The emergence of a worldwide “network of digital hubs” is changing the way global corporations source their rapidly growing digital-services needs. These nodes of highly skilled digital practitioners are increasingly serving as “one-stop shops”—and proximity to them is becoming a crucial factor for companies seeking to keep up with ever-accelerating change, according to a report issued today by global consulting firm Kearney.
Kearney’s Global Services Location Index (GSLI), issued every two years, helps companies make key location decisions about where to locate offshore operations, and the Index sheds light on their complex and shifting choices through an analysis of more than 50 countries. The index is based on 47 metrics across four main categories: financial attractiveness, people skills and availability, business environment, and digital resonance.
For 2021, India and China held the top two spots, respectively, with Malaysia, Indonesia, and Brazil rounding out the top five. Vietnam, the United States, the United Kingdom, the Philippines, and Thailand also finished in the top 10.
The authors of the GSLI report have identified three major evolutions in service-delivery models over the past 30 years—offshoring, outsourcing, and no-shoring. Now, they conclude that a fourth wave, “digital resonance,” is top of mind for business leaders and decision-makers.
Accordingly, the 2021 Index introduces a digital resonance metric that scores countries based on the digital skills of the labor force, digital outputs, the amount of corporate activity, legal protections of intellectual property, and other elements of business activity.
“It would be a mistake to assume that the growth in demand for digital services is limited only to the realms of the telecom and high-tech industries,” noted Arjun Sethi, partner at Kearney and a co-author of the 2021 GSLI report. “Countries that invest in and accelerate their rate of digital adoption are laying the groundwork for future competitiveness on a global stage. Based on current trends and our discussions with business leaders, we expect to see digital resonance scores become more prominent in business decision-making in the coming years.”
When focusing solely on digital competitiveness, certain countries stand out as particularly advanced in their investments and infrastructure. The United States held the highest digital resonance score, followed by Sweden, the United Kingdom, Singapore, and Israel.
In examining a future where digital resonance continues to become more of a priority, we expect a number of countries could see success, including Singapore, Germany, Sweden, Netherlands, France, Canada, and Israel.
“This report should be a moment of reflection for countries such as India, Malaysia, Indonesia, the Philippines, and Vietnam. Traditionally they have placed highly in the GSLI, with financial attractiveness as their winning proposition,” added Vidisha Suman, partner at Kearney and co-author of the 2021 report. “Traditional heavyweights, in our analysis, are falling behind on digital resonance and should view our analysis as a call to action to reevaluate their digital investment strategies.”
About the 2021 GSLI and country ranking methodology
The 60 countries in the 2021 Global Services Location Index were selected based on corporate input, current remote services activity, and government initiatives to promote the sector. They were evaluated against 47 measurements across four major categories: financial attractiveness, people skills and availability, business environment, and digital resonance.
The metrics used to evaluate location attractiveness were determined from responses to Kearney surveys, other industry questionnaires, and knowledge obtained in client engagements over the past five years. The compensation costs component of the financial attractiveness category is based on data from the Mercer Global Pay Summary. The relative weights of each metric are based on their importance to the location decision, again derived from client experience and industry surveys. Because cost advantage is typically the primary driver behind location decisions, financial factors constitute 35 percent of the total weight in the published Index. People skills and availability and business environment each constitute 25 percent of the total weight, and digital resonance—the new category to the Index this year—comprises 15 percent.
To access the report, click here.
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