New A.T. Kearney study positions Egypt, Jordan and UAE among top 20 'offshore' locations globally

Now in its fourth year of publication, A.T. Kearney's Global Services Location Index comprises more than 40 metrics comparing the financial attractiveness, people skills and business environment of 50 countries worldwide. The latest Index is based on full year data for the year 2006.

Highlights from this year's Index include:

•India and China continue to lead the Index by a wide margin, with declines in cost advantage offset by further improvements in talent supply and business environment.

•South East Asian countries reinforce their position as the primary alternates to India and China, with all six major ASEAN markets (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) now ranked among the top 20 locations.

•Reflecting new policy initiatives to promote service exports in many countries, Latin America performs well, with all five major contenders (Argentina, Brazil, Chile, Mexico and Uruguay) rising in the rankings.

•As projected in previous years, newer contenders in Central and Eastern Europe are increasingly outshining more established players, as Bulgaria, Slovakia and the Baltic States move ahead, while the Czech Republic, Hungary and Poland slip in the rankings.

•The Middle East and Africa continue to rise in visibility, with Egypt, Jordan, the United Arab Emirates, Tunisia, Ghana, South Africa, Israel and Turkey all maintaining or improving their position, while Mauritius, Morocco and Senegal debut in the rankings

•While most 'on-shore' or 'near-shore' locations in developed countries improved their absolute scores, almost all fell in the rankings, as emerging markets improved their people skills and environment scores at a faster rate.

The findings also send a message to policy-makers in both developed and developing countries: The key to maintaining and enhancing long-term competitiveness lies in skills development, infrastructure investment and the regulatory environment, not in attempts to control wages. Virtually every country in the Index, even those that fell in the rankings, improved their absolute score in the last year - confirming that competition is intensifying, and simply maintaining current performance levels is no longer sufficient to attract and retain the world's fast-growing remote services business.

Middle East and Africa: a growing cadre

Contrary to the perceived challenges in both regions, Middle Eastern and African countries are increasing their visibility as remote services locations. Egypt, Jordan and the United Arab Emirates maintain roughly the same positions in the top 20, reflecting the increasing number of US, European and Asian companies choosing these locations as centers for regional or global support activities.

The rise of Mauritius, Tunisia, Morocco and Senegal reflects growing interest in locations with the ability to serve francophone markets. Stronger business environments in Mauritius and Tunisia contend with lower costs and larger populations in Morocco and Senegal. Ghana maintains its position as a low-cost English language location in Africa, while South Africa, Israel and Turkey all see their rankings improve, largely as a result of improvements in the policy environment and infrastructure quality.

'For policy-makers, education and training are the key: investing to expand the quantity and quality of tertiary education, designing training and certification programs in collaboration with industry players, attracting skilled workers from outside the country, opening labor markets within the country - all will be key to ensure a supply of skilled labor that is responsive to ever-changing global needs,' said Robert Ziegler, Principal, A.T. Kearney, Dubai.

Implications for global location decisions

'The clear message from the 2006 Global Services Location Index is that short-term cost advantage should not be the primary driver of location decisions,' concluded Ziegler.

'Currency appreciation and demand growth in key locations will gradually erode their cost advantage. At the same time, continued improvements in infrastructure and policy-making in emerging markets will slowly erode the business-environment competitive advantage of developed countries. Companies are finding other advantages, including a time travel that that roughly straddels the Worlds three biggest economies - North America, Europe and Asia. With business booming in the Middle East, there is also more demand for Arabic speakers. The key differentiator in the future will be the talent base and future projections of skilled labor supply will be imperative for companies making long-term location decisions.'

The results of this year's Index are provided below.

About The 2007 Global Services Location Index
The A.T. Kearney Global Services Location Index analyzes the top 50 services locations worldwide against 41 measurements in three major categories: cost, people skills and availability, and business environment.

The Index assigns weightings reflecting the drivers of offshoring decisions based on A.T. Kearney research and engagement experience. Because cost advantages have been the primary impetus behind offshoring, financial factors constitute 40 percent of the total Index weight. People skills and availability and business environment each receive a 30 percent weighting.