India top outsourcing hub, says survey

India remains the most favoured outsourcing destination, according to CyberMedia's Global Services survey on emerging outsourcing destinations in 2007.

Even as fears that the rupee appreciation and rising wage costs would blunt its edge, India still boasts of the largest number of cities (6), which figure among the top-50 emerging cities, followed by China (5), Brazil (3), the Philippines (3) and the US (3), among others.

The study identified Asia and east Europe as favoured destinations for information technology and business process outsourcing, as 19 Asian and 12 east and central European nations featured in the list of the top-50 emerging outsourcing cities, globally.

Bangalore, National Capital Region Delhi, Manila NCR, Mumbai and Dublin dominated as the top-five prime outsourcing cities servicing the global corporate world for over a decade, the study said.

The study, conducted in association with investment advisory firm Tholons, shows that outsourcers consider process maturity, availability of relevant skills and costs as foremost reasons for deciding on the location for IT and BPO services outsourcing.

Avinash Vashistha, chairman and CEO, Tholons, points out, "With the demand-supply gap widening, newer tier-II cities will play a critical role in re-engineered globalisation models."

The top-three global emerging outsourcing cities from India are Chennai, Hyderabad and Pune, while Kolkata ranked fifth and Chandigarh was in the ninth spot.

The list also features three cities from China and two from Vietnam. With most of the large IT companies setting up base there, Chennai was identified as an established location for automotive engineering services, product development and healthcare BPO.

Hyderabad was preferred by large corporates and support from the government, with a plan to create 250,000 new IT jobs in the next two years.

Pune also earned its place as an outsourcing destination due to lower operating costs and low attrition rate compared with the other metros. Kolkata's IT industry is growing at 70 per cent a year on the back of sound educational infrastructure, lower costs and even lower attrition rates.

Owing to its ninth place due to its planned facilities such as telecom, power and road infrastructure and a new technology park, Chandigarh earned the ninth spot and is home to major IT companies such as Dell, Quark, Net Solutions, Netsoft Global Solutions.

In terms of function, Bangalore topped the list for application development and maintenance and testing. NCR took the top spot as the established destination for business analytics and contact centres. Mumbai, meanwhile, dominated the finance and accounting space.