Topic: Offshore Locations - Service Providers' Perceptions and Plans

The continued recovery of the global economy in 2010 is matched by the revival of the global sourcing market. Companies are expanding offshore operations through both captive and third-party models. Further, the geographic spread of offshoring is expanding with new locations emerging across Asia, Central America, and Eastern Europe.

Everest Group administered a survey in early 2011 (January-February) to understand perceptions and plans related to global-services locations, across multiple stakeholders – buyers of global services, third-party service providers, consulting/advisory firms, country associations, and investment promotion agencies. The survey attracted 340 respondents comprising mid-to senior-level executives across all the key stakeholders in global services as mentioned above. In this viewpoint, we present a summary of how third-party service providers are thinking about their expansion plans, specifically with respect to scale and locations. We also explore typical location perceptions of service providers.

Key takeaways:

• India continues to be the most preferred destination amongst service providers with meaningful scale also observed in the Philippines and China. Small and moderate offshore adopters have majority of their scale in these three countries. Large adopters have expanded their footprint and also built significant scale in Latin America and Eastern Europe
• Service providers are adopting a cautiously optimistic outlook on the global services industry, with majority of them indicating expansion plans for their delivery footprint. Besides India, the Philippines, and China, which are key growth locations, large adopters have also indicated expansion plans in nascent locations such as Africa. This growth is also characterized by increasing share of high-value services across all provider segments
• Service providers are taking a strategic view of their global footprint, focusing on driving value across the locations portfolio; India, the Philippines, and China are leveraged primarily as hubs for large-scale offshore delivery, while other locations act as spokes to provide complementary capabilities

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