India tops 2016 outsourcing index

India is the world's biggest outsourcing destination in terms of financial attractiveness and business environment, according to a study published on Tuesday by a London-based global management consulting firm.

A T Kearney's 2016 Global Services Location Index (GSLI) rated India as number one out of the total 55 countries analysed. China, Malaysia, Brazil, Indonesia, Thailand, The Philippines, Mexico, Chile and Poland respectively made up the top 10 list. 

Offshoring to India remains a high attractive proposition for many companies, said the study which also takes a deeper dive into optimal cities for offshoring within the ranked countries.

"While India and the Philippines are still top of mind when it comes to offshoring, the hunt for new talent is now taking companies beyond these countries' capitals and major cites to tier 3 locations such as Surat, Nagpur, and Lucknow in India and Bacolod and Iloilo City in the Philippines," said Nikolai Dobberstien, partner with A T Kearney's Communications, Media and Technology practice. 

One advantage of tier 3 cities is the relative affordability of real estate as facilities in Nagpur and Ahmedabad are 25 per cent to 30 per cent cheaper than Kolkata and Delhi, the report said.

Another advantage is the relative availability of labour, its lower cost and lower attrition rates. Many of these cities have highly developed educational infrastructure, ensuring fresh crops of qualified graduates for the foreseeable future, GSLI said.

"Even though the top six or seven countries are landing in the same order this year as 2014, looking forward, this could all change radically because the very nature of what's being outsourced is changing," said Arjun Sethi, global leader of A T Kearney's strategic IT practice.