A Snapshot View of Locations’ Changing Value Proposition| Sherpas in Blue Shirts

There has been a lot of market activity buzz in some offshore/nearshore regions in the last year. Declining local currency, strong sector-aligned growth, and niche offerings from certain locations (e.g., high-end knowledge services work and SI/consulting, cloud, and digital) have all contributed. Let’s take a quick look.

The changing cost proposition

Chile, Argentina, Mexico, Colombia, Brazil, and Ukraine witnessed a steady decline in local currency, making them attractive from offshore/nearshore delivery standpoint.

Exhibit 1: Countries that witnessed significant decline in local currency during 2014-2015

countries

This changing cost proposition enabled tier-1 and 2 locations in India, China, Mexico, and Costa Rica, to grow at a significant rate and thereby become “Star Performers” for various functions on Everest Group’s MAP Matrix™ 2015.

Function/sector-aligned growth

Costa Rica is witnessing surge in IT services along with its sweet spot for BPS and CC services.

Exhibit 2: Everest Group’s MAP Matrix™ 2015 – IT-ADM

mapmatrix

Singapore and Poland witnessed growth primarily on account of strong BFSI industry. The domestic / regional BFSI market remains strong (and continues to grow), hence, enabling the growth of back-office sector aligned to these services.

Exhibit 3: Everest Group’s MAP Matrix™ 2015 – Transaction-intensive BPS

transactionbps

Niche offerings

Despite relatively high operating costs, Singapore and Dublin managed to grow in terms of new setups and expansion of current setups. Niche offerings in these locations were one of the primary reasons for an upshift in market activity in these regions. For example:

  • Growth in Singapore was led by a push from the strong domestic BFSI industry
  • Growth in Dublin was driven by increasing leverage for high-end work in knowledge services (analytics), IT-ADM (SI/consulting, cloud, and mobility), and judgment-intensive business processes (primarily aligned with the BFSI industry.)

In the Everest Group’s Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions, we evaluate key shifts in the relative positioning of locations from their cost, talent, and risk profile attractiveness for various functions, e.g., Contact Center (English), Transaction BPS, Judgement-oriented BPS, IT-ADM, Bilingual (Spanish and English) and Multilingual (European languages) BPS. The report covers key shifts in the relative positioning of locations from their cost, talent, and risk profile attractiveness. The report also offers perspectives on the suitability of locations under various scenarios – with insights on key risks and rewards associated with each cluster of locations.

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