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Still on top but heeeere comes China ...

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Can China catch up?

Although it could be a good fit for global firms looking to service their APAC operations from its shores, Gartner’s Roy argued that China is at least 6-7 years behind India, with no guarantee it will be able to close that gap as long as India can mature incrementally.

“It’s pretty clear India is top in terms of the attractiveness of offshoring there because it is a very mature location for IT services delivery. It’s not just about available IT skills but the whole ecosystem of support services,” he argued.

“For example, workers often need to work in shifts to cater to various time zones, which means workers need ferrying from home to the office at odd hours. This may sound like a low-level activity but in the overall scheme every small thing matters.”

The Philippines is another rival location getting a lot of attention, especially in areas like back office processing and contact centre work. The annual ranking of the top 100 global outsourcing destinations by outsourcing advisory firm Tholons, released in January, placed Manila and Cebu in the top ten, both improving on their position last year, with the capital in third spot.

Forrester principal analyst Frederic Giron told The Reg that the country had caught up strongly with India in terms of its call centre capabilities thanks to strong language skills (Philippinos' English accents are often easier on American ears) and cultural fit with Western clients, but it isn’t as strong in higher value services, which is where India can flourish.

“India has more equity research analysts than London and New York combined, which is an interesting proof point that skill levels in the country have improved quite a bit,” he said. “I see providers in India focusing on higher value add – consulting and architecture, that type of task. This gives those firms an edge over other destinations like China.”

It should also be noted, as pointed out by IDC research manager Mayur Sahni, that Indian providers are somewhat insulated from the growth in the Philippines because they themselves have “ sizable setups” there for business process outsourcing operations serving global and local clients.

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