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Vietnam tops C&W global outsourcing location index

Released at: 15:33, 25/03/2015

Vietnam tops C&W global outsourcing location index

Cushman & Wakefield report ranks top outsourcing locations worldwide by assessing costs, risks and operating conditions.

by Thu Hoang

Vietnam has been revealed as the world’s top outsourcing location for the first time, according to new research from global real estate adviser Cushman & Wakefield (C&W). The comprehensive global report, entitled “Where in the World? Business Process Outsourcing (BPO) & Shared Service Location Index”, assesses factors likely to affect the successful operation of BPO functions around the world. 

Costs, risks and operating conditions are analyzed in the report to provide insights into which markets are particularly attractive in the current global environment.

With one of the highest growth rates in outsourcing, Vietnam has established a presence in the sector as an alternative destination for low-cost off-shoring services, rising from fifth place in the 2014 index. The government has put in place policies to promote the country as an outsourcing destination, with the services segment expected to expand rapidly.

“This report demonstrates the success that the Vietnamese Government has had in providing a stable business environment along with policies encouraged to raise the education and professional standards of its young and ambitious population,” said C&W’s Head of Research & Valuation in Vietnam, Mr. Jonathan Tizzard.

Vietnam is experiencing an influx of foreign direct investment (FDI), and when the flurry of free trade agreements are signed this year or next FDI is expected to increase. In addition, government legislation making it easier for foreign enterprises to invest and do business in Vietnam comes into effect in mid-2015, suggesting that Vietnam will continue to dominate headlines in the business press for the foreseeable future, according to Mr. Tizzard.

According to C&W’s Head of Occupier Services for APAC and EMEA, Mr. Richard Middleton, while not the cheapest outsourcing destination Vietnam is still very competitive when compared to other global locations and wage rises in India and China largely contributed to it surging up the ranking to take first place in 2015. “Despite rising costs and concerns that overheating will inevitably lead to further pressure surrounding access to skilled labor, India remains the world’s largest BPO destination by market size,” he added.

Rising one place on the 2014 index to take second position this year is the maturing Philippines BPO market, which has become an established pillar of the country’s economy. The market in fact hit a record $15 billion in revenue 2014, leapfrogging India in terms of growth and absorbing 70 per cent of India’s voice and call centre operations. The shift in power has in part been a result of spiraling Indian labor costs and climbing rates of attrition - which stand at 26.9 per cent, the highest globally - as rising wages have left companies continuing to compete for the best talent. 

While the global economic recovery has remained sluggish, much of the BPO sector is being driven by English-speaking industrialized nations, placing the Philippines aggressively ahead of many other BPO locations. The English dialect of the Filipino workforce is also well received within the US.

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