Bangalore keeps its top position as the ideal location for global delivery services. New Delhi edges out Manila for second place, according to a new study from IDC, an international market research firm.
IDC’s Global Delivery Index (GDI) indicated that India is still the off-shoring country of choice in Asia. In its second edition, IDC's GDI ranks 35 cities in the region based on criteria such as labor and rent costs, language skills and political risk.
Two other Indian cities also made it to the top 10 list: New Delhi edged out Manila for the No. 2 spot, while Mumbai dropped three places from last year's list to seventh.
Chinese Cities Gaining
Jenna Griffin, senior research analyst for global delivery services research at IDC Asia-Pacific, says that Bangalore and New Delhi are attractive due to existing infrastructure, large quantity of skilled workers as well as competitive pricing.
Auckland and Beijing made significant progress over last year, moving up five and three notches, respectively. Griffin says that Auckland's ranking was influenced by factors such as greater government support, an increased emphasis toward a digital economy and currency depreciation.
On the other hand, China’s investment in Beijing's infrastructure and the environment for the upcoming Olympic Games has sharpened the city's competitive edge, she added.
Beijing, Shanghai, Dalian Make Top 10
"With prices on the rise in India, locations like Beijing with established infrastructure and lower costs will be in demand," Griffin points out. "Beijing also has a highly skilled workforce, supported by a strong education network."
The Chinese cities of Shanghai and Dalian were also counted by IDC as among the top 10 global delivery locations. Dalian, however, slipped from No. 4 in 2007 to the current No. 9.
According to Griffin, there will be an increase in the number of Chinese cities considered as optimal global delivery locations by 2012. Xian, for instance, will become a top 10 off-shoring destination for businesses.
“Jobs Beyond Borders”
Meanwhile, a new study released by Careerbuilder.com and the Wharton School of the University of Pennsylvania identifies the top three technology jobs at risk for moving offshore. The study, titled “Jobs Beyond Borders,” includes research from 3,000 hiring managers and HR professionals as well as 6,700 U.S. workers.
The study suggests that 32 percent of computer programmer and software developer jobs and 16 percent of systems analysts jobs are at risk. According to the study, "More firms are off-shoring high-wage, high-skill jobs that were once though to be immune to global competition."
In fact, the study says, 28 percent of employers have already off-shored high-skill services positions overseas to third parties or foreign affiliates. What's more, 69 percent of employers who offshore believe high-skill services positions are more likely to be off-shored than low-skill jobs.
Saving Money is the Big Reason
The majority of employers surveyed listed saving money as the reason for off-shoring jobs. According to the study, nearly half of the employers who did off-shore information technology jobs reported saving an average of $20,000 per person.
Of the workers who were displaced by off-shoring, only one in five were reassigned within the company. Of those who were let go or left the company, 81 percent went to another employer who was not aggressively off-shoring.
Matt Gerguson, CEO of Careerbuilder.com, says that in order for most employers to compete with other companies worldwide they ship jobs offshore. "Among employers who off-shore, half said they believe off-shoring is necessary to compete in a global economy and 15 percent project more than 20 percent of their jobs will eventually be sent overseas."
While high-skilled jobs are at risk for being off-shored, Gerguson is positive about the U.S. job market. "One-in-four employers who offshore said it has enabled them to create a greater number of better jobs here in the U.S.," says Gerguson.
