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The Financial Express

Bangladesh becomes 21st most attractive global offshoring destination

GSLI also rates it ninth best outsourcing hub in Asia


| Updated: October 24, 2017 14:18:57


B’desh becomes 21st most attractive global offshoring destination

Bangladesh becomes the twenty-first most attractive offshoring destination in the world and the ninth best-outsourcing hub in Asia as per a global rating of skilled services location.

Such grading of nations came in the latest edition of the Global Services Location Index done by global management-consulting-firm A. T. Kearney.

Bangladesh attained a total score of 5.37 in this year's GSL index, slightly up from the aggregate score of 5.31 it got in the same index last year-largely due the country's increased score in 'People skills and availability'.

Consequently, the country has also moved one notch up from the 22nd place it attained in last year's GSL index.

Now in its eighth edition, the Global Service Location Index is considered premier ranking of location amenability for companies looking to relocate functions such as financial services, accounting, and customer service.

Like its previous editions, the latest Global Services Location Index has analyzed and tracked the offshoring landscape in 55 countries across three major categories: financial attractiveness, people skills and availability, and business environment.

The main factor behind Bangladesh's impressive run in the GSLI, however, is its high score in the area of 'Financial Attractiveness', which takes into account average annual wages, compensation costs, average cost of infrastructure, relative tax burden, costs of corruption and exchange-rate movements.

When it comes to 'Financial Attractiveness, Bangladesh attained a score of 3.34, meaning that 62 per cent of Bangladesh's total score in the index can be attributed to this one parameter.

In fact, the country's score in terms of financial attractiveness is the fourth-highest among the 55 countries included in the index-as only three countries, including Sri Lanka, Egypt and Pakistan, achieved higher scores in this particular segment than Bangladesh's.

Notably, however, Bangladesh was in the second place in terms of financial attractiveness in the same index last year. This means that other countries are gradually catching up with Bangladesh in terms of cost-competitiveness.

It is also evident that when it comes to 'Business Environment', the country's score has decreased slightly from 0.87 to 0.80. This particular parameter in the GSLI is measured by economic and political risks, cultural adaptability, country infrastructure and security of intellectual property.

"The above scoring actually shows that we need to improve in all parameters including the business environment to reap the full benefit of global offshoring," said Ahmadul Hoq, former President of Bangladesh Association of Call Center and Outsourcing (BACCO).

Highlighting the prevailing red tape within the relevant ministries as a major hurdle for improving the country's business environment, he also called for forming a multi-ministry taskforce for better coordination among various government agencies.

Despite the country's relevant improvement in 'people and skills' score, industry outsiders, however, were not so complacent about the skill level of the country's workforce.

"Communication skills, for instance, is an area where we need to improve," Hoq said, adding, "Students need to be trained in such skills starting from the school level."

Asian countries which remain ahead of Bangladesh in this offshoring index include India, China, Malaysia, Indonesia, Vietnam, the Philippines, Thailand and Sri Lanka.

Pakistan, which was slightly ahead of Bangladesh in the same index two years before, now sits far behind Bangladesh at the 30th place.

Overall, this year's Global Service Location Index has extensively highlighted the widening impact of automation in the global offshoring arena.

"Developing nations have long enjoyed the economic benefits of other countries' offshoring. Now this model is in danger as technology takes over much of business process outsourcing," the report says.

"Automation now threatens hundreds of thousands of low-skilled and repetitive jobs in both developed and developing economies. As technology becomes increasingly mature and ubiquitous, jobs in the BPO arena will be particularly at risk," it added.

Asked about this global trend, industry-insiders, however, said automation is unlikely to dislodge Bangladesh's outsourcing boom for the time being.

"Automation is unlikely to have any impact on Bangladesh's offshoring industry within the next five years," Mr Ahmadul said. "Furthermore, tasks that involve dynamic processes or unstructured data are unlikely to be the domain of robotics in the near future," he added.

The former BACCO President also noted that within the next four years, around twenty thousand jobs from government sector and around twelve thousand jobs from the banking sector will need to be outsourced which offers huge untapped opportunity for the local BPO industry within the domestic arena.

India continued to lead this year's Global Service Location Index followed by China, Malaysia, Indonesia and Brazil. India, the report noted, 'offers depth and breadth of English-speaking skilled labour that no other low countries can match'.

"India's cost advantage against the United States is growing thanks to the strong US Dollar and the performance of Indian students on standardized tests is improving," it added.

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