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Vietnam has overtaken the Philippines as the world’s top outsourcing location for the first time, according to new research from global real estate adviser Cushman & Wakefield.
The country came first according to Cushman & Wakefield’s Where in the World? Business Process Outsourcing (BPO) and Shared Service Location Index report. Costs, risks and operating conditions were analysed by the report to provide insight into what markets are deemed particularly attractive in the current global environment.
With one of the highest growth rates in outsourcing, Vietnam has established its presence in the sector as an alternative destination for low-cost offshoring services, up from fifth place last year’s index. The country’s government has put in place policies to promote the country as an outsourcing destination, with the services segment expected to expand rapidly.
Cushman & Wakefield’s Head of Occupier Services for APAC and EMEA, Richard Middleton, said: “While not the cheapest outsourcing destination, Vietnam is still very competitive when compared to other global locations and wage rises in India and China largely contributed to it surging up the ranking to take first place in 2015.
“Despite rising costs and concerns that overheating will inevitably lead to further pressure surrounding access to skilled labour, India remains the world’s largest BPO destination by market size.”
Rising one place on the 2014 index to take second position this year is the maturing Philippines BPO market, which has become an established pillar of the country’s economy. The market in fact hit a record US$15 billion in revenue last year, leapfrogging India in terms of growth and absorbing 70 percent of India’s voice and call centre operations.
The shift in power has in part been a result of spiralling Indian labour costs and climbing rates of attrition – which stand at 26.9 percent, the highest globally – as rising wages have left companies continuing to compete for the best talent.
While the global economic recovery has remained sluggish, much of the BPO sector was being driven by English-speaking industrialised nations, placing the Philippines aggressively, ahead of many other BPO locations. The
English dialect of the Filipino workforce was also well received within the United States.
A new entrant in Europe this year, Lithuania, made the index for the first time securing 11th place – and this was the highest placed country of any new inclusion to the ranking.
Middleton added: “Benefitting from a cost competitive environment, strong labour pool and high levels of language proficiency, Lithuania is well placed as a BPO destination.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg