International Trade in Services Course

Transcription

1 International Trade in Services Course Global Services Location Index Johan Gott, A.T. Kearney March 27, 2009

2 lobal offshore spending has been increasing by 25% a year and is ainly driven by the US market rldwide Offshore IT Services Spending by porting Region ($MN) Worldwide Offshore BPO Services Spending by Importing Region ($MN) 19,454 5, % 25,476 7, ,963 9, , ,500 1, % 2, , ,030 17,372 20, ,415 1,731 2,138 Asia P EMEA N Ame

3 dia and the Philippines is the main exporter of offshore services, pturing 50% of the market Global IT/BPO exports, percent of market India 35 ROW 50 Philippines 15

4 e US is leading the push offshore, and Financial Services the most tive vertical India IT/BPO exports, by geography, $ bn India IT/BPO exports, by industry, % Healthcare 3 Media Publishing & Entertainment 3 Airlines & Transportation 3 Construction & Utilities 4 Retail 8 Other 5 Financial Ser Manufacturing 15 0 Americas Europe ROW Hi-Tech/Telecom 19

5 e offshoring industry can have a dramatic effect on employment in porting countries Indian IT/BPO industry, employment contribution by sector, 1 jobs

6 as well as on export revenues Egypt export revenue growth , compounded annual growth rate

7 me of the factors benefitting economic development are obvious, hers less Societal benefits from ITES export industry Illustrative Immediate benefits Medium term benefits Long term benefits Boost to national export revenues Growing government tax receipts from corporate profits and employee salaries Increase in employment levels Rise in secondary employment Rise of income levels Implementation of international standards and certifications Creation of downstream employment Education premium is pushed upwards Opportunities for diaspora to return to home country International best practice knowledge transfer Focus on education quality and reform Incentives to improve business environment Increased visibility for countries among MNCs Heightened focus and investment in ICT for broader population Facilitates transition to services based economy

8 ssessing offshore locations from a demand perspective, we devised index to measure the attractivness of countries for service delivery.t. Kearney Global Service Location Index

9 e index measures three main components, costs, people, and siness environment T. Kearney Global Services Location Index methodology Global Services Location Index score Financial Costs 40% People Skills and Availability 30% Business Environment 30% Compensation Costs 80% Infrastructure Costs 10% Tax and Regulatory Costs 10% IT/BPO experience and skills 40% Labor Force Availability 20% Educational Skills 15% Language Skills 15% Attrition Rates 10% Country Environment 60% Country Infrastructure 20% Cultural Adaptability 10% Security of IP 10%

10 ch country has its own mix of advantages, creating a unique value oposition. Kearney Global Services Location Index 2007 anks 1-25 Ranks untry score: Financial People Environment

11 e industry playing field is increasingly diverse and in constant velopment Americas Near shoring to Latin America EMEA A shift to the east and south Asia New countries compete Ireland & Scotland Canada Czech, Hungary & Poland East Europe & Middle East India China Vietnam Philippines Mexico & Central America Singapore South America Increasingly, American companies focus on Latin America. Mexico, Chile and Argentina are starting to compete with India for offshore work. Advantages are similar time zones and easier management South Africa Established players Poland, Czech Republic and Hungary are increasingly getting competition from lower cost competitors in Eastern Europe and Middle East China has become a base for companies Asian contact center needs, including Chinese and Japanese language. Singapore is establishing itself as a disaster recovery site for critical functions.

12 summary, the ITES export sector is a positive force for development d open to a diverse range of countries ummary he ITES export industry is a positive force for economic growth and sustainable development ffshoring is not only for India or already developed economies most countries can find its niche in the lobal industry o support an ITES export industry, policy makers need to focus on education, connectivity, and business nvironment, remove obstacles, and then apply a mix of investment promotion and export promotion olicies ach country is unique and has its own particular assets that it can leverage to be successful in the nternational competition. However, each country also has its own challenges that it needs to address