1. Offshoring OpportunitiesAmid Economic TurbulenceThe A.T. Kearney Global Services Location Index, 2011

2. T he current global services landscape is marked by countervailing trends. On one hand, firms are responding to intensifying cost- cutting imperatives by moving operations offshore. On the other,politicians are using global services offshoring as an easy scapegoat forcurrent economic woes and high unemployment levels in their homecountries, stoking resentment against globalized firms and their foreignhost countries. Although signs of a slowdown in the growth of globalservices are evident in this environment, dont expect offshoring to end.In fact, the global services industrys full potential is ready to be tapped.As we publish the 2011 A.T. Kearney GlobalIn terms of the industrys broader macro-Services Location Index, we find that theeconomic environment, the world in 2003 wasworld of services offshoring has changed dramati- similar to todays, emerging from an economiccally since we published the first report in 2003.1 slowdown that had begun two years earlier.What was then an emerging phenomenon that At the time, the economy soon returned to health.seemed to have great potential is now a natural Likewise, the hope today is for renewed growth,element of corporate services supply chains. Thebut the situation is still fragile. The Internationalindustry has grown significantly and in manyMonetary Fund (IMF) projects gross domesticcases exceeded expectations from the early days.product (GDP) growth of 2.3 percent in theThe part of the value chain that can be performed United States in 2011 hardly the kind of dyna-offshore has increased in value-add and complex-mism that would propel the global economy. Theity as we continue to see new types of services IMFs latest projections for global economicbeing handled remotely and across borders. At growth an estimated 4.8 percent in 2010 andthe same time, the geography of offshore delivery 4.2 percent in 2011 come with the warninghas expanded to include a large number of coun- that global recovery remains fragile, becausetries specializing in different parts of the service- strong policies to foster internal rebalancing ofproduction ecosystem. demand from public to private sources and external1The first report was named the A.T. Kearney Offshore Location Attractiveness Index.OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 1 3. Figure 1The A.T. Kearney Global Services Location IndexTM, 2011 Financial People skills Business Rank Country attractivenessand availabilityenvironment Total score 1India3.112.761.14 7.01 2China2.622.551.31 6.49 3Malaysia 2.781.381.83 5.99 4Egypt3.101.361.35 5.81 5Indonesia3.241.531.01 5.78 6Mexico 2.681.601.44 5.72 7Thailand 3.051.381.29 5.72 8Vietnam3.271.191.24 5.69 9Philippines3.181.311.16 5.6510Chile2.441.271.82 5.5211Estonia2.310.952.24 5.5112Brazil 2.022.071.38 5.4813Latvia 2.560.931.96 5.4614Lithuania2.480.932.02 5.4315United Arab Emirates 2.410.942.05 5.4116United Kingdom 0.912.262.23 5.4117Bulgaria 2.820.881.67 5.3718United States0.452.882.01 5.3519Costa Rica 2.840.941.56 5.3420Russia 2.481.791.07 5.3421Sri Lanka3.200.951.11 5.2622Jordan 2.970.771.49 5.2323Tunisia3.050.811.37 5.2324Poland 2.141.271.81 5.2325Romania2.541.031.65 5.2126Germany0.762.172.27 5.2027Ghana3.210.691.28 5.1828Pakistan 3.231.160.76 5.1529Senegal3.230.781.11 5.1230Argentina2.451.581.09 5.1231Hungary2.051.241.82 5.1132Singapore1.001.662.40 5.0633Jamaica2.810.861.34 5.0134Panama 2.770.721.49 4.9835Czech Republic 1.811.142.03 4.9836Mauritius2.410.871.70 4.9837Morocco2.830.871.26 4.9638Ukraine2.861.071.02 4.9539Canada 0.562.142.25 4.9540Slovakia 2.330.931.65 4.9141Uruguay2.420.911.42 4.7542Spain0.812.061.88 4.7543Colombia 2.341.201.18 4.7244France 0.382.122.11 4.6145South Africa 2.270.931.37 4.5746Australia0.511.802.13 4.4447Israel 1.451.351.64 4.4448Turkey 1.871.291.17 4.3349Ireland0.421.742.08 4.2450Portugal 1.211.091.85 4.15Note: The weight distribution for the three categories is 40:30:30. Financial attractiveness is rated on a scale of 0 to 4, and the categories for people skills and availability, andbusiness environment are on a scale of 0 to 3.Source: A.T. Kearney Global Services Location IndexTM, 20112 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 4. rebalancing from deficit to surplus economiesadvanced economies); asymmetrical rates ofare not yet in place.2 The IMFs recent Globalrecovery between developed and developingFinancial Stability Report offers a similar caveat:worlds; uncertainty about the capacity of theThe global financial system is still in a period of United States to engineer a strong economicsignificant uncertainty and remains the Achillesrecovery; persistent questions in Europe about itsheel of the economic recovery.3 fiscal maneuverability (highlighted by the recur- Within this shifting macroeconomic environ- rent sovereign debt and banking crises); concernsment, the Index continues to track the contours of about persistent economic obstacles in Japan; andthe global outsourcing landscape in 50 countries reservations about the capacity of the G20 coun-and their potential across three major categories: tries to formulate unified responses to their variousfinancial attractiveness, people skills and availabil- economic challenges. It is no surprise, therefore,ity, and business environment. We consider 39that the IMF finds that downside risks remainmetrics to identify the top countries for delivering elevated (see sidebar: A World of Risks on page 4).4information technology (IT), business process As the economic environment shifts, theoutsourcing (BPO) and voice services (see appen- picture in the global services industry is growingdix: About the Study on page 19).more complex. Political backlash against offshor- This paper presents an overview of the 2011 ing and talk of reshoring bringing functionsfindings of the Index (see figure 1). We examine and jobs back to home countriesare common-the results for each region and offer guidance for place, and the economic crisis and high unem-choosing the right locations around the globe to ployment rates have made such reshoring in tier-2perform services. In the final analysis, maximizingand tier-3 locations in developed countries morethe benefits of offshoring is vital for success attractive. Still, huge potential remains for global-regardless of economic conditions. ized services delivery, as new technologies such as cloud computing help it continue to evolve rap-Industry in Transition idly.5 How, then, will the traditional outsourcingAfter the 2008 financial crisis hit, we predictedbusiness model change in the future?an immediate and significant impact for globalOffshoring will overcome negative percep-services outsourcing, considering that financial tions. Economic turmoil renewed the negativeservices firms were the biggest customers of ser-perception of offshoring and its perceived impactvices outsourcing and the United States was theon domestic labor markets in developed countries.worlds economic center of gravity. Today, we look In the 2009 Index, however, we pointed to evi-back at an industry that has certainly endured two dence suggesting the contrarythat the sectorslean years.with the fastest employment growth in developed The reality is that the global business environ-countries were actually tradable (or offshoreable)ment has been in profound flux for a variety ofservices.6 In other words, despite growing con-reasons: contrastingand conflictingrecoverycerns about job losses, these services still grew inand post-recovery strategies (especially among developed countries as economies globalized.2IMF, World Economic Outlook: Recovery, Risk, and Rebalancing, Washington, D.C.: October 2010.3IMF, Global Financial Stability Report: Sovereigns, Funding, and Systemic Liquidity, Washington, D.C.: October 2010.4IMF, World Economic Outlook: Recovery, Risk, and Rebalancing, Washington, D.C.: October 2010.5See Software Demand Management at www.atkearney.com.6For more information about the 2009 Index, see The Shifting Geography of Offshoring at www.atkearney.com. OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE | A.T. Kearney 3 5. A World of RisksWith a global business environment tial differences in how to strike arate of 6.4 percent, compared toin flux and economies continuallybalance between continued stimulus 2.2 percent for developed countries.shifting, the picture in the global ser- and belt-tightening to avoid large In short, because they have beenvices industry is growing more com-deficits and longer-term debts. Themore resilient in the face of the reces-plex. The following trends have signif-choices these two countries make sion, emerging economies are catch-icant implications for the industry: have a major impact on the globaling up more quickly. A sector shift isCountries are pursuing different services market, as these countriesalso under way, as developing econo-fiscal strategies. The differences inare the largest demand centers for mies ramp up their service sectorshow countries are adjusting follow-services outsourcing.in addition to their manufacturinging the Great Recession could notProduction and consumption base. China, in particular, appearsbe more pronounced. Consider, forare shifting. Among other things,set to expand its services sector inexample, the stark contrast betweenthe Great Recession has acceleratedthe coming decade.the hard-line fiscal austerity program the shift of global economic produc- Political uncertainty in thepursued in the United Kingdomtion and consumption from devel- United States. In the aftermath ofand the quantitative easing underoped to developing worlds. The IMF the November 2010 mid-term elec-way in the United States. The polar- predicts that in 2011, developingtions, the outlook in the Unitedopposite policies underline substan- countries will grow at an averageStates for an enduring political con-In a political climate of high unemployment, strong, traditional IT outsourcing services arehowever, these concerns are still intensifying asunder threat. These include multi-year contractspoliticians respond to the growing frustrations of based on developing and maintaining customtheir constituents. While reducing global services code and requiring legions of programmers andtrade through legislation and regulation is nearly on-site systems-integration workers. In the newimpossibleespecially when dealing with multi- model, outsourcers provide standardized softwarenational companiesmany firms have elected solutions on a per-use basis. Such services requireto keep at least a temporarily low profile on theirthat outsourcers combine BPO services withoffshoring to avoid risking their reputations. Incloud-based technology, enabling customers tothe long run, however, the cost and talent arbi- outsource entire business processes and only paytrage benefits for overseas locations are still greatfor the information they access or use.7and the underlying business case for offshoring In the past two years, a variety of outsourcersremains intact. As manufacturing supply chains have worked on acquiring the complete stack ofhave permanently left the shores of developedcapabilities required to survive the shift andeconomies, the same is happening to services create a new business model for the outsourcingsupply chains, and a forced move to reshore them industry. These capabilities include: hardwarewould result in significant costs for businesses.and connectivity for hosting and network capabil-Traditional outsourcing is under threat. ities; standardized software that can be deployedWhile the business case for offshoring is stillon shared hardware platforms or through cloud7See Building Flexibility into Software Licensing at www.atkearney.com.4 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 6. sensus to address the nations eco-shoring and its link in the public and elsewhere. Demand centers innomic challenges seems as remote consciousness to economic hardship Western Europe will consequentlyas ever. Nevertheless, the seriousness in the United States.face a challenging road ahead. Com-of the countrys fiscal worries wasEuropes precarious fiscal panies that have restructured mayunderlined recently by the austere situation. The Greek debt debacleemerge stronger and leaner, with arecommendations of a bipartisanlast spring highlighted the precari- favorable attitude toward offshoring.commission on reducing the nationalousness of Europes economic out-Debates about internationaldebt. For firms with global opera- look, and the ensuing debate onexchange-rate policy. The growingtions, the political climate is particu- fiscal policies demonstrates the wideinternational debate over exchange-larly sensitive. A bill introduced inarray of opinions across the eurozone. rate policyand the threat of cur-the Senate this year sought to bar The Organisation for Economicrency warsreflects the lack ofcompanies from receiving tax credits Co-operation and Development a strong, institutionalized, inter-or deductions if they closed a U.S.- (OECD) predicts an uneven recov- national organizational architec-based facility in favor of one over- ery in the eurozone, with growth ture that can address the dynamicseas. Though defeated, the billscurtailed because of deficit-reduction nature of the worlds problems.title Creating American Jobs and plans and credit-market tensions IMF, World Economic Outlook.Ending Offshoring Actis a testa-related to the persistent sovereign- OECD Economic Outlook, Paris:ment to the unpopularity of off- debt concerns in Greece, Ireland18 November 2010.computing; new service capabilities; and commer- manufacturing powerhouses and we can expectcial strength to move from a long-term contractto see a similar development in services. As withmodel to a flexible, pay-as-you-go approach. offshoring of manufacturing, the move of servicesThese are the preliminary steps toward what will jobs will grow less controversial with the passageend up being a revolution in the BPO and ITO of time. Much as the United States and EU coun-marketplace.8tries exchange a wide range of services, trading of Globalization of services has tremendousservices will also grow between developed anduntapped potential. Regardless of changes in the developing countries. In the medium to longoutsourcing industry business model and otherterm, demographics will reinforce this trend. Astemporary setbacks, we believe the era of global-the developed world ages, it faces a choice betweenization of services production has only just begun.allowing more liberal immigration policies andThe untapped potential is enormous. IT and importing manufactured goods and services.BPO offshoring are early manifestations of a largerCountries such as India and Egypt, with large,trend that, in the long run, means that more func- young populations, are well-positioned to take ontions can and will be located outside the countriesa greater role in delivering services to countrieswhere end-customers reside.with shrinking labor pools. We have already witnessed a shift in the foot- In the future, therefore, we will see a dramaticprint of manufacturing across the globe to the shift in the relative balance of service productionpoint at which emerging markets have becomeamong developed and emerging markets.8See Outsourcing (But Not as We Know It) in Executive Agenda, Vol. XIII, No. 2, 2010, at www.atkearney.com.OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE | A.T. Kearney 5 7. Highlights of the 2011 IndexBaltic states are a dramatic example EstoniaThe top three countries in the 2011 Index havemoves into 11th place and Latvia 13th amiddemonstrated remarkable staying power. Thanks ongoing austerity programs. The United Kingdomto their deep talent pools and cost advantages, advances from 31st to 16th place due to theIndia, China and Malaysia have been first, second pounds fall in value coupled with slowing wageand third, respectively, since the inception of the increases. Mexico reaches 6th place and is nowIndex. Wage changes and currency shifts from theLatin Americas top location in the Index, thanksfinancial crisis, however, have led to major changesto currency depreciation and increased nearshor-in other rankings within the Index (see sidebar:ing sentiment in the United States. In the MiddleCurrency Woes on page 7). East, improving fundamentals allowed EgyptFormerly lower ranked states with highlyto inch forward to 4th, while the United Arabqualified labor once again became viable optionsEmirates (UAE), acting as a regional services hub,amid currency devaluation (see figure 2). The moved from 29th to 15th position, because itsFigure 2Fallout from the financial crisis shook up the rankings, as once-expensive countries moved upChange in rankings (2009 to 2011) 1 India0 26 Germany 8 2 China0 27 Ghana 12 3 Malaysia 0 28 Pakistan 8 4 Egypt2 29 Senegal5 5 Indonesia0 30 Argentina5 6 Mexico 5 31 Hungary 6 7 Thailand3 32 Singapore 3 8 Vietnam2 33 Jamaica10 9 Philippines 2 34 Panama910 Chile 2 35 Czech Republic311 Estonia5 36 Mauritius 612 Brazil 0 37 Morocco813 Latvia14 38 Ukraine 414 Lithuania5 39 Canada 1315 United Arab Emirates 1340 Slovakia216 United Kingdom15 41 Uruguay517 Bulgaria 442 Spain 318 United States443 Colombia019 Costa Rica 3 44 France320 Russia 1345 South Africa 521 Sri Lanka446 Australia 122 Jordan 13 47 Israel223 Tunisia548 Turkey 424 Poland15 49 Ireland125 Romania450 Portugal0 Source: A.T. Kearney Global Services Location IndexTM, 20116 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 8. service sector became more competitive as the the United States accounted for 63 percent offinancial crisis tempered the breakneck speed ofglobal IT offshore outsource spending, downits growth.9somewhat from pre-crisis levels of approximately The following offers a breakdown of the67 percent.10 At the same time, the United StatesIndex results by region:presents an interesting supply possibility, as its North America. The United States is the toptier-2 locations rank 18th in the Index, thanks tocustomer market for outsourcing services andits top position in people skills and availabilitywill remain so for the foreseeable future. In 2010, (see figure 3 on page 8).Currency WoesFluctuating currencies cause vola-This doomsday scenario willrenminbi and other emerging markettility for corporate planners, andhopefully be averted as central bankscurrencies would appreciate. Offshor-currency concerns will likely remainand international institutions comeing companies will see a decline ina central feature of internationaltogether to broker solutions among labor arbitrage opportunities in certainbusiness and policy into the future.major players such as the United countries as this process unfolds.China is currently under attack for States and China. Kati Suominen of The challenge for corporate plan-its undervalued currency, which has the German Marshall Fund sees twoners is to look beyond the month-to-been propped up by $2.5 trillion in other more palatable options going month or even year-to-year currencyreserves. Meanwhile, the United forward: dtente and containment. swings so they can stay attuned toStates has angered some countries In dtente, countries would look tothe long-term trends. A typical plan-because of its quantitative easing. the IMF to settle disputes and provide ning horizon for establishing offshore Government interventions solutions for international currency centers is three to five yearsoftenthroughout the world are prompt-troubles. This would be a neat solu- longer. Some of the exchange-rateing worries about destructive cur- tion to current problems, but highly fluctuations we have seen in the pastrency wars. A full-scale currencyunlikely given that policymakers infew years may be merely blips, such aswar would indeed put the brakes many emerging markets still do not the dramatic dip of the British pound.on the worlds economic growthtrust the IMF. In containment, coun- Other currencies are significantlyprospects and would injure thetries would not cooperate at the level more likely to experience longer-termglobal offshoring industry. In such described above, instead holding out changes. As developing countries (fora scenario, economic relationsthe threat of tariffs and currency example, China and India) experiencebetween countries could devolve devaluations. The interconnectedness dramatic export-led growth, theirinto tit-for-tat duels about curren-of their economies and a fear of currencies will come under long-termcies one country erecting tariffs mutually assured destruction, how- pressure to appreciate, which has theto counter the effects of anothers ever, would lead to a certain level of potential to alter the economic calcu-devaluation. Economic uncertainty good behavior. This system could belations of corporate planners.would reign and companies would stable for global firms to navigateKati Suominen, Globalization at Risk:find global service supply chains albeit cautiously. The dollar would Challenges to Finance and Trade, YaleUniversity Press, New Haven, Conn.:costly and difficult to maintain. likely decline in this era while theOctober 2010.9The rankings were made before the recent political unrest in Egypt and Tunisia began. As a result, the political uncertainty and country risk associated withboth countries have dramatically increased. The situations need to be monitored closely to gauge whether the long-term risk profiles will change.10 International Data Corporation, Worldwide and U.S. Offshore IT Services 2010-2014 Forecast, May 2010. OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 7 9. Figure 3The United States leads in people skills and availabilityPeople skills and availability scoresUnited States (tier 2)4.372.22 1.341.67 9.60 India 4.342.221.391.25 9.20China3.902.221.331.06 8.51United Kingdom (tier 2) 3.940.551.39 1.67 7.55Germany (tier 2) 3.92 0.58 1.40 1.33 7.23 Canada 3.69 0.311.471.67 7.14France (tier 2) 3.93 0.531.371.22 7.05Brazil 2.891.751.071.19 6.90Spain3.91 0.401.321.22 6.85 Australia 2.651.441.67 6.00 Russia 1.821.691.291.18 5.98Ireland2.671.411.67 5.79Singapore 2.611.521.38 5.54 Mexico2.110.891.141.19 5.33Argentina2.41 0.481.061.31 5.26Indonesia1.181.721.091.10 5.09 Malaysia1.91 1.241.22 4.60Thailand 1.770.631.16 1.03 4.59Egypt 1.650.72 1.04 1.11 4.53Israel 1.871.24 1.31 4.49 Philippines 1.380.83 1.941.22 4.38 Turkey 1.330.721.20 1.07 4.31Poland 1.18 0.461.391.22 4.25 Chile 1.701.201.15 4.22Hungary 1.42 1.37 1.26 4.15 Colombia1.46 0.41 1.001.13 3.99Vietnam1.08 0.68 1.22 0.97 3.96Pakistan 0.710.97 0.941.22 3.85 Czech Republic 1.04 1.391.26 3.79Portugal0.90 1.311.33 3.63 Ukraine 0.600.581.24 1.17 3.58 Romania 0.751.141.29 3.42 Estonia0.401.43 1.33 3.18 Sri Lanka 0.62 1.28 1.13 3.16 United Arab Emirates 0.801.420.89 3.15 Costa Rica0.62 1.191.29 3.14Latvia0.531.351.21 3.11 Lithuania 0.511.341.21 3.10Slovakia 0.481.341.22 3.10 Relevant experienceSouth Africa 0.81 0.35 0.581.35 3.09 Size and availability of labor forceUruguay 0.541.171.29 3.04 EducationBulgaria0.511.161.21 2.94Mauritius0.481.11 1.31 2.91Language capabilities Morocco 0.59 1.03 1.07 2.90Jamaica0.300.86 1.67 2.85Tunisia0.48 1.051.07 2.70Senegal0.361.250.90 2.59Jordan 0.34 1.121.06 2.58Panama0.42 0.831.13 2.41 Note: Values below 0.20 not shown due to space constraints. Ghana 0.32 0.80 1.06 2.31 Source: A.T. Kearney Global Services Location IndexTM, 2011 Some cause for concern exists, however: U.S.sions or choosing local options, historical trendsanti-outsourcing sentiment is re-emerging, par-suggest that once the economy rebounds, global-ticularly given the countrys stubbornly highization will resume.unemployment rates and rancorous political dis- Still, companies are not automatically assum-course. While we believe that some companies ing that overseas locations are the answer to theirwill likely respond to such a hostile environmentservice transformation questions. U.S. tier-2 andin the short term by postponing offshoring deci- tier-3 cities with strong talent pools and low oper-8 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 10. ating costs are becoming attractive alternatives, ining nearshoring sentiment, even with the difficultlight of lower domestic wages and greater avail-times related to escalating drug violence in itsability of human resources during the recession.northern states. The country boasts one of the Canada (39th) falls in the Index this year. It ishighest numbers of Capability Maturity Modelno longer primarily an offshore destination to theIntegration (CMMI) certified centers worldwide.11United States, as its relative cost-competiveness Additionally, as its management schools improvehas eroded. Instead of strong growth in contact in quality, Mexico could carve out an importantcenters serving its southern neighbor, Canada isspace in the service sector (see sidebar: Mexico: Citytoday equally important as an integrated part ofby City on page 10).the North American IT supply chain,much as the two countries auto-motive industries have become inter-twined over the years with multiplesupplier relationships and assembly Mexico stands to benefit fromplants on both sides of the border. Latin America. Latin Americas increasing nearshoring senti-proximity to the U.S. consumer mar-ment, even with the difficultket serves it well as a services hub.With a growing Spanish-speakingtimes related to escalating drugpopulation in the United States andEnglish proficiency continuing toviolence in its northern states.grow in Latin America, customer ser-vice activities will naturally increase.Latin America, similar to otherregions, presents a kaleidoscope of skill sets.Chile dropped to 10th place from 8th, largelyBrazil excels in IT and is a strong platform loca-because its economic contraction was less severetion for software developers and systems integra- than elsewhere, meaning its wages have remainedtors. Mexico is becoming a more prominent BPO relatively stable. The countrys infrastructure scorelocation, as it supports the United States with also received a slight downgrade because of theboth Spanish and English. Meanwhile, Chile hasvulnerabilities exposed during the February 2010emerged as a niche destination for R&D and ana- earthquake; although by all accounts, Chileanlytics, while Costa Rica and Argentina continue toauthorities response to the disaster was com-grow their offshore services presence despite facingmendable. The recent success in rescuing trappedsome decline in cost-competitiveness. miners has helped fortify the countrys brand. Mexico (6th) is the highest-ranked LatinBrazil ranks 12th for the second straight year.American country. Its average wages decreased 18The countrys standing in global services has beenpercent in dollar terms last year, as it was buffeted challenged in recent years by a strengthening cur-by economic headwinds from the United States. rency. While this demonstrates strong economicThe country now stands to benefit from increas- prospects in a bleak global landscape, it hinders11 CMMI is a process-improvement program created by the Software Engineering Institute of Carnegie Mellon University. OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 9 11. export growth. The triumph of President Luizelectricity infrastructure. Argentina (30th) falls Incio Lula da Silva (whose term in office endedfive slots as inflation and rising demands among on the first day of 2011) in bringing Brazil to the labor leaders for increased wages challenged its global stage will hopefully linger as his successor,competitive position. Dilma Rousseff, the countrys first elected female Colombia (43rd) enters the Index after per- president, defines the new political trajectory.forming particularly well in the people skills and Costa Rica (19th) moves up three spots, availability category. Colombian Spanish is a neu- thanks to infrastructure modernization, increased tral accent that allows call centers in Colombia to international bandwidth and improvements in serve people throughout the Spanish-speaking Mexico: City by City The Global Services Locationture for IT services. Mexico Cityboth technical and soft skills by Index looks at IT/BPO potential also offers a vast range of services 2013. Mexico IT promotes Mexico at the country level, but in ourand Queretaro is a smaller alternative as a nearshore outsourcing location client work we are asked to develop location that has capitalized on its for U.S. companies. ProSoft offers a more detailed view of each coun-aerospace industry to grow (seesubsidies and tax incentives for com- try in order to match client needsfigure). Across all regions, Mexicopanies investing in the IT sector. to specific locations. We therefore has prioritized the development of The following offers a description work with clients to customize thethe IT/BPO industry through severalof some of Mexicos top destinations: Index methodology according toinitiatives. Mexico First aims to cer- Guadalajara is often referred to their specific preferences. Oncetify 60,000 specialized workers in as Mexicos Silicon Valley, reflect- a shortlist of countries is deter- mined using this methodology, we Figure: Key IT/BPO locations in Mexico perform deep dives for each location to understand the internal market dynamics. This research requires Ciudad Jurez MonterreyHub for nearshore City features top a thorough assessment of suchBPO has securitytechnical university aspects as city-level talent availabil-concernsand homegrownIT firms ity, government incentives and infrastructure. Here we provideSantiago de a brief outline of a city assessment Queretaro for Mexico. We selected this coun- HermosilloLess expensiveTier 2 emerging location is an try instead of several others in the location is aerospace hubclose to the Index because not only is it a top U.S. West Coast performer with a large industry, Mexico City it also presents a range of capabil- Largest city has aCuliacn GuadalajaraBPO focus and a ities across the country.Tier 2 locationMexicos Silicondeep pool of talent Guadalajara and Monterrey arefeatures contact Valley is home to HP,centers and IT IBM and Flextronics the top locations in Mexico in terms of talent availability and infrastruc-Note: BPO is business proc process outsourcingcessSourceSource: A.T. Kearney Global Services Location IndexTM, 201110 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE|A.T. Kearney 12. world with relative ease. A major hurdle, however,now all Colombian school children receive Englishis the level of English among professionals. As training. In Bogota, the Talk to the World cam-Colombias currency appreciates, the government paign provides funding for companies to upgradewill have to adjust to the fact that it will not be abletheir employees English capabilities.to compete as a low-cost destination and will have Europe. The financial crisis pummeled manyto look higher on the value chain for advanced ser- economies in Europe, and fiscal woes in Greece,vices such as architectural rendering and finance.Ireland and elsewhere have raised the specter thatTo achieve this shift, several English-improvementthe euro could fail. In the process, countries out-programs have opened in the past few years, and side the eurozone that were once too expensive oring its history as a major electronics Though foreign firms have not yet pool, however, is shallower than thecenter specializing in software design,been directly targeted, a general others listed above.semiconductor design, embedded sense of unease is stifling invest- Ciudad Jurez has long been asoftware and multimedia. General ment or expansion of operations inhub for nearshore BPO services, cap-Electric, IBM, Intel, Hitachi, the area. italizing on its proximity to El Paso,Hewlett-Packard, Siemens, Flextron-Mexico City hosts numerousTexas, just across the Rio Grande,ics and Solectron have national head-large and small IT firms, domesticto turn large volumes of physicalquarters or major development cen- and foreign, offering voice, BPOdocuments into data. It is one of theters in the city. The region containsand KPO services. The growth of Mexican cities hit worst by drug-16 ITO and BPO service centers,this sector in Mexico City is a natu- related violence, however, with more150 software companies and 35ral byproduct of the citys economicthan 3,000 homicides in 2010 alone.design houses, but competition isweight and the synergies among theHermosillo and the surroundingfierce for the limited talent that broad range of businesses operating area is a tier-2 option just across thespeaks English.there. The city has shown increased border from the United States that inMonterrey is an IT and BPO focus in recent years on BPO devel- the past has been primarily orientedcenter, housing both international opment. The city and its environs toward manufacturing operations,and domestic firms and home to contain 72 universities with IT but which is emerging as an IT desti-Mexicos most successful homegrown programs. nation in close proximity to clientsfirms Softtek and Neoris. SofttekQueretaro provides an alternative on the U.S. West Coast.was started by engineers from petro- location to the countrys established Culiacn is another tier-2 loca-chemical company Alfa, while Neorishubs and has gained prominence as tion. Its main focus is IT and contactwas a spin-off of the IT operationsan aerospace hub and manufacturingcenters. Many of the IT companiesof Mexican multinational cementsite for Canadian aerospace and in Culiacn are working in state-sup-giant CEMEX. Firms in Monterreydefense company Bombardier. The ported IT technology clusters.have access to some of the countrys Queretaro site offers call-center and Other states, such as Aguascali-top technical talent through the BPO capabilities; the knowledge entes, Zacatecas and Baja California,Monterrey Technical Institute. base of the local population is highare also starting to develop strategiesHowever, Monterrey is experienc- and compensation costs are also less, to promote the IT/BPO sector,ing an upsurge in drug war violencein part because of the locations rela- mainly through technological parksconnected to the northern states.tive obscurity. The regions laborand human capital initiatives.OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 11 13. had experienced long stretches of growth onceHowever, he bundled his somewhat reassuring again became viable offshoring options.message with a plea to Indian firms that they findEstonia (11th), Latvia (13th) and Lithuania a way to invest in job growth in the United (14th) are examples of countries that have climbed Kingdom. Trade relations between the two coun- in the rankings as a direct consequence of the eco-tries have indeed become quite symbiotic, with nomic crisis. Strong people skills have allowedjobs in the United Kingdom being created by these countries to develop small but strong BPOIndian firms and vice versa. and voice markets. The global financial crisis hit In addition to the United Kingdom, we also all three (Latvia in particular) harder than mostinclude two other main customer markets for IT/ countries, propelling them into a dire situation BPO services in Europe: Germany and France. with rapidly expanding current account deficits. We use tier-2 cities (cities in areas of the country Instead of devaluing their currencies, Latvia, that have a lower relative income level) in these Lithuania and Estonia pursued what they called countries as a benchmark to compare them to the internal devaluation. Their governments andoffshore competition. For the United Kingdom, private sectors cut wages by an average of 35 per- we use cities in Northeast England, Wales and cent and slashed expenditures. As a result of theseNorthern Ireland as benchmarks. For Germany, painful adjustments, cost levels became more we use Saxony in the former East Germany, and competitive. Increased cost-competitiveness hasfor France, the region of Languedoc-Roussillon. propelled these countries to the higher echelons ofIn Central and Eastern Europe, Poland is the the Index and has already yielded new invest-top story, moving up 15 places to 24th after ments in the IT/BPO sector. U.K.-based Barclaysweathering the economic troubles and benefiting opened an IT center in Vilnius in 2009, and U.S. from improved investor sentiment. Hungary financial services company Western Union has (31st) and the Czech Republic (35th) also fared also announced plans to establish a regional ser-slightly better this year because of decreasing wage vice center in Lithuania. Significant growth is stilllevels. However, the nearshoring story in Europe needed, however, to get the Baltic states on the still shows a shift to Bulgaria (17th), Romania same turf as the more traditional European out-(25th) and the Middle East. sourcing locations.Portugal (50th), Ireland (49th) and SpainThe United Kingdom rises substantially in (42nd) which together with Greece (not the rankings, from 31st in 2009 to 16th in 2011, included in the Index) have been grouped under driven by steep drops in compensation coststhe less-than-flattering acronym PIGS are all (14 percent in dollar terms). First and foremost,countries in financial distress and have not seen however, the United Kingdom is a demand market improvement in the Index this year, as opposed to for outsourcing. In what is now a rather regular the Baltic states. While some time in coming, refrain on both sides of the Atlantic, British politi- the crises have just started to appear in these coun- cians have decried outsourcing in the face oftries. Although austerity measures are being put mounting unemployment. On a recent visit toforward, they have not yet taken effect. They are India, however, British Prime Minister David also less likely to be as far-reaching as the extreme Cameron tried to put to rest the notion that the measures taken by other European governments United Kingdom would prevent IT outsourcing. (for example, the Latvian government). It should12 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 14. be noted that currency devaluation is not anin recent years as an ideal offshoring locationoption for these countries to increase competitive- for European firms taking advantage of theness as they are members of the eurozone. regions proximity and vast pool of skilled talent.Middle East and Africa. The region of the Indeed, North Africa has eclipsed several EasternMiddle East and North Africa has emergedEuropean locations, as demonstrated in this yearsIndustry Activity in the Top 10 LocationsThe Global Services LocationITO from being primarily a contact- ing in BPO work. On voice work inIndexTM ranks countries based oncenter hub. languages other than Chinese, how-their attractiveness across IT, BPO For most countries, the outlook isever, it is almost non-existent, otherand voice work, but all countries more complex, and success is deter- than a cluster of Japanese-languagehave specific niches in which theymined by identifying a niche. China contact centers in the countryscompete. For companies locating is a good example: It ranks secondNortheast.their shared services functions off-in the Index based on its strong off- As countries continue to special-shore, it is not just a matter of pick- shore fundamentals, but its capabili- ize in offering services, it is impera-ing the top countries in the Index. ties are mixed in terms of industry tive for buyers of services to under-Deciding on an offshore location is activity. China is increasingly strongstand these differences whena complex decision that must con- in the IT area and is rapidly improv- evaluating locations.sider each countrys mix of capabil-ities and specific niche in globalFigure: Industry activity in the top 10 countriescompetition. To illustrate the differ-ent profiles, we assessed the Indexstop 10 locations based on their capa-CountryBPO Voice ITObilities in IT, BPO and voice, and Indiathe industry activity in each of these Chinasectors (see figure).India alone has proven able to Malaysiacompete in all dimensions. It is the Egyptpreeminent destination and leaderin all fields of offshore services, excel- Indonesialing in IT thanks to its elite educa- Mexicotional institutions, in BPO becauseof a large annual output of qualifiedThailandgraduates, and in voice because of Vietnamthe English capabilities of its pop-ulation. The Philippines, an early Philippinesentrant into the service sector, is also Chilerelatively well-rounded. It has hadNote: BPO is business process outsourcing; High industry activity Limited industry activitymore than a decade to hone its capa- ITO is information technology outsourcingbilities and by now has moved intoSource: A.T. Kearney Global Services Location IndexTM, 2011 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE | A.T. Kearney 13 15. Index, which features Egypt 4th in the world and There is significant diversity in the ranks of the leader in the Middle East. The country hasthese top Asian players. India is the all-around scored consistently well over time because of standout, able to provide manpower for any its economical wage rates and large supply of type of offshoring activity. The Philippines long- talent. The Egyptian government has also actively established tradition of providing leading call- promoted the sector abroad while aggressively center support continues to be strong. China pushing industry to bring its standards up to provides competitively priced high-end analytics international levels. However, the recent political and engineering, while Malaysia attracts IT ser- turmoil in the country could have long-term con-vices offshoring (see sidebar: Industry Activity sequences for Egypt as a sourcing location. in the Top 10 Locations on page 13). The sectorsin Indonesia, Vietnam and Thailand, how-ever, are in their relative infancy. Thesecountries have not yet devoted as muchas they could to promoting information India, with its first-moverand communications technology, yet they advantage and deep skill score highly in the Index because of vastpools of talent and competitive wages base, still maintains the(see sidebar: Whats Holding Back Thailandand Indonesia? on page 16). In particular, lions share of the IT Vietnam ranks as the most financiallyattractive country for offshoring in the services market. Index (see figure 4).India, with its first-mover advantageand deep skill base, remains the unques-tioned leader in the Index a half-pointThe UAE is second in the region15th over- ahead of China and a full point in front of allthanks to more competitive compensation Malaysia and still maintains the lions share of costs, a rise in the quality of its managementthe IT services market. On top of that, Indias IT schools and an improvement in literacy scores.services stalwarts are moving up the value chain. The UAE leads in headquarters functions and Companies such as Infosys and Wipro are pursu- services, which support many multinational cor- ing their own R&D capabilities and expanding porations throughout the region. Cost pressures well beyond their traditional vendor roles. have also declined in the wake of the financialIn the early years of offshoring, China was crisis. Jordan (22nd) and Tunisia (23rd) remain inseen as a less-attractive option because of con- the top 25. cerns about language capabilities and intellectualAsia. The top three locations in the Index property security. The economys strong manu- remain India, China and Malaysia. Asia also ranks facturing orientation has also meant that the highly throughout the rest of the top 10, which service sector has remained largely undevel- features Indonesia (5th), Thailand (7th), Vietnam oped. Now, as the economy transitions to include (8th) and the Philippines (9th).more services, the government is supporting the14 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE | A.T. Kearney 16. Figure 4Vietnam leads in financial attractivenessFinancial attractiveness scoresVietnam 7.07 0.53 0.57 8.17Indonesia6.950.590.56 8.10Senegal 6.960.600.51 8.08Pakistan7.08 0.38 0.61 8.08 Ghana 7.10 0.26 0.67 8.03 Sri Lanka 7.12 0.41 0.47 7.99 Philippines6.87 0.58 0.51 7.96 India6.86 0.37 0.54 7.76Egypt 6.530.750.46 7.74Tunisia6.30 0.77 0.57 7.64Thailand6.54 0.560.51 7.61Jordan 6.39 0.48 0.55 7.42 Ukraine 6.37 0.42 0.35 7.14 Costa Rica5.900.580.62 7.10 Morocco 6.000.56 0.51 7.07Bulgaria 5.89 0.56 0.59 7.05Jamaica6.17 0.28 0.57 7.02 Malaysia5.77 0.56 0.61 6.94Panama 6.07 0.43 0.42 6.92 Mexico5.68 0.44 0.58 6.69China 5.740.51 0.31 6.55Latvia5.32 0.48 0.62 6.41Romania 5.230.490.62 6.35 Lithuania5.11 0.500.59 6.19 Russia5.16 0.48 0.55 6.19Argentina 5.31 0.41 0.40 6.12 Chile 5.160.75 6.10Uruguay 4.99 0.38 0.68 6.06 United Arab Emirates 4.77 0.44 0.82 6.04 Mauritius 5.04 0.76 6.01 Colombia5.03 0.31 0.50 5.84Slovakia4.88 0.38 0.56 5.82 Estonia4.69 0.460.63 5.78South Africa 4.40 0.70 0.57 5.67Poland 4.29 0.39 0.67 5.35Hungary4.11 0.370.62 5.11Brazil 4.400.52 5.06 Turkey3.68 0.360.64 4.68 Czech Republic3.50 0.38 0.65 4.53Compensation costsIsrael 2.38 0.50 0.74 3.61Infrastructure costsPortugal2.00 0.410.63 3.03Tax and regulatory costsSingapore1.41 0.34 0.76 2.51United Kingdom (tier 2)1.12 0.37 0.79 2.28Spain1.03 0.41 0.59 2.03Germany (tier 2) 0.80 0.400.70 1.89 Canada 0.62 0.76 1.40 Australia 0.530.75 1.28United States (tier 2)0.540.59 1.14Ireland 0.280.76 1.04 Note: Values below 0.20 not shown due to space constraints.France (tier 2) 0.360.59 0.95Source: A.T. Kearney Global Services Location IndexTM, 2011BPO sector with unprecedented enthusiasm.China makes its greatest impact, however; itsImproved skills from language ability to engi- most attractive areas are high-end analytics andneering are turning Chinas BPO centers into advanced IT, where it is an alternative to Russiaviable options.and Eastern Europe, and BPO, where it can beChina has begun offering specialized skillscompetitive with India. China is now developingnot only in English, but also Korean, Japanese and R&D capabilities as a necessary adjunct to itsChinese. Call centers are unlikely to be where manufacturing capabilities, which creates a strongOFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 15 17. Whats Holding Back Thailand and Indonesia? The Global Services Location center in Bangkok, which it hadment, however, has committed IndexTM measures the underlyingacquired from Philips three yearsto ramping up investments in infra- fundamentals that make a locationearlier. What is holding back thesestructure in the future and we ex- an attractive destination for servicecountries? pect to see improvements soon. In delivery. However, in some top-Language. Language is a majorThailand, the unstable political situa- ranked countries in the Index, there impediment. English has not been tionshowcased last spring in front is no thriving industry instead, taught historically in Thai or Indo- of the worlds TV cameras when the there is great potential. Such is thenesian schools and is not used byarmy clashed with the opposition on case in Thailand and Indonesia,these countries administrations.the streets of Bangkokis creating which are among the top 10 in theBy comparison, in the Philippines, uncertainty among foreign investors. Index but are not household namesEnglish is widely spoken as a result Hope remains, however, for improve- in offshoring. These countries haveof historic ties to the United States. ments after the upcoming elections. the fundamentals in place to beWhile English instruction is partGovernment support. A lack of successful service locations theyof curricula today in Thailand and government support has hampered enjoy large workforces and competi-Indonesia, the quality of instructionthe outsourcing sector as govern- tive cost levels. Yet companies areis often lacking.ments spend their scarce resources not flocking to Bangkok or Jakarta Business environment. Indonesiaon promoting different industries. to fill their needs in fact, the suffers from a legacy of neglected With increased promotional efforts opposite is happening. For exam- infrastructure invest-ments, mani- and removing crucial roadblocks, ple, Infosys announced in July fested in poor electricity supply andIndonesia and Thailand could repeat 2010 that it was closing its BPO insufficient bandwidth. The govern-the Philippines success. foundation for knowledge process outsourcing, BPO sector and generating $7.2 billion in reve- also called KPO services. nues in 2009. Call centers make up the majorityThe top two countries have even begun link-of the countrys operations, at $5 billion in reve- ing up to expand their expertise. For example,nues, but growing BPO niches such as services Indian firms Tata Consulting Services (TCS),catering to the healthcare and pharmaceutical Infosys and Wipro have all established operations industries help fuel overall growth. Amid fierce in Chengdu, China. Chengdus mayor, who competition from other regional players, the gov- actively courted the Indian firms, told reporters ernment has launched a plan to build a virtual that he dismisses language concerns: As soft-BPO university and extend training in call-center ware development will be in English for [both]skills to an additional 10,000 students to retain the domestic market and exports, language its competitive edge. Meanwhile, Singapore is will not be a problem for companies and their 32nd, as it once again is the global number one professionals.12 in the business environment category but aThe Philippines remains an offshoring behe-small labor force and high costs give it a relatively moth, employing half a million people in thelower ranking (see figure 5). 12Chengdu woos Indian firms to invest in Chinas IT hub, Nearshore Journal, 1 March 2010.16 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 18. Figure 5Singapore remains the leader in business environmentBusiness environment scoresSingapore 4.67 1.640.97 0.70 7.99 Germany (tier 2)4.62 1.640.480.81 7.56Canada4.69 1.340.840.63 7.51Estonia 4.48 1.620.86 0.51 7.48United Kingdom (tier 2)4.31 1.640.690.80 7.44Australia 4.781.17 0.41 0.76 7.11 France (tier 2) 4.24 1.620.560.61 7.03 Ireland 4.21 1.160.950.60 6.92 United Arab Emirates 3.76 1.470.97 0.64 6.84 Czech Republic 3.851.31 0.92 0.67 6.76Lithuania4.171.43 0.70 0.43 6.73United States (tier 2)4.20 1.29 0.39 0.83 6.71 Latvia4.17 1.080.88 0.40 6.53 Spain3.77 1.25 0.55 0.69 6.25 Portugal 3.69 1.32 0.64 0.54 6.18Malaysia3.67 1.19 0.70 0.53 6.10Chile 4.331.250.42 6.06 Hungary 3.62 1.17 0.61 0.66 6.06 Poland3.81 0.970.700.55 6.03 Mauritius 3.620.93 0.72 0.39 5.65 Bulgaria 3.401.27 0.53 0.38 5.58 Slovakia 3.70 1.140.50 5.51Romania3.341.27 0.44 0.44 5.48 Israel2.89 1.14 0.83 0.61 5.46Costa Rica3.471.01 0.33 0.39 5.20 Panama3.301.15 0.36 4.97 Jordan 2.481.10 0.94 0.45 4.96Mexico3.32 0.75 0.31 0.43 4.81 Uruguay2.84 1.060.47 0.37 4.74 Brazil3.17 0.97 0.47 4.61South Africa 3.180.79 0.58 4.56 Tunisia2.56 1.140.47 0.39 4.55 Egypt2.88 0.93 0.28 0.41 4.50 Jamaica2.680.92 0.55 0.31 4.46 China2.95 0.870.55 4.38 Thailand2.73 1.10 0.36 4.31Ghana 2.590.650.78 0.26 4.28Morocco2.250.950.67 0.34 4.21 Vietnam 2.62 0.98 0.30 4.13 Country riskColombia 2.36 1.030.41 3.94Country infrastructureTurkey 2.54 0.95 0.41 3.90 Cultural exposurePhilippines1.97 0.710.80 0.38 3.86India 2.560.57 0.59 3.81 Security of intellectual property Senegal2.39 0.70 0.30 .032 3.71Sri Lanka 2.020.840.52 0.32 3.71 Argentina 2.35 0.96 0.29 3.63Russia 2.16 0.990.34 3.56Ukraine2.000.90 0.25 0.26 3.41 Indonesia2.400.66 0.32 3.38 Note: Values below 0.20 not shown due to space constraints. Pakistan 1.34 0.53 0.36 0.29 2.52 Source: A.T. Kearney Global Services Location IndexTM, 2011Glimmers of Hope lessness continue to roil the global economy. TheThe headlines about persistent economic volatil- long-term prospects, however, appear little changedity may be here for some time. For the global ser- from our first edition. An increasingly intercon-vices industry, the short term will remain rocky asnected world and increasing demand mean thatworries about sovereign debt, currencies and job-the global services industry remains on the rise.OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE | A.T. Kearney17 19. AuthorsErik Peterson is managing director of the firms Global Business Policy Council. Basedin the Washington, D.C., office, he can be reached at erik.peterson@atkearney.com.Johan Gott is a manager in the Washington, D.C., office. He can be reachedat johan.gott@atkearney.com.Samantha King is a consultant in the Washington, D.C., office. She can be reachedat samantha.king@atkearney.com.The authors wish to acknowledge the contributions of their colleague Rodrigo Slelatt,principal in the organization and transformation practice, and Nora Patio, a consultantin the Mexico City office, in developing this report.18 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE | A.T. Kearney 20. Appendix: About the StudyThe 50 countries included in this years Global Services Location IndexTM were selected on the basisof corporate input, current remote services activity and government initiatives to promote the sector.They were evaluated against 39 measurements across three major categories: financial attractiveness,people skills and availability, and business environment (see figure).The metrics used to evaluate location attractiveness were determined from responses to A.T. Kearneyand other industry surveys, and knowledge obtained in client engagements over the past five years.The relative weights of each metric are based on their importance to the location decision, againderived from client experience and industry surveys. Because cost advantage is typically the primarydriver behind location decisions, financial factors constitute 40 percent of the total weight in theIndex. The two remaining categories people skills and availability, and business environment each constitute 30 percent of the total weight.Index metricsCategorySubcategoriesMetricsFinancial attractivenessCompensation costs Average wages(40%) Median compensation costs for relevant positions (call-center representatives, BPO analysts, IT programmers and local operations managers)Infrastructure costs Rental costs Commercial electricity rates International telecom costs Travel to major customer destinations (New York, London and Tokyo)Tax and regulatory costs Relative tax burden Corruption perception Currency appreciation or depreciationPeople skills and Remote services sector Size of existing IT and BPO sectorsavailabilityexperience and quality Contact center and IT center quality certifications(30%) ratings Quality ratings of management schools and IT trainingLabor force availability Total workforce University-educated workforce Workforce flexibilityEducation and language Scores on standardized education and language testsAttrition risk Relative IT and BPO sector growth and unemployment ratesBusiness environmentCountry environment Investor and analyst ratings of overall business and political environment(30%) A.T. Kearney Foreign Direct Investment Confidence IndexTM Security risk Regulatory burden and employment rigidity Government support for the information and communications technology (ICT) sectorInfrastructure Overall infrastructure quality Quality of telecom, Internet and electricity infrastructureCultural exposure Personal interaction score from A.T. Kearney Globalization IndexTMSecurity of intellectual Investor ratings of IP protection and ICT lawsproperty (IP) Software piracy rates Information security certificationsSource: A.T. Kearney Global Services Location IndexTM, 2011 OFFSHORING OPPORTUNITIES AMID ECONOMIC TURBULENCE| A.T. Kearney 19 21. A.T. Kearney is a global management consulting firm that uses strategic For information on obtaininginsight, tailored solutions and a collaborative working style to help clients additional copies, permissionachieve sustainable results. 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