Monday, March 2, 2009

Outsourcing: The New Hot Spots

A new study from KPMG identifies 31 cities that could challenge established centers in India and China. Look out Bangalore, here comes Belfast 

By Nick Heath

Forget Chennai and Mumbai – the outsourcing hubs of tomorrow will be in Belfast and Brisbane. 

An eclectic mix of 31 cities, in countries ranging from Australia and Ireland to areas in South America and Africa, will challenge today's best-known outsourcing centres in India and China, according to advisors at KPMG. 

Faced with overburdened telecoms infrastructures and overstretched labour markets in traditional offshore locations, cities including Brisbane and Belfast are among the alternatives that should be considered by companies, the KPMG report says. 

Belfast makes the grade for its strong schools and universities, its young population, high number of IT graduates and cheap operating costs, while Brisbane has a large talent pool, a multilingual workforce and employee costs that are 10 to 15 per cent cheaper than other Australian cities. 

According to Shamus Rae, advisory partner at KPMG in the UK, the credit crunch will drive more companies to outsource IT and business processes, which will in turn hasten the search for new cities to host these services. 

The report found that the new cities in Asia-Pacific offer lower costs, younger populations and government incentives such as easy work permits, while those in Europe, Middle East and Africa promise robust telecoms and power infrastructure and niche specialisms in fields such as data management. 

Meanwhile cities in the Americas can draw on large labour pools, a more mature service offering, proximity to a major client base and multiple language skills. 

Size is not a deciding factor among these emerging cities, with the tiny Port Louis in Mauritius with a population of just 130,000 making the KPMG list alongside the metropolis of Buenos Aires, home to almost 13 million people. 

A more important factor is the proportion of computer graduates, the number of research and development institutions, the rate of migration to the cities and common languages with their target markets. 

The complete list: 

Americas 
Boise 
Buenos Aires 
Calgary 
Campinas 
Curitiba 
Guadalajara 
Indianapolis 
Queretaro 
Santiago 
Winnipeg

Asia-Pacific 
Ahmedabad 
Brisbane 
Changsha 
Davao City 
Hangzhou 
Ho Chi Minh City 
Iloilo City 
Jaipur 
Nagpur 
Penang

Europe, the Middle East and Africa
Belfast 
Belgrade 
Cairo 
Cluj-Napoca 
Gdansk 
Lviv 
Port Louis 
Rostov-on-Don 
Sofia 
Tunis 
Zagreb