Viet Nam enters top 10 of global index

Wednesday, Sep 20, 2017 13:00

Viet Nam enters the top 10 of the 2017 Global Service Location Index for its growing popularity for business process outsourcing (BPO) centres. — Photo

Viet Nam rose five places to the sixth position in the A.T. Kearney’s 2017 Global Service Location Index (GSLI). This is the highest ranking for Viet Nam ever, which also for the first time, since 2003, entered the top 10 of the index.

The upward movement reflected the country’s growing popularity for business process outsourcing (BPO) centres. The country’s BPO industry reached US$2 billion in 2015, and has grown at a rate between 20 and 25 per cent annually in the past decade.

"This growth is, in part, due to the low cost of labour in Viet Nam, which is half of that in India and China’s tier 1 cities. Furthermore, a significant percentage of the predominantly young Vietnamese population is fluent in English," the study noted.

The study said that as Japan was the Vietnamese BPO industry’s primary client, continued growth in this area would depend, in part, on the strength of the Japanese economy.

Since 2016, Augen Software Group has opened a technology development centre to serve the enterprise clients in Viet Nam and other Southeast Asian countries. In addition to this, the Kiwi Technology Centre, described as a hub for New Zealand tech companies, investing and doing business in Viet Nam and ASEAN, opened a technology development centre.

The GSLI study, which was released on Tuesday, analyses and tracks the contours of the offshoring landscape in 55 countries, mainly in Asia, across three major categories: Financial attractiveness, people skills and availability, and business environment. The GSLI brings rigour to companies’ decisions about where to locate offshore operations, and sheds light on their complex and shifting choices, particularly in the BPO arena.

The eighth edition of the GSLI, titled ‘The Widening Impact of Automation’, chronicled the growing threat to BPO jobs in both the developed and developing economies — estimating that one million jobs are at risk in just four countries — and shed light on the gap this was creating with the rest of the global outsourcing market. The study’s findings revealed a far bigger change in global employment stability than the shifts in the rankings of the countries. In fact, the top-ranking countries have undergone a few changes in position, since the 2016 GSLI.

GSLI is the premier ranking on location amenability for companies looking to relocate functions such as financial services, accounting and customer service. This year’s study also takes a broader view of the likely implications of automation in several types of economies around the world.

"What’s new in this year’s findings is that we see the effects of automation hitting white-collar service profession jobs," said Johan Gott, A.T. Kearney principal and co-author of the study.

Johan said that the lower-cost nations have experienced tremendous increases in high-quality employment and transformational economic growth in recent years. Indeed, this has been a large part of their economic development strategy. However, automation is reversing the flow of countries, such as India and the Philippines, which have benefited from labour arbitrage.

“Our goal is to help companies make sound decisions about which pieces of the activity in the value chain should use automation and on retooling people towards higher-paid jobs," said Johan.

The GSLI study highlighted that India, China and Malaysia were once again the top-ranked offshoring destinations, with India pulling way ahead of all other countries. Meanwhile, Indonesia and Brazil have swapped rankings at the 4th and 5th position, respectively. — VNS

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