Shake up for A/P delivery locations

Changing economics and market drivers are shaking up the market for global delivery locations within Asia/Pacific. As the focus shifts away from costs, the differentiation between cities is being reduced while competition for lucrative offshore spending is increasing. These shifts have conversely impacted different segments of the market, with formerly low-cost destinations becoming less desirable and higher cost skills-based propositions becoming more popular.

Results from IDC's Global Delivery Index- Asia/Pacific (GDI-AP) v2.0 indicate changes in the market for global delivery locations, with notable movements since 2007. Changes in scores are the result of a number of factors which are primarily linked to changes in economic circumstances -- either directly, or by way of changing buyer and investor behaviour.

Changes in several key criteria that have impacted the scores of cities profiled in the index include the following:

• Government support has changed for a number of locations over the last six months, driving initiatives on both a federal and local government level. Results indicate the greater the support, the better a location is positioned for global delivery.
• Labour costs are increasing across the board as early adopters and formerly low-cost locations are falling subject to diseconomies of scale, and appreciation of many currencies, in particular the rupee.

There has been a shake-up in the locations currently considered to be optimal for global delivery, with some notable movements. Dalian, Beijing, Auckland, and Kuala Lumpur most strongly reflect the changing dynamics, particularly in regard to changes in government support and the fallout from rising labour costs.

Len Rust is publisher of The Rust Report

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