandfor real estate due to recession,which resulted in dropping the priceof real estate dramatically. Now, thecommercial and residential propertycould be purchased easily.The entire business industry has gone fora massive rationalization of its businessmodels and its business costs. It doesnot mean cutting electricity, salaries,expenses but it means rethinking theentire business model that how doesthe IT Industry make money under theadverse circumstances where businessis less, the customers are payingless. All these factors have forced thetechnology industry to become efficient.Bubbles have gone away. We are goingto optimize our cost. GS— By Pratibha VermaOctober 2009 www. globalservicesmedia.com GlobalServices 25

Special ReportThe gateway to the global sourcing of IT and BPO servicesQ&ANeeraj Bhargava, CEO, WNS“Quality of talent isexcellent”What challenges did your company facein the past five years.We have witnessed a biggest problem ofpower and transportation, which needs tobe addressed by the government. Over thepast five years, the real estate cost havesoftened which came as a respite.What are the reasons to set up a centerin Mumbai? And how do you utilizethe destination to improve on youroutsourcing capabilities?Mumbai has good infrastructure and highqualitytalent pool. This makes Mumbaian attractive destination for providingBPO services, and it is because of theseadvantages, we opened our headquarterin Mumbai.Our organization currently has over 23,000full-time employees, delivering servicesfrom 22 global delivery centers spreadacross 3 continents. A large portion of theworkforce operates from India. Employeesare predominantly between the age groupof 25 to 35 years.The quality of talent is excellent acrossthe board for BPO services, which helpsus cater for over 200 customers includingBritish Airways, Travelocity, Aviva, BritishGas, T-Mobile. GS— By Pratibha VermaMumbai, IndiaMumbai, the financial capital of India, is not only home to Bombay StockExchange, which is the oldest stock exchange in Asia, but also is the centerof excellence for its outsourcing capabilities in financial services, ApplicationDevelopment and Management (ADM) and health-care services.India’s largest city Mumbai generates 5 percent of the country’s total GDP.The emerging services areas in Mumbai are engineering services, media andentertainment outsourcing, animation and game development.The city’s GDP is $41.3 billion, and its per capita income is $1,010, which isalmost three times the national average.The city exhibits an established position in the global outsourcing spaceowing to various factors like infrastructure, a large talent pool of around60,000 in BPO sector and developed policies. It had traditionally owed itsprosperity largely to its textile mills and its seaport till the 1980s, which werereplaced by industries employing more skilled labor such as engineering,health care and IT.India’s IT-services industry was born in Mumbai in 1967 with the creationof TCS. The first software export zone SEEPZ was set up here way back in 1973,the old avatar of the modern day IT park. There was a time when more than 80percent of the country’s software exports happened out of SEEPZ.There are around 30 registered units of electronic and hardware firmsand around 74 registered units of electronics and software firms in SEEPZat present. SEEPZ is relatively a safer area in Mumbai because there isn’t toomuch of new business or growth that is happening currently. Other parts ofMumbai are witnessing bigger growth and, hence, are more riskier.Mumbai is the preferred choice of outsourcing buyers for financial servicesBPO sector, contract research, which is in the growing mode and legal serviceswhich has a major center in the city. It is easy to find quality resourcesin Mumbai but costlier than other cities. ADM is the core strength of this cityand the new model, which is growing here is marketing and financial analytics.Some niche skills which are prominent here are engineering services andresearch and development.The city exhibitsan establishedposition in theglobal outsourcingspace owing tovarious factors likeinfrastructure, alarge talent poolof around 60,000in BPO sector anddeveloped policiesTop services providers like TCS, IBM, Infosys,Wipro, HCL, Mahindra Satyam, Accenture,CSC, ACS, Caliber Point, Firstsource, Convergys,Genpact, WNS Global Services, Minacs, Cognizantand EDS are present here.Estimated exports from Mumbai in softwareservices (including IT and IT-enabledservices) in 2008 were $3.0 billion to 3.6 billion.However, if Mumbai continues to growat 63 percent (as last year), it is expected totouch $ 4.1 billion.Being home to many financial institutions,the city faced a considerable impact of recession.Tholons Analyst Saugata Sen Gupta says,“The captive centers in Mumbai suffered badlydue to economic slowdown. The job marketbecame sluggish. A lot of engineers faced salarydeductions, and layoffs. The market has notyet recovered. We see some hopes in the end offirst quarter of 2010.”GS26 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesManila NCR, The PhilippinesManila is the central business district of the Philippines and contributes 65percent to the country’s economic growth. According to Business ProcessingAssociation of the Philippines (BPA/P), the country’s export revenue is$6 billion, which is growing at an annual rate of 36 percent.The Philippines’ recognition as an attractive outsourcing destination cameto pass largely because of the development of the Manila NCR outsourcing sectorover a period of time. Factors that drive outsourcing in the city are availabilityof English-speaking talent with strong cultural affinity to North America.Manila’s 270 higher education institutions churn out about 90,000 graduatesevery year. Of which 23 percent (about 22,000) are technical graduates while77 percent (about 75,000) are non-technical graduates. This is why, Manila’sstrength lies in contact-center outsourcing services, distantly followed by smallerniche back-office processes, FAO, software development and engineering design,transcription services and animation and graphics design.Although its non-voice BPO segment is relatively smaller compared to thevoice-based BPO segment, its employee base has posted a YoY growth rate of 41percent from 2004 to 2007.The prominent firms that have their outsourcing centers in the city are HSBC,Citi, Convergys, JP Morgan, Accenture, PeopleSupport, IBM, Fujitsu, Sykes, Dell,Teletech, Teleperformance, Unisys and Trend Micro.The city’s sound infrastructure and robust telecommunications make it acompetitive destination. The city attracts service providers to open up their outsourcingcenters there. As there are too many BPOs located in the region, it is becomingcongested. Almost 70 percent of the total number of BPO employees inthe country work in Manila; and therefore, it’s started getting saturated. That iswhy the government is promoting the next-wave cities for companies to exploreother tier-2 or tier-3 destinations outside the capital. This will not only generatejobs in that particular area, but it will boost the local economy of the certain areaas well, according to industry experts.Its labor has an entry-level salary cost of $320 to $340 in the ITO sector and$240 to $260 in the BPO segment. The city is in competition with Cebu City,Delhi NCR, Bangalore, Pune and nearshore destinations including Mexico,Costa Rica, Brazil, the U.K., Poland andCzech Republic (which also have multilingualcapabilities).Manila NCR is now witnessing rising attritionrates due to availability of large numberof MNCs, which are at risk of repeatingthese costs simply to retain employeebases. It is also tackling with the problemof diminishing supply of high-quality laborpool. The high rates of attrition mentionedmay also be reflective of the thinning supplyof quality labor in the city as competitionto ‘get the best’ becomes tighter.However, inability to move toward moremature services from contact-centers andback office is a real concern. BPA/P and thegovernment have taken a number of initiativesoff late to improve the skill level of theIT and other technical workforce. GSManila’s 270higher educationinstitutions churn outabout 90,000 gradsevery year. Of which23% (about 22,000)are technical gradswhile 77% (about75,000) are nontechnicalgradsSpecial ReportJonathan Defensor De Luzuriaga, Executive Director,Industry Affairs, BPA/P“22–23% growth inManila outsourcingservices by 2010”Q&AWhere do you see Manila in 2010?We see 22 to 23 percent growth inManila’s outsourcing services by 2010.There has been a demand of 100,000new employees YoY. We believe thataround 120,000 graduates would be inbusiness and accountacy field, whichgives us a message that outside voice,customer service, techincal supportrequirement, Manila could also serviceBFSI sector. There are lots of captiveoperators operating in Metro Manilagiving the global F&A requirement.Numerous incentives are in place nowto encourage outsourcing.What has been the impact of recessionon the city’s outsourcing sector andthe cities operating into it?The Philipiones has been exempted fromthe global economic crisis because wewere at the better bargaining end. ThePhilippines has been the beneficiary ofthe mergers and the acquisitions whichhappned due to economic crisis. We havenever seen any decrease in terms ofthe demand of manpower as well as theoperations stepping down. GS— By Pratibha VermaOctober 2009 www. globalservicesmedia.com GlobalServices 27

Special ReportThe gateway to the global sourcing of IT and BPO servicesQ&APaul Pierotti, Management Consultant,PA Consulting, Dublin“Wages in the privatesector are reducingdramatically”Don’t you think that high labor cost is abane to this destination?The current recession is hitting Irelandhard and with it there labor costs in theprivate sector are reducing dramatically.Public sector salaries remain high andaddressing this is likely to be a priority inthe coming government budget.What has been the impact of recession?Where do you see Dublin in 2010?It is hard to overstate the impact thisrecession is having on Ireland. For example,unemployment has increased from nearzero to some of the highest in Europe andthe banking system has only survived dueto massive government bail outs—Ireland’sbad bank is covering a staggering—90billion euro worth of assets2010 is likely to be a challenging yearfor Ireland as the economy continues toperform badly. Further, there is likely to besignificant industrial unrest in the publicsector as the government seeks to cutspending and address the large deficit.However, the fundamentals of the Irisheconomy remain good and many analystsexpect to see some form of recovery bythe end of 2010. GS— By Pratibha VermaDublin, IrelandDublin, the capital of Ireland, is considered as an excellent nearshore outsourcingdestination for Western Europe. Its capabilities lie in high-endshared services. The city attracts the major portion of FDIs from other WesternEuropean countries.According to estimates, 50 percent of Ireland’s revenues come from Dublinwherein country’s revenue for the year 2008 was $3.5 billion. Around 47,000students graduate every year from the city’s three top universities as it is theprimary center of education in Ireland.Today, the city is ranked 10th (up from 13th in 2008) in the Global FinancialCenters Index and has one of the fastest growing populations of any Europeancapital city. Being the center of Ireland’s economic growth, the city offers ahigh standard of living with high cost.In 2008, Dublin was listed as the fifth-richest city in the world and is nowthe world’s 16th most expensive city (8th most expensive city in Europe,excluding Russian cities),according to Wikipedia. It was also listed as thethird most expensive city in the world. However, it has the second highestwages in the world, ahead of both New York City and London, thoughbehind Zurich.The city’s outsourcing capabilities lie in English contact support, IT-infrastructuremanagement services, business analytics, multi-lingual contact support,F&A, product development, research & development, health care and legalprocessing services. Prominent companies like Accenture, IBM, Microsoft,Fujitsu, HP, Dell, Intel, Capgemini, Oracle and Citi have their centers here.Western European countries prefer to nearshore their work to the cityheadquartered service providers as this place offers them an advantage ofsame time zone. The city also has the people who have same work culture,and offers sound infrastructure attracting investment from the companies inwestern and central Europe.The main reason which prevents offshoring is its high labor cost. The entrylevel salary cost in the city is $1,200 in ITO and $900 in BPO sectors.The major disadvantages of this destination are high cost and competitionalthough the productivity and quality are of high quality. Dublin is now facinga competition with other EE cities like Krakow,Around 47,000studentsgraduate everyyear from thecity’s threetop universitiesas it is theprimary centerof education inIreland.Warsaw, Prague and Budapest.Year 2009 to 2010 adversely affected the city’seconomy due to recession leading to many dealsterminations and delay in new deals. The entireeconomy in Ireland saw a downward trend in theyear 2009 to 2010 although it has started picking upbut the change is slow.The city’s scalability, which is talent pool, is limitedand not as large as other offshore nations. Dueto limited talent availability in the city, there is apossibility that industry would be saturated in thenear future. This aspect of the talent pool needs tobe improved exponentially to compete with otheroffshore nations like India/Philippines.With all the pros and cons, the city has a greatpotential to grow as an attractive and mature destinationdue to its high-value services and highclass talent pool. GS28 GlobalServices www. globalservicesmedia.com October 2009

Chennai, IndiaThe gateway to the global sourcing of IT and BPO servicesChennai is the star city of South India with competitive business environment,operating cost advantages, scalability, quality real estate, telecom connectivity,urban infrastructure, city governance and skilled professionals to deliver qualityoutput.The city is India’s second-largest exporter of software, IT and related servicesand contributes 39 percent of the Indian state of Tamil Nadu’s GDP. The major ITOproviders in the city are TCS, Infosys, Wipro, Cognizant, HCL, Mahindra Satyam,IBM, Accenture, Polaris, L&T InfoTech, PerotSystem and Vertusa.Reputed educational institutions such as IIT, Regional Engineering College,Anna University, Bharathiyar University in Chennai account for 51 percent ofthe total computer and engineering graduates in the country. Tamil Nadu has22 universities, 250 engineering colleges, 207 polytechnics and 526 IT institutes.The state churns out 75,000 engineering graduates per year including more than35,000 IT specialists. With 45,000 professional, the state also has the largest numberof IT professionals. This is primarily the reason behind the city’s young English-speakingtalent pool—which is an added advantage for the BPO industry.The BPO providers ruling the city are Office Tiger (now part of RR Donnelley),TCS, 24X7 Customer, HCL BPO, KPMG, Wipro BPO to name a few.The labor cost is significantly cheaper as compared to any U.S. cities. Themonthly salary of an entry-level techie in Chennai is $280 to $300 and for an entry-levelBPO executive is $200 to $220. In addition, the city is much more cost efficientthan any other Indian outsourcing city. It offers best infrastructure amongthe South India cities and has a low cost of living and rapidly developing infrastructure.Its closeness to the airport is a geographical advantage, which a clientmight consider while outsourcing its BPO projects.As any other outsourcing city, Chennai specializes in some specific outsourcingservices. It has an established center of excellence for product development,ADM, testing, engineering services, business analytics, and legal services. It is alsoan emerging destination for R&D.Companies such as Lason, Ajuba Solutions(India), Apollo Health Street, iHealthcare, ParamountHealthcare, and Hinduja TMT in the citysignify the opportunity for healthcare IT firms.The expansion of healthcare services providedwould include ADM services to maintain electronicmedical records, hospital-managementsystems, systems for capture of medical billingand coding, transcription related domain expertise,medical insurance and payment related expertise,and many more.The captives in the city are Citi, Caterpillar,CB Richards Ellis, Maersk, Deloitte, L&T Engg,Philips, Red Hat, Siemens, Texas Instruments.Chennai has grown significantly over the pastdecade along with the government initiativesthrough IT / IT-enabled services state policies(2008) incentives.However, the hot and humid climatic conditionsin the city are still a black mark to some extentwhich might influence a minor percentageof employees to leave the city.GSThe city has a lowcost of living andrapidly developinginfrastructure.Its closeness tothe airport isa geographicaladvantage, whicha client mightconsider whileoutsourcing itsBPO projectsQ&A“Top outsourcingdestination”Special ReportVardhman Jain, Managing Director, BusinessProcess Solutions, Perot System, India and ManilaDo you think that recession has adverselyaffected the city’s outsourcing industry?While there are clear concerns about theevolving global economic downturn, we areseeing evidence of strong interest in ourtraditional core services of ITO. Over thelast 21 years, we have weathered at leastfour major recessions. In each of thosedownturns, we experienced substantialgrowth. In part, the growth occurs becauseorganizations need to become more efficientand productive. Clearly, the services thatPerot Systems provides are part of thatequation. So, we anticipate growth duringthis downturn as well. It appears thatinvestment in healthcare and IT to supporthealthcare is a growing priority amongmany of the organizations across the globe.Among the various stimulus packages underconsideration by governments throughoutthe world, one of the constant themes ishealthcare and IT. We believe this puts us ina strong position for development through2009 and into the coming years.With growing demand in healthcareprovider, payer, and life insurance businessthat we are witnessing, we have added anew facility in DLF special economic zone,Chennai to accommodate growth through2009 and into the coming years. GS— By Diksha DuttaOctober 2009 www. globalservicesmedia.com GlobalServices 29

Special ReportThe gateway to the global sourcing of IT and BPO servicesPramod Bhasin, President, Genpact“Hyderabad: Terrificas an outsourcingdestination”Q&AWhat has been your experience withyour Hyderabad delivery center?We started our center in the city in 1999-2000. Hyderabad has been terrific as anoutsourcing destination, particularly inthe infrastructure space. We experiencedimmense government cooperation.Moreover, the existing and emergingcolleges / universities are an addedadvantage as they provide capabilities. Iconsider Hyberabad better than the otherbig cities in the country.What has been the impact of the Satyamscam on the city?There has been no impact. In fact, I findno reason to have an impact on the othercenters based out of the city.How do you see the future of Hyderabad’soutsourcing industry?Growth is slow for everybody across theglobe, so there is nothing in particularwith Hyderabad. The city will continue togrow, as long as it can keep pace with thenew crowd and increasing traffic. Till now,the infrastructure has managed it decentlyand I don’t think there will be any troublein the future as well. GS— By Diksha DuttaHyderabad, IndiaHyderabad, the capital of Andhra Pradesh, is India’s hi-tech city,which is also known as “Cyberabad.” Andhra Pradesh delivers thelargest number of engineers in the country. Its capital hosts three centraluniversities, two deemed universities, and six state universities. Moreover,Hyderabad also has the lowest costs of living and education amongIndian cities.Not known as a metropolitan city traditionally, Hyderabad has beenable to stand its ground when compared to other outsourcing destinationsin India. Hyderabad, one of the favorite visiting spots of international tourists,experiences the advantage of being a twin city with Secunderabad.The city has been actively marketing itself in the IT-services space, andstands second to the NCR region in total IT-enabled services exports, accordingto The Indian Offshore Advantage written by Ian Hunter.Hyderabad has established itself as the leading destination for IT andIT-enabled services, pharmaceuticals call centers, and other outsourcingprocesses. Many computer software companies and consulting firms,BPOs and other technological services firms have their offices and facilitiesin the city.The main ITO service providers in the city are IBM, TCS, Wipro, Infosys,Mahindra Satyam, iGate and Accenture. Available large talent pool makes ita suitable location for BPOs as well. Companies such as Deloitte, 24X7 Customer,EDS, Mahindra Satyam BPO and Sitel have their BPO setups in thecity. Many global companies, including HSBC, Bank of America, Microsoft,AT&T, Deloitte and Novartis have their captive centers in Hyderabad.The labor cost in the city is a shade higher as compared to cities such asPune and Chennai. The salary of an entry-level BPO executive in Hyderabad is$200 to $220 and of an entry-level ITO professional varies from $290 to $310.Hyderabad, which is a known as established outsourcing location forADM, testing and healthcare outsourcing services, is developing new outsourcingcapabilities such as product development, financial services andcontact center (English).Being home to a population of 6.8 million, it needs constant infrastructuraldevelopments. And, interestingly the city has managed to keep pacewith this demand. There have been extensive investments in digital infrastructurewithin the city promoting the setting up of several campuses by avast array of companies within the city.The government is also providing fullThe per monthsalary of an entrylevelBPO executivein Hyderabad is$200 to $220 andof an entry-level ITOprofessional variesfrom $290 to $310support by coming up with business and operationsfriendly policies. The latest policycame into effect in 2005, possibly one of thebest in terms of offering incentives and infrastructurerequirements to the IT servicesindustry. It includes power, tax, Stamp duty,property, real estate, and also mega incentives.No update of the policy has howeverbeen done yet.Thus, being blessed with robust infrastructureand government support, Hyderabadis now developed as a cosmopolitiancity being listed in the top global outsourcingdestinations.GS30 GlobalServices www. globalservicesmedia.com October 2009

Pune, IndiaThe gateway to the global sourcing of IT and BPO servicesPune is a city, which signifies “youthfulness and enthusiasm” at its best. Withmore than hundred educational institutions and nine universities, it’s called“The Oxford of the East.” The city claims to have the largest number of schools,colleges and universities in the world, with students coming from all across theglobe to study here. With the fast increasing number of migrants from otherparts of India, the city is one of the fastest growing India urban areas.Large student population consequentially leads to a large employableworkplace in Pune. The favorable climate and constantly improving quality oflife is an attrations to the migrants as well. Pune offers a more pleasant localtravel than Mumbai.The concept of IT parks touched Pune way back in 2,000 to encourage newIT companies. Since then many IT parks have been established in the city.Among many others, the Rajiv Gandhi IT Park, the Magarpatta Cybercity, theMIDC Software Technology Park at Talawade, the Marisoft IT Park and KumarCerebrum IT Park at Kalyani Nagar, the International Convention Centre(ICC), and Weikfield IT Park are the popular ones.The city is exclusively known for its center of excellence in engineering services.This is why many global firms have their engineering setups here. Forexample, Emerson, a manufacturing and technology group, established theirPune center in June 2003. This center is exclusively helping other Emersoncompanies in product development and research work.The city in the state of Maharashtra is also developing skills in financialservices, legal services, contact center (English), product development, applicationdevelopment and infrastructure-management services.The long list of service providers in the city includes ITO providers such asAccenture, Cognizant, CSC, Geometric, HCL, IBM, Infosys, TCS, Tech Mahindra,Wipro Zensar and many more and BPO provider such as Convergys, EDS,EXL and WNS to name a few. Pune has a signicant number of captive setups ofglobal firms such as Amdocs, Citi, Microsoft, Oracle, Kanbay, Mimosa Systems,HSBC Software and Symantec. The IT majors that have BPO operations as wellin Pune include Infosys, Wipro and Mahindra Satyam.An entry-level techie in Pune earns between $270 and $290 and an entry-levelBPO executive can cost from $180to $200.To look at the government initiatives, MaharashtraIT policy was last updated in 2003and is presently under restructuring. Thepolicy offers special, real estate and mega incentives,which are at par with the other topoutsourcing cities in this year’s list. However,recently Maharashtra has been facing someresistance to people coming from other states.This could prove to be a major hindrance forthe city to go to the next level in its evolutionas an outsourcing destination and a cosmopolitancity.However, the city lacks international airconnectivity. Despite that it has been attractingmany investors. Large labor pool and tech skillsmake Pune an ideal outsourcing destination formany cutomers and the service providers. GSThe city isexclusively knownfor its centerof excellencein engineeringservices. This iswhy many globalfirms have theirengineeringsetups hereQ&ASpecial ReportGirish Wardadkar, President and ExecutiveDirector, KPIT Cummins Infosystem“Offers a large talentpool with 650,000students”What is the main attraction of Pune as anOutsourcing Destination?I would categorize the advantages of Pune infour aspects.Firstly, proximity to Mumbai and the trianglebetween Pune, Nasik and Mumbai offers agreat geographical advantage. Secondly, thevibrant industrial infrastructure that hostsa variety of industries such as engineering,automotive, pharma to name a few. Moreover,the city also offers a large talent pool with650,000 students and 5,700 engineeringcolleges in Pune university, and 526 affiliatedgraduate colleges in the city. Lastly, thesafety factor in the city is incredible. Usually,it’s said that if immigration in a city is high,the crime rate will automatically increase.However, this hasn’t happened in Pune.Where does Pune stand as compared tothe other Indian outsourcing cities?The software scene in the city is veryattractive. Pune is inviting small as well aslarge software companies to invest here.Talking in statistics, Pune has 212 softwarecompanies; Bangalore has 208 followed byHydrabad with 97. However, Pune hasn’t beenable to reach the 300 score of Mumbai. GS— By Diksha DuttaSource of the statistics given by the spokespersonin answer 2: STPI StudyOctober 2009 www. globalservicesmedia.com GlobalServices 31

Special ReportThe gateway to the global sourcing of IT and BPO servicesTop Established and EmergingGlobal Outsourcing Cities by FunctionsCompanies are always looking at opportunities to offshorenew areas. This leads to growth in overall scopeof services that get offshored. This is why, last year we hadintroduced two new sub categories including emerging andestablished cities for Contact Centers (English and Multilingual).Similarly, in the 2009 study we have introduced threenew sub categories. These new functions include:• Animation / Game Development: The global game developmentmarket, which estimated at $10 billion in 2007,is always under pressure to improve time-to-market fornew games, increase cost savings and remove concernssuch as piracy of popular games. Outsourcing of gamedevelopment activities helps mitigating all of these concernsof the customers segment.Countries such as China, Russia and Brazil are alwaysconsidered as leaders in this space. There are manyother countries such as Ukraine, Vietnam, India, ThePhilippines, Korea and Romania that are strengtheningtheir skills in this area. This is why, cities such asShanghai, Beijing, Moscow and São Paulo have formedthe list of emerged outsourcing locations for the gamedevelopmentservices. And the list of emerging outsourcinglist of this sub category has cities such as Manila(NCR), Buenos Aires, Ho Chi Minh, Bangalore andThiruvananthapuram. The growing number of mobileusers across the globe has also encouraged outsourcingof animation and game-development services inthe recent past.• Health-care Services: Cities including Hyderabad, Bangalore,Warsaw, Prague, St. Petersburg, Mumbai arenamed as the top cities for the health-care services space.Top established global outsourcing cities by functionssThe list of emerging outsourcing locations in this area hasBucharest, Bucharest and Shanghai.• Infrastructure-management Services: As IT infrastructureoutsourcing is almost a five year-old industry, itmade sense to us to have this sub category this year. Infact the demand of remote infrastructure managementoutsourcing is expected to touch $5.9 billion in 2009 and$8.6 billion in 2010, according to the Everest ResearchInstitute. Believing that there is clearly an opportunity inthe current economy to reduce costs in IT-infrastructureoutsourcing space, providers offer multiple solutions tohelp customers reduce IT budgets, such as virtualizingcustomers’ server environments or consolidating theirdata centers into pooled environments, network services,storage, desk operations, midrange, security, mainframeand desktop support.In 2009, the list of established global outsourcing citiesfor infrastructure-management services has three topglobal cities Bangalore, Delhi NCR and Dublin and twocities, including Toronto and Kuala Lumpur from the Top50 Emerging Global Outsourcing Cities category.We have not ranked the cities mentioned in these subcategories. But we have identified three to six establishedand emerged cities by outsourcing functions, including ApplicationDevelopment and Management (ADM), Animation/ Game Development, Business Analytics, Contact Center(English), Contact Center (Multilingual), Engineering Services,Finance and Accounting (F&A), Health-care Services,HR, Infrastructure Management Services, Legal Services,Product Development, Research and Development (R&D)and Testing.FunctionsADMAnimation / Game DevelopmentBusiness AnalyticsContact Center (English)Contact Center (Multilingual)Engineering ServicesF&AHealth-care ServicesHRInfrastructure Management ServicesLegal ServicesProduct DevelopmentR&DTestingSource: Global Services and TholonsEstablished CitiesBangalore, Mumbai, Hyderabad, Chennai, DublinShanghai, Beijing, Moscow, São PauloDelhi NCR, Mumbai, Bangalore, Chennai, Kraków, TorontoDelhi NCR, Manila NCR, Dublin, Mumbai, Bangalore, TorontoMexico City, Cairo, Kraków, Buenos Aires, Dalian, BucharestBangalore, Chennai, Pune, St. Petersburg, GuangzhouMumbai, Bangalore, Manila NCR, Kraków, Shanghai, DublinHyderabad, Bangalore, Warsaw, Prague, St. Petersburg, MumbaiPrague, Bucharest, Bangalore, Makati City, BudapestBangalore, Dublin, Kuala Lumpur, Delhi NCR, TorontoManila NCR, Mumbai, ChennaiBangalore, Moscow, Chennai, Shanghai, Ho Chi MinhSt. Petersburg, Bangalore, Moscow, Shanghai, DublinBangalore, Chennai, Hyderabad, Ho Chi Minh, Toronto, ShanghaiNew Entrant(s) / Category32 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportTop Emerging Global Outsourcing Cities by FunctionsFunctionsADMAnimation / Game DevelopmentBusiness AnalyticsContact Center (English)Contact Center (Multilingual)Engineering ServicesF&AHealth-care ServicesHRInfrastructure Management ServicesLegal ServicesProduct DevelopmentR&DTestingSource: Global Services and TholonsEstablished CitiesShenzhen, Ho Chi Minh, PuneManila (NCR), Buenos Aires, Ho Chi Minh, Bangalore, ThiruvananthapuramBucharest, Cairo, ShanghaiCebu City, PuneSão Paulo, San José, Casablanca, AccraPrague, Delhi NCR, Coimbatore, MoscowCebu City, Pune, ColomboBudapest, Bucharest, ShanghaiCebu City, Tallinn, KrakówPrague, Pune, Bucharest, Mexico City, São PauloJohannesburg, Pune, Cebu CityPune, Bucharest, São Paulo, St. PetersburgBucharest, Beijing, Prague, Chennai, KrakówBucharest, São Paulo, CairoNew Entrant(s) / CategoryIn the “emerged outsourcing citiesby functions,” most of the categoriesare dominated by cities from this year’s“top 8 outsourcing cities.” For example,the cities named under the ADMcategory and the legal services list havenames only from the top 8 global outsourcingcities. And, the ADM categoryis the same the year’s list.Toronto and Dublin have enteredthe sub lists of business analytics andF&A services respectively. One of themajor factors for the growth of anydestination in the business analyticsspace will be the ability to acquire theright kind of talent and retain it. Asthese high-end business processessuch as business analytics rely mainlyintellectual arbitrage, cities likeToronto get an extra edge over theother cheaper destinations, primarilyknown for low-end BPO services.A closer look at the top emergingglobal outsourcing cities by functionsreveals that Accra has figured inthe list for the first time. The city hasbeen named among the top emergingcities for multilingual contactcenters, with other cities such as SãoPaulo, San José and Casablanca.Accra is the capital of Ghana, whichis one of the major economies in theWestern Africa region. Apart from BPOand call-center capabilities, the governmentof Ghana has realized the potentialof technology and has identifiedIT-enabled services as one of the keyOne of the major factors forthe growth of any destinationin the business analyticsspace will be the ability toacquire the right kind oftalent and retain it. As thesehigh-end business processessuch as business analytics relymainly intellectual arbitrage,cities like Toronto get an extraedge over the other cheaperdestinations, primarily knownfor low-end BPO servicesareas to enhance economic growthand welfare of the county. As a result,the government of Ghana hasundertaken an ambitious initiative,eGhana, to improve labor forceskills as well as enabling infrastructureto support the ICT industry.In the product-development subcategory, the city of St. Petersburghas figured as a new entrant in theemerging city space. Unlike IT-BPOcompanies, product-developmentcompanies have a very niche market.The educational structure of St.Petersburg is capable of generatingskills required to develop the city asone of the most potential outsourcingcities for product development.The strong presence of offshoredproduct-development companiessuch as Reksoft and DataArt displaysthe growing activities in thisspace. The city is known as an establisheddestination for engineeringand R&D services.Krakow, an established destinationfor business analytics outsourcingservices, is an emerginglocation for HR and R&D outsourcingservices. The city has figured inthe emerging R&D outsourcing locationsfor the first time.Other categories in both emergingand established segments havemore or less the same names as wehad in the last year’s listing. See tablesto know more. GSOctober 2009 www. globalservicesmedia.com GlobalServices 33

Special ReportThe gateway to the global sourcing of IT and BPO servicesTop 10 AspirantsRank 2009 City Country Region1 Nizhny Novgorod Russia Eastern Europe2 Bhubaneswar India South Asia3 Iloilo City Philippines Southeast Asia4 Cork Ireland Western Europe5 Thiruvananthapuram India South Asia6 Recife Brazil South America7 Santa Rosa, Laguna Philippines Southeast Asia8 Córdoba Argentina South America9 Puerto Rico U.S.A. Central America10 Amman Jordan Middle East and AfricaSource: Global Services and TholonsThis year the Global Services-Tholons research team decidedto form a new set of cities, which have potential tofigure in the Top 50 Emerging Global Outsourcing Cities inthe coming years. However, there is a lot to be done in eachof these locations to develop and facilitate outsourcing activities.Hence, we decided to name this category as “Top 10 Aspirants.”A few of the names mentioned in the list might make tothe emerging outsourcing cities list in the coming years but, asof now, their interest and recent efforts to develop outsourcingindustry helped them position among Top 10 Aspirants.The “Top 10 Aspirants” list is full of interesting names. Thelist has four cities from Asia itself. Of which, two are Indian cities(Bhubaneswar and Thiruvananthapuram) and the other twoare Filipinos (including Iloilo City and Santa Rosa, Laguna).The top slot of the list was bagged by the fourth-largestRussian city Nizhny Novgorod. The city’s IT industry is one ofthe largest in Russia, and is known for its engineering, R&Dand software development capabilities. Many software developersand offshore service providers such as Auriga, Devetel,Exigen Services, MERA Networks, RealEast Networksand Teleca have their setups in Nizhny. Intel has its R&Dfacility in the city. Nizhny’s educational structure, which isinclined toward mathematics and science, helped buildingworld-class engineers and techies. Institutes such as NizhnyNovgorod State Medical Academy, Nizhny Novgorod StateUniversity, Nizhny Novgorod Technical University, as well asNizhny Novgorod Institute of Information Technologies, focuson IT trainings. The city is a good nearshore location forEuropean countries.Bhubaneswar, the Indian city that has bagged the secondposition in this category, serves the corroborative evidence ofthe fast emerging tier-2 and tier-3 outsourcing locations in India.The city’s lucrative talent pool is attracting many outsourcingfirms. This is why many firms have planned long-term investmentplans for Bhubaneswar. For example, Genpact hasannounced to set up a BPO center in the city. Genpact BPOcenter is expected to generate 3,000 jobs. Similarly, MindTreeConsulting’s new project for the city is likely to create 5,000 jobsin Bhubaneswar. However, these two projects are behind theschedule. And the notification of the revised building norms byBhubaneswar Development Authority (BDA) has also contributedits part in putting many other IT projects on hold. ZensarTechnologies’ project is one of them.Another Indian city Thiruvananthapuram, the capital ofthe Indian state of Kerala, is positioned at the fifth place inTop 10 Aspirants.Another interesting name in the list is Recife, Brazil. Thecity is Brazil’s fourth-largest metro and has a dedicated ITarea called “Porto Digital,” which hosts 90 IT companies thatemploy over 3,000 people. The tech companies based in thecity has another benefit of counting on techies produced byFederal University of Pernambuco, which has one of the bestcomputer science departments in LatAm. The state governmenthelp Porto Digital to have world-class business environmentfor the IT companies. Factors such as strongeducational structure, international airport, and culturaland geographical proximity to North Americamake it a potential location for North American buyers.Despite that the city has not yet been able tocatch global media attention yet.Other cities that figure in the list are Cork (Ireland),Cordoba (Argentina), Puerto Rico (The U.S.) andAmman (Jordan). GSCork41Nizhny NovgorodPuerto Rico9Recife6CórdobaAmmanBhubaneswar10Santa Rosa, Laguna2573ThiruvananthapuramIloilo City834 GlobalServices www. globalservicesmedia.com October 2009

MethodologyThe Global Services-Tholons Top 50 Emerging GlobalOutsourcing Cities 2009 study provides a weightedranking of specific locations in relation to their respectivecapacities as global outsourcing destinations.The following methodologies were implemented infulfilling the report:Primary ResearchSurveys and interviews with both tier-1 and tier-2 globalservice providers and customer were conducted to gatherinformation. The gathered data were used to determinedelivery and consumption trendsfor outsourced services in specificdestinations. Other primary datagathering methodologies were alsoimplemented to determine marketand labor sizes as well as expansionstrategies of tier-1 and tier-2 serviceproviders. Extensive network ofindustry stakeholders includingcustomers and services providers,governments, trade bodies andassociations were utilized to collectand validate data and analysis.Secondary ResearchSecondaryresearchmethodologies were used to collectinformation, especially whereprimary means are not availableor possible. Historical data fromgovernments, global institutions andagencies and monetary bodies wereused to provide global economy-related information. Publiclyreleased data from government sources were also consideredwhen using country-specific market data. Publicly availablefinancial records such as quarterly and annual reports,industry bulletins and trade publications were used to verifymarket assumptions and analysis.Quantitative and Qualitative AnalysisA combination of quantitative and qualitative analysishas been utilized in developing the weighted rankings. Theproprietary weighing and ranking framework were developedand refined by senior Tholons consultants over years ofdirect customer engagements and professional observations.Further, qualitative analysis was implemented to provideperspective to the quantitative results of the report. Tholonscarefully considered numerous variables when providing finalrankings, and considered the impact which non-numericaldata plays in the assessment of global outsourcing locations.The gateway to the global sourcing of IT and BPO servicesSpecial ReportConverging Centers of ExcellenceTholons is a pioneer of the “Center of Excellence”concept in the offshoring and outsourcing space, and theconcept has proven its validity over the years. More recently,however, the industry has moved toward convergenceof outsourcing destinations from the perspective of thecustomers and location assessment. As the decision onwhere to locate becomes more complex and as the decisionparameters expand constantly, customers are requiredto adopt more complex frameworks and methodologiesfor location assessment. The best approach looks at allrequirement factors and seeks tofind the most appropriate locationfor businesses--the Center ofExcellence. The answer is neverdirect or simple and requiresextensive research and assessment,both on the process requirementand service delivery fronts. Inthe customer’s search for itsappropriate Center of Excellence--a country is always looked atbefore a city is finalized. This isthe convergence of the offshoredestinations (individual locations)into offshore nations (collectivelocations), which this report aimsto capture.The global outsourcing landscapehas evolved significantly in the lastfive years, earmarked by increasingcomplexity and wide-scale expansionin terms of both locations andoutsourced processes. In this period, Tholons has observedconcise differences between customer perception of offshoredestinations and actual location-assessment results. Thus, ithas become even more important to understand the client’sviewpoint and location assessment from their respectivestandpoints.Tholons has also identified the recent convergence ofspecific service delivery locations. The report discussesconvergence of these centers from two vantage points—delivery centers as a part of their respective countries anddelivery centers expanding beyond their geographicalboundaries. The coming together or convergence ofcities in a country as one common value proposition tothe client is highlighted in the section, Top 5 OffshoreNations and Next 5 Offshore Nations. The mitigatingof geographical boundaries by cities and formation ofcity clusters is also discussed in the subsequent section“Cities as Clusters.”October 2009 www. globalservicesmedia.com GlobalServices 35

Special ReportThe gateway to the global sourcing of IT and BPO servicesAbout Global ServicesGlobal Services (www.globalservicesmedia.com) is a mediaplatform for the global outsourcing industry.Global Services connects buyers and service providers in theglobal IT services and BPO industry. Its portfolio of media optionsincludes online website, events, newsletters, microsites, onlinedirectory (OsourceBook) and custom solutions. Established in Feb.‘06, Global Services is published by CyberMedia (India) Ltd.Established in Feb. ‘06, Global Services is published byCyberMedia (India) Limited, South Asia’s largest specialty mediaand media services company. CyberMedia is engaged in publishing(with 15 publications dedicated to myriad tech areas, such asinfotech, telecom, consumer electronics, and biotech), marketresearch, content outsourcing, gaming and media education.Global Services TeamE. Abraham Mathew, President, CyberMedia,abrahamm@cybermedia.co.inEditorialEd Nair, Editor, ed@cybermedia.co.inImrana Khan, Senior Assistant Editor,imranak@cybermedia.co.inPratibha Verma, Senior Correspondent,pratibhav@cybermedia.co.inDiksha Dutta, Correspondent, dikshad@cybermedia.co.inSales & MarketingSatish Gupta, AVP - Sales and Marketing,satishg@cybermedia.co.inArun M., Manager, Sales (International)arunm@cybermedia.co.inSubhadeep Biswas, Executive - Marketing,subhadeepb@cybermedia.co.inAbout TholonsTholons is a Services Globalization and Investment Advisoryfirm that combines “Best of Breed” consulting experience withdeep execution expertise and investment insights to delivertruly effective services to its clients. Tholons offers a detailedunderstanding of business processes and combines it with practicalhands-on expertise in executing the strategy. Tholons draws uponthe considerable experience of a hand-picked team, which hassuccessfully formulated and executed globalization strategies tounlock value for Global Fortune 1000 companies. Service providersleverage Tholons expertise to optimize their global deliverymodel. Tholons advisors engage with government bodies to buildcompelling strategies for making countries attractive destinationfor outsourcing.Tholons TeamAvinash Vashistha, CEO and GlobalManaging PartnerManuel Ravago, Research DirectorSaugata Sengupta, AnalystLester Bautista, AnalystKaren Tehani San Pedro, MarketResearcherJhoana Mutiangpili, Market Researcher36 GlobalServices www. globalservicesmedia.com October 2009

MONDAY, AUGUST 10, 2009Special ReportThe 2009 Destination Coverage in Global ServicesThe gateway to the global sourcing of IT and BPO servicesMarhabba BPO! Jordan Is Ready to GreetIt looks like another little oasis of IT delivery is building up as the vast sands of Middle Eastblow winds of new market opportunity while the U.S. and Europe are weathering some severestorms. After the likes of Egypt, its now Jordan that joins the club, as it gets all set to woothe outsourcing industry. Here's how— By Pratima H.The Kingdom of yore looks all set to morph into a valleyfor IT and BPO industry.And it won’t be just all about the royal gleam of HashemiteKingdom or awe-inspiring camels, or majestic sand dunes orthe rich Arabic tales anymore. If the new direction bears itsfruits on time, Jordan could soon be within the eyesight ofBPO nomads too.At the Nasscom Summit 2009, foreign delegations of manyhues and shades were seen exploring and selling businessopportunities in the new world order that is shaping up fora post-recession scenario. And rubbing shoulders with thelikes of Ireland, Scotland and Wales, we could see delegatesfrom Jordan too. They were not only prepared enough for astrong competitive pitch, but also had large spoonfuls of thepudding’s proof up their sleeves.Why Jordan?“It’s a great gateway to the Middle East (ME), the nextgoldmine of opportunity for IT and BPO industry,” offersKinan A. Jaradat, Enhanced Productivity Component OutsourcingSector Lead from Jordan.“The ME is no doubt an emerging market and while mostGulf countries lack human resources to cater to the newtechnology needs springing up here. This puts Jordan in aunique position of advantage.” With a teeming population ofsix million, of which about 50 to 60 percent fall in the lessthan 25 years of age demographics and have skills to match,there could be a strong argument here.And from its vantage point, being a region that has beenstable since the 1960s, gives Jordan another unique territoryin a geography, which though promising, has been punctuatedwith geo-political tensions. “We are not impacted fromwhat happens in the surrounding regions and have alwaysbeen stable, which is a good consideration point from a businessperspective,” Jaradat reasons.Jordan Valley TechnologyOctober 2009 www. globalservicesmedia.com GlobalServices 37

Special ReportThe gateway to the global sourcing of IT and BPO servicesEnglish language skills, apart from French, Spanish andRussian, add to Jordan’s demographic attractions. “The goodpart is that English here stands out for its neutral-Arabic accent,”he adds.As to the cultural milieu, he assures that Jordan has anopen and welcoming arm towards foreign labor and anycompany is given the nod for employing 100 per cent expats,if it may choose so. On the infrastructure side, areas likepower, roads and buildings are positive too. It has alreadybeen recognized on the eco-friendly distinction, where theexample of Amman, a building zone, is cited as an exampleand an award-winning case in masterful city planning.There are three Development Zones (DZs) currently operatingin Jordan while more might be announced in thefuture. These are King Hussein Bin Talal Development Area(KHBTDA) spanning 21 sq.m., Ma’an Development Areasituated near the Saudi border and covers about 9 sq.m.in a cluster design, Irbid Development Area (IDA) which isstretched over a 3.2 sq.m. area. The IDA is pegged adjacentto some leading scientific institutions and one of the ME’sforemost ICT and healthcare Universities. This one providessector opportunities in ICT, healthcare, R&D etc.Government in TangoThe Hashemite Kingdom of Jordan looks all serious anddetermined. The Development Zones (DZC) Commissionbusiness brochure reads, “In His Majesty King Abdullah IIquest to ensure quality leap in the sustainable developmentof Jordan, the creation of Development Zones across theKingdom was launched. The DZC is the Jordanian governmentalentity, financially and administratively independent.Established in 2008, under the Development Zones Law, theCommission aims at increasing Jordan’s FDI and the DZCBoard of Commissioners alongside to a One Stop Shop team,supervises and centrally approves a comprehensive investmentrelated administrative matters, expediting all governmentalservices quickly in one location, along with a numberof investment and tax and customs exemptions.”These services, as the brochure adds, include licensing, registrationof enterprises and permits; labor licenses including visas,residency and employment related procedures and approvalsalong with ongoing procedures necessary for operations.Samer I. Asfour, Commissioner for Investor Services andDevelopment, from DZC, tells how the Government is givinga strong buttress to attracting investments in IT and BPOs.“We have been mandated by the Government through a law,which has been commended as the world-class law for SpecialEconomic Zones. There is ease of ownership of capital.There is ease on movement of labor, including foreign laboretc. And with a good transfer of power from government tothe Commission, there is actually a single-point clearancelevel and pace for investors coming to Jordan. There is noneed to deal with multiple levels of agencies. Zero-tariff invarious taxes, property-level incentives and other perks atvarious levels and in many areas add up to an open arm fromthe Government.”For players looking at setting up their anchors here, thereare both greenfield and brownfield options open here.An IT city, Arabic Development zone with parts inhabitedby IT firms and parts for BPO firms is just one example citedon the infrastructure side. Amman is another area that lookstall for a service provider’s compass. The business park inAmman has just finished the first phase sprawled across 500sq km, spread over all on 1.8 hectares.Jordan’s Allure for Contact Center (CC) sectorMay 2008, A Datamonitor white paper on ‘Jordan as a contact center location of choice’>> Jordan’s CC outsourcing sector has 1200 agent positions andthe market is estimated to increase in next five years based onexisting domestic, near shore (Gulf) and offshore demand>> CrystelCall (with client wins in North America, the ME and Jordan),E3Mar (a virtual CC), Jordan Telecom (focused on Governmentaccounts) and Extensya are some of the current CCdeployments already here. Datamonitor notes that many otherOSPs are actively pursuing the Jordanian market with a verticaland onshore-offshore mix in mind.>> Pricing-wise, an offshore agent’s price per hour ranges between$12 to 15, depending on function and vertical. Jordan’s rate istagged as favorable and compelling in comparison to other CCmarkets like Central and Eastern Europe, South Africa and India.Low attrition and limited unionization add to that. Arabicservices are priced at about $10 per agent per hour, which is avery competitive rate for the Gulf region.>> Stable and attractive Real Estate market from the view of commercialproperty availability, both purchase and lease side.>> Incentives for CCs include up to 75 percent income tax andsocial service levy abatement for ten years (location-dependent).>> Customs and sales tax exemptions on fixed assets (if importedinto Jordan within three years of incentive approval)>> Training subsidies>> Strategically located ICT free economic zones / DZs that areclaimed to be fully connected, networked supported with highlevelIT infrastructure and competitive business environment.>> Key Offshore markets: Gulf States (main countries- Qatar, theUAE, Oman and Saudi Arabia where Jordan leverages physicalproximity, Arabic fluency of its agents and low price points);Western Europe (Jordan as an alternative to UK clients lookingfor diversification where English as primary second languageamong Jordanian helps); and U.S. / Canada (as a lower-cost locationfor English-speaking services) GS38 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportHere are some more incentives within the DZs:>> Income tax rate: Five percent, on income generated fromactivities within the DZ>> Sales tax rate: Zero percent, on goods and services purchasedinto or imported for use in economic activities>> Custom Duties: Zero percent, under the DZ>> Social Services Tax, and Dividends tax: Zero percent,within the Zone, or outside the KingdomDedicated to ICTJordan has an ICT industry-support association foundedin 2000. It’s called int@j, which has been steering as per thedirection put forth by His Majesty King Abdullah II in 1999. In2007, int@j created the National ICT strategy (2007-11) whichinvolves three high-level strategic objectives to be achieved by2011. These are – increasing Internet penetration in the Kingdomfrom 11 per cent to 50 per cent,raising the number of workers in theICT industry to 35,000 and upping ICTsector’s revenue to $ 3 billion.As per int@j, these policies havecumulatively positioned Jordan as oneof the region’s most open economiesto trade and foreign participation andtaxation has become relatively liberal.Citing names like Microsoft, Intel, CiscoSystems, Oracle and France Telecom asinvestors, it adds that the Governmenthas shown further support to ICT.“As a result, annual sector growthhas risen to about 50 per cent over thepast few years and its generated incomerepresents approximately ten per cent of the country’sGDP,” claims the association.BPO has been identified as one of the main sectors identifiedwith great potential to support by int@j’s National ICTStrategy.Sibling Rivalry?Jaradat shrugs off any concerns from competition billowingout of the neighborhood. Commenting on Egypt he confidentlyputs in two brackets – compete as well as co-opt with Egypt.“Both the regions are capable of attracting investments in theMiddle East. While Egypt did start a little earlier, it doesn’t leaveus in the ‘catch-up’ category. Our forte would be more on theKPO side and that’s how we will also complement each other.”From a third eye’s lensAnupam Govil, CEO, Global Equations, an outsourcingadvisory firm is of equally strong opinions on the argumentof ME as a growth market. “We cover regions with provenunique advantages. Egypt and Jordan are top two destinations.But yes, Jordan’s English is more neutral and it doeshave a highly educated workforce. From a risk mitigationJordan provides accessto three major marketsand a near-shore lengthto the Gulf market,making it an idealgatewayview, the economic and political condition is stable. Governmentis supportive with tax incentives and subsidies, alongwith dedicated zones for BPOs.”Overall, he tags Jordan good as it provides access to threemajor markets and a near-shore length to the Gulf market,making it an ideal gateway.What’s not hot yet?Oozing with confidence, but candid enough is what youwould call them when you question these delegates on thebumps they see ahead. Talking of challenges, Asfour andJaradat say building up momentum would be quite a task.“There is also the challenge of taking off the fog of misperceptionand generalization on geo-political disturbances.The Middle East on the whole is generalized when it comesto that mindset. We have to separate Jordan from that misperceivedzone and position it as asafe harbor and advanced businessdestination, which it really is.”In Govil’s view, the challengesthat await Jordan include a formidablebranding task. “The regionis still early on maturity curve withnot as many service providers rightnow. The unemployment rate isas high as over 25 percent becauseof the lack of visibility of BPOs, sotraining and efforts in this directionneed to materialize soon.”So far, so goodAsk Jaradat if the timing is tooright or too late to start positioning Jordan as the newdestination in the BPO industry’s radar, and he answers,“I think, this of all times is the exact time to do that. Becauseall the international companies are reconsideringtheir strengths and this is an opportune time to placeourselves right.”During this India trip, he and his delegates have alreadydone a couple of meetings with some CEOs of the industryhere and given India’s proven strengths as a vendor in theBPO industry, he adds, “We take India very seriously and areexploring a lot in the meetings we are doing here.” On thegovernment side too, there are some high-level trade andinvestment agreements to boot as Asfour shares. “The ideais to activate various agreements as a vehicle to start attractinginvestments.” The firm-to-firm, one-on-one matchmakingfor BPOs in Jordan looks all set to get accentuatedas Jordan gets serious to explore the expertise, knowledgebandwidth and proven capabilities of India.It would take some time but it sure would be an interestingtransition to witness when the ‘Marhabba’ translatesto ‘Masha-Allah’. And someone in Jordan is surelywhispering, Amen!GSOctober 2009 www. globalservicesmedia.com GlobalServices 39

Special ReportTUESDAY, SEPTEMBER 29, 2009The gateway to the global sourcing of IT and BPO servicesThe 2009 Destination Coverage in Global ServicesOffshoring: The Caribbean ExperienceOne of the most preferred tourists spots, Jamaica is now an offshoring hub too. With itsfast increasing emphasis on the quality of its infrastructure and workforce, the countrydifferentiates itself as a nearshore outsourcing destination. However, Jamaica is notpositioned as a low-cost destination. A look at the Jamaican outsourcing industry— By Diksha DuttaJamaica might have a violent history considering thatthe Spanish conquered the peaceful Awarkas, way backin the 16th century. But today, the country has risen withpassion and perseverance and is a potential place to tradeand invest for countries across the globe.Similar time zone makes Jamaica a convenient nearshoreoutsourcing location for the outsourcing servicesbuyers from neighboring countries, including the U.S.,Latin America and other Caribbean countries. The timezone varies zero to three hours from North America andfive to six hours from Europe.“Jamaica is an ideal destination for investing as its locationprovides a crossing point between both North andSouth America,” explains Hugh Cresser, Principal Consultant,Emerging Markets, PA Consulting. International directdialing links subscribers to the U.S., Canada, Europeand the Caribbean and the Jamaica. Digiport Internationalin the Montego Bay Free Zone offers satellite earth stationswith support technology to facilitate satellite linksand digital switching to carrier networks in North Americaand Europe.“Customers like Jamaica because of its ease of access.We have several customers living in Atlanta. It’s just as easygetting on the plane to go to Jamaica as it is to go to Washington,DC. Proximity to the U.S. is certainly a factor, andthere are great labor resources,” says Tom Blodgett, Execu-Major Outsourcing Cities in JamaicaCityMontego Bay FreeZoneThe Cazoumar FreeZonePortmoreKingstonSource: Global ServicesUSP>> highly developed financial services sectorthat offers on-line banking facilities,and foreign companies may operate theircorporate accounts at any of these institutions.>> Ready access to qualified graduates withskills required for the competitive marketplace>> Client Relations Division helps investorscontact recruitment agencies and traininginstitutions for specific skills.>> Office space, telecommunications facilities,a Flow NOC, catering (canteens) andtransportation for workers.>> Informatics Park has prominent offshoreinvestment opportunities in ICT>> Top quality information processing facilities>> A young, well-educated and computer literatepopulation.>> Huge potential inspite of its high crimerate>> ACS recently purchased a company callede-Services with established operations inKingston.40 GlobalServices www. globalservicesmedia.com October 2009

The gateway to the global sourcing of IT and BPO servicesSpecial ReportAttrition Rate in Jamaican Outsourcing IndustryLow attrition rates relative to industry average>> F&A: 22%>> Data entry: 0%>> Overall: 13%>> Wages: 40% to 60% lower than the U.S. and Europe>> Estimated Average Call Center/BPO wage: (gross, pre-tax andwithout benefits)>> Call center wage $3.50 per hour>> BPO operator wage from $4.50 per hour>> Main Players: Offshore Call centers and BPOJamaica Trade and Investtive Vice President and Chief Operating Officer, CommercialOperations, ACS, a Dallas-based IT service providerand has become the main player in Jamaica by making 100acquisitions over a decade and having 5,400 employees.Jamaica’s world-class Business Process Outsourcing(BPO) capabilities are the result of its educated Englishspeakingworkforce, cultural and physical proximity toAmerica and Europe. Global serviceproviders such as ACS, Alliance One,Salary.com, Vista Print, NationalAsset Recovery Services, e-Services,Paragon Communications, MarketTrack and Accent marketing, have aprominent presence in the country.There are total 24 delivery centersin the country.To establish the IT services outsourcingin Jamaica, the countrywill require huge investments inhigher-tier labor resources and infrastructuresuch as hardware andbandwidth.“The industries that look towardJamaica as an outsourcing destinationare Insurance, financial entities and customer serviceorientedcompanies. Companies looking toward Jamaicaas an outsourcing partner tend to outsource the followingdisciplines: Debt collection, finance and accounting, HRmanagement, graphic design, payroll, customer service,and insurance claims and tech support,” says Don A. Gittens,Senior Consulting Officer, Knowledge Services, JamaicaTrade and Invest.As compared to India and the Philippines, the attritionrate in Jamaican BPO is 15 percent lower, reports PA Consulting.Though the labor cost in the country is higher ascompared to the other two.To establish the ITservices outsourcing inJamaica, the countrywill require hugeinvestments in highertierlabor resources andinfrastructure such ashardware and bandwidthHowever, as the Caribbean community has the highestrate of emigrants in the world, Jamaican talent poolhas also not been able to contribute to its economy to agreater extent. In 2007, the region’s 35 percent of the laborforce migrated to OECD countries since 1965, accordingto a Canadian International Development Agency (CIDA).A closer look at the study reveals that since the independenceof the region, approximately80 percent of Jamaican have gradsleft the country.Interestingly, the Jamaican governmenthas taken prominent stepsfor the outsourcing community byproviding 100 percent tax holidayon profits in perpetuity for servicecompanies that export 85 percentor more of their ICT services. Moreover,the Government is also identifyingoffice space for potentialinvestors by being in the process ofestablishing a technology park forprospective investors.Chris Nuttall, a member of PAConsulting Group managementteam and sourcing advisory expert concludes that manyU.S. corporations and service providers continue to looktoward Canada, Mexico, the Caribbean and Latin Americaas viable destinations for near and offshore work. He believes,any Jamaica or Caribbean strategy needs to be designedin the context of a wider global shared services andsourcing strategy, and it remains critical for the supplyside service delivery centers to become and remain highlycompetitive (against both in-house service delivery centersand against viable alternative onshore, near shore andoffshore centers) so as to secure and ensure a multiyearstream of increasingly valuable workflow.GSOctober 2009 www. globalservicesmedia.com GlobalServices 41

Special ReportWEDNESDAY, SEPTEMBER 02, 2009The gateway to the global sourcing of IT and BPO servicesOutsourcing to ColomboThe 2009 Destination Coverage in Global ServicesAlthough, Colombo outsourcing industry has not yet matured enough to take on high-value offshoredapplication development and management work, the city is well known for its F&A andknowledge-process outsourcing services because of high availability of certified accountants— By Pratibha VermaDespite having battled with terrorism for more than twodecades, Colombo, the largest city and commercialcapital of Sri Lanka, has succeeded in cornering 60 percentof the country’s FDI.In 2006, the country’s FDI was $480 million, and it roseto $889 million in 2008, according to United Nations Conferenceon Trade and Development (UNCTAD) and Board ofInvestment (BOI).The city’s geographical location, infrastructural facilities,direct access to the Indian market, high standards ofthe work force, open economy and various free-trade agreementsmake this place an attractive outsourcing destination.Colombo has 90,000 graduates, according to Census andStatistics Dept. 2008. And, its labor costs is 15 to 20 percentlower than India.Although, its outsourcing industry has not yet maturedenough to take on high-value software product developmentprocesses, it is well known for its F&A and knowledgeprocessoutsourcing services because of high availability ofU.K.-certified accountants.Majority of the city population possess good English languageskills--which makes it ideal for captives in financial,telecommunication and healthcare sectors. HSBC, WNSGlobal Solutions, RR Donnelley, John Keells Computer Services,Just in Time, Virtusa and Astron are some of the companies,which have invested in the city.Despite having all the capabilities, it is tough for the cityto compete with other outsourcing destinations due to lackof investment in the country. The major concern with SriLanka, and hence with Colombo, is the risk factor; althoughthe war between the government and LTTE has ended, therisk perception continues.American customers (the biggest investors) have beendiscouraged from investing in the country because of thetravel warning imposed by the U.S. Department of State fora number of years. According to the warning, American citizenstraveling to or living in Sri Lanka face a risk of continuedinstability, including possible terrorist attacks.According to an investment advisory firm, Tholons’ AnalystSaugata Sengupta, “The problem of geo-political risk hasAverage monthly salaries at each level of experience by job category (in $)Job CategoryLess than 1 yearDatabase Administration and Development 180 289 413 545Digital Media 164 224 317 455Enterprise Systems Consulting 204 323 473 552Network Design and Administration(Networking) 183 268 413 560Software Engineering 194 298 448 636Project Management 228 341 557 739Quality Assurance 175 274 426 612Sales & Marketing 189 290 441 651Technical Support 163 246 333 445Technical Writing 176 257 318 467Web Development 155 239 343 466IT Management 333 471 644 885Average 195 293 427 584Source : National IT Workforce Survey – 200542 GlobalServices www. globalservicesmedia.com October 20091 to 5years6 to 8yearsOver 8years

The gateway to the global sourcing of IT and BPO servicesSpecial Reportmade the investment climate in the country suffer a greatdeal. Since the war between the government and LTTE is nowover, the perception of risk for the country will improve withtime--however, as of now the risk parameter is not congenialfor the offshoring/outsourcing industry in Sri Lanka.”The country is also facing a problem of brain drain dueto lack of opportunities. Sengupta says, “The opportunitiesoutside the country are much more lucrative for them [ITworkers]. The best guys go out of the country toward the Gulfand Europe. However, better salary packages would makethe situation better.”The government and relevant trade bodies are trying to retainthe talent pool by encouraging the ICT sector in general,and the IT/BPO sector in particular. For the encouragement ofthe ICT sector, the Sri Lankan Consulate General, Los Angeles,in association with BOI, has recently launched FDI promotionprogram for entrepreneurs on the West Coast of America.Tholons is quite optimistic about Colombo’s prospects inthe industry. Sengupta says, “As of now only a handful organizations(HSBC, WNS to name a few) are utilizing their economicaland talent pool potential. As the risk perception forSri Lanka improves, they should be well on their way to stillachieve SLICTA’s [Sri Lanka Information and CommunicationTechnology Association] target $1 billion target by 2012.” GSOctober 2009 www. globalservicesmedia.com GlobalServices 43

Special ReportTHURSDAY, AUGUST 27, 2009The gateway to the global sourcing of IT and BPO servicesNearshoring to Bucharest: Say ‘Salut’Besides multilingual services capabilities, Bucharesters inherit strong mathematical andanalytical skills. This is what makes the city an adorable outsourcing location not only to thecompanies that operate in the same time zone but also to the ones several miles away— By Imrana KhanOnce called “Little Paris,” Bucharest is the capital of Romania,and is known for its extravagant architectures andcontemporary high life. With favorable business conditions andexcellent transportation facilities, the city differentiates itself asone of the wealthiest Eastern European urban areas.One of the biggest advantages of this city is its proximity tothe world’s second largest outsourcing services buyer base inWestern Europe.According to Central and Eastern European OutsourcingAssociation (CEEOA)’s 2008 CEE Review report, there were 580domestic and international IT outsourcing companies in Romaniain 2008, with 12,000 IT employees working for the industry.These include companies such as Accenture BPO, Genpact,Ness Technologies, Luxoft, Perot System, TechTeam, Unisys,Wipro and WNS to name a few.However, higher wage rate makes Bucharest an expensivechoice: a techie in Romania earns between $28,510 and $57,450per annum approximately, according to CEEOA. And the industryfeels that too much attention from established players whocontinue to consolidate presence in Bucharest may put a pressureon salary levels.When the Michigan-headquartered IT-services companyTechTeam needed a platform to expand its team quickly withtop talent, it started Bucharest operations in 1998. Today, thecompany that provides technical design, software architecture,development and on-going maintenance for its customers’products has over 160 developers operating out of Bucharest.“We were looking for a combination of attractive costs plustechnical expertise set in a time zone as close as possible to EuropeanStandard Time. In time, TechTeam considered manyother locations to expand on our existing Romanian capabilities(for example, India, the Ukraine, Bulgaria)--each of thesebeing very competitive locations in their turn, but we couldnot find the right mix of technical abilities and pro-activeness,which is characteristic of our business,” revealed the company’sBusiness Development Manager Mihai-Daniel POPA. “Most ofour customers are based in Switzerland, the U.K., Netherlandsand other Western European locations, since time differencewith these countries (1 to 2 hours) works to their advantage(and ours).”Bucharest’s multilingual outsourcing capabilities are alreadyone of the popular ones among the buyers of outsourcingservices. “Proficiency in English and French, but also German,coupled with minimal cultural differences from Western Europe,make communication very smooth. What is characteristicof Bucharest, and Romania in general, is that its people haveThe 2009 Destination Coverage in Global Servicesthe East European frankness of telling whether something canbe done or not, but at the same time manage to do that in aconstructive way related to the client’s bigger picture,” said thespokesperson from TechTeam, which provides services in over25 languages globally.To promote the outsourcing services in the city and otherEastern European outsourcing service providers, many associationsare being formed, and many have been working for thebetterment of the industry for ages. Some of the known namesin the sector are: Central and Eastern European OutsourcingAssociation (CEEOA), Human Resource Outsourcing AssociationEurope (HROAE), Information Technology and CommunicationAssociation of Romania, Romanian Associationof Electronic and Software Industry, Employers Association ofSoftware and Services Industry, and Ministry of Communicationand Information Technology.Bucharest’s educational structure is inclined toward mathematicsand physics. This is why the city has one of the strongestICT educational institutions such as University of Bucharestand Politechnica University of Bucharest. There are otherinstitutions as well that offer technical degrees. Academy ofEconomic Studies is one of those names.According to the 2007 figures of The Information Technologyand Communications Association of Romania, “Every year5,000 graduates leave the universities for the ICT industry oreducation system. On per capita basis, Romania has more ITgraduates than the U.S., Russia, India or China. These peoplehave language skills as a result of a traditional good foreign languageseducation in universities.” The city also lures talent fromother countries, like the Republic of Moldova.With two international airports (Henri Coanda InternationalAirport (OTP) and Baneasa Airport), the city has direct flightsbetween Bucharest and all the major European cities (averageflight duration is 2.5 hours, maximum is 3.5 hours). Transportationnetwork (metros, trams, buses, taxis, and fleet facilities) inthe city is one of the largest in Romania. Interestingly, there aremany international trains from Bucharest to other Western Europeancities including Athena, Belgrade, Istanbul, Kiev, Moscow,Prague, Sofia, and Vienna and vice versa. At the same time,Bucharest is well connected with other Eastern European citiesthrough the country’s robust train network. It facilitates frequentand face-to-face meetings between nearshore outsourcingservice providers and customers from Western Europe.Besides, NATO-grade geopolitical stability and EU-grade IntellectualProperty protection make Bucharest one of the mostattractive nearshore outsourcing cities in Eastern Europe. GS44 GlobalServices www. globalservicesmedia.com October 2009

MONDAY, AUGUST 24, 2009Outsourcing to South AfricaThe gateway to the global sourcing of IT and BPO servicesSpecial ReportThe 2009 Destination Coverage in Global ServicesAbundant supply of resources. A well developed financial, legal, communications, energy andtransport sector. A stock exchange (the JSE Limited) that ranks among the top 20 in theworld. A modern infrastructure supporting an efficient distribution of goods to major urbancenters throughout the entire region. A look at South Africa, which is nurturing ambitions forrobust outsourcing engagements— By Diksha DuttaAlthough considered a shopper’s paradise, South Africais also home to significant offshoring and outsourcingactivity.SA is an established destination for its capabilities in BPOwith a major focus on customer services and financial services.It has extensive financial-services expertise, particularlyin insurance, mortgage processing and collection.Legal services outsourcing is seeing steady growth. SA’slegal structure is almost exactly the same as the U.K. As perTholons, Eversheds, one of the world’s largest full service lawfirms with operations across the U.K., Europe, the Middle Eastand China has made significant deployments in the countryby outsourcing a host of its processes to South Africa. Eversheds,through its alliance with a local partner, has enjoyedthe benefits of a similar legal system and availability of nativeEnglish-speaking lawyers. Excellent cultural/language/accentcompatibility with European client nations helps.Lovells is one of the handfuls of law firms piloting theoffshoring of a portion of low-end legal work. In addition toLovells, several magic circle firms including including CliffordChance , Allen & Overly and Linklaters are rumored tobe actively looking at launching their own SA legal processoutsourcing program.SA has also attracted engineering and R&D operations.Tholons reveals that Renault and Siemens are already presentin Johannesburg. Renault is a French automaker producingcars, vans, buses, tractors, and trucks. Due to its alliancewith Nissan, it is currently the world’s 4th largest automaker.However, the market for IT services is still emerging inSA. Till now, IT services has restricted itself to the domesticmarket. According to Tholons, an investment advisory firm,Business Connexion is an emerging large IT services providerwith significant record in ADM and IT-infrastructure managementservices, though the largest company in IT servicesis Dimension Data. Smaller IT-services firms such as 3i Solutions,Saratoga are yet to gain momentum.Moreover, the South African corporate sector spends anestimated R7 billion per year on research and development(R&D). In its 2004 to 2005 financial year, Siemens alone spentabout six times as much, with global R&D expenditure comingin at more than 5.2 billion Euros, fourteen percent ofwhich is invested into the medical field, while 19 percent isconcentrated on Automation and Drives.Nearshore AdvantagesSA cannot be seen as a low cost destination for outsourc-October 2009 www. globalservicesmedia.com GlobalServices 45

Special ReportThe gateway to the global sourcing of IT and BPO servicesService Providers in South AfricaLegal ServicesBusiness ProcessesIT ServicesSource: TholonsLovells, Clifford Chance , Allen & Overly andLinklatersUnisys, Virgin, LufthansaBusiness Connexion, Dimension Data, 3i Solutions,SaratogaMajor outsourcing cities in South AfricaJohannesburgCape TownPort ElizabethDurbanSource: TholonsQuick TakeLocationPopulation 49,052,489Literacy rateUnemployment rateGDP(official exchange rate)Source: CIA Fact Filesing. Entry level BPO salary in Johannesburg can range from$1,000 to $1,100. Cost of an ITO entry level employee canrange anywhere from $1500 to $1,600 monthly compared to$400 to $500 per month in tier-1 Indian cities. BPO in SouthAfrica (including captives) employs just about 30,000 to35,000, in comparison to India’s about 800,000.Investments in outsourcing business in SA does not yieldan optimal return compared to risks, except maybe for apartfrom legal process outsourcing.Southern Africa, at the tip of the continent of Africa87 percent21.7 percent$300.4 billionCost advantage of SouthAfrica over countrieslike India is not favorableto see significantgrowth in outsourcingduring this period ofrecession. However,Call Center (Domesticand International)contributes to about 1percent of the GDPAllan Wattrus, Director, Global Outsourcingand Infrastructure Services,Unisys Africa says, “The diverse backgroundsof people in South Africa, withthe influence of Europe and the UK,provides us with a pool of resourcesthat can deliver services in most languagesfound in our time zone. French,German, Dutch, Italian, Portugueseand Spanish are some examples of thelanguage competencies accessible inaddition to English. Offering multilingualcompetency to more clients isa definite attraction.” He also explainsthat delivering services into close timezones where language and culture aresimilar and the client is looking forservices that are more than just an operatoron the other end of a telephoneis where opportunity exists. Unisys Africa’smain location is in Rivonia nearJohannesburg and has another location in Capetown.SA has a unique time-zone compatibility with Europe.The time zone advantage (GMT +2) with Europe enables it toqualify as an attractive nearshore destination.The major outsourcing cities in the country are Johannesburg,Cape Town, Port Elizabeth and Durban, primarilybecause of their advanced development in the country.According to Tholons, on the other hand, key clientmarkets for SA include the U.S., Canada, Mexico, the U.K.and Western Europe (Germany and Netherlands). Also,the key Captives include Shell, Budget Group (Fusion Outsourcing),Pruhealth, Carphone Warehouse, Virgin, Lufthansa(Global Telesales).Another advantage with SA is a favorableand stable exchange rate versusEuro. In addition, the stable exchangerate ($1 = ZAR 7.1) is a factor that helpsthe country with its macroeconomicattractiveness.Strong government support givenby the SA government is likely to adda lot of value in its outsourcing sector.In 2007, SA government spent 1.1 billionon a BPO support program. Theplan focused on a broad-based marketingstrategy. It included a governmentsupport program that had investmentgrants and training subsidies. A developmentalpricing framework for telecommunicationswas also one of itsfeatures. However, the results for thisplan are still awaited.The overall picture suggests that SAis still growing in terms of an outsourcingdestination though it has exclusivityin some areas. Tholons views that cost advantage of SouthAfrica over countries like India is not favorable to see significantgrowth in outsourcing during this period of recession.However, Call Center (Domestic and International) contributesto about 1 percent of the GDP.46 GlobalServices www. globalservicesmedia.com October 2009GS