Top 50 Emerging Global Outsourcing Cities - Tholons

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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
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Top 50 Emerging Global Outsourcing Cities - Tholons

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