India, China, and the United Kingdom have emerged as the top offshore service destinations, driving global market growth, according to the latest report by global management consultancy Kearney. The 12th edition of the Global Services Location Index (GSLI) analyzes the key factors that make countries attractive as potential locations for offshore business services.
In this year’s GSLI, India, China, and Malaysia maintained their leading positions, while Brazil and the United Kingdom rounded out the top five. While Asian countries continue to dominate due to their cost advantages, talent pool, and strong skills, the United Kingdom’s rise to fifth position is a significant milestone. It marks the first time a Western economy has entered the top five, highlighting its attractiveness as an offshore service destination.
With evolving technology and changing trends, businesses are increasingly delivering services such as information technology, business process outsourcing, and engineering across borders to lower costs, access a larger talent pool, and improve efficiency. The global market for business services has grown from US$624 billion in 2022 to US$681 billion in 2023 and is projected to expand at a compound annual growth rate of eight percent through 2027.
The GSLI ranks 78 countries based on 52 metrics across four dimensions: financial attractiveness, people skills and availability, business environment, and digital resonance. A key trend identified in this year’s GSLI is the importance of talent regeneration. As digital technologies advance, cost-centric service locations face the risk of losing their competitiveness to more technologically advanced countries. Talent regeneration, therefore, becomes crucial in maintaining a competitive edge.
The United Kingdom’s tech sector has become a $1 trillion economy, making it one of the strongest ecosystems in Europe. The government’s investment of £100 million in funding for the Foundation Model Taskforce, responsible for accelerating the country’s capabilities in emerging artificial intelligence, further boosts its talent regeneration potential. With the highest number of technology patents filed in emerging areas such as AI/ML, automation, blockchain, and robotics, the UK is at the forefront of technological advancements in the region.
Ramyani Basu, Partner of Digital Transformation at Kearney, emphasized the importance of labor force skills and digital outputs in a country’s performance. The UK’s climb in the rankings is attributed in part to its investment in digital training, government programs, and funding for businesses. Basu highlighted the need for countries to build a strong talent pipeline and supportive business environment to meet both current and future needs.
The 2023 GSLI evaluated countries based on corporate input, current remote service activity, and government initiatives to promote the sector. This year, the Index focused on digital resonance and talent regenerative capabilities, capturing the forward-looking aspect of countries’ offshore potential. The rankings were adjusted to reflect global trends and local disruptors, resulting in some notable changes.
In conclusion, India, China, and the UK have solidified their positions as top offshore service destinations, propelling global market growth. While Asia continues to dominate due to cost advantages and abundant talent, the UK’s rise highlights its appeal as a Western economic powerhouse. Talent regeneration will play a critical role in maintaining competitiveness amidst technological advancements. The UK’s investment in digital training and emerging technologies positions it well for future offshore service opportunities.
