The Hindu Business Line : Global Services Location Index — Low-cost cities in developed nations jump into fray

WHILE India and China bagged the first and the second slots respectively, Malaysia maintained its third position in AT Kearney's Annual Global Services Location Index.

Singapore remained at the fifth slot, the same as last year. The Philippines broke into the top five league, rising from sixth to fourth position overcoming issues such as continuing political instability and infrastructure weaknesses, and capitalising on factors such as global exposure and English language skills of its workforce.

Thailand rose from 13th to 6th, while Indonesia leapt into the index at 13th position. Even Vietnam, at 26th in this year's Index, saw its ranking rise from 20th to 16th position among the original 25 countries included in both the 2004 and 2005 Indices.

The study ranked the locations on parameters such as financial structure, people and skills availability and business environment. With cost advantages being the primary impetus behind offshoring, financial factors constituted 40 per cent of the total index weight. People skills and availability and business environment each received a 30 per cent weighting

Despite higher costs, the US benefited from the breadth and depth of its skill-base, strong infrastructure and generally positive business environment. The UK regions (as represented by Belfast) did not perform quite as well (ranked 28th out of 40), but still either matched or surpassed better-known offshore locales such as the Ireland and South Africa. Germany (represented by Leipzig) and France (represented by Marseille) finished 31st and 35th, respectively, largely due to higher costs and weaker business environments.

AT Kearney had added four lower-cost cities in the US, UK, Germany and France during 2005 to gauge how they compare with more traditional offshore locations.

"The performance of the four developed countries is not surprising since mature markets still offer by far the best combination of skill levels, relevant experience, infrastructure and business environment," said Mr Paul Laudicina, Managing Director of the Global Business Policy Council, the AT Kearney sponsor of the research.

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