Global City Competitiveness Report 2009

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 Global City Competitiveness Report 2009

INTRODUCTION

Despite the ongoing economic crisis, the outlook for outsourcing

remains optimistic. Organizations continue to adopt outsourcing as a
business strategy and an effective optimization and transformation
lever to help them mitigate the current financial and competitive
challenges. As a consequence of increased adoption of outsourcing,
the global sourcing landscape has been undergoing changes and many
global locations are evolving to serve specific needs of organizations
that embark on their globalization journey or evolve as mature
globalizers.

Global sourcing is mainstream. While cost containment will continue to

be an important factor in the global sourcing decisions of
organizations, other factors such as access to a global talent pool, new
market entry, and geographic risk diversification have become
increasingly important. The cities covered in this report are by no
means an exhaustive set of potential destinations. New destinations
are constantly emerging in the global marketplace. This report
attempts to provide its readers a view of the changing landscape
across the more established as well as emerging destinations. We
hope this report will provide you with insights as you consider and
evaluate options as part of your organization’s location strategy.

This report analyzes a mix of established as well as emerging and

nascent outsourcing destinations. The report covers over 60 cities
across 29 countries. While traditional and preferred outsourcing
destinations have been the focus of attention for over a decade, this
report provides a perspective of many other locations that possess a
strong potential to emerge as successful global sourcing destinations in
future.

Key Topics Covered

Key insights and emerging themes on the global sourcing landscape

Detailed profiles of over 60 cities across Asia Pacific, Europe,

Middle East, and Africa, and Central and Latin America
Key outsourcing services from each city
Current and future attractiveness of cities
Established, emerging, and nascent locations by outsourcing
service functions
Data on annual graduate pool, IT and BPO workforce for each city
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Recommendations on location strategy and evaluation
 Global City Competitiveness Report 2009

TABLE OF CONTENTS

KEY INSIGHTS 04

METHODOLOGY 07

ASIA PACIFIC (APAC) REGIONAL ANALYSIS 13

EUROPE, MIDDLE EAST, AFRICA (EMEA) REGIONAL ANALYSIS 53

CENTRAL AND LATIN AMERICA REGIONAL ANALYSIS 83

CONCLUSION 118

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 Global City Competitiveness Report 2009

Methodology & Coverage

Data for this report was collected using a combination of The data gathered was qualitatively analyzed using Neo
primary and secondary research. Neo Advisory contacted Advisory’s proprietary location assessment framework.
outsourcing industry associations from various countries, Leveraging our experience on location assessment
software technology parks, investment agencies, as well engagements by working with our clients, the research
as service providers across 28 countries covered in this focuses broadly on six categories that are critical to be
report. analyzed while choosing a location.

Location Factors Key Parameters

Real estate rent, support cost, corporate tax rates, labor cost, HR cost, cost to start
Financial Attractiveness
business, tax incentives

Size of industry, presence of major IT & BPO companies, multilingual capability, key
Service Maturity
services, industry specific services and focus

Size of workforce, university graduates output, attrition rate, scalability, sustainability,

Human Capital
wage inflation

Number of ISPs, personnel computers, number of IT parks and SEZs, airline connectivity,
Infrastructure
road infrastructure

Risks Crime rate, financial risk, labor risk, infrastructure risk, geo-political and socials risk

Government support and incentives, social environment, quality of living, bureaucracy,

Business Environment
cost and time to set up business, cost of living

Table 1: Key Location Selection Factors

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 Global City Competitiveness Report 2009

Financial Attractiveness

Cost saving has been one of the traditional business Numbers of university and technical graduates, attrition
drivers for globalization and continues to remain a rates, size of IT & BPO workforce are some of the factors
critical decision criteria. Cost, broadly can be classified to be considered.
as personnel cost and operations cost. Personnel cost in
terms of wages, administration cost, related HR cost Infrastructure
accounts for approximately 40-50 percent of the total
With demand for sourcing of services surging globally,
globalization cost. Operations cost is also another critical
there is a definite need for a well established
factor to be considered while setting-up operations.
infrastructure adhering to global standards.
Operations cost include office real estate rent,
Infrastructure would encompass physical infrastructure
telecommunication cost, tax incentives, corporate tax,
like air, land, and sea connectivity and related support
travel cost, cost of electricity, and cost to set-up a
system, industry infrastructure like development of
business.
technology parks, presence of Special Economic Zones

Service Maturity (SEZs), and business infrastructure like availability of

office space, telecommunication, and other related
Service maturity typically gauges the relative capability business support systems.
of a location in the global sourcing landscape. The
presence and type of services delivered by large IT and Risk
BPO companies is a leading indicator to gauge the
A robust and pro-active risk monitoring system for global
maturity of a location. The market size of the
locations is proving to be a key success factor for
outsourcing industry, multi-lingual capability, established
sustainable business operations. Risks such as labor risk,
and emerging services, industry specific focus are few
financial risk, security risk, geo-political risk, and social
factors that help provide a holistic view of service
risk are the different types of risks to be cognizant of
maturity of a location.
while setting up new business in low cost locations.

Human Capital
Business Environment
Global competitiveness is driving market growth across
While a location could be financially attractive, and
domains, and as organizations expand, the need to focus
mature in terms of service capabilities with a sizeable
on core or anchor service capabilities becomes
labor pool, a critical success factor for locations is the
increasingly critical. Human capital is the most critical
business environment and the support system that it can
success factor to retain and grow core competence in the
provide. Business culture, quality of life, government
global services market. The availability of a well-
support, procedures, cost of living, and cost and time to
educated, qualified labor pool, its scalability, and
commence business in a particular location are key
sustainability in a competitive environment are few key
aspects to be studied. Understanding the business
parameters to be considered while evaluating this factor.
environment is a necessary step for organizations setting
While the above stated factors are specific to the current
up a business operation within its own country or
labor pool, a futuristic evaluation parameter to be
outside.
considered would be the educational system that
supplies appropriate quality labor force to meet the
forecasted demand of the industry. Large numbers of
fresh graduates lead to low wage inflation and high
productivity in the labor market in a particular location.

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 Global City Competitiveness Report 2009

Coverage
The report covers 3 global regions: Asia Pacific (APAC), Europe, Middle East, and Africa (EMEA), and Central and Latin
America. Following is the coverage of countries under these three regions.

Figure 1: Country Coverage

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 Global City Competitiveness Report 2009

The following is the list of cities covered in this report under respective regions:

Global Cities Coverage

APAC EMEA CENTRAL & LATIN AMERICA

1. Bangalore 1. Brno 1. Bogotá

2. Bangkok 2. Bucharest 2. Buenos Aires
3. Beijing 3. Budapest 3. Córdoba
4. Cebu 4. Cairo 4. Guadalajara
5. Chandigarh 5. Cape Town 5. Guatemala City
6. Chengdu 6. Casablanca 6. Kingston
7. Chennai 7. Dubai 7. Managua
8. Coimbatore 8. Johannesburg 8. Mexico City
9. Dalian 9. Kiev 9. Monterrey
10. Davao 10. Kraków 10. Montevideo
11. Delhi (NCR) 11. Łódź 11. San Jose
12. Hangzhou 12. Minsk 12. San Salvador
13. Hanoi 13. Moscow 13. Santiago
14. Ho Chi Minh City 14. Nizhny Novgorod 14. São Paulo
15. Hyderabad 15. Novosibirsk
16. Johor 16. Poznań
17. Klang Valley 17. Prague
18. Kolkata 18. Pretoria
19. Manila 19. Sofia
20. Mumbai 20. St. Petersburg
21. Penang 21. Warsaw
22. Pune
23. Shanghai
24. Shenzhen
25. Trivandrum
26. Xi’an

Table 2: City Coverage

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 Global City Competitiveness Report 2009

Contact Information

Global Headquarters Asia/Pacific Headquarters

4000 Pimlico Drive, 114-108 No. 16 & 16/1, 5th Floor

Pleasanton, CA 94588 Phoenix Towers, Museum Road
U.S.A. Bangalore 560 025,
Tel. +1.415.462.0569 India
Fax +1.415.462.5450 Tel. +91.80.4018 2000
info@neoadvisory.com Fax +91.80.4018 2010
info@neoadvisory.com

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