Alternative offshore locations emerge for 2008

The number of countries enterprise companies can offshore services to is growing, Gartner says, as the research firm predicts offshore spending to grow this year in both the United States and Europe.

Gartner recently released a list of some 30 countries it identified as suitable for offshore locations. The firm also forecasts spending on offshore services this year to increase by 60% in Europe and 40% in the United States, making the need for alternative locations more critical.

While India remains the "undisputed leader" in offshore services, Gartner says locations in China, Russia and Brazil are providing "credible alternatives." Others topping the list include Mexico, Ireland, South Africa, the Philippines, Ukraine and Vietnam.

"While these 30 countries demonstrated their suitability to develop or enhance their offshore service credentials, another 35 countries were considered," according to Ian Marriott, research vice president at Gartner, who said the latter 35 did not meet the criteria required to sustain offshoring.

Gartner used 10 criteria including language, labor pool, cost, and data and intellectual property security and privacy to assess countries worldwide and determined 30 that would be most suited to support offshore facilities. Other factors used to calculate offshore sustainability include government support, infrastructure, educational system, political and economic environment, cultural compatibility, and global and legal maturity.

"The aim of the study was not to rank each country, as every organization will have a different view of which factors are the most important for their needs, but rather help sourcing managers determine which locations are right for their organizations," Marriott said in a press release.

For instance, Canada topped the list of alternative locations among the Americas, meeting seven of the 10 criteria Gartner laid out. And as Spanish language skills grow in importance among U.S. companies, Latin American countries become an appealing target for offshoring, or nearshoring, Gartner says. 

Gartner's complete list of 30 countries by region is as follows:

• Americas: Argentina, Brazil, Canada, Chile, Costa Rica, Mexico and Uruguay;

• Asia/Pacific: Australia, China, India, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka and Vietnam;

• Europe, the Middle East and Africa (EMEA): the Czech Republic, Hungary, Ireland, Israel, Northern Ireland, Poland, Romania, Russia, Slovakia, South Africa, Spain, Turkey and Ukraine.