Mexico rose by two places to 4th in the 2014 A.T. Kearney’s Global Services Location Index, while Brazil climbed four places to 8th in the ranking of the world’s most preeminent offshoring locations. India retained the number one spot while Chile is 13th in the index, which measures the offshoring potential in 51 countries based on cost, availability of skilled labor and business environment.
The report noted that several smaller U.S. cities have begun attracting a large number of outsourcing firms, but it also suggested that the outsourcing industry is heading for a “no location” future.
According to A.T. Kearney, physical location will lose relevance in the years ahead with automation playing a more important role and freelance outsourcers increasing in number.
“Over the past several decades, we’ve gone from a world where organizations that once had just one location now have dozens. In the future, however, as quick and easy deployment makes automation feasible for whole new categories of jobs, we may move to a world of ‘no location,” says Erik Peterson, co-author of the study.
The report says that automation, using robots to perform for even less than low-cost labor, is becoming increasingly accessible.
Paul Laudicina, A.T. Kearney’s chairman, also noted that technology’s relentless progress has continued to change “not only where work is moving to, but how it is done.”
Advancing Information Technology is contributing greatly to drastic changes in IT outsourcing sector. Some multinationals, who aggressively outsourced back-office operations in the mid-2000s, are now reassessing their outsourcing strategies.
The study found some functions being repatriated from vendors back to the use of companies’ own service centers and employees (captive centers).
“This is particularly true of IT, whose strategic importance has vastly increased over the past decade with the advance of digitization,” the report added.