Geography of Offshoring is Shifting, According to A.T. Kearney Study

India and China continue as top offshoring destinations; but Central/Eastern
Europe falls while Southeast Asia and Middle East countries rise

CHICAGO, May 18 /PRNewswire/ -- Deteriorating cost advantages and improved
labor quality are driving a dramatic shift in the geography of offshoring
according to the latest edition of global management consulting firm A.T.
Kearney's Global Services Location Index (GSLI), a ranking of the most
attractive offshoring destinations.

While India, China and Malaysia retain the top three spots they've occupied
since the inaugural GSLI in 2004, a fundamental shift in the index has taken
place as once strong Central European countries have yielded ground to
countries in Asia, the Middle East and North Africa.

The GSLI analyzes and ranks the top 50 countries worldwide for locating
outsourcing activities, including IT services and support, contact centers and
back-office support. Each country's score is composed of a weighted
combination of relative scores on 43 measurements, which are grouped into
three categories: financial attractiveness, people and skills availability and
business environment.

Established Central European countries including Poland, the Czech Republic,
Hungary and Slovakia, once among the premier offshoring destinations for
Western Europe companies, have fallen significantly due to a rapid increase in
costs driven by both wage inflation and currency appreciation against the
dollar. Meanwhile, low-cost countries in Southeast Asia and the Middle East
made significant gains this year as the quality and availability of their
labor forces improved. Egypt, Jordan and Vietnam ranked in the GSLI's top 10
for the first time ever.

"While cost remains a major driver in decisions about where to outsource, the
quality of the labor pool is gaining importance as companies view the labor
market through a global lens driven by talent shortages at home, particularly
in higher, value-added functions," said Norbert Jorek, a partner with A.T.
Kearney and managing director of the firm's Global Business Policy Council.
"In response, governments all over the world are investing in the human
capital demanded by the offshoring industry."

The complete results of this year's Index are provided below. A more detailed
analysis and information on regional performance can be found at
www.atkearney.com.

Highlights from this year's GSLI include:

-- The Middle East and North Africa is emerging as a key offshoring
region
because of its large, well educated population and its proximity to
Europe. In addition to Egypt and Jordan, ranked at sixth and ninth,
respectively, Tunisia (17th), United Arab Emirates (29th) and Morocco
(30th) all rank among the GSLI's top 30 countries. "The Middle
East and Africa area has the potential to redraw the offshoring map
and
in the process bring much needed opportunities for its large,
underemployed educated class," said Johan Gott, project manager for
the Global Services Location Index.
-- Sub-Saharan Africa also showed strength. Ghana ranked 15th, Mauritius
25th, Senegal 26th and South Africa 39th.
-- Countries in Latin America and the Caribbean continue to capitalize on
their proximity to the United States as nearshore destinations. Chile
placed highest among countries from the region, ranking 8th on the
strength of its political stability and favorable business
environment.
Other strong performers in the region include Mexico (11th), Brazil
(12th) and Jamaica, which rose 11 places to rank 23rd.
-- India, China and Malaysia continue to lead the index by a wide margin
through a unique combination of high people skills, favorable business
environment and low cost. In particular, India has remained at the
forefront of the outsourcing industry and actually has become an
enabler
for industry growth through expansion of Indian offshoring firms into
other countries.
-- The United States, as represented by the onshoring potential of
smaller
"tier II" cities such as San Antonio, rose to 14th in the
rankings due to the financial benefits of a falling dollar. The
country
is the leader in the people skills category and the combination of
rising unemployment and political pressure to create jobs is
increasing
interest in onshoring possibilities among smaller inland locations.
Similar trends are evident in the UK, France and Germany, all of which
also rose in the GSLI.

-- While the global financial crisis has slowed recent offshoring moves,
the percentage of companies' staff offshore may very well increase
as a result of the crisis. Layoffs at home are not translating to
layoffs among offshore workers as companies seek to maintain service
but
reduce costs. Additionally, offshore facilities tend to be more
efficient because they are newer and lack years of inefficiencies
often
built up in onshore facilities.

"The dynamics of global offshoring are clearly shifting as companies
re-evaluate the political risks, labor arbitrage and skill requirements in the
context of the likely aftermath of the global economic crisis," said Paul A.
Laudicina, A.T. Kearney chairman and managing officer. "Risk management will
take on new importance to protect global service delivery from interruption
and ensure capabilities are strategically dispersed rather than concentrated
in a few cost-effective locations."

About A.T. Kearney
A.T. Kearney is a global management consulting firm that uses strategic
insight, tailored solutions and a collaborative working style to help clients
achieve sustainable results. Since 1926, we have been trusted advisors on
CEO-agenda issues to the world's leading corporations across all major
industries. A.T. Kearney's offices are located in major business centers in 36
countries. For more information, please visit www.atkearney.com.

Global Services Location Index 2009
(number in parenthesis indicates ranking in 2007 GSLI)

1. India (position in 2007 GSLI: 1) 26. Senegal (39)
2. China (2) 27. Argentina (23)
3. Malaysia (3) 28. Canada (35)
4. Thailand (4) 29. United Arab Emirates (20)
5. Indonesia(6) 30. Morocco (36)
6. Egypt (13) 31. United Kingdom (Tier II)* (42)
7. Philippines (8) 32. Czech Republic (16)
8. Chile (7) 33. Russia (37)
9. Jordan (14) 34. Germany (Tier II)* (40)
10. Vietnam (19) 35. Singapore (11)
11. Mexico (10) 36. Uruguay (22)
12. Brazil (5) 37. Hungary (24)
13. Bulgaria (9) 38. Poland (18)
14. United States (Tier II)* (21) 39. South Africa (31)
15. Ghana (27) 40. Slovakia (12)
16. Sri Lanka (29) 41. France (Tier II)* (48)
17. Tunisia (26) 42. Ukraine (47)
18. Estonia (15) 43. Panama (41)
19. Romania (33) 44. Turkey (49)
20. Pakistan (30) 45. Spain (43)
21. Lithuania (28) 46. New Zealand (44)
22. Latvia (17) 47. Australia (45)
23. Costa Rica (34) 48. Ireland (50)
24. Jamaica (32) 49. Israel (38)
25. Mauritius (25) 50. Portugal (46)

*Based on lower-cost locations in each country: San Antonio (U.S.),
Belfast (UK), Leipzig (Germany) and Marseilles (France).

SOURCE A.T. Kearney

Doug MacDonald of A.T. Kearney, +1-312-223-6248,
douglas.macdonald@atkearney.com