BrazilThe world’s most attractive locations for global services
Though India, China, and Malaysia take the top positions in a list of the most desirable countries for business services due to offshoring, the United Kingdom, the United States, and several European countries were also listed in the top 25.
Most of the top countries for global services are in Asia, with India and China at the top of the list in 1st and 2nd. The United Kingdom saw a notable change, with a jump up from 8th place in 2021 to now land in 5th place. That is according to this year’s edition of the ‘Global Services Location Index’ from management consulting firm Kearney.
The global business services sector grew from around $568 billion in 2022 to reach $620 billion in 2023, and it is projected to grow at a compound rate of 8% every year to 2027. Offshoring business services is an important part of the business strategy of companies that seek to lower costs by taking advantage of the increasingly available (and competent) global talent pool.
Some of the main competitive edges for countries like India, China, and Malaysia are their significant cost advantage, huge talent pools, and strong skills. China is quickly becoming a leader in tech, with major Western companies like Apple using Chinese factories to manufacture their products.
India too has a booming tech scene, with the city of Bangalore being nicknamed the “Indian Silicon Valley” thanks to a strong software and semiconductor industry.
United Kingdom a leader in Europe
The UK remains the top business services leader in Europe, with a tech industry valued at £800 billion (around €972 billion), the largest in Europe.
“Digital skills of the labor force and digital outputs of business activity are increasingly becoming key differentiators of a country's performance. The UK's climb in the ranking is partly due to its heavy investment in digital training, newly announced government programs, and funding for businesses which have helped boost its talent regeneration potential,” said Ramyani Basu, partner at Kearney.
Significant investments were recently made into a taskforce designed to boost the country’s artificial intelligence capabilities. The UK is seeking to become a world leader in science and technology by 2030, with many top tier companies already employing around 3 million workers there.
Talent regeneration
The countries that are best able to quickly reskill and redeploy their talent pools will have better success in attracting companies seeking offshore business services, according to the report.
Talent regeneration refers to the systematic approach of nurturing and developing the skills, knowledge, and potential of employees within a workforce. This proactive strategy ensures a sustainable pipeline of skilled workers, fostering innovation, adaptability, and aims for long-term success.
The global labour market has seen major shifts in recent years with Covid-19, the war in Ukraine, and shifting macroeconomic dynamics seeing ‘global south’ countries soon rising to the level of the G7 nations.
These challenges undoubtedly make regenerating the talent supply chain more difficult and a successful strategy will need to be deliberate and comprehensive. For example, the public and private stakeholders will need to close the skills gap by offering training and expanding talent pools by tapping into the world of remote work and freelancers.
Additionally, countries should work to create favorable tax incentives for outsourcing and can look to enable English-language proficiency, as the Philippines and India have shown can give an enormous competitive edge.
“It's important that countries build a strong talent pipeline and solid business environment not just for today's needs but for those of our future generations. We're seeing a large shift in Asia's previous dominance and could see Europe and the Americas climb up the rankings in the next decade,” said Basu.
