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India tops A.T. Kearney's Global Services Location Index, extends lead over China

Livemint:  September 20, 2017

New Delhi: India has topped management consulting firm A.T. Kearney’s 2017 Global Services Location Index (GSLI) for the eighth consecutive year since its inception in 2004. This year, however, India has extended its lead over other countries, especially China which is ranked second. In 2016, India’s lead was already significant at 0.47; in 2017 this has increased to 0.76.

What works in India’s favour is English-speaking skilled labour that none of the other low-cost countries can match and an improved policy environment that adds to the country’s overall financial competitiveness.

“Its attractiveness as a global services destination continues to increase with its growing cost advantage against the United States, and the improving performance of Indian students on standardised tests. The combination of these factors continues to strengthen India’s position as the destination of choice for companies looking to outsource business processes,” said Ajay Gupta, Partner at A.T. Kearney India.

There are currently 200 multinational corporations operating in India and 1.1 million employees in Business Process Outsourcing (BPO). However, the sector faces challenges from automation. A.T. Kearney’s research showed that as many as 250,000 jobs in the BPO sector in India could be lost in the next five years due to automation. This represents nearly 22% of the workforce employed in the sector.

But India is not the only country facing this challenge. All major outsourcing centres such as The Philippines, United States and Poland face potential job losses in the future due to automation. The US is likely to be the worst hit with more than 700,000 jobs, representing 21% of workforce employed in the sector, likely to be made redundant in the next five years.

The index is based on metrics in three categories: financial attractiveness, people skills and availability, and business environment. According to the Index, Asian countries continue to dominate the Index with China and Malaysia staying on second and third spots, Indonesia rose one place to rank fourth, The Philippines held on to its seventh position while Thailand fell two places to eighth position.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.