India still top for IT offshoring, but others catching up

India remains the top destination for companies moving information-technology services to lower-cost economies, but China, Russia and Brazil are catching up, said a report released Tuesday.

Research firm Gartner also said offshore spending will grow 60 percent in Europe and 40 percent in the US next year in a boost to countries such as India that are dependent on Western economies for IT revenues.

"The analysis showed that India remains the undisputed leader in offshore services, but increasingly countries such as China, Russia and Brazil are providing credible alternatives," Gartner said in the report.

India, led by software firms such as Tata Consultancy, Infosys and Wipro, has leveraged on a vast engineering talent pool and labour costs that are a fifth of those in the West to build itself into the world’s back-office.

Gartner used 10 criteria to rate potential locations for IT services, including language, government support, labour pool, infrastructure, educational system, cost and political and economic environment.

Cultural compatibility, global and legal maturity, and data and intellectual property security and privacy were also factored in.

"The aim of the study was not to rank each country, but rather help sourcing managers determine which locations are right for their organisations," Ian Marriott, research vice-president at Gartner, said in a statement here.

Thirty countries around the world made the cut as suitable IT offshoring locations.

Although seen as India’s greatest challenger in terms of its potential scale, China fared poorly for language skills, Gartner said.

China, India and Singapore all had strong government support for the promotion of their country as an offshore services location.

The political and economic environment remains a concern for many companies when moving work to offshore locations and so Pakistan, the Philippines, Sri Lanka and Vietnam rated poorly, Gartner said.

Bank of the South could be an ‘opportunity:’ IMF chief

The Bank of the South launched on Sunday by several South American countries is an alternative to the IMF and brings fresh opportunity to the region, IMF director general Dominique Strauss-Kahn said Tuesday.

"I can understand the political idea," behind the bank’s creation, said Strauss-Kahn, a French former finance and economy minister. "It’s not a problem, it’s maybe an opportunity," he said.

"There is no reason why another development bank couldn’t be useful," he added, stressing that the new bank’s activities are not exactly the same as the International Monetary Fund’s, since it will primarily deal with financing development projects.

The Bank of the South was the brainchild of Venezuelan President Hugo Chavez in his campaign against the United States and international financial institutions like the IMF and World Bank, which he claims are tools of Washington.

"It might be less efficient or more efficient, we will see," Strauss-Khan said of the new regional bank.

The IMF chief was in Buenos Aires for Monday’s inauguration of Argentine President Cristina Kirchner, with whom he met today, along with Argentina’s new Economy Minister Martin Lousteau.

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