Topic: Offshore Locations - Buyers' Perceptions and Plans

The continued recovery of the global economy in 2010 is matched by the revival of the global sourcing market. Companies are expanding offshore operations through both captive and third-party models. Further, the geographic spread of offshoring is expanding with new locations emerging across Asia, Central America, and Eastern Europe.

Everest Group administered a survey in early 2011 (January-February) to understand perceptions and plans related to global-services locations, across multiple stakeholders – buyers of global services, third-party service providers, consulting/advisory firms, country associations, and investment promotion agencies. The survey attracted 340 respondents comprising mid-to senior-level executives across all the key stakeholders in global services as mentioned above. In this viewpoint, we present a summary of how buyers are thinking about their expansion plans, specifically with respect to scale and locations. We also explore typical location perceptions of buyer organizations.

Key takeaways:

• India continues to be the most preferred destination amongst buyers:
  • For moderate (500-2,500 offshore FTEs) and large adopters (>2,500 offshore FTEs), The Philippines and China are important locations for offshore delivery, in addition to India
  • Latin American locations are also gaining prominence owing to the unique opportunities offered by this region
• Buyers plan to ramp up scale mainly in India, The Philippines, and China, primarily by expanding their existing presence. There is also a marked preference for other locations (such as Brazil, Poland, and Mexico); preferences vary with the level of existing offshore adoption
• Buyers are taking a strategic view of their global footprint, driven by factors such as concentration pressures and the increasingly complex demand from locations. India and The Philippines are primarily leveraged as hubs supporting large scale delivery by most buyers, while other locations act as spokes, lending complementary capabilities and/or serving risk mitigation objectives

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