Neo Global Cities Abridged Version

8/8/2019 Neo Global Cities Abridged Version

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Global City Competitiveness Report 2009

Copyright 2009 Neo Advisory, All Rights Reserved Page 1


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INTRODUCTION

Despite the ongoing economic crisis, the outlook for outsourcingremains optimistic. Organizations continue to adopt outsourcing as abusiness strategy and an effective optimization and transformationlever to help them mitigate the current financial and competitivechallenges. As a consequence of increased adoption of outsourcing,the global sourcing landscape has been undergoing changes and manyglobal locations are evolving to serve specific needs of organizationsthat embark on their globalization journey or evolve as matureglobalizers.

Global sourcing is mainstream. While cost containment will continue to

be an important factor in the global sourcing decisions of organizations, other factors such as access to a global talent pool, newmarket entry, and geographic risk diversification have becomeincreasingly important. The cities covered in this report are by nomeans an exhaustive set of potential destinations. New destinationsare constantly emerging in the global marketplace. This reportattempts to provide its readers a view of the changing landscapeacross the more established as well as emerging destinations. Wehope this report will provide you with insights as you consider andevaluate options as part of your organizations location strategy.

This report analyzes a mix of established as well as emerging andnascent outsourcing destinations. The report covers over 60 citiesacross 29 countries. While traditional and preferred outsourcingdestinations have been the focus of attention for over a decade, thisreport provides a perspective of many other locations that possess astrong potential to emerge as successful global sourcing destinations infuture.

Key Topics Covered

Key insights and emerging themes on the global sourcing landscape

Detailed profiles of over 60 cities across Asia Pacific, Europe,Middle East, and Africa, and Central and Latin America

Key outsourcing services from each city

Current and future attractiveness of cities

Established, emerging, and nascent locations by outsourcingservice functions

Data on annual graduate pool, IT and BPO workforce for each city

Recommendations on location strategy and evaluation


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KEY INSIGHTS 04

METHODOLOGY 07

ASIA PACIFIC (APAC) REGIONAL ANALYSIS 13

EUROPE, MIDDLE EAST, AFRICA (EMEA) REGIONAL ANALYSIS 53

CENTRAL AND LATIN AMERICA REGIONAL ANALYSIS 83

CONCLUSION 118

TABLE OF CONTENTS


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Methodology & CoverageData for this report was collected using a combination of primary and secondary research. Neo Advisory contactedoutsourcing industry associations from various countries,software technology parks, investment agencies, as wellas service providers across 28 countries covered in thisreport.

The data gathered was qualitatively analyzed using NeoAdvisorys proprietary location assessment framework.Leveraging our experience on location assessmentengagements by working with our clients, the researchfocuses broadly on six categories that are critical to beanalyzed while choosing a location.

Location Factors Key Parameters

Financial Attractiveness Real estate rent, support cost, corporate tax rates, labor cost, HR cost, cost to start

business, tax incentives

Service Maturity Size of industry, presence of major IT & BPO companies, multilingual capability, keyservices, industry specific services and focus

Human Capital Size of workforce, university graduates output, attrition rate, scalability, sustainability,wage inflation

Infrastructure Number of ISPs, personnel computers, number of IT parks and SEZs, airline connectivity,road infrastructure

Risks Crime rate, financial risk, labor risk, infrastructure risk, geo-political and socials risk

Business Environment Government support and incentives, social environment, quality of living, bureaucracy,cost and time to set up business, cost of living

Table 1: Key Location Selection Factors


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Financial Attractiveness

Cost saving has been one of the traditional businessdrivers for globalization and continues to remain acritical decision criteria. Cost, broadly can be classifiedas personnel cost and operations cost. Personnel cost interms of wages, administration cost, related HR costaccounts for approximately 40-50 percent of the totalglobalization cost. Operations cost is also another criticalfactor to be considered while setting-up operations.Operations cost include office real estate rent,telecommunication cost, tax incentives, corporate tax,travel cost, cost of electricity, and cost to set-up abusiness.

Service Maturity

Service maturity typically gauges the relative capabilityof a location in the global sourcing landscape. Thepresence and type of services delivered by large IT andBPO companies is a leading indicator to gauge thematurity of a location. The market size of theoutsourcing industry, multi-lingual capability, establishedand emerging services, industry specific focus are fewfactors that help provide a holistic view of servicematurity of a location.

Human Capital

Global competitiveness is driving market growth acrossdomains, and as organizations expand, the need to focuson core or anchor service capabilities becomesincreasingly critical. Human capital is the most criticalsuccess factor to retain and grow core competence in theglobal services market. The availability of a well-educated, qualified labor pool, its scalability, andsustainability in a competitive environment are few keyparameters to be considered while evaluating this factor.While the above stated factors are specific to the currentlabor pool, a futuristic evaluation parameter to beconsidered would be the educational system thatsupplies appropriate quality labor force to meet theforecasted demand of the industry. Large numbers of fresh graduates lead to low wage inflation and highproductivity in the labor market in a particular location.

Numbers of university and technical graduates, attritionrates, size of IT & BPO workforce are some of the factorsto be considered.

Infrastructure

With demand for sourcing of services surging globally,there is a definite need for a well establishedinfrastructure adhering to global standards.Infrastructure would encompass physical infrastructurelike air, land, and sea connectivity and related supportsystem, industry infrastructure like development of technology parks, presence of Special Economic Zones(SEZs), and business infrastructure like availability of office space, telecommunication, and other related

business support systems.

Risk

A robust and pro-active risk monitoring system for globallocations is proving to be a key success factor forsustainable business operations. Risks such as labor risk,financial risk, security risk, geo-political risk, and socialrisk are the different types of risks to be cognizant of while setting up new business in low cost locations.

Business Environment

While a location could be financially attractive, andmature in terms of service capabilities with a sizeablelabor pool, a critical success factor for locations is thebusiness environment and the support system that it canprovide. Business culture, quality of life, governmentsupport, procedures, cost of living, and cost and time tocommence business in a particular location are keyaspects to be studied. Understanding the businessenvironment is a necessary step for organizations settingup a business operation within its own country or

outside.


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Coverage

The report covers 3 global regions: Asia Pacific (APAC), Europe, Middle East, and Africa (EMEA), and Central and LatinAmerica. Following is the coverage of countries under these three regions.

Figure 1: Country Coverage


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The following is the list of cities covered in this report under respective regions:

Global Cities Coverage

APAC EMEA CENTRAL & LATIN AMERICA

1. Bangalore2. Bangkok3. Beijing4. Cebu5. Chandigarh6. Chengdu7. Chennai8. Coimbatore9. Dalian

10. Davao11. Delhi (NCR)12. Hangzhou13. Hanoi14. Ho Chi Minh City15. Hyderabad16. Johor17. Klang Valley18. Kolkata19. Manila20. Mumbai

21. Penang22. Pune23. Shanghai24. Shenzhen25. Trivandrum26. Xian

1. Brno2. Bucharest3. Budapest4. Cairo5. Cape Town6. Casablanca7. Dubai8. Johannesburg9. Kiev

10. Krakw11. d 12. Minsk13. Moscow14. Nizhny Novgorod15. Novosibirsk16. Pozna 17. Prague18. Pretoria19. Sofia20. St. Petersburg

21. Warsaw

1. Bogot2. Buenos Aires3. Crdoba4. Guadalajara5. Guatemala City6. Kingston7. Managua8. Mexico City9. Monterrey

10. Montevideo11. San Jose12. San Salvador13. Santiago14. So Paulo

Table 2: City Coverage


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Contact Information

Global Headquarters

4000 Pimlico Drive, 114-108Pleasanton, CA 94588U.S.A.Tel. +1.415.462.0569Fax [email protected]

Asia/Pacific Headquarters

No. 16 & 16/1, 5th FloorPhoenix Towers, Museum RoadBangalore 560 025,IndiaTel. +91.80.4018 2000Fax +91.80.4018 [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

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Neo Global Cities Abridged Version