India continues to remain the preferred outsourcing destination with the total revenues from the outsourcing industry estimated at $20 b for the year 2008. According to Nasscom , the combined IT-ITes revenues are expected to be $50 b for 2008 and the total addressable market for the BPO industry is estimated at $630 b.

India’s closest competitors are the Philippines and China in terms of offshoring maturity and cost attractiveness. However, turn of the century has seen other destinations like Malaysia, Singapore, South Africa, Egypt, Poland, Bulgaria, Romania, Mexico, etc. contending for greater share of total offshoring market.

Newer emerging destinations like Kenya, Ghana, Senegal, Brazil, Argentina, Mexico, Malta, and Lithuania are looking to leverage their strong domestic industry, language capability, proximity to developed nations in addition to the cost advantage and fuel the economy through outsourcing. The exhibit below lists some of the emerging outsourcing destinations.

 **Source: ValueNotes Research
Doing Business Rankings (www.doingbusiness.org)
**BBC, Indiatimes Infotech, Outsourcing Times, Gulf News, ZDNet, CIO, CBR

Quality of Infrastructure (including technology)

Every emerging destination is looking to grab a substantial share of the outsourcing industry. India, the Philippines and China have been able to establish and position themselves quite strongly in the buyer community.

India is known for its large talent pool with domain knowledge ranging from Engineering, Pharma, Statistics, and Legal to a strong IT labor pool, and the ability to scale. Similarly, the Philippines has also established itself as a preferred or ‘first choice’ destination for offering contact center services to the US clients.

Going Forward….

There is a shift in focus towards Europe and Asia Pacific thus necessitating setting up centers there. Given the uncertain market conditions, companies are looking to mitigate risks and set up centers in multiple countries. Moreover, the slump in the US market is putting pressure on the margins, forcing Indian BPOs and multinational companies to diversify their client base. Interestingly, companies that have shifted services to India on a large scale are gradually trying to diversify their outsourcing strategies by having a secondary or backup location. For instance, Wipro, TCS, Infosys, Satyam, WNS, OfficeTiger and Cognizant have set up development centers in Australia, China, Sri Lanka and Japan to serve the Asia Pacific market.

Alternately, countries like Malta, Lithuania, Vietnam, Kenya, Ghana, etc. have seen growth in their local outsourcing industry driven largely due to domestic clients. With maturing service capability, vendors in these destinations are now looking towards graduating to international clients with the help of government incentives.

Apart from being low-cost destinations, tax incentives provided by the government will contribute towards attracting investments in BPO. On the flip side, some of these destinations have their own set of drawbacks including political and economic volatility, data security concerns and the problem of scalability due to the relatively limited manpower availability.

However, with growing saturation among the large offshore destinations and the buyers' need to diversify risk; we may witness greater growth towards smaller locations. While these smaller and less matured (in terms of offshoring) destinations are likely to find it difficult to become a ‘first choice’ destination for outsourcing, they can enter the industry by positioning themselves as complimentary outsourcing destinations.