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Introduction
For the third year running, Tholons presents the Global 50 Centers of Excellence - an exhaustive studywhich aims to provide an accurate means of assessment of Global Outsourcing destinations in relation totheir capacities as service delivery centers.
In recent years, we have noticed an increasing trendduring our interactions with Tier I and Institutionalclients. That is - there is an increasing need for ahigher level of granularity when identifying potentialGlobal Outsourcing locations. We are more oftenreferring to specific locations such ‘Cebu City’ and‘Monterey’ rather than broad designations of Philip-pines and Mexico. Further, clients have increas-ingly demanded a greater focus when we are askedto provide location assessment. The days of simplystating English literacy rate, or number of collegegraduates, have greatly evolved. Today, we aredelivering location analysis to clients that are moredetailed and more relevant in guiding their businessdecisions. When we refer to voice and English profi-ciency for example, we asses by specific segmentssuch as comprehension, attention to detail andverbal aptitude. Likewise, this more granular method of segmentation is applied to other catego-ries such as scale and quality of the labor force.Where indicating the total number of graduates mayhave been a sufficient point of reference five yearsago, today we are enumerating the number of Engi-neering and Computer Science graduates on both aper country and per city level.As a reference point, Tholons identifies six generalcategories in providing location assessment. Withinthese six segments are fifteen sub-categories, eachpossessing a corresponding weight. Providing thislevel of detail allows for a more thorough analysis of locations and their long-term potential as BusinessProcess Outsourcing delivery centers, where abusiness process can be IT, technology or any of the other business services lines such as financeand accounting, human resource, business analyt-ics or R&D.For this report, Tholons utilizes the following catego-ries in providing location assessment:• Scale & Quality of Workforce (includingEducation)• Business Catalyst• Cost• Infrastructure• Risk Profile• Quality of LifeThe parameters above are the very same compo-nents which differentiate cities, and to a largeextent – determine their individual capacities tofulfill particular services. Cities with large, English-proficient labor pools for example, may be better equipped to provide voice-based customer supportwhile a smaller city with robust infrastructure andadequate supply of network engineers may bebetter candidates to provide IMS (InfrastructureManaged Services). Consequently, there is nodefinitive set or order of parameters which willprovide a definitive advantage for each city acrossall service lines. Each parameter must take intoconsideration a number of determining factors: typeof service, desired scale, and nature of delivery, toname a few aspects.Needless to say, the past eighteen months havebeen an incredibly dynamic period for the globalOutsourcing industry. The ongoing downtrend of the US economy, the continuing maturation of theOutsourcing model, the rise of Tier II & III cities asdelivery centers, the heightened level of competi-tion and emergence of ‘global BPO providers’ aresome of the key ecosystem movements wecontinue to closely monitor. We have noticed thatwith each fundamental shift in the market, stake-holders in turn are requiring a deeper understand-ing of delivery locations. This level of knowledgehas become essential not only to maintain financialobjectives, but more so to ensure competitiveadvantages and longevity in an increasingly com-petitive market environment.With each passing year, location assessmentcontinues to be a moving and morphing target, witha new set of market variables that need to beconsidered. This is the challenge that Tholonsreadily accepts in delivering theGlobal 50 Centersof Excellence.
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City v/s Country
Location assessment based on a city perspectiveas opposed to a country level is reflective of theongoing trend we are witnessing in the globalOutsourcing arena. That is, service providers arelooking to identify and tap the inherent capabilitiesand capacities of specific locations. This transitionon how service providers view locations illustrateboth the maturation of the Outsourcing model andheightened focus on service delivery optimization.Today, a single provider can have centers inmultiple countries and cities, with each city havingthe optimal conditions to fulfill specific service lines.Software development can be done in Bangalore,customer service can be done out of Makati City,while Engineering Services are processed out of Krakow. The one-stop-shop country model has infact given way to the more efficient, multi-city, best-of-breed city model.Further, the city perspective which location assess-ment now entails reflects the increased responsi-bilities which local government units now have indeveloping their respective areas. City officials,infrastructure providers, and local stakeholders areoften better able to promote, stimulate and markettheir city’s specific capabilities as outsourcingservice providers. Moreover, local stakeholders areable to address ecosystem concerns in a timelier manner. Many City Mayors and local governmentunits for example, can provide city-specific taxincentives for locators, and Telco providers candeploy connectivity in a much more targeted scale.This pace of efficiency ultimately allows cities tomove in a more efficient manner in attracting serviceprovides into their fold. Consequently, nationwideagendas and developmental roll-outs as otherwisemandated by national Governments are oftenprolonged and drawn out – a pace unfavorable tomost service providers.Though we highlight the increasingly vital role whichindividual cities play in a country’s Outsourcingarena, we do not discount the significance whichnational governments and institutional bodies play inshaping the industry. National governments andindustry bodies are commonly tasked to provideguidance, policies and set direction. Likewise, theseorganizations provide essential monitoring and regu-latory roles – ensuring that labor and businessrelated concerns are managed and implemented.As such, the role of the city with regards to Outsourc-ing should not be viewed as one which has becomeentirely independent or separated from that of thecountry. Rather, one should view the evolution of thecity as a direct result of a country’s inherent capabili-ties as an outsourcing provider. Referring to Pragueas a Center for Excellence for Software Develop-ment or Ho Chi Minh for IT Outsourcing (ITO)processes for example, highlights the respectivecountry strengths which have allowed them todeliver such services in those specific cities.
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