Mumbai: While India, China and Southeast Asia continue to dominate A T Kearney's annual ranking of the most attractive locations for "offshoring" of service activities such as IT, business processes and call centres, the United States ranks surprisingly well in a new version of the index.

For 2005, the global management consulting firm added four lower-cost cities in the United States, United Kingdom, Germany and France to determine how they compare to more traditional offshore locations across the 40 measurements analysed to create the Global Services Location index (previously known as the Offshore Location Attractiveness index). The US, represented by San Antonio, ranked 11th out of the 40 countries evaluated.

Some highlights:

• India remains the best offshore location by a wide margin, although wage inflation and the emergence of lower-cost countries decreased its overall lead.
  
• Improved infrastructure and relevant people skills have increased the attractiveness of China as a low-cost option for servicing Asian markets.
  
• Thailand jumped from 13th to 6th in this year's index and Southeast Asian countries now make up four of the top six locations on the index.
  
• Offshore attractiveness in Europe continues to migrate eastward as Bulgaria, Slovakia and Romania all enter the index for the first time.
  
• The Middle East and Africa appear to be the next frontier in offshoring as countries such as Egypt, Jordan, United Arab Emirates and Ghana perform well.

India and China: still dominating:

• India still leads by a wide margin.
  
• The gap between India and the second-ranked country, China, is larger than the gap between the next nine countries combined.
  
• India's lead has shrunk slightly compared to 2004. This is mainly due to a slight reduction in India's financial attractiveness, the result of wage inflation in India and
  
• The emergence of new even lower-cost contenders such as Ghana and Vietnam.

China maintains its second place ranking and partially closes the gap with India, thanks largely to continued improvement in its infrastructure quality and the availability of relevant people skills. For example, the number of development centres in China with CMM or CMMI certifications (an industry standard for rating the process-quality of IT development centres) showed the largest increase of any country in the index, jumping from 108 in 2004 to more than 277 in 2005.

For a growing number of Asian and Western multinationals, China remains the best choice for serving their growing operations throughout the East Asia region - the logical location for IT and back-office support and call centres for China itself, but also a low-cost option for servicing established markets in Japan, Korea, Taiwan, Hong Kong and Singapore.

The 2005 Global Services Location index

Rank	Country
1	India
2	China
3	Malaysia
4	Philippines
5	Singapore
6	Thailand
7	Czech Republic
8	Chile
9	Canada
10	Brazil
11	U.S.*
12	Egypt
13	Indonesia
14	Jordan
15	Bulgaria
16	Slovakia
17	Mexico
18	Poland
19	Hungary
20	UAE
21	Costa Rica
22	Ghana
23	Argentina
24	Romania
25	Jamaica
26	Vietnam
27	Russia
28	U.K*
29	Australia
30	Tunisia
31	Germany*
32	South Africa
33	Israel
34	New Zealand
35	France*
36	Panama
37	Portugal
38	Spain
39	Ireland
40	Turkey

* Based on lower-cost locations in each country: San Antonio (US), Belfast (UK), Leipzig (Germany) and Marseilles (France).

The A T Kearney Global Services Location index analyses the top 40 services locations world-wide against 40 measurements in three major categories: cost, people skills and availability, and business environment.

The index assigns weightings reflecting the drivers of offshoring  decisions based on A.T. Kearney research and engagement experience. Because cost advantages have been the primary impetus behind offshoring, financial factors constitute 40 percent of the total index weight. People skills and availability and business environment each receive a 30 percent weighting.