By: The Rise of No-Location Jobs
More Choices Than Ever
The number of locations suitable for business services offshoring is greater than ever. For companies, that's welcome news, but it also increases the complexity of designing “the optimal footprint,” according to the A. T. Kearney report.
Top 10 Offshoring Countries
Rank, Country, Position Change: 1 India 0, 2 China 0, 3 Malaysia 0, 4 Mexico +2, 5 Indonesia 0, 6 Thailand +1, 7 Philippines +2, 8 Brazil +4, 9 Bulgaria +8, 10 Egypt -6
India Increases Its Lead
India maintained and even increased its lead as the top offshoring destination against second-ranked China. Asia continues to dominate, with six of its countries among the Global Services Location Index's top 10. The index ranked Bangladesh for the first time, at 26.
Mature Labor in Central Europe
Central Europe offers highly skilled workers at 50% of the cost of Western Europe, and that cost advantage increases in Southeast Europe. These cost advantages must be balanced, however, against a more mature industry and regulatory landscape.
Middle East, North Africa, and North America
The Middle East and North Africa benefit from a large pool of talent and from their proximity to Europe. North America offers attractive opportunities outside metropolitan areas.
Outsourcing Course Correction
Companies are repatriating some functions to companies' own service centers and employees, especially in IT, whose strategic importance has vastly increased with the advance of digitization this past decade.
Other Priorities Replace Cost-Effectiveness
“What was once a decision based primarily on cost-effectiveness has now started to incorporate other considerations, for example, whether the function is core to the business, and therefore needs to be brought back in-house, as well as external regulatory factors impacting business relationships, accountability, and the ability to protect intellectual property and customer privacy,” says Erik Peterson, director of A.T. Kearney's Global Business Policy Council think tank.
A No-Location Future
Greater automation and freelance outsourcers will make physical location less relevant. Whereas the last two decades have seen one-location outsourcing, now companies have dozens of locations. But that might succumb to location-less jobs, due to automation and other technologies.
No-Location Threatens Offshore Countries
Countries in low-value-add niches may see opportunities erode with the rise of no-location jobs, and will need a strategy to aggressively rise in the value chain and stay relevant.
