The Philippines is now the world’s leader in business support functions such as shares services and business process outsourcing after effectively overtaking India in these categories last year, according to IBM’s Latest Global Locations Trend Annual Report released recently in New York.
The 20-page report, launched in October but was only made available online last month, said it was the first time that India was not in the leading position for these activities. India now ranks No. 2.
“The Philippines has taken over the lead in the global ranking from India, after having challenged the top position for several years,” the report said.
It said the Philippines offered a similarly attractive business environment for international businesssupport functions as India, but has not had the same labor cost increases as have occurred in various Indian “hot spots” in recent years.
The International Labor Organization, in its report titled “Offshoring and Working Conditions in Remote Work” released in Geneva in July this year, said the BPO industry may be broadly divided into “voice” services such as call/contact centers, and “back office” services, like finance and accounting, data processing and management, and human resource development. Call centers make up 70 percent of the BPO industry in the Philippines.
Trailing India were the United States, Poland, China, United Kingdom, Colombia, Costa Rica, Fiji, Ireland, South Africa, Sri Lanka, Hungary, Australia, Egypt, Chile, France, Canada, France, Singapore and Netherlands.
The report noted China’s continuing ascent as a services destination, and confirmed it should not be considered anymore “merely” the world’s factory.
Sri Lanka is another Asian country that has succeeded in positioning itself as an alternative to India, the report also said, while South Africa and Egypt confirmed their increased attractiveness for services investment. Also, various other countries have emerged as new preferred destinations, notably in Latin America whereCosta Rica and Colombia are now both among the world’s Top 10 recipient countries.
Finally, Fiji is remarkably highly ranked due to one single large services center.
Each October, IBM Global Business Services presents an annual report analyzing the latest global trends in location selection. The report is prepared by PLI-Global Location Strategies, a division of IBM Global BusinessServices that advises clients where to establish and operate their business functions around the world, and also helps economic development organizations with their strategies to attract and retain businesses and improve their business environment.
This year’s Global Location Trends report outlined the economic changes and their implications for the global economic landscape and the investment attraction and retention efforts of cities, regions, and countries.
These changes in corporate location strategies manifested themselves in more nuanced ways for different types of business functions, the report said.
Hence, investment in services activities (regional headquarters, shared services centers, business support functions) recovered in 2009, with more than 115,000 jobs created globally in these functions compared with just over 100,000 in 2008.
Accordingly, a central feature of the corporate restructuring currently taking place is the move toward greater use of the “Shared Services Center model” (where a particular function is concentrated in one place for use throughout the organization) for a wider range of activities, including higher value-added activities such as Human Resources and decision support functions.