Australia among top offshore IT services countries in 2008: Gartner

Stan Beer
Friday, 12 December 2008 05:15

IT Industry - Strategy

On cost, the picture is somewhat different, with Vietnam rated "excellent" (the top score across all the countries analysed) and China, India, Pakistan, the Philippines and Thailand all "very good." The political and economic environment remains a concern for many companies when moving work to offshore locations; in this area Malaysia and Vietnam scored "fair," while Pakistan and Thailand were both rated "poor."

The link between lower risk and higher cost holds true: The higher-cost locations of Australia, New Zealand and Singapore all rated "excellent" in this category, and led the ratings in terms of cultural compatibility, global and legal maturity, and data and intellectual-property security and privacy.

During the last 12 months there has been significant activity in many countries to consolidate or grow their positions as leading locations for offshore services. “As a result of this, four countries have dropped out of the ‘Top 30’ and have been replaced by four that were just outside the ‘Top 30’ 12 months ago. This does not mean that the four ‘relegated’ countries have underperformed this year but the dynamic nature of the market has seen others making strong progress,” said Ian Marriott, research vice president at Gartner.

The four countries leaving the ‘Top 30’ this year were Northern Ireland, Sri Lanka, Turkey and Uruguay. The new entrants into the 30 leading countries for offshore services were Egypt, Morocco, Panama and Thailand. Strong interest in nearshore locations was a key factor; language skills, cultural compatibility, time zone and travel time were important considerations. As French speaking countries increase their proportion of work conducted offshore, they have been keen to find appropriate French language countries, and saw Morocco ‘step up’. The nearshore benefits of Egypt and Panama, and the cost consideration in Thailand were also important.

“Countries such as Mexico, Poland and Vietnam have continued to strengthen their position against leading alternatives, while others have forced their way into the ‘Top 30’. These countries will be seeking to take advantage of the opportunity created by the increased focus that many organisations now have on cost optimisation, as a result of the current economic crisis,” said Mr Marriott.
 
Although only seven countries from the Americas appeared in the final list of 30, these countries are becoming an attractive proposition for the largest buying market for offshore services – the US. Only Canada was rated "excellent" for language (with fluent English and French) but Latin American countries are able to leverage their Spanish-language skills increasingly in the US as more organisations now require Spanish language from their providers for communication with parts of their workforce that speak Spanish as a first language.

The final list of 30 countries included 13 from the Europe, Middle East and Africa (EMEA) region and for the first time saw two North African countries enter the leading countries. Locations such as Ireland, Israel and South Africa fared well for language skills, because of the quality and quantity of English-language speakers. However, other countries, such as Morocco, Romania, the Czech Republic, Poland and Hungary were also given credit for the availability of alternative languages that address the needs of an increasing number of continental European buyers.