Global Services Oct 2008

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Service-oriented Architecture p. 36 Managing Disputes p. 40
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TOP
50
EMER GING
OUTSOURCING
GLOBAL
Shanghai
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Toronto
CITIES Global Services-Tholons Study

Budapest
They are not Bangalores or Makatis
yet; but they could get there sooner.
There are nine new entrants and six
dropouts from the 2007 list
52 pages including cover
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contents_final.qxp 9/22/2008 10:45 AM Page 4

O c t o b e r 2 0 0 8 Vo l u m e 0 3 , I s s u e 3 3
FEATURES
14 TOP
50
EM ERGING
OUTSOURCING
GLOBAL
CITIES Global Services-Tholons Study

By Avinash Vashistha, Tholons, and
Imrana Khan, Global Services
36 40
SERVICE-ORIENTED ARCHITECTURE MANAGING DISPUTES
By Jayaprakash Nair, Delivery Manager, Aspire Systems By Namita Goel
Is SOA still a buzzword? Why would a company spend money to spon- Who suffers the most in case of a dispute — customer or
sor a so-called technical initiative by the IT team instead of financing service provider? Whose fault is it anyway? Who’s holding the
some other business feature development by the team? Is it true that a ball at the time of deal termination or disagreements? Is it
lack of SOA in an enterprise with a complex IT ecosystem has a direct possible to carry on an outsourcing relationship after a nasty
impact on the IT costs, and hence the bottom line, in the long run? scrap? Here’s a reality check
4 GlobalServices www.globalservicesmedia.com October 2008

contents_final.qxp 9/22/2008 10:46 AM Page 5
24X7
8 THE FINANCIAL
CRISIS AND 10 PUBLIC SECTOR
SIGNS SIX BIG ITO
OUTSOURCING DEALS IN AUG. ’08
The news about Lehman By Datamonitor
Brothers and Merrill Lynch
shook the global financial-services
industry like never before. Will
outsourcing by the sector also see
10 LATIN AMERICA MSS
MARKET SET TO
a drastic fall? What happens to
projects that are already under-
GROW TO $332.7
way? Are there any new opportu- MILLION BY 2013 COLUMNISTS
nities that the crisis throws up? By Imrana Khan
SHYAMANUJA DAS
8 HP TO CUT 24,600
EDS JOBS
Shyamanuja pioneered
outsourcing
journalism in India in
By Imrana Khan 1998 with bpOrbit, a
newsletter for the
U.S NEWSPAPER
11 INDUSTRY EMBARKS
domestic Indian BPO
industry. He is now
ON OFFSHORING Editor, Dataquest magazine, Cybermedia.
By Imrana Khan
ALLAN SCHWEYER
Allan is the President
INFOSYS-AXON M&A and Executive Director
12 DEAL KICKS OFF A of the Human Capital
Institute and author of
NEW TREND Talent Management
By Tholons Systems.
PHIL FERSHT
DEMAND
13 DOWNTURN: TOP
Phil is Research Director,
Business Process
Outsourcing, offshoring
OUTSOURCING TO
9 SENEGAL
REASON FOR JOBS
CUT IN AUG.
and IT sourcing, for
leading industry analyst
By Keerthi Nair By Namita Goel firm AMR Research, Inc.
EXPERT VIEWS
44
CHINA’S CHALLENGES TO
DEVELOP A GLOBAL BPO
CAPABILITY
By Phil Fersht, AMR Research
46 50
SALES STRATEGIES IN PLACING TALENT AT THE
SERVICE PROVIDER CENTER OF INTEGRATED
COMPANIES TO SUCCEED TALENT MANAGEMENT
IN A TOUGH ECONOMY By Allan Schweyer, HCI and
By Matt Smith, 3forward Tony Marzulli, Workscape

editors note_final.qxp 9/19/2008 11:19 AM Page 6
EDITOR’S NOTE
Where Do You Want

to Go Today?
I n this issue, we list out 50 emerging cities that are vying for a piece of action
in the outsourcing space. They are at a stage where they can be called “out-
sourcing destinations” because they demonstrate a few qualifying attrib-
utes and level of activity such locations need to have.
How does a city get there? Through sustained efforts directed at creating
an environment that helps attract investments, develop talent pools, and cre-
ate a “pull” factor for the industry. The role played by the country govern-
ment, in general, and the local government, in particular, is no less. But the
entire onus of developing the right climate and conditions does not rest on
ED NAIR the government alone. The private sector, the universities, the commercial
Editor institutions and the industry associations perhaps have a bigger role to play.
ed@cybermedia.co.in The stellar role played by India’s tech industry association — Nasscom —
in developing India’s software exports industry and catapulting it to global
prominence makes a good case study. Other examples like the Philippines’
The entire onus of BPAP, the industry association for business process outsourcing, and devel-
opment agencies like Singapore’s IDA have also demonstrated success.
developing the right The other key aspect in developing a destination is to have a few anchor
climate and conditions companies, ideally globally leading ones, who can set the ball rolling. These
does not rest on the companies then start acting as reference cases and when these companies scale
up, they are able to create an ecosystem of support services that the larger
government alone. industry would require. These companies also largely determine the area of
The private sector, technical competence that the place can choose to specialize. For instance,
the universities, the way back in the late eighties, Texas Instruments and Tektronix were amongst
the first ones to choose Bangalore for software development. Many other com-
commercial institutions panies then followed suit and in about eight years, Bangalore became a hub
and the industry of software development.
associations perhaps It takes time for a city to develop into a favorable destination for out-
sourcing. As it is said, “Rome was not built in a day.” Credit is due to the
have a bigger role cities that are featured in this issue for their sustained efforts at developing
to play the outsourcing industry. And they have many more peaks to scale. GS

ad.qxp 9/11/2008 5:11 PM Page 29
24x7_final_revised.qxp 9/22/2008 11:17 AM Page 8
HP to Cut
24,600 EDS Jobs
Jobscut p. 13
24x
The Financial Crisis
7
and Outsourcing
T he tech behemoth HP
announced plans to cut 7.5
percent (about 24,600 EDS jobs) of
BY IMRANA KHAN
the combined entity’s manpower

under the company’s restructuring
program that is expected to save $1.8
T he news about Lehman Brothers
and Merrill Lynch shook the
global financial-services industry like
solidation in the industry will lower
the overall demand and the company
will reap synergy. This will, subsequ-
billion annually. The affected employ- never before. uently, show up in lower demand for
ees will be provided with severance It is almost clear that the financial services in India,” says Vikas Sehgal,
packages, counseling and job- industry is going to cut more jobs in Principal and Executive Director, India
placement services. the coming future. The industry has Business, Booz Allen Hamilton, a
HP said in a statement that the already shed nearly 103,000 workers Virginia-headquartered strategy and
company plans to replace 50 percent in 2008, and it seems that it’s going to technology-consulting firm.
of those jobs by 2011. The replace- unleash another round of heavy layoffs The future of the BPO captives
ment intends to board the right talent in the sector. “A year-end spike in and outsourcing setups of these banks
with services delivery capabilities in financial cuts, ignited by these latest is uncertain. The careers of employees
order to cater to its global clients actions, could send 2008 job cuts in in these setups are also in doubt. On
from various industries. the sector past the 2007 record total of one hand, they could be laid off at any
Most of EDS’ employees are U.S.- 153,105,” according to Challenger, point of time, but on the other, there
based and expensive. Handling EDS’ Gray & Christmas, a global outplace- would be trained talent available to
expensive manpower in order to save ment consultancy. other BPO companies. For companies
cost was one of the topmost chal- The financial sector is one of the that are looking at adding scale, the
lenges for HP after the merger. Thus, biggest buyers of IT and Business captives would be an easy buy.
it was expected that HP would axe Process Outsourcing (BPO) services. And, what will happen to the pro-
EDS’ jobs after inking the HP-EDS If companies in the sector start falling jects that are already underway? “Some
merger accord. like ninepins, many of the current out- for sure will go away as the companies
The HP-EDS merger announce- sourcing projects would get short-cir- are gone; for those that are merged,
ment was made initially on May cuited and the existing providers you'll see elimination of redundant
13th. However, the acquisition was would bear the brunt. contracts. Some projects that were
formalized and completed on Aug. The industry experts believe that for growth will either be canceled or
26th, 2008. Under the terms of the these announcements will impact the lowered in volume,” adds Sehgal.
acquisition, the company bought outsourcing industry badly. “There However, every bad news precedes
EDS for $13.9 billion. EDS’ buyout will be a negative impact and this will something good. So there will be
1 is HP’s largest acquisition in the IT-

services space.
With this buyout, HP has one of
show up in lower/slow growth. There
will also be an impact on the price. As
the supply of talent in the U.S. will
some opportunities as well. “Especially
for the providers going for value play.
India can help in consolidation of
the technology industry’s largest port- increase, it will, thereby, depress the banking in U.S. by offering services to
24x7
folios of products, services and end-to- wage in the U.S. and place a subse- integrate the systems and finance
end solutions. GS quent negative impact on arbitrage- processes across new and old entities,”
driven value proposition. Also, con- states Sehgal. GS

OUTSOURCING TO
SENEGAL
Five places to visit
Dakar
The capital region of
BY KEERTHI NAIR Senegal, Dakar, is a modern
metropolis where colonial-style
A former French colony, Sene-

gal, is fast luring outsourcing
opportunities from the Francophone
the world, after Japan, to have devel-
oped a very sophisticated government
intranet system, the Senegalese have
villas, big modern buildings, and
the Medina — the old quarter
— share an implausible mix.
The Institut Fondemental
world — its stability, similar time the opportunity to gain a significant d'Afrique Noir (IFAN) and
zone, low wages and stock of young, amount of training from their home Galérie Nationale are some major attractions.
educated employees being the bonus. country, thus avoiding the financial Ile de Goree
An extensive and modern telecom- burden of going overseas,” says Lance Also known as
the Goree Island, Ile de
munication infrastructure — in place T. Artis, President, Apyo Technolo- Goree is a magnificent,
with a digital and fiber-optic network gies, a French-speaking technolo- lovely and captivating
place with lovely
nationally and an optic marine and gy/outbound telemarketing firm. palaces, mansions and
satellite network internationally — is Though Senegal ranks among the colorful little alleys lined
making the country’s telecommuni- 20 least developed countries in the with pastel colonial buildings and a mighty fortress.
UNESCO declared this island a World Heritage Site.
cations as good as any in Europe. world, and has an unemployment
The icing on the cake comes with rate of 48 percent, the center taps into Saint Louis
Saint Louis or
French as one of Senegal’s national a pool of well-educated, young Sene- Ndar retains a nostal-
languages. Dakar call-center staff galese people who are respectful than gic atmosphere in its
narrow streets flanked
have an accent neutral enough to pass the staff in Europe. Also the quality by beautiful colonial
for native French, and this allures of certain public services (electricity) houses, balconies and
French organizations toward Senegal. hinder the country’s economic devel- verandas. Two spectacular national parks
grace the city — the Langue de
The major four call centers in Sene- opment and industrialization, being Barbarie National Park and the Djoudj
gal — PCCI, Call Me, Access Value, focused only in Dakar, makes the city National Park.
Center Value — offer services main- overpopulated. To counter all this, Tambacounda
ly for French companies. Senegal has not only taken the ini- The town is
known for its varied
With the minimum education tiative to promote telecoms in rural agricultural potential
being a college degree, around 600 zones, but has also started imple- and rail connections
operators aged between 20 and 25 menting ambitious plans for the peri- with Dakar to the
northwest and Mali to
work up to 40 hours a week equipped od 2005 to 2015 such as improve the northeast as well
with a French-sounding pseudonym. roads and expand Dakar Port. as a paved road to Kédougou in the southwest.
Niokolo Koba National Park, Senegal’s largest
Senegal, in addition, plans a com- With high-levels of human skills, national park, is located here.
petitive and trained workforce in diversified service fabric and a deter-
The Petite Côte
order to attract more foreign com- ministic approach, Senegal is bound The Petite Côte is
panies. For example, Senegal plans a to become a similar outsourcing an excellent beach, a
2
network within the country linked by magnet for the French call-center great fishing center and
shelters the beautiful
satellite to the University of New York industry as India has become for forests of baobab-trees
(Project SMKS) to enable students to Britain and the U.S., putting it in in Senegal — an excel-
lent base to discover
obtain American diplomas. competition with Morocco, Tunisia this country. Saly-
24x7
“Since Senegal is the country in and Mauritius. GS Portudal or Saly and

Mbour are the popular tourist resorts of this region.
SOURCES: © 2007 PEARSON EDUCATION, OXFORD BUSINESS GROUP, © 2008 CondéNet, INC. Compiled by Keerthi Nair

ITdeals Metrics
Latin America’s
Public Sector Signs Six Big BY IMRANA KHAN
ITO Deals in Aug. ’08
BY DATAMONITOR
L atin America’s Managed Security Ser-
vices (MSS) market is set to surge by
30 percent in the next five years — from
D emand from the public sector

continued to drive outsourcing
contract signing activity in Aug. ’08.
signed 10 deals worth over $100 million
since the beginning of 2008, all with
U.S. federal government agencies.
$66 million in 2007 to $333.7 million in
2013 — according to the latest findings of
a Calif.-headquartered business-research
Of the 10 biggest deals announced Lockheed Martin, a major player in and consulting firm, Frost & Sullivan.
during the month, six involved public- the U.S. public sector, secured a sig- With the highest annual growth rate, the
sector customers. nificant deal with a government agency MSS market in the entire region is expect-
The U.S. Army awarded the month’s in the U.K. in August. The company ed to reach about $90 million in 2008.
largest deal to a defense-services con- will head up a consortium, also includ- In the current market scenario, the
tractor, ManTech International. Under ing Logica, Oracle, Steria and Cable & outsourcing of network security in the
the two-year, $820 million agreement, Wireless, tasked with supporting the region is now being accepted at a larger
ManTech will provide equipment and 2011 census in England, Wales and pace. Thus, Latin American IT-services
systems to support mine detection and Northern Ireland. The team will design, providers are leveraging full outsourcing
retrieval programs in Southwest Asia, install and support systems using char- agreements. Most of the developed indus-
including Iraq and Afghanistan. The acter recognition and color processing tries such as telecom, IT and manufac-
contract win is one of the biggest in for paper census forms, as well as turing, to name a few, share the biggest pie
ManTech’s history, and completes a ensure that the census can be complet- (46 percent) of the region’s MSS market.
successful few months for the company, ed via the internet. However, the finance and banking indus-
which signed two deals worth over In the private sector, the biggest try still prefers to manage the network
$100 million each in July ’08 and deal worth $431 million was signed security in-house.
acquired security-services provider, between China Mobile and Motorola to Brazil and Mexico are the two domi-
Emerging Technologies Group. provide GSM network upgrades and
One of ManTech’s rivals, SAIC, also expansions. Some 16 network-services
secured a major defense-services award deals have been signed in China this
last month. It was selected by General year, as the country looks to improve its
Services Administration to provide pro-
ject management, helpdesk support and
telecommunications infrastructure.
Aside from Motorola, Alcatel-Lucent,
U.S Newspaper
system-integration services to the U.S.
Army’s HR command. SAIC has now
Nokia Siemens Networks and Ericsson
have secured big deals. GS
Industry Embarks
THE 10 LARGEST IT SERVICES DEALS IN AUGUST 2008
on Offshoring
BY IMRANA KHAN
Customer Provider Engagement(s) Value Duration
($ mn) (yrs)
l
l
U.S. Army
China Mobile
ManTech International
Motorola
Maintenance, training
Network mgmt.
820
431
2
—
T he $11 billion Indian Business Process
Outsourcing (BPO) industry — slat-
ed to reach $30 billion by 2012, and
l General Services SAIC Helpdesk mgmt., systems 410 5 which employs over 700,000 people — has
Administration integration
become a monster to manage. Recent stats
l Boeing AT&T Network mgmt. 400 5 on the sector’s employee turnover show an
Health Net IBM Infra mgmt. 300 5
3
l unprecedented rise; enough to keep busi-
l Office for National Statistics Lockheed Martin Processing services 276 — ness leaders awake at night.
l Health and Safety Executive Capita Group BPO 257 10 Any offshoring announcement by
l U.S. Army Telecommunication Systems Application mgmt. 246 3 (est.) U.S. newspaper publishers always makes
24x7
l Absa Telkom Network mgmt. 237 5 headlines. Especially when the publish-
l NOAA Diversified Global Partners ADM* 200 9 ers decide to offshore the services beyond
*Application Development & Maintenance; SOURCE: DATAMONITOR IT SERVICES CONTRACTS DATABASE

MSS Market Set to Grow to $332.7 Million by 2013

REVENUE FORECAST CURRENT MARKET CONDITIONS IN LATIN AMERICA
40 Region Current status
300 l Andean countries — Colombia, With 14 percent participation, this region has shown
Revenues ($ millions)
30 Ecuador, Peru, Bolivia great growth potential, especially in Colombia and

Growth rate (% )
and Chile Venezuela, detaining Latin America’s highest CAGR for

200 the forecasted time period
20
l Brazil Is region’s largest and most established market,
detaining 40.9 percent of MSS revenues
100 10 l Central America & Caribbean Very underdeveloped region, with growth potential
for all MSS solutions. Costa Rica, Puerto Rico and
0 0 Panama are the main markets in this region, fuelled
2007 2008 2013 by government investments and the presence of
Total revenues Annual growth rate multinational companies
l Mexico Represents 24.1 percent of MSS revenues and has
SOURCE: FROST & SULLIVAN very similar market characteristics as the much larger
nant markets in Latin America. In Brazilian market
l Southern Cone Accounting for 16.2 percent of the region’s revenues,
2007, these markets together account-
driven particularly by Argentina’s very high GDP
ed for over 65 percent of the region’s growth over the past years and by Chile’s developed
MSS market. financial vertical.
According to the study, titled Latin SOURCE: FROST & SULLIVAN
America Managed Security Services Mar-
kets, the primary drivers behind this proof network-security solutions, lack of However, many factors such as lack of
growth are: Increasing threat levels, pres- qualified IT professionals to manage in- awareness of current threats and available
sure from regulatory bodies to adopt house IT departments, and companies’ solutions in the market and lack of quan-
security measures, improving awareness desire to reduce the costs with IT-securi- tifiable ROI hinder the growth of this
about the growing necessity for fool- ty expenditure to focus on core business. market largely. GS
their typical ad-production work. Many

a times such announcements are met
with resistance due to jobs cut
announcements. Over 6,500 jobs cut cern for U.S. newspapers publishers. The lion, estimated a business intelligence and
have been reported in the first newspaper industry in the region is going research firm, ValueNotes.
six months of the year 2008. Even through a major crisis. So the ultimate Currently, there are a handful of
the blogspace gets flooded with senti- solution for survival is to save costs by providers such as Express KCS, Affini-
ments of angst against “the outsourced outsourcing production and content ser- ty Express, 2AdPro and Mindworks
newspapers.” vices to low-cost offshoring destinations Global that serves this market, but
Quite a bit of muck was raised such as India. there’s the opportunity for more
when The Orange County Register, one Even though offshoring by U.S. news- providers to come in.
of the leading regional newspapers, papers primarily revolved around ad- Going forward, according to Val-
recently announced its plan to off- production work, some copy-editing and ueNotes’ study, the current Indian pen-
shore copy-editing and page-layout page design work is now also being sent etration into this market stands at
work to India. In 2007, when Calif.-
based news Website hired Indian jour-
nalists to cover meetings of the Pasade-
to these locations. From India’s perspec-
tive, the country has a huge untapped
market. India shares a very small pie —
around one percent. The revenues of
Indian service provides could grow to
$120 million by 2012. Also the number
4
na City Council, the reaction of the $35 million — of the total offshore of total workforce involved in this
24x7
locals was quite uncomplimentary. opportunity from newspaper publishers, industry is set to cross 5,500 in the next
Plunging revenues is the biggest con- which is expected to be about $3,500 mil- four years. GS

Infosys-Axon M&A Deal Kicks Off a

BY NISHANT VERMA, PRINCIPAL, AND AVINASH VASHISTHA, CEO, THOLONS
A ugust ’08 witnessed the announce-

ment of the largest Indian cross-bor-
der deal wherein Infosys, an India-based IT-
cent of total revenue comes from the U.S.
and around 30 percent comes from the
European regions, unlike other India-based
marked by the synergetic benefits arising
from 2,000 employees offering SAP con-
sulting services to customers from the
services giant, acquired Axon Group, the tier-1 firms such as Wipro (44 percent from aerospace, retail, manufacturing, utilities,
U.K.-based SAP consulting-services firm, the U.S. and 24 percent from Europe) and financial and other commercial sectors,
for a total transaction value of $753 million. TCS (50 percent from the U.S. and 29 per- providing the global giant with strong
This acquisition seems to be a trendsetter. cent from Europe). cross-sell and up-sell opportunities. The
Since the announcement, a spurt of simi- From a geographical expansion per- acquisition would also strengthen the
lar activities is being noticed. spective, the target is expected to provide position of Infosys in the U.S., China and
Infosys has the largest exposure to West- a strong local presence and a front-end for other Asian geographies. However, this
ern customers. Of which, around 68 per- Infosys in Europe. The deal is further deal would dilute the higher profit margins
of Infosys.
MEGA M&As OF AUGUST '08 Due to the cultural barriers and non-off-
Acquirer Target Deal size
shore benefits, Indian acquirers have always
($ mn) stayed away from large transactions in
l Infosys Technologies Axon 753
European regions. This could be further
elaborated by the fact that Europe witnessed
l Serco Si International 525
over 80 IT and business process outsourc-
l Sungard Capital Gl Trade 443 ing transactions in the past eight months,
l Nuance Communications Snapin 180 where around 50 percent are domestic, 40
l KKR Anite Public Sector 107
percent are U.S.-based acquirers and 10
percent are from others.
l Singapore Telecommunications Singapore Computer Systems 99
Another large transaction of the month
l Superinvest Superoffice 95 was the U.S.-based acquirer SunGard Cap-
l Healthvision Solutions Medisolution's Healthcare 50 ital acquiring French financial software
Information Systems Division solutions firm GL Trade for $443 million.
l Spectris Ncode International 44
l Adaptec Aristos Logic 41 DEAL COUNT
BY TARGET COUNTRY (%)
l Nuance Communications Zi 35
l Salesforce.com Instranet 32
l Sbi Holdings Sbi Net Systems 25
l ITC Pyxis Solutions 25
l Champion Technology Kantone 24
l Wind River Systems Mizi Research 16
l Q-Free Asa Dacolian 15
l Callwave Webmessenger 9
l Ucs Group Computer Software Consultant 9
l Creative Master Bermuda Tronic International 7
l Kn Wave Dawoori Entertainment 6
5 l Wiseman
l Info-Drive Software
Heartland Data
Technoprism
6
5
U.S.: 44
Belgium: 3
Canada: 7
Norway: 1
Singapore: 3
South Korea: 1
l Global Med Technologies Edonor 5 Germany: 7 U.K.: 13
24x7
l Salary.Com Infobasis 5 Hong Kong: 4 Others: 13
To see the full table, please visit www.globalservicesmedia.com Japan: 4
SOURCE: THOLONS SOURCE: THOLONS

New Trend Jobscut

Demand Downturn: Top
DEAL VALUE
BY TARGET COUNTRY (%)
Reason for Jobs Cut in Aug.
BY NAMITA GOEL
T he number of jobs cut in Aug.

’08 was 14 percent less than the
number quoted in July. August wit-
MONTH-BY-MONTH TOTALS
Month 2008 2007
U.S. 38 U.K. 32 nessed slightly better market condi- l May 103,522 71,115
tions compared to the last couple of l June 81,755 55,726
months, though the number is still l July 103,312 42,897
stubbornly high at 88,736, states the l August 88,736 79,459
jobs cut report released by global out-
placement consultancy, Challenger, MORTGAGE / SUB-PRIME LAYOFFS
Gray & Christmas. Demand down-
Month 2008 2007
turn has been stated as the top reason l May 15,505 3,948
by employers for the jobs cut, howev- l June 18,936 3,713
er, the year-to-date category market
l July 14,735 1,175
conditions is still topping the chart for
l August 1,337 30,892
the reasons behind the cuts.
Till now, employers in various sec-
tors have announced 667,996 jobs AUGUST JOBS CUT REASONS
cut, which is 29 percent higher than Reasons Number
2007 eight-month total of 515,855. of layoffs
The months of May and July have jolt- l Demand downturn 20,614
ed the entire jobs market so badly that l Closing 16,779
there are very less chances of recovery l Cost-cutting 15,617
within this year. After the phase of l Restructuring 11,821
2001 to 2005 that repeatedly saw l Market conditions 8,294
Others: 17 Japan: 1 over a million yearly positions cut by l Bankruptcy 3,871
Belgium: 0 (est.) Norway: 3 employers, just three years later, 2008 l Merger/acquisition 3,646
Canada: 2 Singapore: 4 is set to join the “over a million” jobs
Germany: 1 South Korea: 1
l No clear reason 2,655
cut club. l Fluctuating sales 1,986
Hong Kong: 1
Even though 2002 was a bad year
l Relocation 1,092
SOURCE: THOLONS with 1,466,823 jobs cut in total, the
l Rising Costs 930
summer of 2008 beats the summer of
l Order cancellation/ 733
The acquisition will expand the financial 2002. Hopes of a late summer reprieve
reduction
software offerings of SunGard to European in layoffs were dashed by heavy down-
l Outsourcing 450
customers and would enable it to penetrate sizing in the automotive and govern-
l Voluntary severance 115
the small and mid-sized market segment. ment sectors, where employers
Firms based in the U.S. have emerged as announced 17,233 and 12,328 job l Reorganization/ 103
consolidation
favorite targets with 31 transactions, fol- cuts, respectively. This level of summer
l Technological update 30
lowed by the U.K. with nine deals, Canada
and Germany with five deals each. Other
target geographies targeted were Hong
job cutting has not been seen since
2002, when the country was still
struggling to recover in the wake of the
Total 88,736
SOURCE: CHALLENGER, GRAY & CHRISTMAS
6
Kong, Japan, Norway, Singapore, South 2001 recession and September 11,
24x7
Korea, Sweden, Australia, China, France, according to the firm. May 2007. The 144 exits are 16.1 per-
India, Israel, Netherlands, South Africa, The number of CEOs exits cent higher than the previous month
UAE and Sweden. GS touched 144, the highest mark since when 124 exits were recorded. GS

coverstory_ik.qxp 9/22/2008 12:29 PM Page 14
coverstory_ik.qxp 9/22/2008 5:24 PM Page 15
TOP
50
EMER GING
OUTSOURCING
GLOBAL
CITIES
Global Services-Tholons Study
They are not Bangalores or Makatis
yet; but they could get there soon-
er. There are nine new entrants and
six dropouts from the 2007 list
Premier Sponsor
cstory_Final.qxp 9/22/2008 3:25 PM Page 16
The Global Services-Tholons Study
THE LOCATION
THE PARAMETERS OF EVALUATING THE CITIES
In order to provide location assessment, Tholons
has considered “six general categories” — “Scale &
Quality of Workforce (including education),”
“Business Catalyst,” “Cost”, “Infrastructure,” “Risk
Profile” and “Quality of Life.” Within these six seg-
ments are fifteen sub-categories, each possessing a
corresponding weight.
The parameters above are the same components,
which differentiate cities, and to a large extent deter-
mine their individual capacities to fulfill particular ser-
vices. Cities with large, English-proficient labor pools,
for example, may be better equipped to provide voice-
based customer support while a smaller city with
By Avinash Vashistha, Tholons, and robust infrastructure and adequate supply of network
engineers may be better candidates to provide infra-
Imrana Khan, Global Services structure managed services. Consequently, there is no
definitive set or order of parameters, which will provide
T
IER-1 GLOBAL SERVICE PROVIDERS a definitive advantage for each city across all service
lines. Each parameter must take into consideration a
such as Accenture, ACS, Cognizant,
number of determining factors: Type of service, desired
Capgemini, CSC, EDS, Genpact, HP, IBM,
scale, and nature of delivery, to name a few aspects.
Infosys, LogicaCMG, TCS, Satyam and
Wipro continue to increase their global pres- THE LOCATION-ASSESSMENT FRAMEWORK
ence. The difference is that service providers Our “Location-assessment Framework” takes into
such as IBM and Accenture are looking to tier-2 and tier-3 consideration an expansive set of variables when eval-
Indian cities for expansion, while the Indian providers uating a city’s potential as a delivery center. Further, the
Infosys, TCS and Wipro are heading toward cities in South quantitative data gathered is substantiated and ana-
America and Eastern Europe. lyzed qualitatively.
In a way, the choice of the right city has become more In analyzing the capacity and potential of individual
important than the choice of the country. It is rather the city city centers, Tholons identifies the inherent character-
istics of a location — its key differentiator and at the
(than the country), which represents a more accurate pack-
same time, its primary inhibitor. The recognition of
age of attributes that service providers seek. Thus, Cebu City
these city-specific aspects is also essential in correlat-
and Monterrey matter more than the Philippines and ing which specific service lines a city has the potential
Mexico from a decision-making standpoint. or is most capable in delivering. City A for example, can
This study identifies those locations that are globally rec- have a high percentage of its labor pool that is English-
ognized for their “specific” outsourcing services offerings as proficient, but may also have a smaller percentage of IT
well as the ones that are establishing themselves as special- or technical-related university graduates as compared
ized locations for particular outsourcing functions. To make to City B — having a low number of English-speaking
the study complete, like last year, we have also come up with graduates, but a more favorable ratio of IT graduates. In
the names of top emerging outsourcing cities as that’s the this case, we can infer from a resource perspective, that
main focus of this study. There are eight such cities instead City A may be more suitable for delivery of customer-
support services, while City B may be better equipped
of five that we had reported last year. (See Table 2 —“Top 8
to fulfill ITO-related services such as engineering or
Global Outsourcing Locations.”)
software development.
This year’s list of top 50 emerging global outsourcing From a service-delivery perspective, the more suc-
cities, though, has quite a few surprises. We profiled nine cessful outsourcing cities have leveraged on their
“new entrants” — including Quezon City (The
Philippines), Toronto (Canada), Rio de Janeiro (Brazil),
Mexico City (Mexico), Jaipur (India), Singapore
(Singapore), Chengdu (China), Guadalajara (Mexico) and The Perspective of the City
Mandaluyong City (The Philippines) — to the list. (See Location assessment based on a city as opposed to a
Table 3.) Last year we had profiled top 15 emerging out- country is reflective of the ongoing trend we are witnessing
sourcing locations. in the global outsourcing arena. Service providers are look-

ASSESSMENT
available resources to capture specific cost and large population bases are
market segments. Cities in the Philippines often required.
for example, continue to avail of their There are also various regional and
large English-proficient workforce in ecosystem dynamics, which differentiate
catering to the U.S. customer-service mar- the capacities of cities. A converging
ket. The same holds true for Central and Europe is a prime example. As Europe
South American cities that have been continues to expand its unified market,
quick to capitalize on the growing cost-effective destinations in Eastern
Hispanic population in the U.S. Further, Europe will continue to increase their Budapest
despite the U.S. currency’s recent slide, market share of outsourced services
these destinations continue to be more from customer nations in Western
cost efficient as compared to onshore Europe. In this regard, Eastern European
(U.S.) delivery centers. cities such as Kraków and Prague will
Due to the deteriorating political situ- continue to leverage their nearshore and
ation in the state of West cultural compatibility advan-
Bengal, we continue to put tages. Alternatively, cities in
Kolkata on the watch list. countries with large popula-
Political disturbances con- tion bases such as India and
tributing to an unfavorable China will maintain competi-
climate for business would tive advantage by offering
prove to be a big hindrance scale and labor costs, which
Shanghai
for the city to attract invest- most destinations will be
ments. However, we expect unable to counter. Cities in
the government to take steps to restore these two countries — with millions of
normalcy and to continue on the growth people — will also have the best potential
path as an outsourcing destination. to offer a wider array of outsourced ser-
Cities are differentiated not only by vices. However, this does not necessarily
their available resources (quality/type of imply that the advantage is exclusive to
labor force, cost, available infrastructure such mega cities. Cities such as Ho Chi
and such), but also by their long-term Minh City, Vietnam, and even smaller
potential in fulfilling demand for specific destinations like Monterrey, Mexico have
services. In many instances, these scale- made inroads in high-value ITO and engi-
related inhibitors can directly impact neering services. For similar sized cities
what type and size of outsourced ser- that may have demographic constraints,
vices that location can fulfill. For head- identifying the available strengths within Santiago
count-dependent processes such as their ecosystem is essential in develop-
voice-based customer support, lower ing their respective niche markets. GS
CITY CHARACTERISTICS WITH RESPECT TO SPECIFIC SERVICE

BPO (Contact Center) ITO (Infrastructure Managed Services)
High
Cost Scale & Quality of Workforce

Scale & Quality of Workforce Infrastructure
Priority
Infrastructure Business Catalyst

Risk Profile Cost
Business Catalyst Risk Profile
Low
Quality of Life Quality of Life
Singapore
ing to identify and tap the inherent capabilities and capaci- service-delivery. Today, a single provider can have centers in
ties of specific locations. This transition on how service multiple countries and cities, with each city having the opti-
providers view locations illustrate both the maturity of the mal conditions to fulfill specific service lines. Software devel-
outsourcing model and heightened focus on optimization of opment can be done in Bangalore, customer service can be

done out of Makati City, while engineering services are

delivered out of Kraków. The one-stop-shop country model
has in fact given way to the more efficient, multicity, best-
LOCATION FIRST
of-breed city model.
Further, this also reflects the increased responsibilities,
By Shyamanuja Das
A
which local government units now have in developing their h! The debate is still alive. It is more
respective cities. City officials, infrastructure providers and than a decade since Jack Welch made
local stakeholders are often better able to promote, stimulate the world believe in his 70-70-70 for-
and market their city’s specific capabilities to potential out- mula — 70 percent of the GE’s process-
sourcing service providers. Moreover, local stakeholders are es can be outsourced; 70 percent of what can be
able to address infrastructure and ecosystem concerns in a outsourced can be offshored; and 70 percent of
timelier manner. Many city mayors and local government what can be offshored can be executed in India.
units, for example, can provide city-specific tax incentives Many technology and pure services firms have
and telecom providers can deploy connectivity in a much actually bettered on that formula. There are
more targeted scale. In contrast, nationwide agendas and start-up firms in the valley that are born global —
developmental rollouts, as otherwise mandated by national just a few heads in the U.S. and rest in India.
governments, are often prolonged and drawn out — a pace Yet, the debate remains. I will but add one
unfavorable to most service providers. more page to that. But as the Nobel Prize win-
Though we highlight the increasingly vital role, which ning economist Amartya Sen, well, argues,
individual cities play in a country’s outsourcing industry, we sometimes the arguments are as important as
do not discount the significance that national governments the final conclusion. At least majority of Indians
and institutional bodies play in shaping the sector. National believe so and I am no exception either.
governments and industry bodies are commonly tasked to First let us examine the question a little care-
provide guidance, policies and set direction. Likewise, these fully: Should you choose a location first or a
organizations provide essential monitoring and regulatory partner first? The question, then, inherently
roles — ensuring that labor and business-related concerns excludes the captive option. It is for a company
are managed and implemented. that has decided to outsource to a third-party
As such, the role of the city with regards to outsourc- service provider (a partner). The reason I am
ing should not be viewed as one, which has become specifically pointing this out in the beginning is
entirely independent of the country. Rather, one should that the importance of location selection is min-
view the evolution of the city as a direct result of a coun- imized significantly, if not eliminated completely
try’s inherent capabilities as an outsourcing provider. in this case.
Referring to Prague as a “Center for Excellence” for soft- Now, let us build typical scenarios.
ware development, or Ho Chi Minh City for IT Let’s say, to start with, a very large company
Outsourcing (ITO) processes, for example, highlights the with global business presence is looking at a
respective country’s strengths. mega outsourcing deal. In this case, it is safe to
assume that it will need the work to be executed
The Locations & the Year Gone By in different languages, for different time zones
The past eighteen months have been an incredibly with some business continuity or at least disas-
dynamic period for the global outsourcing industry.
The ongoing slowdown in the U.S. economy, the contin-
uing maturation of the outsourcing model, the rise of
tier-2 and tier-3 cities as delivery centers, the heightened ous. That is, Asian cities are the ones that rock the top 50
level of competition and emergence of “global Business cities chart. However, the interesting thing is that not only
Process Outsourcing (BPO) providers” are some of the the tier-1 cities in the Asia-Pacific region are ruling the out-
key ecosystem movements we continue to closely moni- sourcing industry but also there are many tier-2 and tier-3
tor. We have noticed that with each fundamental shift Asia-Pacific cities that are fast emerging as outsourcing des-
in the market, stakeholders in turn are requiring a deep- tinations. Of the top nine emerging cities, six — Cebu City
er understanding of delivery locations. This level of (The Philippines), Shanghai (China), Beijing (China), Ho
knowledge has become essential not only to maintain Chi Minh City (Vietnam), Kolkata (India) and Shenzhen
financial objectives, but more so to ensure competitive (China) — are from the Asian continent. Thirty-eight per-
advantages and longevity in an increasingly competitive cent of the top cities list have been occupied by such loca-
market environment. tions followed by 26 percent by Central & Eastern
The region-wise analysis reveals something near to obvi- European cities.

OR PARTNER FIRST?
terms it may not be classified as a mega deal. In
that case, it may not always be possible for the
company to influence the service provider to go
to a location of its choice. But in practical terms,
it may not be a major roadblock, as most service
providers today are fairly mature in generic busi-
ness-process delivery, and they will always find a
good fit for the work. So, this one too goes to
partner first.
But what about a large (or even) small compa-
ny looking to outsource very specialized work?
Say, design of some automotive components or
design of algorithms? In that case, while a part-
ner-first approach can be convenient, one would
argue that a better approach is to select a location
first. And considering that most specialized work
does not happen in hundreds of locations, the
company will have to choose between two to three
ter-recovery capability built in. All these point to a locations; that is not that tough.
multilocation strategy. Any large service provider In many such cases, it is important to choose
that can execute this contract should either have not just the country but specific location. Take
presence in multiple locations or capabil- engineering design services. Within
ity to quickly add some locations, or ide- India, there are a few places like Pune
ally both. Fortunately for the customers (otherwise a tier-2 location), Bangalore,
of outsourcing, most large global service Hyderabad and Chennai that come on
providers, irrespective of their country of top, rather than Mumbai or Delhi.
origin, are today building that capability. The rational behind choosing/shortlist-
Whether it is IBM, Accenture or EDS or ing locations first, in these cases, is not
TCS, Infosys and Wipro, all of them today just because of the capability of the
have a strong global delivery strategy. workforce, but there is the danger of
Let us say a small or medium company wants missing out good, small, specialized players, if
to outsource what could be of significant size for one does not have a first-hand evaluation of
that company but general IT or business process, these locations. GS
like finance and accounting work or entire cus-
tomer-service work, even though by sheer dollar Shyamanuja is Editor, Dataquest, CyberMedia.
Losers & Gainers The Bangalores …

With each passing year, our location assessment continues The year’s list of top global Bangalores is bigger than the
to be a target that’s moving and morphing like an amoeba, last year’s. Our Top 5 Global Outsourcing Cities list has now
with a new set of market variables that need to be considered. become Top 8 Global Outsourcing Cities with some new
Our location-assessment framework, thus, follows a deeper members — Chennai (India), Hyderabad (India), Makati
approach to identify the emerging global outsourcing loca- City (The Philippines) and Pune (India). As expected,
tions. Thus, we see new entrants — even some among the Indian cities dominate the top list once again. Makati City,
ones who topped the emerging cities list — spanning over as part of the Philippines NCR (National Capital Region)
the list as well some going away from the listing. The cities holds its ground, while Indian cities with the entrance of
that were recognized in our last year’s list and that could not Chennai, Hyderabad and Pune continue to dominate the
make to the list this time can be seen in the table below top chart. (See Table 2.)
which also shows the list of new entrants (See Table 1). Continued on page 26


Chart 1
8
REGION-WISE BREAKUP (%)
n=50
24 4
6 Middle East
38 Africa
Western Europe
20
TOP GLOBAL
North America
South America Table 2
Central &
Eastern Europe
Asia Pacific
OUTSOURCING
26 CITIES
The region-wise analysis reveals something near to
obvious — Asian cities are the ones that rock the top 50
cities chart. However, an interesting point is that not
only the tier-1 cities in the Asia-Pacific region are ruling
the outsourcing industry but also many tier-2 and tier-3
Asia-Pacific cities are fast emerging as outsourcing des-
tinations. Of the top nine emerging cities, six — Cebu
City (The Philippines), Shanghai (China), Beijing (China),
Ho Chi Minh City (Vietnam), Kolkata (India) and
Shenzhen (China) — are from the Asian continent.
Thirty-eight percent of the top cities list has been occu- Makati City
pied by such locations followed by 26 percent by
Central & Eastern European cities.
Table 1
DROPOUTS l Bangalore India
l Chennai India
Rank (2008) City Country
31 Perth Australia l Delhi NCR India
36 Baguio City The Philippines l Dublin Ireland
37 Leeds U.K. l Hyderabad India
(Yorkshire & Humber)
l Makati City The Philippines
38 Birmingham, Alabama U.S.
45 Oklahoma City, U.S. l Mumbai India
Oklahoma l Pune India
50 Juarez Mexico
NEW ENTRANTS*
Rank (2008) City Country
21 Quezon City The Philippines
22 Toronto Canada
26 Rio de Janeiro Brazil
30 Mexico City Mexico
31 Jaipur India
36 Singapore Singapore
37 Chengdu China Dublin Docklands
44 Guadalajara Mexico
45 Mandaluyong City The Philippines
With a rapidly maturing, expanding global outsourcing
industry, our last year’s “Top 5 Global Outsourcing Cities”
chart has now become “Top 8 Global Outsourcing Cities.”
Makati City, as part of the Philippines NCR (National
Capital Region) holds its ground, while Indian cities with
the entrance of Chennai, Hyderabad and Pune continue to
dominate the top chart.
Singapore
*THE NEW ENTRANTS HAVE BEEN PROFILED IN THE NEXT PAGES STARTING FROM PAGE NO. 30 TO PAGE NO. 34.

Top 50 Emerging Global Outsourcing Cities Table 3

Rank Rank Cities Country Time Population Currency Exchange Rate
(2008) (2007) Zone (in mn) (as of Sept. 10th, '08)
(GMT) est. in 2007 USD 1 =
1 4 Cebu City Philippines +8 0.8 Philippine peso (PHP) PHP 46.59

2 8 Shanghai China +8 21.6 Chinese yuan (CNY) CNY 6.84
3 10 Beijing China +8 15.9 Chinese yuan (CNY) CNY 6.84
4 6 Ho Chi Minh City Vietnam +7 5.4 Vietnamese dong (VND) VND 16,527.50
5 16 Kraków Poland +1 0.8 Polish zlotych (PLN) PLN 2.46
6 5 Kolkata India +5:30 13.6 Indian rupee (INR) INR 44.80
7 11 Cairo Egypt +2 7.7 Egyptian pound (EGP) EGP 5.41
8 15 São Paulo Brazil -3 10.9 Brazilian reai (BRL) BRL 1.77
9 14 Buenos Aires Argentina -3 3.0 Argentine peso (ARS) ARS 3.06
10 13 Shenzhen China +8 26.3 Chinese yuan (CNY) CNY 6.84
11 12 Hanoi Vietnam +7 2.2 Vietnamese dong (VND) VND 16,527.50
12 9 Chandigarh India +5:30 2.3 Indian rupee (INR) INR 45.12
13 17 Curitiba Brazil -3 1.8 Brazilian reai (BRL) BRL 1.77
14 20 Prague Czech Republic +1 1.9 Czech koruna (CZK) CZK 17.59
15 23 Pasig City Philippines +8 0.6 Philippine peso (PHP) PHP 46.59
16 18 Dalian (Dairen) China +8 3.9 Chinese yuan (CNY) CNY 6.84
17 21 Coimbatore India +5:30 4.7 Indian rupee (INR) INR 45.12
18 19 Santiago Chile -4 5.4 Chilean peso (CLP) CLP 529
19 7 Colombo Sri Lanka +5:30 2.5 Sri Lankan rupee (LKR) LKR 107.88
20 25 Johannesburg South Africa +2 3.9 South African rand (ZAR) ZAR 8.06
21 NEW Quezon City Philippines +8 2.3 Philippine peso (PHP) PHP 46.59
22 NEW Toronto Canada -4 2.5 Canadian dollar (CAD) CAD 1.07
23 22 Guangzhou (Canton) China +8 14.2 Chinese yuan (CNY) CNY 6.84
24 24 Belfast Ireland Offset 0.6 Euro (EUR) EUR 0.71
25 28 Budapest Hungary +1 2.5 Hungarian forint (HUF) HUF 170.66
26 NEW Rio de Janeiro Brazil -3 6.1 Brazilian reai (BRL) BRL 1.77
27 29 San José Costa Rica -6 0.4 Costa Rican colon (CRC) CRC 548.79
28 26 Warsaw Poland +1 1.7 Polish zlotych (PLN) PLN 2.46
29 27 Brno Czech Republic +1 0.7 Czech koruna (CZK) CZK 17.59
30 NEW Mexico City Mexico -6 8.5 Mexican peso (MXN) MXN 10.55
31 NEW Jaipur India +5:30 6.5 Indian rupee (INR) INR 45.12
32 33 St. Petersburg Russia +3 4.8 Russian ruble (RUR) RUB 25.61
33 32 Kuala Lumpur Malaysia +8 1.9 Malaysian ringgit (MYR) MYR 3.46
34 34 Accra Ghana Offset 2.0 Ghanaian Cedi (GHS) GHS 1.16
35 40 Bratislava Slovakia +1 0.5 Slovak koruna (SKK) SKK 21.39
36 NEW Singapore City Singapore +8 4.6 Singapore Dollar (SGD) SGD 1.44
37 NEW Chengdu China +8 7.8 Chinese yuan (CNY) CNY 6.84
38 43 Bucharest Romania +2 1.9 Romanian leu (RON) RON 3.59
39 42 Moscow Russia +3 11.0 Russian ruble (RUR) RUB 25.61
40 41 Sofia Bulgaria +2 1.3 Bulgarian lev (BGN) BGN 1.39
41 46 Monterrey Mexico -6 1.1 Mexican peso (MXN) MXN 10.55
42 30 Glasgow City U.K. Offset 0.6 British pound (GBP) GBP 0.56
43 44 Brasília Brazil -3 2.5 Brazilian reai (BRL) BRL 1.73
44 NEW Guadalajara Mexico -6 1.6 Mexican peso (MXN) MXN 10.55
45 NEW Mandaluyong City Philippines +8 0.3 Philippine peso (PHP) PHP 46.59
46 47 Tallinn Estonia +2 0.4 Estonian kroon (EEK) EEk 11.08
47 39 San Antonio U.S. -6 1.3 U.S. dollar (USD) USD 1
48 35 Halifax Canada -4 0.4 Canadian dollar (CAD) CAD 1.07
49 48 Kiev Ukraine +2 2.7 Ukrainian hryvna (UAH) UAH 4.38
50 49 Ljubljana Slovenia +1 0.3 Slovenian tolars (SIT) SIT 169.70

ad.qxp 9/22/2008 6:56 PM Page 22
ad.qxp 9/22/2008 6:56 PM Page 23
Top 50 Emerging Global Outsourcing Cities

Rank Key Service Providers Major Universities
(2008)
1 Accenture, ACS, Convergys, eTelecare, People Support Univ. of the Philippines, Univ. of San Carlos
2 Accenture, Cognizant, EDS, Infosys, Neusoft, TCS, Wipro, Unisys East China Univ. of Science & Technology, Shanghai Jiao Tong Univ.
3 Accenture, Capgemini, EDS, IBM, Infosys, TCS, Wipro, Unisys Beijing Univ. of Tech., Peking Univ., Renmin Univ. of China
4 FPT Software, IBM, Luxoft, Vietnam Software Outsourcing Co. Ho Chi Minh City National Univ., Univ. of Technical Education
5 Capgemini, HCL, Hewitt, IBM, LogicaCMG, Philip Morris AGH Univ. of Science & Technology, Cracow Univ. of Technology
6 Capgemini, Cognizant, Genpact, HCL, IBM Daksh, TCS, Wipro Univ. of Calcutta, Bengal Engineering & Science Univ.
7 C3, Convergys, EDS, Raya Contact Center, Tamima, Xceed, Unisys Al-Azhar Univ., Ain Shams Univ., Cairo Univ., Call Center Academy
8 Accenture, Convergys, Cisco, Dell, EDS, Fidelity, Satyam, TCS Univ. of Sao Paulo, Federal Univ. of Sao Paulo
9 Accenture, Convergys, Cognizant, EDS, HP, Globant, TCS, TeleTech Universidad Catolica Argentina, Universidad de Buenos Aires
10 ACS, AT&T, HP, IBM, Siemens, Satyam Shenzhen Univ., Shenzhen Institute of Technology
11 Vietnam Offshore Services, Spi, Vietnam Software Outsourcing Co. Hanoi Univ. of Technology, Hanoio National Univ.
12 IBM Daksh, Infosys, Net Solutions, Netsoft Global Services, Quark Punjab Univ.
13 Accenture, Atos Origin, Wipro, Unisys The Federal Univ., Catholic Univ., The Federal Technical Univ.
14 Accenture, HP, Infosys, LogicaCMG, Unisys Charles Univ., Czech Technical Univ.
15 Sitel, Unisys Univ. of the City of Pasig
16 Accenture, Convergys, IBM Global Services Dalian Univ. of Technology, Dalian Maritime Univ.
17 Cognizant, TCS, Wipro Anna Univ., Bharathiar Univ.
18 Accenture, EDS, TCS, Unisys Pontificia Universidad CatÓlica de Chile, Univ. of Chile
19 Astron BPO, IBM, Lingua, LogicaCMG, Virtusa, WNS Univ. of Ceylon, Univ. of Colombo, Univ. of Peradeniya
20 Accenture, Satyam, TCS, Unisys Univ. of Johannesburg, Univ. of the Witwatersrand
21 IBM Daksh, C3, Sitel, One Touch Center, eTelecare, Sykes St. Paul Univ. Quezon City, Univ. of the Philippines
22 Accenture, Cognizant, EDS, Infosys, LogicaCMG, TCS, Unisys Univ. of Toronto, York Univ., Ryerson Univ.
23 Accenture, Atos Origin, Capgemini, EDS, Siemens, Unisys Sun Yat-sen Univ., South China Univ. of Technology, Guangzhou Univ.
24 Firstsource, HCL BPO Services, TeleTech Queen's Univ. Belfast, Univ. of Ulster
25 Accenture, Convergys, EDS, EPAM, Genpact, LogicaCMG, TCS Budapest Univ. of Tech. & Economics, Corvinus Univ. of Budapest
26 DBA, EDS, Politec, Satyam, Teleperformance, Unisys Federal Univ. of Rio de Janeiro, Federal Univ. of State of Rio de Janeiro
27 Accenture, CCC, IBM, Unisys, SlashSupport Univ. of Costa Rica
28 Accenture, EDS, TCS, Unisys Univ. of Warsaw, Warsaw Univ. of Technology
29 Accenture, CSC, IBM Global Services, Ness Technologies Masaryk Univ., Brno Univ. of Technology
30 Accenture, ACS, EDS, Hildebrando, Softtek, Stefanini, TCS, Unisys National Autonomous Univ. of Mexico, Metropolitan Autonomous Univ.
31 Infosys, Genpact, ST Microsystems, Spanco Rajasthan Univ., Rai Univ.
32 EPAM, Exigen Services Herzen State Pedagogical Univ. of Russia, Saint Petersburg State Univ.
33 Accenture, Convergys, HCL, LogicaCMG, TCS, Wipro Univ. of Malaya, Univ. of Kuala Lumpur, Tech. Univ. of Malaysia
34 ACS Methodist Univ. College Ghana, Wisconsin Intl. Univ. College
35 Ness Technologies, Unisys Comenius Univ., Univ. of Economics, Slovak Technical Univ.
36 Accenture, CSC, Cognizant, EDS, HCL, IBM, TCS, Unisys, Wipro National Univ. of Singapore, Nanyang Technological Univ., SIM Univ.
37 Augmentum, Dextrys, EDS, Genpact, Neusoft, Wipro Southwest Jiaotong Univ., Chengdu Univ. of Technology
38 Genpact, Ness Technologies, Perot Systems, Unisys, WNS Univ. of Bucharest, Univ. Politehnica of Bucharest
39 Accenture, Convergys, EDS, EPAM, IBM, LogicaCMG Moscow State Technical Univ., Bauman Moscow State Technical Univ.
40 HP, Sofica, SBND Tech., Sutherland Global Services, Unisys Saint Clement of Ohrid Univ. of Sofia, Technical Univ. of Sofia
41 Accenture, ACS, Sutherland Global Services Univ. of Monterrey
42 Unisys, LogicaCMG Univ. Of Glasgow, Univ. Of Strathclyde, Glasgow Caledonian Univ.
43 Accenture, Convergys, Politec, TCS, Unisys Univ. of Brasilia
44 TeleTech, Hispanic Teleservices, Perot Systems, TCS Universidad de Guadalajara, Universidad Panamericana
45 CPI Outsourcing, eTelecare, IBM Daksh, ICT Group Don Bosco Technical College, The Jose Rizal Univ., The Rizal Tech. Univ.
46 IBM, Hansapank, LogicaCMG, SAS (SSC*), SEM IT Partner, Solvus Tallinn Univ., Tallinn Univ. of Technology, Tallinn College of Engineering
47 Univ. of Texas, St. Mary's Univ., Trinity Univ.
48 ADP, EDS, Keane, TeleTech, CSC, Unisys, Fujitsu Dalhousie Univ., Saint Mary's Univ., Univ. of King's College
49 EPAM, Luxoft, GlobalLogic, LogicaCMG Kyiv National Technical Univ., Kiev National Taras Shevchenko Univ.
50 Unisys Univ. of Ljubljana

CHINA, CHINA, EVERYWHERE
Language Skills
English
English, Japanese
English, Japanese, Korean
Chinese, English, French
English, Polish, Japanese
English
Arabic, English, French, German, Spanish
English, Portuguese, Spanish Whether it is the 2008 ing in the Chinese outsourcing
English, French, Portuguese, Spanish Olympic Games, or the list of space, there are some other
Chinese, English emerging global outsourcing areas — encouraging the usage
Chinese, English, French locations, China dominates of English language in schools —
English both. In the former, Chinese which the Chinese government
English, Portuguese, Spanish athletes bagged the maximum is focussing on.
English, German gold medals, and in the latter With supportive government
English Chinese cities claimed six and favorable outsourcing condi-
Chinese, English places. These cities are: tions, China’s outsourcing indus-
English l Shanghai (at the 2nd try is set to flourish further.
English, Spanish position) That means we might see some
English l Beijing (at the 3rd) new Chinese names in this list
English l Shenzhen (at the 10th) or some of the top emerging
English l Dalian (at the 16th) cities moving to the top out-
English, French l Guangzhou (at the 23rd) sourcing cities’
Chinese, English l Chengdu (at the 37th). list in our next
English, Irish Of them, Shanghai is already study on out-
English, German known as one of the mature sourcing
English, Portuguese, Spanish destinations for providing ser- cities. GS
English, Spanish vices offerings such as F&A,
English, Polish product development, R&D and
English
testing, and Guangzhou is
English, Spanish
known for engineering-services
English
offering. Outsourcing services
English
such as application develop-
ment and maintenance and
English
business analytics are now also
English
being offered from Shenzhen
English
and Shanghai, respectively.
English
Consequently, the country
Chinese, Japanese, English
has become home to numerous
English, Romanian
IT and BPO services providers.
English, Russian
While global providers such as
English, French
Accenture, ACS, Atos Origin,
English, Spanish
AT&T, Capgemini, Cognizant,
English
Convergys, EDS, Genpact, HP,
English, Portuguese, Spanish
Infosys, IBM, Satyam, TCS,
English, Spanish
Wirpo and Unisys have their
Filipino, English, Chinese presence across China, local
English, French, German, Finnish providers such as Augmentum,
English Bleum, Dextrys and Neusoft are
English and French also known at a global scale.
English, Russian, Ukrainian Even though a lot is happen-
English, Slovene

Outsourcing Cities by Functions

Table 4
Functions Established Emerging

ADM Bangalore, Chennai, Dublin, Hyderabad, Mumbai Ho Chi Minh, Pune, Shenzhen
Business Analytics Bangalore, Chennai, Delhi (NCR), Kraków, Mumbai, Bucharest, Cairo, Shanghai
Engineering Services Bangalore, Chennai, Guangzhou, Pune, St. Petersburg Coimbatore, Delhi (NCR), Moscow,
Prague
Finance and Accounting Bangalore, Kraków, Makati City, Mumbai, Shanghai Cebu City, Colombo, Pune
Human Resources Bangalore, Bucharest, Budapest, Makati City, Prague Cebu, Kraków, Tallinn
Legal Services Chennai, Makati City, Mumbai Cebu City, Johannesburg, Pune
Product Development Bangalore, Chennai, Ho Chi Minh, Moscow, Shanghai Bucharest, Pune, São Paulo
Research and Development Bangalore, Dublin, Moscow, Shanghai, St. Petersburg Beijing, Bucharest, Chennai, Prague
Testing Bangalore, Chennai, Ho Chi Minh, Hyderabad, Shanghai, Bucharest, Cairo, São Paulo
Toronto
White: Same as last year; Red: Jumped from 2007 emerging list to 2008 list of established cities; Black: New entrants
NEW CATEGORIES
Functions Established Emerging
Contact Center Bucharest, Buenos Aires, Cairo, Dalian, Kraków, Casablanca, San José, São Paulo
(Multilingual) Mexico City
Contact Center (English) Bangalore, Delhi (NCR), Dublin, Makati City, Mumbai, Cebu City, Kolkata, Pune
Toronto
Can You Name this One? be between $380 and $100 per month.
In the 2008 Top 50 Emerging Global Outsourcing Cities l In this city, many U.S. and Western European
list, there is a city that springs the biggest surprise. Here’s a companies enter much before than other Eastern European
set of clues to find that out: cities to source their F&A and business-analytical
l In this city, the outsourcing industry continues to services from.
flourish tremendously. The outsourcing facilities of l In this city, many educational institutions are produc-
global companies such as Capgemini, HCL and Philip ing thousands of students every year.
Morris are already operational here. l In this city, the outsourcing industry is expected to
l In this city, the obvious choices for customers are to grow further.
outsource their F&A, business analytics and multilingual This city is Kraków, the capital of Poland. The compara-
contact-center. The city has had skills in these areas in the tive analysis reveals that this year Kraków has bagged the
past too. The city is also an emerging location for fifth place with an improvement of 11 positions from last
nearshoring HR services. year’s 15th rank.
l In this city, the labor costs are quite competitive. An
entry-level techie can mint $680 to $600 per month, while City by Functions
a BPO exec with similar experience can expect his salary to As the global outsourcing market becomes increasingly
competitive, we expect the cities to be more focused in iden-
Cathedral, Mexico City tifying appropriate service lines and in developing their ser-
vice-delivery capabilities. This means, as the industry
matures, cities will be compelled to recognize the services
they can deliver best. The concept of an individual location
being a “one-stop-shop” has given way to “smart/
multi/selective sourcing” models, wherein selected processes
are outsourced only to the most appropriate destination.
Therefore, we deviate from the notion of an “ideal loca-
tion for all outsourcing services.” This study is more inclined
toward the fact that there are locations which are more suit-
able for specific outsourcing processes — services logically
gravitate to destinations where conditions are most optimal
for their delivery.

The lower cost equation does not always work. It’s always l Cork, Republic of Ireland: The city is not only sup-
a trade-off between cost benefit and complexity. In many porting the small outsourcing operations but also encourag-
instances, where the cost benefit is an advantage for distant ing them to expand further.
offshore locations, the complexity of services that can be l Tianjin, China: Another tier-2 Chinese city is getting
processed is consequently lower. For instance, offshore cities ready to serve the global outsourcing services’ buyers on a
such as St. Petersburg, Shanghai, Bangalore, Makati City, larger scale. Vast labor pool and low-cost of operations in the
Ho Chi Minh City and Delhi (NCR), to name a few, pro- city are sufficient enough to allure the outsourcers.
vide high-end, complex functions but not at a lower cost. l Bacolod City, The Philippines: We tag this Fili-
Similarly, customers can easily get the less complex work pino city as the promising next wave outsourcing city in
done from onshore locations such as San Antonio and the country.
Glasgow at a lower price. l Amman, Jordan: The government is actively support-
ing the capital region of Jordan, Amman, to count it among
Crystal Ball Gazing the most attractive outsourcing locations in the Middle East
As the outsourcing industry matures and the quest for and African continent.
cost-effective and resourceful services-delivery locations con-
tinues, we would see some new tier-2 cities making head- About the Study
lines. A few of them are: For the third consecutive year, Global Services and
l Nizhniy Novgorod, Russia: This tier-2 city in Russia is Tholons have identified the top 50 emerging global out-
already witnessing huge R&D activities. Intel’s R&D facili- sourcing cities. These locations are not Bangalores or
ty is already operational in the city. Continued on page 34
THE RELATIONSHIP BETWEEN COST BENEFIT & COMPLEXITY OF THE PROCESS

Chart 2
High
H
H St. Petersburg
H
Toronto
H
Complexity
Bangalore
HH
Shanghai
H Kraków
Dublin Bucharest
H
H H H Delhi
(NCR)
H H
Glasgow
H São Paulo
Dalian
Makati
H H
San Antonio
Buenos Cairo
Ho Chi Minh
Aires
Low
On-site Onshore Nearshore Offshore
Low Cost benefit High

A Report
An IT Services Outsourcing
Country Guide
States and Cities that Offer Unique IT Business Opportunities
By Daniel Tkach
Mexico City State of Jalisco

Mexico City (population: 8,890,000; 19.3 million metro area in- The State of Jalisco (population: 6,800,000) strongly supports the
cluded,) is the capital city of Mexico and the economic heart of growth of IT Mexican companies. It has developed a robust infra-
the country. Greater Mexico City (the metropolitan area) has a structure for global companies to conduct business in- and- from
population of 19.2 million. Mexico City has a per capita income Jalisco and created advanced technology centers. Jalisco’s main
of more than 23,000 USD (purchasing power parity adjusted cities are Guadalajara, Chapala and Puerto Vallarta.
2006) and ranks as the eighth-richest urban agglomeration in Guadalajara is known as the Mexican Silicon Valley. Over 70
the world. From 1999 to 2007, the city has received 106 billion international companies, such as General Electric, IBM, Intel,
USD in foreign direct investment– mainly in sectors such as fi- Hitachi, Hewlett Packard, Siemens, Flextronics and Solectron
nancial services, retail, pharmaceutical, and tourism. have established facilities in Guadalajara. IT companies in Gua-
Higher Education and Professional Workforce: The National dalajara offer advanced IT services including application design,
Autonomous University of Mexico (UNAM) is the largest (with development and testing, embedded software for the automotive
269,000 students) university in the Americas. Other major high- and aerospace industries, wireless applications, printers, medical
er-education institutions are the National Polytechnic Institute, devices, and multimedia.
the Metropolitan Autonomous University (UAM), the ITAM, the Higher Education and Professional Workforce: Guadalajara
ITESM, the Universidad Panamericana (UP), and the Universi- is a very important center of universities and educational centers
dad La Salle. 13,000 IT professionals graduate every year. with national and worldwide prestige that include the Universi-
Why Invest in Mexico City: Mexico City is a very attractive dad Panamericana, ITESO, Universidad de Guadalajara, Monter-
place for foreign investment due to its high infrastructure and rey Institute of Technology and the Universidad Autónoma de
human capital standards, as well as the robustness of its in- Guadalajara (U.A.G.). 3,200 IT professionals graduate every year.
ternal market. The city welcomes investments and productive Why Invest in Jalisco: Many leading IT and BPO companies
projects in the IT field and provides incentives and grants for conduct operations in the state because of its advantages such as
relevant projects. a convenient geographic location, qualified IT human resources,
excellent infrastructure and state investment incentives.
State of Mexico State of Nuevo Leon

The State of Mexico (population: 14,000,000) surrounds Mexico The State of Nuevo Leon (population: 4,500,000) shares a 9 miles
City, with which it has practically merged. The main cities in the border with the U.S. state of Texas. It features a secure high-
state are Toluca (the capital), Naucalpan and Tlalnepantla. bandwidth communications network and research and tech-
The IT companies of the State of Mexico offer a large variety nology parks. The main cities in the state are Monterrey, (the
of services including IT consulting, data centers, infrastructure capital), Guadalupe, and Apodaca.
management, and application development and testing. In- Monterrey is well known in the global IT marketplace and
dustry solutions focus on the automotive, biotechnology and many large Mexican and Indian IT service providers have estab-
pharmaceutical sectors. BPO services include contact centers, lished their delivery centers in the city.
data mining, help desk, market analysis, F&A services and loan Higher Education and Professional Workforce: Monterrey
application processing. is home to two of the nation’s most prestigious universities, the
Higher Education and Professional Workforce: The State of National Autonomous University of Nuevo Leon and the Insti-
Mexico is the home of three of the most prestigious universities tuto Tecnologico de Estudios Superiores de Monterrey (Monter-
in Mexico—the National Autonomous University, the State of rey Institute of Technology and Higher Education). Other reput-
Mexico University and a campus of the Monterrey Technology ed universities include the University of Monterrey (UDEM) and
Institute. 5,200 IT professionals graduate every year. the Universidad Regiomontana. The state has 44 higher educa-
Why Invest in the State of Mexico: The State of Mexico has a tion institutions from which 3,000 IT professionals graduate
large number of already established multinational companies. every year.
The state population enjoys a high quality of life. There is signifi- Why Invest in Nuevo Leon: Nuevo Leon borders the US, and
cant availability of qualified human resources, and the state has investors are attracted by an American-style business culture,
an excellent infrastructure. The government of the state actively the availability of highly educated professionals, an excellent
supports foreign investments in IT, and offers a rich set of incen- infrastructure and a high quality of life. The state government
tives and tax exemptions for investors. offers incentives and tax exemptions to investors.
Sponsored Report
A Report
“Nearshore” outsourcing to Mexico for U.S. buyers offers the advantages of proximity, cultural affinity, time-
zone alignment, relatively lower costs, fast and simple visa attainment, ease of software and hardware pro-
curement, and the legal and IP protection provided by the NAFTA treaty. The decision of where to conduct
business in Mexico, however, depends on your fi rm’s strategy. Some companies prefer the states with the largest
population of IT professionals, such as Mexico City, Jalisco, and Nuevo Leon. Others prefer locations with a
fast-growing IT industry, good universities and a friendly local environment such as Baja California, State of
Mexico, Puebla, Sinaloa, Sonora and Veracruz.
State of Puebla State of Sonora

The State of Puebla (population: 5,600,000) is located in the cen- The State of Sonora (population: 3,100,000) shares an extensive
ter east of Mexico. Puebla is a strategic state for trade between border with the U.S. state of Arizona and a shorter one with New
Europe and the Americas. The main cities in the state are Puebla Mexico. The main cities in the state are Hermosillo (the capi-
(the capital), Tehuacan and Cholula. tal), Ciudad Obregón and Nogales.
The most dynamic sectors in Puebla are the automotive, tex- The industry in Sonora has been oriented to automotive,
tile and apparel, metalworking, furniture, and chemical indus- aerospace and electronics and is now growing fast in Informa-
tries. The state is home to a competitive workforce specialized tion Technology. Sonora has built a Technology Park designed
in industry and services. specifically for the IT Industry, and two additional Technology
Higher Education and Professional Workforce: Puebla is a Parks are in the planning stage.
national and international center for higher education that fea- Higher Education and Professional Workforce: Sonora fea-
tures many universities and technical schools such as the Uni- tures 48 Universities and multiple specialization schools. The
versidad de las Américas, Universidad Iberoamericana, Ben- main institution of higher education is the University of Sonora
emérita Universidad Autónoma de Puebla, Universidad Popular (UNISON), There are 17 universities in Sonora, including two
Autónoma del Estado de Puebla and the Monterrey Institute of campuses of the ITESM (Monterrey Institute of Technology).
Technology and Higher Education. 1500 IT professionals grad- 1000 IT professionals graduate every year.
uate in Puebla every year. Why Invest in the State of Sonora: The state’s proximity to
Why Invest in the State of Puebla: Puebla is rated as “an ex- the U.S., the availability of talented professionals (usually edu-
cellent destination for foreign direct investment” by Standard cated in the USA), the high use of English language and the sig-
& Poor’s and Fitch Ratings. The main foreign companies with nificant lower operations costs make Sonora a very attractive lo-
operations in Puebla are of German, Brazilian, Canadian, Swiss, cation for IT investments, and a natural option to serve the U.S.
French and American origin. The Government of Puebla offers West Coast. The government of Sonora actively supports foreign
attractive incentives for IT investments. investments in IT through its “soft-landing” program.
State of Sinaloa State of Veracruz

The State of Sinaloa (population: 2,700,000) is located in the The State of Veracruz (population: 7,200,000) is located in the
north west of the Mexican Republic The main cities in the state east-central part of the Gulf of Mexico The main cities in the
are Culiacán (the Capital), Mazatlan and Los Mochis. state are Xalapa (the capital), and the port cities of Veracruz
The technology sector of the state of Sinaloa is growing at a and Coatzacoalcos.
yearly rate of 300%. The main focus of the IT industry in Sinaloa The state’s principal natural resource and dominant industry
is on Contact Centers and nearshoring of application develop- is oil; it is the main extraction, processing, and transport hub
ment services. The state has one of the largest IT clusters in for much of the country’s oil reserves and is a leading producer
Mexico that gathers fifty-five companies of advanced IT matu- of agricultural products. The ver@cluster is a regionally highly
rity level. competitive IT cluster.
Higher Education and Professional Workforce: Sinaloa fea- Higher Education and Professional Workforce: Veracruz
tures 48 Universities and multiple specialization schools. 3000 has 49 universities that offer degrees in information technology.
IT professionals graduate every year, and a large percentage of The main universities are Universidad Veracruzana, Universi-
them are English – Spanish bi-lingual. dad Autónoma de Veracruz and Universidad Mexicana, plantel
Why Invest in the State of Sinaloa: Sinaloa is an excellent Veracruz. 1100 IT professionals graduate every year.
location for IT industry investments for global IT providers that Why Invest in the State of Veracruz: The government of Ve-
want to establish a nearshore delivery center in Mexico with the racruz is strongly committed to the growth of the state and pro-
low cost environment offered by a tier-2 location. The state is vides incentives and tax breaks, creating excellent opportunities
conveniently located very close to the U.S., and its time zone is for investment. The environment is friendly and the cost of living,
CST. The state government offers generous incentives for inves- conducting business and building infrastructure is very low.
tors in technology.
Daniel Tkach is the CEO of PartnersMarket Consulting, Inc.
Strategic Marketing advisors to MexicoIT.
Contact: dtkach@partnersmarket.com
Learn more about the Mexican states and cities at www.mexico-it.com or call 1-866-639-4248.
21 Quezon City, The Philippines
Supportive government, world-class infrastructure, vast and

affordable talent pool help the city to bag 21st position in the list
Q
uezon City is the most populous city in the country with 2.3 million
people; a third of its residents under 15 years. These demographics
point toward the city’s readiness to tackle new opportunities in the next
three to five years. Above: Libis by night located
With the help of 65 colleges and universities, the city produces an enormous num- at the Southeastern corner
ber of educated workerforce every year. To leverage the vast talent pool for the growth of Quezon City
of the BPO industry, the city’s government is taking several innovative steps includ- Below: Katipunan Avenue, a
ing the introduction of a 320-hour competency course for call-center agents for poor major road in Quezon City
on Sept. 15th, 2008. Besides free meal, transportation allowance will also be provided.
As of now, the city has lured close to 57,000 business establishments, with BPOs
finding the city a cost-effective location. At present the city has over 60 BPOs and
about 35 call centers. A BPO agent in the city earns more than $250 per month. Also
the labor costs in the city are comparable to other major global outsourcing cities.
Even though the monthly rental charges in Quezon City is $2 to $4 per square
feet, registering property for any business purposes can take about 39 days in order
to complete the eight property registration procedures.
Quezon City has good infrastructure, and is well networked with the major high-
ways, thoroughfares and mass transit systems of Metro Manila. Even the longest high-
way in the metropolis and the country’s widest highway run through the City. Two
elevated light rail systems also make commuting, to and from Quezon City easy. GS
Toronto, Canada 22
One of the good options for the U.S.-based companies to
nearshore their testing and contact-center functions
T
oronto, the city with a population of 2.5 million, is known for the
immense R&D activities, skilled talent pool, renowned universities, sup-
portive government initiatives and world-class infrastructure. The
information and communication technology sector is the region’s
largest private-sector employer in the technology hotbed of Canada, Toronto. The
city is home to a mature and diverse IT-services industry. However, labor cost in
Above: Toronto city
Below: Yonge-Dundas Square
Toronto is higher than the wages in most of the other global outsourcing destina-
tions. An IT professional in Toronto pockets no less than $2,200, which could go
up to $3,000. Even a BPO executive earns between $2,000 and $2,400 per month.
The per month rental charges for commercial real estate in the city are
$2 to $3 per square feet. In addition, Toronto-based businesses typically can use
investment tax credits to offset up to 75 percent of its federal tax for a year, with
unused balances carried forward 10 years, according to Toronto’s Economic
Development Body.
The city has a well-educated and skilled talent pool. University of Toronto, York
University and Ryerson University and several other colleges and IT training facil-
ities churn out a large educated workforce suitable for knowledge-based industries.
Toronto’s extensive road and rail connections further make it a flourishing desti-
nation in addition to the great international connections. GS

26 Rio de Janeiro, Brazil
A tempting treat for global outsourcing service providers to set

up their shop
R
io de Janeiro is the second largest city in Brazil with its vibrant popula-
tion of some 6.1 million. Over years, the city has been a tempting treat
to many providers such as DBA, Politec, Satyam and Teleperformance
to set up operations here. Apart from playing host to the third-party cen-
ters, some companies including Citigroup and Oracle have set up their captive cen-
ters in the city.
The city’s universities churn out approximately 265,000 students and 20,000 Above: Rio de Janeiro city
researchers every year. There are almost 110 universities and educational institutions Below: Leme Beach
in Rio de Janeiro that offer 566 programs for technical education. Therefore, the city
provides an alternative source of highly skilled and low-cost technical professionals
for IT projects and staff augmentation. Techies can be hired at a lower cost of $420
to $440 per month. Favorable time zone — depending on the season the city is just
one or three hours later than New York — cultural proximity and large pool of Eng-
lish- and Spanish-speaking people make it an ideal destination for setting up call-cen-
ter facilities and BPOs. An entry-level BPO worker can make $360 to $330 per month.
With 15 procedures, starting a business in Rio de Janeiro takes 68 days, and the
total start-up cost could go up to 10.9 percent of GDP per capita. The per month
rental charges in the city are between $4 and $5 per sqft. With 14 procedures, it takes
75 days to register a property and set up a shop in the city. And it takes about three
percent of the property value to register a property in the region. GS
Mexico City, Mexico 30

The NAFTA status boosts outsourcing in most of the tier-1 and
tier-2 Mexican cities such as Mexico City and Monterrey
M
exico City, the capital region of Mexico, is the most vital industri-
al, economic and cultural center in the country. In the top 50 cities’
list, this new entrant has been positioned at the 30th place, and has
left many global, well-known counterparts behind — St. Petersburg
(Russia) and Bucharest (Romania) to name a few. Even though Mexico City has been
Above: Mexico City Cathedral known as one of the top outsourcing destinations in Mexico, this is the first time that
Below: Santa Fe business this city managed to get a place in our top 50 cities’ list.
district Today many U.S. and European companies outsource their IT-services require-
ments to Mexico City. Apart from being a delivery location for many of the global
IT-services providers — such as Accenture, EDS, Softtek and TCS to name a few —
the city also supports large contact centers and BPO markets. Proficiency in English
and Spanish languages helps the country to cater to the large Hispanic community
in the U.S. More than 70 percent of the Mexico City BPO market is concentrated
in the Mexico City axis.
At $340 to $360 per month, the salary of entry-level BPO employees in Mexico
City is $20 to $40 higher than the BPO agents in Guadalajara and Monterrey while
there is no variation in the salaries of entry-level techies in all the three cities — they
earn $360 to $380 per month. Unlike Indian outsourcing cities there is no major dif-
ference between the salaries of techies and BPO agents in Mexico City. GS

31 Jaipur, India
Being geographically closer (5 to 6 hrs drive) to Delhi NCR,

Jaipur’s infrastructure is able to attract and retain global providers
W
ith the inauguration of the much-awaited IT Special Economic
Zone (SEZ), Mahindra World City, in Aug. ’08, Jaipur has allured
numerous IT and BPO companies. Many such companies
including Infosys, Wipro and Connexions are already operating
or intending to operate out of the SEZ. Infosys’ BPO center at the SEZ is the
company’s second facility in the city with a seating capacity of 3,200 employees.
Infosys’ first such center in Jaipur was built in 2006 with a seating capacity of
890 employees.
Above: Hawa Mahal
Beyond the SEZ, the city has other BPOs like Spanco, and captives like Erics- Below: Carving at Amer Fort
son to name a few. GECIS (now GE) and Genpact were one of the earliest entrants
into the city with the employee base of 1,200 and 1,000 people, respectively. An
entry-level BPO agent earns from $140 to $160 per month, while an entry-level
techie pockets no less than $200 per month.
The city with a population of 6.5 million people (estimated in 2007) offers big
cost-saving opportunities to the outsourcing industry. Jaipur’s 410 colleges and 15
universities including 25 engineering colleges and 27 business-management insti-
tutes churn out thousands of graduates per annum.
Even though the standard of living in the city is not as great as many other Indi-
an cities, the per month rental charges in Jaipur is $1 to $3 per square feet. Also
Jaipur’s railway and airport are well connected with all major cities in India. GS
Singapore City, Singapore 36

Not only does the city have local and skilled talent to pitch on
but it also employs thousands of foreign white-collared workers
W
ith tremendously increasing countrywide economic develop-
ments, there is hardly any difference left between Singapore and
its capital region Singapore City. No doubt, it is now referred
as the “city-state.” In 2007, the per capita GDP of Singapore
was about $37,289, with a 7.7 percent annual growth rate and an annual infla-
tion rate of 2.1 percent.
Fourteen bilateral and multilateral trade agreements including USSFTA (the
U.S.-Singapore Free Trade Agreement), EFTA (European Free Trade Association:
Above: Central Business
Iceland, Liechtenstein, Norway, Switzerland), mark the city-state as one of the
District
Below: C751B train at Eunos
most business-friendly countries in Asia. Singapore, therefore, houses thousands
MRT Station of multinational corporations.
The labor costs in Singapore are relatively higher than other Asian countries. How-
ever, they are lower than those in the U.S. A BPO agent in Singapore earns (from
$1,400 to $2,000) seven times more than what an agent in India gets for the same
job. Interestingly, techies earn almost double than BPO employees in Singapore.
Even the real-estate costs are very high in the city. The per month rental charges
are $10 to $11 per square feet. However, the city-state enjoys the benefit of having
the strongest intellectual property protection in the entire region of Asia, according
to The World Economic Forum. GS

37 Chengdu, China
An important outsourcing hub in China and home to global

providers such as EDS, Wipro and Genpact to name a few
C
hengdu is the economic center of Southwestern China. The city is an
important global IT outsourcing destination. Several IT companies such
as EDS, IBM, HP, Neusoft, Dextrys (formerly known as DarwinSoft),
Augmentum, Wipro, Genpact have their presence in the city. Above: Jin RIver & Anshun
The city with a population of 7.8 million people has a large pool of highly skilled Bridge
IT professionals. A large number of universities and research institutions in Cheng- Below: Temple in Chengdu
du churn out over 20,000 students per year.
In addition, Chengdu’s labor cost is quite competitive, which is about two thirds
the wages in coastal cities, and the employee turnover rate is below 10 percent, accord-
ing to Invest Chengdu’s statistics. On an average, a mechanical engineer earns about
$4,488.65 per year, while a software engineer gets $9,299 per annum.
Also, Chengdu is an important R&D center in China. The city houses several SEZs
including Chengdu Hign-tech Industrial Development Zone and Chengdu Economic
and Technological Development Zone. Chengdu Information Association and Cheng-
du New and High Technology Industry Area have established an “Implementation
Plan for Speeding up the Development of Chengdu Software Outsourcing.”
Chengdu has a world-class infrastructure, and is well connected with the other
metropolis such as Beijing and Shanghai. Chengdu Shuangliu International Airport
is the sixth largest airport in mainland China. The city has one of China’s densest high-
way networks with 10 expressways so far. GS
Guadalajara, Mexico 44
The city’s educational system makes it suitable for engineering
services outsourcing
G
uadalajara, Mexico’s Silicon Valley and the second largest city with a pop-
ulation of 1.7 million people, has attracted significant levels of foreign
investment. The multinational enterprises that Guadalajara hosts
have helped to transform the city into an excellent place to do business.
The city’s IT industry in the city boomed after the inking of the North America
Above: Puerta de Hierro Free Trade Agreement. Since then the foreign direct investments has been growing.
Below: Mormon Temple However, the industry noticed a shakeout in 2001 to 2003 when most of the MNCs
started shifting their shops toward “far” East.
Guadalajara is the hotspot for the engineering-services industry because of its capa-
bility to churn out engineers from universities such as Universidad de Guadalajara
and Universidad Panamericana, to name a few. Many educational institutions and
the government are working together to groom up world-class techies.
The engineering services in the city were earlier related to just the manufactur-
ing segment but now it has grown to other areas such as design engineering. Guadala-
jara houses several IT outsourcing firms such as Perot Systems and TCS. The BPO
sector is already flourishing in the city with key BPO providers such as Hispanic Ser-
vices and TeleTech. An entry-level BPO executive can make $320 to $340 per month.
In addition, Guadalajara is also a major national and international transportation
and shipping hub. The city is also served by Guadalajara International Airport. GS

45 Mandaluyong City, The Philippines
Besides entering our list for the first time, Mandaluyong has
recently bagged The World Bank’s business-friendly city status
I
n a small population of 295,733 people, the overall literacy rate in the City
of Mandaluyong is pegged at 99 percent with exactly one percent belong-
ing to the illiterate group, as per the Philippines’ National Statistics
Office’s results. There are three major universities — Don Bosco Technical
College, The Jose Rizal University, The Rizal Technological University — and 47
colleges in the city. Over 40,000 students graduate every year from these edu-
cational institutions. Most of the colleges offer short-term courses on computer
and technical education. A techie can earn $320 to $340 per month during his
initial professional journey.
While Cebu city in the Philippines is the undisputable BPO hub, Mandaluy-
ong City is gearing up to share the load. BPO players such as eTelecare are also
expanding in the city. Last year, eTelecare completed a facility in Mandaluyong City
Mandaluyong City skyline
— accommodating up to 3,000 employees. An entry-level BPO executive pock-
ets around $280 to $300 per month.
In 2007, new businesses in the city grew 21 percent from the year before. Inter-
estingly, it takes only 21 days to register a property in the City of Mandaluyong.
The per month rental charges in the city is between $2 and $4 per sqft.
Mandaluyong City is considered to be the heart of Metropolitan Manila as it
has three routes to link the two cities together. Mandaluyong City’s biggest asset
is its easy road access – both within the city and to the adjacent cities. GS
Continued from page 27 We obtained historical stats from governments, global

Makatis. These are the ones that are not only capable institutions and agencies, and economic-related data
enough, but are also gearing up fast to compete with such from monetary bodies. Publicly released data from gov-
global “Silicon Valleys” for providing IT and BPO services. ernment sources were also considered when using coun-
To make the location assessment further eas- try-specific market data. Publicly available
ier for the global buyers of outsourcing services, financial records such as quarterly and annu-
we have also identified established and emerging al reports, industry bulletins and trade publi-
cities by various functions such as application cations were used to verify market assump-
development and management, business analyt- tions and analysis.
ics, contact center (multilingual and English), A combination of comprehensive quanti-
engineering services, finance and accounting, tative and qualitative analysis was considered
HR, legal services, product development, R&D in developing the rankings. The proprietary
and testing. In addition, we have also identified weighting and ranking system was developed
the top eight global outsourcing locations. and refined by senior Tholons consultants. Further,
qualitative analysis was implemented to provide perspec-
Methodology tive to the quantitative results of the report. Tholons
To determine delivery and consumption trends for glob- carefully considered numerous variables when providing
al outsourcing services in specific destinations, Tholons uti- final rankings, and considered the impact which non-
lized similar surveys and interviews with tier-1 and tier-2 numerical data plays in the assessment of global out-
providers and service buyers. The data gathering method- sourcing locations. GS
ologies were also applied to determine market and labor sizes
as well as expansion strategies of tier-1 and tier-2 providers. Avinash Vashistha is the CEO of Tholons, a global advisory, investment
In addition, governments, industry bodies and related and research firm. With additional inputs from the Tholons' team —
stakeholders were also interviewed to provide both primary Manuel Ravago, Skanda Jankiram, Paul Santos and Vinu Kartha —
data and validation of analysis. and Global Services' team — Keerthi Nair and Namita Goel

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feature-SOA_Final.qxp 9/22/2008 11:08 AM Page 36
Service-oriented

Tools & Technologies
Architecture
Is Service-oriented Architecture (SOA) still a buzzword? Why would a company
spend money to sponsor a so-called technical initiative by the IT team instead of
financing some other business feature development by the team? Is it true that a
lack of SOA in an enterprise with a complex IT ecosystem has a direct impact on
the IT costs, and hence the bottom line, in the long run?
By Jayaprakash Nair, Delivery Manager, Aspire Systems
L
ET US TAKE A quick look at a few things The following problems are likely to occur with
commonly observed in the industry today. this arrangement.
OBSERVATION 1: Companies make investments Problem 1: In due course of time, the company may
in various “best of breed” products for their want to get the ISV’s product extended to replace part of the
Line-of-Business (LOB) functionalities. These functionality of P2 that belongs to another provider, and the
are typically monolithic systems tightly coupled together functionality that needs to be changed could be anywhere
using traditional Enterprise Application Integration (EAI) amidst the existing workflow provided by P2. So, there
approaches (and proprietary technologies to glue them would be a need to build more interfaces between the prod-
together), leading to a heterogeneous and brittle IT ecosys- ucts to ensure that the flow is seamless. (See Diagram 2.)
tem. Any seasoned industry observer will identify this as an This leads to an increasingly fragmented IT ecosystem.
omnipresent scenario. You can consider this akin to the continuous fragmentation
OBSERVATION 2: The major software product companies that happens on the hard disk because of deletion of some
had hitherto left gaps in their offerings, which were filled by files/folders and addition of new files/folders which do not
smaller Independent Software Vendors (ISVs) with their fit the size of an existing gap. This increased fragmentation
niche offerings. (See Diagram 1.) leads to an increase in the cross-references between the dif-
Diagram 1
Gap in the eco-system:

P1 P1 P1 P1 P1 P1 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2
Your product fills the gap:

P1 P1 P1 P1 P1 P1 * * * * * * * * P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2
Integration point 1 Integration point 2
P1 Product 1 * ISV’s Product P2 Product 2

ferent storage blocks on the hard disk, which is exactly what components/products use the same language to communi-
happens in a typical enterprise IT setup, leading to a cate with each other, and it becomes easy to continuously
spaghetti type of integration. realign or “re-integrate” them. This, in turn, leads to a very
Problem 2: The company may decide to replace product “amoebic” enterprise architecture, i.e. an architecture, which
P1 with another product (say P3), by another provider. can continuously change shape, without any harm to its
There’s a good likelihood that the company would need to fundamental constitution.
approach the ISV to customize its product, or at least repair CUSTOMIZATION/ENHANCEMENT: A typical software appli-
the integration point with the new product, in order to cation solves one or more business problems, and business
maintain the workflow/dataflow within the enterprise. problems are manifested in business processes. An applica-
OBSERVATION 3: The company might introduce some tion can be effective only if it has a direct relevance to the
changes in its business processes/rules, which would lead to business processes followed by the company, and most of
further breakages in the integration. them are likely to change very frequently. There are two
OBSERVATION 4: In many cases, the trading partners of com- problems identified in traditional product implementations:
panies having business-to-business integration can change Problem 1: Atomicity. The atomic level of a traditional
the interface points, thus breaking the integration. application is normally a module, which is nothing but a set
As you would be well aware, the above observations are, of closely knitted classes (here we assume that the applica-
by no means, hypothetical, and such occurrences are expect- tion is developed in a disciplined object-oriented manner
ed to increase, while moving forward. Let’s see what can be with the right composition of modules). Modules are typi-
done to alleviate some of the hurdles. cally significant in size, highly cohesive and put into pro-
duction after different levels of rigorous testing. Now if
The Solution — SOA there’s a change in any of the business processes contained
In the instances mentioned above, the existing IT ecosys- within a module, it would mean that the module needs to
tem in an enterprise had potential breakage points. From a be broken open, possibly gutted and reworked on. It would
solution perspective, the firm will have two options: require multiple analyze-code-test loops for the module to
Diagram 2
P1 P1 P1 P1 P1 P1 * * * * P2 P2 P2 P2 P2 P2 * * * * P2 P2 P2 P2 P2 P2
Integration point 1 Integration point 2 Integration point 3 Integration point 4
P1 Product 1 * ISV’s Product P2 Product 2
l Either continue with the existing IT setup and keep be put back in production. And then, there’s always the huge
on increasing the ever-so-brittle integration interfaces risk of regression errors (and subsequent negative ripple
between the different products/applications, thus increas- effects) creeping into the module.
ing the complexity of the integration/implementation of Problem 2: Non-segregation of variable and fixed busi-
the IT ecosystem. ness processes. Every business has a set of core business
l Or, convert the enterprise architecture into a SOA. processes, which are relatively fixed in nature, i.e. they hard-
From the options, the first one is not really a “solution” ly change over a period of time. Then there are business
and just amounts to maintaining the status quo (or maybe processes that change very frequently. Now in a typical tra-
worsening the situation), whereas the second option is a ditional application, modules are structured around features,
solution that the company can adopt. Service-orientation and as such, contain a mix of business processes, which are
describes an architecture that uses loosely coupled services to fixed, and the ones that are not. Thus, every time a change
support the requirements of business processes and users. is required in a business process, a module needs to be dis-
mantled and reworked on.
How SOA Can Reduce Costs Both the above problems can be solved, if the application
INTEGRATION: A successfully implemented SOA will reduce adapts to an SOA. SOA requires that the code implementa-
the coupling between the different components in the sys- tion of stable business processes be segregated from those,
tem. This is possible because of the standards based (typical- which change very frequently. Also, it requires that the
ly XML) interfaces that SOA adopts. This manner of using atomic unit of cohesiveness be the “service” and not the
services for integrating the disparate systems is called Service module. This makes the whole application easily customiz-
Oriented Integration (SOI). This approach is totally differ- able, thus reducing customization/enhancement costs.
ent from the proprietary interfaces used by traditional EAI. To sum it up, as the complexity of the IT ecosystem in a
What happens in an SOA scenario is that the different company increases, (primarily because of heterogeneity) the

revenue savings obtained from SOA also increases, provided ment. Also, you need to be aware which provider you will
SOA is implemented in a disciplined manner with proper hold responsible in case of any issues.
governance in place. Also it has been observed that the IT In short, you need to find a provider who has the abili-
ecosystems are indeed getting more and more complex. ty to provide you with a “cost-effective” and “pragmatic
Now let’s take a look at the first steps a company can take turn-key” solution without disrupting any of your existing
to implement SOA. business activities.
Call for Action Different Approaches

As a first step, you will need to talk to SOA consul- There are three approaches that companies typically con-
tants/providers and identify those with the required capabil- sider, for SOA adoption:
ities. Here are some of the things that you could keep in TOP-DOWN APPROACH: Here, the company builds an SOA
mind for narrowing down your list of prospective providers: framework suitable for their requirements (in terms of gov-
l Check if the provider has any standing in the IT-ser- ernance), creates services which cater to specific business
vices space, since that will be crucial for your provider to processes, and then plugs these new services into the frame-
understand your stated as well as unstated challenges, and work. The cons with this approach are the same as what has
work out solutions to alleviate those. been seen with the waterfall model of software development.
l Does the provider have consulting capabilities? Can l By the time the framework is built, some of the
they identify the cross-section within your enterprise where assumptions/policies of the company’s business processes
SOA can be implemented end-to-end with maximum would have changed, and the framework would need to
impact? Note that at this stage, your be reworked.
provider should be focusing mainly on l It takes a lot of time to actually
business process, and not too much on AS THE COMPLEXITY see any tangible result in the
the technology. OF THE IT ECOSYSTEM “SOAfication” of the enterprise.
l Check if that provider has a solid BOTTOM-UP APPROACH: In this
implementation team, because once INCREASES, THE approach, the company starts at the
the candidate cross-section for (con- REVENUE SAVINGS leaf level, i.e. builds services, and then
verting to) SOA has been identified, tries to stitch them together and arrive
and the architecture is in place, the OBTAINED FROM SOA at a framework. With this approach,
next step would be to actually imple- ALSO INCREASES, the risk is that, being focused on the
ment the solution using services. trees, it is easy to lose sight of the for-
Here, you need to ensure that the PROVIDED SOA IS est. So, instead of an SOA, one could
provider has a proven track record in very well end up with Just a Bunch Of
the requisite technologies.
IMPLEMENTED IN A Web Services (JBOWS), without a
l Does the provider have proven DISCIPLINED MANNER uniform governance framework,
capabilities in the appropriate software- which is so critical for any SOA imple-
development methodologies (engineer-
WITH PROPER mentation to be successful.
ing as well as project management), GOVERNANCE IN PLACE “START IN THE MIDDLE AND SCALE
which are apt for SOA implementation? OUT” APPROACH: A complete over-
For instance, using a waterfall model for hauling of your architecture may not
this would be akin to fitting a round keg in a square hole. be feasible. But will the evergreen Pareto Rule be applica-
SOA and waterfall normally don’t work well together. What ble to your product? That is, will converting 20 percent of
you need is a provider who has sufficient expertise in Agile your product into SOA reduce 80 percent of your inte-
(or at least some other Iterative) methodologies. gration pains and, if yes, will the ROI justify the 20 per-
l Any code that is developed needs to be tested. Now cent investment?
“SOA Testing” is a different beast. So check if your provider Here, SOA is implemented in a cross-section of the
has that expertise. enterprise, i.e. in a complete end-to-end LOB chain. A good
l Check if your provider has a quality-management sys- cross-section of business-workflow is identified as a candi-
tem in place to ensure consistently good quality. date, the required governance framework is built only for
l Needless to say, check if your provider will do all these that section, and the corresponding services are designed,
at a low cost. built, tested and deployed. This approach overcomes most
One option is to go for an amalgamation of different of the cons of the above two approaches.
providers to meet the above goals, but you then need to be Normally, the last option is the best — start small, iden-
prepared to shell out the extra cost involved in project man- tify your main bottlenecks, hit at those places with well-gov-
agement, communication management and risk manage- erned services, see the results, and then extrapolate. GS

feature-mng disputes_final.qxp 9/22/2008 11:39 AM Page 40
Managing
DISPUTES
Who suffers the most in case of a dispute — customer or service provider? Whose
fault is it anyway? Who’s holding the ball at the time of deal termination or
disagreements? Is it possible to carry on an outsourcing relationship after a nasty
scrap? Here’s a reality check

Strategies
By Namita Goel
S
TARBUCKS TERMINATES HRO Contract Disputes to Disagreements
with Convergys; Liverpool Victoria Replaces EDS Legally, the term dispute has a strong connotation
with Atos Origin; Deutsche Post Kills Huge HP attached to it. “They are never disputes, they are disagree-
Outsourcing Deal. These are a few headlines ments. I have had customers wanting to terminate the deal
about outsourcing deal terminations. The rea- due to change in the business needs and the contract did not
sons were the same as they were a decade ago — cost over- provide for any regulations in such a situation. Sometimes
runs, governance failure and delivery failure. the disagreements arise due to mismanagement of change
In 2005, a research report released by Deloitte management,” said William Bierce, Partner, Bierce &
Consulting clearly stated that the year 2004 saw a signifi- Kenerson, a law firm.
cant rise in distrust in outsourcing relationships and more Change management and governance failure are report-
customers opted for deal terminations — 44 percent ed to be the top reasons for break up between the provider
chose deal termination over litigation, re-negotiation and and customer. Problems relating to delivery failure or cost
other remedies that involved mutual understanding. The overruns can still be sorted out through discussions, where
trend has improved a bit as both customers and service as the case of governance and change management that
providers have matured. The recent report released by challenges the very essence of the contract takes a hit. “In
Deloitte, “Why Settle for Less,” reveals that 70 percent of some cases the initial contract is scrapped and a brand new
the respondents — in all 300 global players — reported contract is drafted. While in the other the scope of the
being satisfied with the outsourcing setup, yet a disturb- contract, SLAs and cost changes are incorporated,” said
ing 39 percent revealed to have terminated at least one Stephen Nordahl, Partner, Global Technology Transactions
contract and moved to other service providers. Group, Milbank, Tweed, Hadley & McCloy. “Here at
Europe too is getting matured in handling outsourcing Milbank, we have two sorts of disputes, small-d-disputes
relationships. While evaluating the U.K. IT-services deals, and capital-D-disputes. If it is the latter, then we know it’s
Pierre Audoin Consultants, the U.K.-based consultancy, been on for a while and the two parties failed to reach an
revealed that just 13 percent of the U.K.-based companies agreement, so they seek the help of a third party; whereas
that updated their outsourcing deals during the first seven in the former case they probably might need to incorporate
months of 2008 terminated the initial deal to move on to a some changes in the contract due to the changing business
new provider. needs,” added Nordahl.
There have been numerous articles that compare out- The study by Deloitte also shows that contract termina-
sourcing relationships with marriage, and to extend the tion is not the first thought that crosses the mind of the cus-
analogy, outsourcing contracts have started resembling tomer and provider. “Sixty-one percent of the respondents
the infamous pre-nups. The trend is that service reported that in case of issues during the first year of the
providers and customers now more strongly believe in contract, the matters were immediately escalated to senior
deciding beforehand about the exit strategies and the management, with 15 percent reporting five or more such
payouts, even before signing the deal. Definitely, the cyn- escalations. Fifty-three percent continued to have to escalate
icism is infectious and what happens in a marriage is in the second year. Clearly, outsourcing is working finan-
making way into business too. cially for most of the respondents, but their relationships

Strategies
with their providers have not been without problems, with OPINIONS ON
escalations being a common practice and terminations and
“
cancellations viewed as real possibilities,” states the study.
"Termination-assistance clauses
Initiation of Disagreement and Termination are usually drafted to help the
The customer and the service provider could both initi- customer stay in control on ter-
ate a disagreement and seek legal recourse, but often it is the mination or expiration. The cus-
customer who usually does so. This trend could change. “In tomer will want a choice of
the past, customers had more powers, and were usually the replacing the incumbent service
ones to find faults and raise arguments. However, the last provider with another service
few years have seen a change in the trend and a lot of provider, or taking some or all of
providers have also come up with issues of non-cooperation the outsourced services in-house. There could be
or lack of sufficient information to deliver the services ade- a reconfiguration of the in-scope services, with
quately,” said Bierce of Bierce & Kenerson. partial outsourcing and partial insourcing after
It is a general belief that the power of contract termina- the termination or expiration.
tion lies in the hands of the customer. The fact is to some Termination-assistance clauses set forth how
extent true, but lately the trend is that even providers have the customer or its substitute provider will be
voiced out their disagreement with the customer. It is more able to receive something useful. Such clauses
of a reputation issue for the service provider whenever a con- define how the service provider will transfer the
tract terminates. So the providers prefer re-negotiation to ‘platform’ on which the outsourced services are
termination or litigation. performed. If the platform involves third-party
“I would say it is mutual. Whenever there is a situa- technology, there are licensing issues that need
tion of discomfort in a contract, both of them — cus- to be resolved. In general, since each technology
tomer as well as service provider — feel it and sometimes platform and the outsourced business process is
say it together, while most of the times one of them have somewhat unique, it's advisable to plan and occa-
to initiate it. So it is the matter of timing,” added sionally review the plan for transferring the plat-
Nordahl of Milbank. form, not just the data.
“Being a provider, we have had also raised disagreements Without such a clause, there could be anarchy
at times. But termination is usually not our opted choice. in terms of a complex process that is essential to
And the situation for termination does not come in to dis-
cussion until the matter of disagreement reaches out to the
senior management on both the sides. From the service
providers point of view, disagreements are normal as they first two years of the contract due to work transition. “If the
sometimes help in improving the relationship but termina- deal can go along these initial years with probably minor dis-
tion just leaves a bad taste for both the provider and the cus- agreements that can be amended, then the deal goes on till
tomer,” said Kirill Degtiarenko, BDC Executive Director, the end,” explained Bierce.
IBA Group, a service provider. Nordahl agreeed, “Nothing is certain in a contractual
cycle. However, the chances of the deal termination increas-
Retardation of the Deal es with the increase in the degree of unpleasantness in the
Outsourcing deals on an average have a term of five to initial years. Else, the deal rolls peacefully with minor trou-
seven years and usually the disagreements come during the bled waters here and there.”
THE FEW MAJOR DEALS TERMINATED FROM SEPT. ’07 TO SEPT. ’08
Deal Customer-Provider Actual deal term vs. Signed deal term* Reason for termination
l Triad-Perot 2 vs. 10 Lack of cost effectiveness and
delivery failure
l AA-IBM 2 vs. 5 AA merged with Saga
l Starbucks-Convergys Not defined Change in Starbucks business needs
l Liverpool Victoria-EDS 4 vs. 13 Moves the process in-house
l State of Texas-Accenture 3 vs. 5 Service delivery failure
l Deutsche Post-HP Six months vs. 7 Lack of cost advantage.
*IN YEARS; SOURCE: GLOBAL SERVICES

Strategies
TERMINATION-ASSISTANCE CLAUSES
business continuity. Indeed, termination-assis- providers. The negotiations typically permit the
tance clauses are among the most important pro- customer to get what it needs to continue on with
visions since they give comfort for a relatively its business. However, providers usually are
smooth transition upon termination or expiration. tougher on issues related to the disposition of
The key to drafting such clauses is to give the cus- their proprietary IP to the customer and hiring of
tomer reasonable control over the processes and their employees by the customer.”
assure the provider's cooperation and a plan for Stephen Nordahl,
the continuity of operations. Service providers will Partner, Milbank, Tweed, Hadley & McCloy
want to negotiate economic issues, including
costs, payment terms, scheduling and roles." “Outsourcing contracts normally
William Bierce, include termination for cause
Partner, Bierce and Kenerson and termination for convenience
provisions. These clauses nor-
“These provisions typically cover
topics such as, wind-down of ser-
vices, provision of transition-out
services (i.e. termination-assis-
tance services), transfer of IP,
transfer of hardware, transfer of
third-party agreements, right to
hire project staff to name a few.
As these exit provisions or termination-assis-
tance provisions are highly negotiated, it is not
mally favor the customer and are
intended to protect the customer
and its dependence on the
provider from the risk of early
“
termination, while preserving termination as an
option for the customer, should the deal prove
unfavorable. Ironically, even though customers
may have the option to terminate for conve-
nience, exercising such option tends to be diffi-
cult given the dependence that customers have
clear that they "favor" one party versus the on service delivery.”
other. And also based on my experience, I would Michael S. Mensik
say no to the fact that they are more in favor of Partner, Baker & McKenzie
The painful time is when the deal gets messed up amidst while and this can generate frustration and ill-will between
all these disagreements. The staff and the service delivery the parties. Sometimes, it can be useful to replace those
bear the brunt of it. Usually it takes six to nine months for affected by a particularly contentious re-negotiation by
the disagreements to settle down with the help of lawyers, new people so that the relationship can start fresh,” said
but in the worst case scenario, it can also span over a year. Michael S. Mensik, Partner, Baker & McKenzie.
If there is a termination, then the contract goes ahead
Life After Resolution or Termination with the termination-assistance clauses. Life is more pre-
It definitely leaves a bad taste in the dictable in this case as the conditions are
mouths of both the customer and pre-decided. However, there is always
provider. If there is a resolution, then the room for negotiations for the reason
continuing relationship between the two that while designing the contract none
parties is a bit strained, at least till both of the parties could predict the exact cir-
are able to prove themselves that they cumstances of the termination. But
won’t repeat the actions that lead to dis- apart from the customary compensation
pleasure. The terms of the contract clauses in the contract, the deal termi-
become more legally stringent and alter- nation carries a whole lot of intangible
nate compensatory options are created in effects on both the parties that lower
favor of both the parties in case of any similar occurrence morale and heighten mistrust. It is a sure hit on the rep-
in the future. “It can be difficult, even under the best of utation of both, however, the impact is more for the ser-
circumstances where the dispute is settled in a manner vice provider. That’s why some of the deal terminations
both sides deem as fair, for the parties to resume the course are either not made public or are followed by explana-
of the deal because major issues tend to ‘percolate up’ for a tions to each other’s case. GS

experts lead-China’s challenges_Final.qxp 9/22/2008 11:41 AM Page 44
Experts
China’s Challenges to Develop a
Global BPO Capability
Known as a global engineering-services outsourcing destination,
China also has potential to develop a compelling Business Process
Outsourcing (BPO) industry. However, there are many obstacles
the country needs to combat in order to develop this beyond an
industry that is merely serving a sub-region
By Phil Fersht
I
n our current economic climate, as a powerful delivery center for global BPO and much better English-lan-
enterprises are vigorously looking at BPO services? We believe it will perform guage skills. Moreover, we are seeing
ways to retain their core talent and well in the medium term delivering attrition rates as high as 30 percent in
processes while containing costs on knowledge-based services to Chinese the major cities of Beijing, Guangzhou
routine, tactical functions, for speaking businesses — and some Japan- and Shanghai.
example administrative finance, HR, ese and Korean — but will struggle to l Providers wary of the “India expe-
customer management and procure- break into the global market to deliver rience” all over again. With all the initial
ment processes. services to Western enterprises for the teething problems firms ensured sending
The industry for Business Process following reasons: out BPO services to India, why would
Outsourcing (BPO) — the transfer of l China is in a time-crunch. China they want to go through all this again
management responsibility of these rou- is already touting its tier-2 cities, such as with China? Some outsourcing giants
tine business processes over to a third- Xi’an and Chengdu, as its mainstays of such as Infosys and TCS have only
party — has been enjoying steady Beijing and Shanghai are already suffer- established a token foothold in the
growth over the last decade and we antic- ing from chronic job attrition (30 per- region — in the hundreds of employees
ipate this to accelerate with current eco- cent) and wage inflation. India, and as opposed to the multiple thousands in
nomic conditions. BPO is a logical other offshore locales such as the Philip- India, this seems to indicate that these
direction for many enterprises to take, pines and Eastern Europe, have enjoyed firms are still hedging their bets on
where enterprises can drive cost-effi- a stable period of several years to devel- China. Only IBM has surpassed 1000
ciencies and improved process-rigor op their BPO infrastructures before employees in China for BPO services.
through service provider offerings that these issues crept in. China is moving l Latin America is offering a com-
appropriate low-cost offshore talent and into BPO with little breathing space to pelling alternative for delivering BPO
standardized processes underpinned by establish its infrastructure and build services to U.S. businesses. We are
the latest technology tools and platforms. critical mass. It is easier for BPO firms already seeing a strong competition for
Is China, with its unprecedented to combat attrition and wage inflation BPO services from the Latin American
base on cheap labor, low-cost product once there is critical mass of staff and countries for the following reasons:
manufacturing, de-regulated banking infrastructure available. n Wage rates are comparable
sector, booming domestic economy and l Wages and attrition for knowl- n Little need to relocate staff into
developing infrastructure, poised to edge workers in China are already the U.S.
challenge India, the Philippines, Central high. Wages are not much lower than n No need for bridge teams" which
and Eastern Europe and Latin America, in India, which has more experience in spend their time overlapping develop-

experts lead-China’s challenges_Final.qxp 9/22/2008 11:42 AM Page 45
ment work with both onshore and off- the service provider to increase its wage titude of industry regulations, data pri-
shore teams and currency appreciation, which is vacy and compliance standards.
n Staff travel costs are far lower for threatening to erode the offshore service l China’s “Great Firewall” could
nearshore models of today’s BPO providers. With inhibit its knowledge services industry.
n English competency is strong China’s prime attraction for BPO ser- Just last month, there were 868 arrests
n Staff attrition is lower in LatAm vices being low-cost workers, moving made of people providing unhealthy
countries than in India or China. work over here could be a regressive step content over the Internet. Google
The strong competency for Latin for many enterprises, with the current reports that the most searched for words
American workers to deliver both Eng- wage appreciation and employee attri- in China are related to “money” and
lish and Hispanic voice-based services tion dynamics. Having said that, expe- “technology,” which indicates that this
and their ability to administer routine rienced outsourcing providers delivering unhealthy content probably wasn’t all
business services makes the region an China-based BPO services can claim to pornography. People talk a lot about
attractive location for services providers have learned from past mistakes and seek how “China will be changed more by
to develop BPO service delivery centers. to rectify these. the Internet than the Internet will
For example, enterprises can now source l China’s English-competency is a change China,” but if the Chinese gov-
administrative accounting tasks for com- major minus for BPO. Whereby Singa- ernment manages to keep most Western
parable rates in Mexico, than they can in pore and Hong Kong adopted English sites from being accessed, and persists
China or India. as their mother tongue many years ago, with stepping up attempts to block this
l China’s core competency is engi- China is still a good decade away from unhealthy content, will there surely be
neering. China is more of a manufac- being able to boast good English-speak- a limit to the level with which China
turing/industrial powerhouse, and we do ing competency. Beyond the Chinese- can change? If the Chinese middle-class-
view it being so adept at performing speaking languages, and some sur- es are continually blocked from inte-
administrative business services. R&D rounding Asian languages such as grating their online culture with the rest
services are in the Chinese DNA, rather Japanese and Taiwanese, it is difficult to of the world, won’t this impact their
than BPO services, which is the direc- see China becoming more than a local ability to assimilate, understand West-
tion we see China taking, for example hub for its domestic economy and some ern business culture and deliver knowl-
industrial design work, contract manu- of the Asian-speaking countries. To run edge services for customers outside of
facturing, biotech services to name a few. truly pan Asia-Pacific services, not hav- the Great Firewall? The constant
l Movement away from mere labor ing a strong English-speaking compe- attempts by the government to keep
arbitrage. BPO services are increasingly tency is a major issue with BPO. When China sectioned off from the rest of the
moving away from the “body shopping” running the vast majority of BPO ser- world over the Web could substantial-
game, and more towards the provision of vices, there needs to be elements of close ly hold back the country from deliver-
value-added business services and inno- interaction between the outsourcer, or ing knowledge-based business services
vative offerings. Moreover, most of the offshore worker, and the mother com- for Western companies. GS
offshore BPO providers increasingly pany outsourcing the services.
prefer to price their services by transac- l China’s legal system’s policies and Phil is Research Director, Global
tions, for example, invoices produced per enforcement of data privacy and patent Services and Outsourcing, for leading
day, or reports per month, as opposed to protection is extremely poor. BPO ser- industry analyst AMR Research, Inc. He
cost savings per employee salary. Pricing vices rely on sensitive employee, cus- also authors the popular blog “Horses for
services by employees provided as tomer and financial data being sent to Sources” which can be accessed at
opposed to services delivered expose remote locations and adhering to a mul- http://www.fersht.typepad.com

experts_Matt smith_Final.qxp 9/22/2008 3:03 PM Page 46
xperts By Matt Smith, VP and co-founder, 3forward
Sales Strategies to Succeed in a

Tough Economy
The basics of selling and account management do not change
in a tough economy. Regardless of the level of business
economic conditions, the selling teams in service provider
companies only need to make some tactical adjustments to
reach their revenue goals
T
he U.S. Slowdown: Survive & REVISITING SALES AND ing (BPO) firms to achieve the desired
Thrive reads one headline, MARKETING BASICS sales results. A few of the familiar reasons
while Grim Outlook for IT Regardless of the level of business illustrate why:
Spending reads the next. economic conditions, outsourcing sales ● Many sectors spend less on IT ser-
While Outsourcing Takes a success begins with an external audit of vices in uncertain times and some stop
Hit says a Wall Street Journal blog, the customer markets, including needs, spending entirely.
same day CIO News posts TPI’s report trends, competition and product alter- ● Competitors without plans for
of outsourcing’s best two quarters in 10 natives. At the same time, an internal economic down-cycles often make des-
years. Although the headlines clearly dis- audit examines organizational capabili- perate pricing decisions or agree to
agree on the impact a slower economy ties, available resources, financial require- unrealistic contract terms that only
has on outsourcing sales, there remains ments, experience and offerings. Strate- make matters worse.
little argument that the U.S. economy gic marketing plans are then ● Outsourcing decisions take longer
and many others worldwide continue constructed, including differentiation because more people share in the review
showing weakness. approaches and promotion, pricing, process when cash is tight. At any hint
How is it that, with economic con- and channel decisions. Good times or of risk, the safe answer seems to be to
ditions the same for everyone, there are tough, all these elements work together delay the purchase.
such varying results across the provider to determine sales success for the out- Challenges like these require differ-
industry? It is, at least, partly because sourcing provider. ent sales tactics and the following are five
successful firms are making better tacti- of the best options to consider. Depend-
cal adjustments to their selling and mar- THE IMPACT OF SLOW ECONOMIES ing on the outsourcer’s vertical expertise
keting strategies to accommodate for the It is a reality that slow economies some may apply more than others, but
economic changes. So what did they make it harder for IT Outsourcing the concepts can apply to most ITO and
change and where did they start? (ITO) and Business Process Outsourc- BPO markets.

experts_Matt smith_Final.qxp 9/22/2008 11:43 AM Page 47
Intensify focus on existing accounts.

Even in healthy economies, IT deci-
sion-makers generally find their
existing solution providers less risky
than unknown providers.
FIVE TACTICAL ADJUSTMENTS Intensify focus on existing accounts. tomers, including strategic customers.
FOR TOUGH ECONOMIC Even in healthy economies, IT decision Specifically, 96.2% of our 2007 revenues
CONDITIONS makers generally find their existing solu- were derived from customers who had been
Some sectors thrive in bad eco- tion providers less risky than unknown using our services at the end of 2006.”
nomic times — like outsourcing. providers. Two proven approaches to Consider indirect sales channels.
Throughout 2008, study after study increasing outsourcing sales in existing For outsourcing companies trying to
from firms such as TPI, Everest, Gartner accounts are portfolio expansion — penetrate the U.S. mid-size and small
and others have shown an acceleration of selling solutions that are already in your business market, an indirect sales strat-
outsourcing activities as companies portfolio but not yet being utilized by egy through the ValueAdded Reseller
search for more cost-effective ways to the target — and incorporating partner- (VAR) and System Integrators (SI) chan-
continue delivering IT services and busi- delivered solutions for even broader nel is often the only viable approach
ness processes. Segments under heavy capabilities. The latter can also be a wor- because of the overwhelming number of
cost pressure like banking, manufactur- thy defensive strategy to keep competi- small and medium business prospects.
ing and retail are particularly receptive to tors from gaining access. In either case, Many VAR’s and SI’s focus on a partic-
outsourcing solutions that can demon- the sales cycle will be shorter and less ular geographic market or vertical, and
strate savings. Other segments, which costly than trying to win a new customer have extremely high credibility with
excel in downturns, are also great indus- and the revenue ramp up will also be those customers. Selling through Orig-
tries to target — perhaps with a value faster. An excellent example of this strat- inal Equipment Manufacturers (OEMs),
proposition emphasizing the greater egy is highlighted in Cognizant’s 2007 other tech firms and even other out-
capabilities outsourcing can enable. annual report titled Management’s Dis- sourcers is another very strong indirect
Fox Business.com recently highlighted cussion and Analysis where they identify sales market for many niche ITO and
Five Sectors That Can Survive a Recession account expansion as a key driver to rev- BPO outsourcers. These larger compa-
and they include “green” providers, enue growth in 2007: nies are a great way to penetrate the top
financial services, alternative medicine, “Expansion of our service offerings corporations, the challenging U.S. mid-
on-line advertising and engineering. enabled us to cross-sell new services to our market and even small business.
Companies in these industries should customers and meet the rapidly growing Fine tune your value proposition.
be high on the target list of any out- demand for complex large-scale outsourc- Spend time analyzing and refining
sourcer with solutions that can help ing solutions.” how you explain the benefits your
them maximize their success. “Increased penetration at existing cus- products and solutions provide cus-

experts_Matt smith_Final.qxp 9/22/2008 11:43 AM Page 48
tomers. Marketers are taught to ask the focus on two particular segments,
question, “So what?” Do you take banking and financial services, and
steps out of a process? Add features?
Outsourcing can energy and utilities. To keep the mar-
Provide capabilities that did not exist definitely improve rev- keting message simple, they high-
previously? Those are great, but “so lighted just two solutions — remote
what!” A strong value proposition
enues, service delivery infrastructure management and cus-
takes these statements at least one and market share, but tomer service desk. These two services
more level and makes the outsourcing could be sold as stand-alone solutions
benefit tangibly evident to the cus-
it is each company’s and therefore had the potential to
tomer. In strong or weak economic unique value proposi- close faster than a more complex end-
times, customers are looking for the to-end program. Lastly, to keep their
same benefits from outsourcing:
tion that determines existing sales organization focused on
Increased revenues, reduced costs, their opportunity to expanding sales with their existing
improved market share, gain in com- accounts, they outsourced the market
petitive advantages and delivery of
make the sale. development and qualification process
improved service. Outsourcing can to an outside sales specialist. The pro-
definitely deliver these results, but it is gram is now generating several quali-
each company’s unique value propo- opportunities and may be an option fied prospects each month.
sition that determines their opportu- for some outsourcers to explore.
nity to make the sale. LASTLY, DON'T PANIC — FOLLOW
Consider outsourcing certain sales PUTTING IT ALL TOGETHER WITH APLAN!
activities. Companies, which outsource TWO CASE STUDIES If tough economic conditions are
certain sales or marketing activities do so A U.S.-based provider of technology forcing your company to consider new
for the same reasons many other func- support services has found great success selling models, first analyze your existing
tions are outsourced — cost reduction, with their indirect sales strategy. In approaches and reconfirm your under-
acceleration of results, and the benefits addition to selling directly to large cor- lying strategies. Tactical course correc-
of performance-based agreements. Cir- porate accounts they also market their tions as market or economic conditions
cumstances when sales outsourcing can services through three indirect channels change are exactly what effective out-
make sense include: — OEMs, end-to-end IT outsourcers sourcing sales organizations are always
● Entering new markets, geogra- and resellers. These indirect channels doing. Don’t panic when adjustments
phies or customer segments allow the provider to reach customer are required. Instead, consider the many
● Creating or exploring indirect markets that would be too costly to sell options available and look to those
sales channels to otherwise, including consumer, small companies delivering the best results as
● Mentoring new sales leaders and business and mid-market. Indirect sales models for success. It is a great time to
business development teams have now grown to represent nearly half “survive and thrive!” GS
● Supplementing existing sales, busi- of company’s total revenues.
ness development or solution teams. In early 2008 a mid-sized ITO Matt Smith is the Executive VP and
Under the right circumstances, anticipated that the slowing U.S. econ- Co-founder of 3forward, a Dallas, Texas-based
outsourcing sales or market develop- omy would create additional growth company specializing in sales, marketing and
ment is a very efficient, productive opportunities in outsourcing services. alliances for outsourcing companies in India
approach to quickly develop new sales Their market research suggested they and the U.S.

ad_strip_1.qxp 7/15/2008 4:08 PM Page 20
Handshakes, Eyeballs
Readers & Viewers
Empowering the Knowledge Nation

expert_Optimizers_Final.qxp 9/19/2008 11:50 AM Page 50
xperts By Allan Schweyer and Tony Marzulli
Placing Talent at the Center of

Integrated Talent Management
For effective Talent Management (TM), integrated
TM solution platform is required. An “employee-
centric” mindset too is necessary; one that makes
talent a partner in the lifecycle. But is that followed
in organizations?
W
hen employees are mance management, workforce plan- l Career and succession planning:
at the center of the ning, skills management, succession This area provides a window into what's
talent-management planning, recruiting, and resource possible — the new roles and responsi-
lifecycle, they are scheduling. In order to garner the bilities that represent growth and
better able to under- greatest competitive advantage from advancement for each worker.
stand what it takes to be considered “top the organization’s resources, an orga-
talent” and to be a part of the leadership nization needs to bring these process- EMPLOYEE-CENTRIC TM
succession pool. es into an integrated whole. Employee involvement, through a
TM is the end-to-end and integrat- Six areas stand out as key elements formal referral program is, inarguably,
ed process of planning, recruiting, devel- within this framework: the best method of recruiting by every
oping, managing and compensating l Competency and skills manage- meaningful measure (cost per hire,
employees throughout the organization. ment: These pieces of the workforce- quality of hire, time to performance
An integrative and talent-centric planning puzzle help organizations iden- and length of retention). Most orga-
“mindset” and initiatives led by a senior tify the critical talents essential for each nizations know this and do it well.
executive with overall responsibility for role within the company. Two areas that are less developed in
talent is critical. Much has been written l Recruitment: The first step in hir- organizations (in terms of employee
about the benefits of integrated TM. ing the right talent is being able to accu- involvement) are development and
What has been less discussed and rately evaluate candidates to match their succession planning.
researched is the employee’s role in inte- skills to the requirements of current Where employees are at the center
grated TM — what can and should openings and future business goals. of the talent management lifecycle,
employees participate in for their bene- l Learning management: A learning they are better able to understand
fit and the benefit of the organization? management system helps determine what it takes to be considered “top tal-
In this regard, Human Capital Insti- skills gaps in key positions and ent” and to be a part of the leadership
tute, with Workscape, conducted a sur- provides a way to bring workers up to succession pool.
vey of its membership to identify current necessary levels. Career pathing, whether leading to
market perceptions and emerging needs l Performance management: leadership or not, is too often non-
surrounding the integration of benefits For ongoing auditing and monitoring existent in organizations. Our research
and TM solutions into a single, “employ- of talent productivity, this important found that where employees are given
ee-centric” solution offered on an inte- area compares and connects emp- more involvement in charting their
grated platform. loyee performance results to organi- own paths, including paths to leader-
zational objectives. ship, the system runs more fluidly and
INTEGRATED TM l Compensation: Proper rewards, less expensively; that way talent is
Skilled human capital is the most including base and incentive pay likely to stay longer. GS
important element in running a suc- and equities, help HR staff and line
cessful business. TM touches a wide managers recognize achievements and Allen is President and Executive Director,
range of Human-capital Management push employees to strive for higher lev- Human Capital Institute. Tony is Chief Mar-
(HCM) disciplines such as perfor- els of effectiveness. keting Officer for Workscape.

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qxp 9/22/2008 12:54 PM Page 1

Service-oriented Architecture p. 36 Managing Disputes p. 40

October 2008 Vol. 03, Issue 33

CITIES Global Services-Tholons Study

with all Great Achievements you ﬁnd

Building on Our Global Heritage Working Together: IT-Enabled BPO

The gateway to the global sourcing of IT and BPO services

DIRECTORY OF SERVICES Hoshie Ghaswalla Head-Sales & Marketing

Subscription In the Next Issue

October 2008 www.globalservicesmedia.com GlobalServices 3

The gateway to the global sourcing of IT and BPO services

CITIES Global Services-Tholons Study

4 GlobalServices www.globalservicesmedia.com October 2008

October 2008 www.globalservicesmedia.com GlobalServices 5

Where Do You Want

6 GlobalServices www.globalservicesmedia.com October 2008

the combined entity’s manpower

1 is HP’s largest acquisition in the IT-

8 GlobalServices www.globalservicesmedia.com October 2008

A former French colony, Sene-

“Since Senegal is the country in and Mauritius. GS Portudal or Saly and

October 2008 www.globalservicesmedia.com GlobalServices 9

D emand from the public sector

10 GlobalServices www.globalservicesmedia.com October 2008

MSS Market Set to Grow to $332.7 Million by 2013

30 Ecuador, Peru, Bolivia great growth potential, especially in Colombia and

and Chile Venezuela, detaining Latin America’s highest CAGR for

their typical ad-production work. Many

October 2008 www.globalservicesmedia.com GlobalServices 11

Infosys-Axon M&A Deal Kicks Off a

A ugust ’08 witnessed the announce-

l Salary.Com Infobasis 5 Hong Kong: 4 Others: 13

To see the full table, please visit www.globalservicesmedia.com Japan: 4

SOURCE: THOLONS SOURCE: THOLONS

12 GlobalServices www.globalservicesmedia.com October 2008

New Trend Jobscut

T he number of jobs cut in Aug.

October 2008 www.globalservicesmedia.com GlobalServices 13

The Global Services-Tholons Study

16 GlobalServices www.globalservicesmedia.com October 2008

The Global Services-Tholons Study

CITY CHARACTERISTICS WITH RESPECT TO SPECIFIC SERVICE

Cost Scale & Quality of Workforce

Infrastructure Business Catalyst

Quality of Life Quality of Life

October 2008 www.globalservicesmedia.com GlobalServices 17

The Global Services-Tholons Study

done out of Makati City, while engineering services are

18 GlobalServices www.globalservicesmedia.com October 2008

The Global Services-Tholons Study

Losers & Gainers The Bangalores …

October 2008 www.globalservicesmedia.com GlobalServices 19

The Global Services-Tholons Study

20 GlobalServices www.globalservicesmedia.com October 2008

The Global Services-Tholons Study

Top 50 Emerging Global Outsourcing Cities Table 3

1 4 Cebu City Philippines +8 0.8 Philippine peso (PHP) PHP 46.59

October 2008 www.globalservicesmedia.com GlobalServices 21

The Global Services-Tholons Study

Top 50 Emerging Global Outsourcing Cities

24 GlobalServices www.globalservicesmedia.com October 2008

The Global Services-Tholons Study

CHINA, CHINA, EVERYWHERE