Companies are always looking at opportunities to offshore new areas. This leads to growth in overall scope of services that get offshored. This is why, last year we had introduced two new sub categories including emerging and established cities for Contact Centers (English and Multilingual). Similarly, in the 2009 study we have introduced three new sub categories. These new functions include:
Animation / Game Development: The global game development market, which estimated at $10 billion in 2007, is always under pressure to improve time-to-market for new games, increase cost savings and remove concerns such as piracy of popular games. Outsourcing of game development activities helps mitigating all of these concerns of the customers segment.
Countries such as China, Russia and Brazil are always considered as leaders in this space. There are many other countries such as Ukraine, Vietnam, India, The Philippines, Korea and Romania that are strengthening their skills in this area. This is why, cities such as Shanghai, Beijing, Moscow and São Paulo have formed the list of emerged outsourcing locations for the game-development services. And the list of emerging outsourcing list of this sub category has cities such as Manila (NCR), Buenos Aires, Ho Chi Minh, Bangalore and Thiruvananthapuram. The growing number of mobile users across the globe has also encouraged outsourcing of animation and game-development services in the recent past.
Health-care Services: Cities including Hyderabad, Bangalore, Warsaw, Prague, St. Petersburg, Mumbai are named as the top cities for the health-care services space. The list of emerging outsourcing locations in this area has Bucharest, Bucharest and Shanghai.
Infrastructure-management Services: As IT infrastructure outsourcing is almost a five year-old industry, it made sense to us to have this sub category this year. In fact the demand of remote infrastructure management outsourcing is expected to touch $5.9 billion in 2009 and $8.6 billion in 2010, according to the Everest Research Institute. Believing that there is clearly an opportunity in the current economy to reduce costs in IT-infrastructure outsourcing space, providers offer multiple solutions to help customers reduce IT budgets, such as virtualizing customers’ server environments or consolidating their data centers into pooled environments, network services, storage, desk operations, midrange, security, mainframe and desktop support.
In 2009, the list of established global outsourcing cities for infrastructure-management services has three top global cities Bangalore, Delhi NCR and Dublin and two cities, including Toronto and Kuala Lumpur from the Top 50 Emerging Global Outsourcing Cities category.
We have not ranked the cities mentioned in these sub categories. But we have identified three to six established and emerged cities by outsourcing functions, including Application Development and Management (ADM), Animation / Game Development, Business Analytics, Contact Center (English), Contact Center (Multilingual), Engineering Services, Finance and Accounting (F&A), Health-care Services, HR, Infrastructure Management Services, Legal Services, Product Development, Research and Development (R&D) and Testing.
In the “emerged outsourcing cities by functions,” most of the categories are dominated by cities from this year’s “top 8 outsourcing cities.” For example, the cities named under the ADM category and the legal services list have names only from the top 8 global outsourcing cities. And, the ADM category is the same the year’s list.
Toronto and Dublin have entered the sub lists of business analytics and F&A services respectively. One of the major factors for the growth of any destination in the business analytics space will be the ability to acquire the right kind of talent and retain it. As these high-end business processes such as business analytics rely mainly intellectual arbitrage, cities like Toronto get an extra edge over the other cheaper destinations, primarily known for low-end BPO services.
A closer look at the top emerging global outsourcing cities by functions reveals that Accra has figured in the list for the first time. The city has been named among the top emerging cities for multilingual contact centers, with other cities such as São Paulo, San José and Casablanca.
Accra is the capital of Ghana, which is one of the major economies in the Western Africa region. Apart from BPO and call-center capabilities, the government of Ghana has realized the potential of technology and has identified IT-enabled services as one of the key areas to enhance economic growth and welfare of the county. As a result, the government of Ghana has undertaken an ambitious initiative, eGhana, to improve labor force skills as well as enabling infrastructure to support the ICT industry.
In the product-development sub category, the city of St. Petersburg has figured as a new entrant in the emerging city space. Unlike IT-BPO companies, product-development companies have a very niche market. The educational structure of St. Petersburg is capable of generating skills required to develop the city as one of the most potential outsourcing cities for product development. The strong presence of offshored product-development companies such as Reksoft and DataArt displays the growing activities in this space. The city is known as an established destination for engineering and R&D services.
Krakow, an established destination for business analytics outsourcing services, is an emerging location for HR and R&D outsourcing services. The city has figured in the emerging R&D outsourcing locations for the first time.
Other categories in both emerging and established segments have more or less the same names as we had in the last year’s listing. See tables to know more.