India remains the top destination for companies moving information technology (IT) services to lower-cost economies, but China, Russia and Brazil are catching up, a report released on Tuesday said.
Research firm Gartner also said offshore spending will grow 60 percent in Europe and 40 percent in the US next year in a boost to countries such as India that are dependent on Western economies for IT revenues.
"The analysis showed that India remains the undisputed leader in offshore services, but increasingly countries such as China, Russia and Brazil are providing credible alternatives," Gartner said in the report.
India, led by software firms such as Tata Consultancy, Infosys and Wipro, has leveraged on a vast engineering talent pool and labor costs that are a fifth of those in the West to build itself into the world's back-office.
Gartner used 10 criteria to rate potential locations for IT services, including language, government support, labor pool, infrastructure, educational system, cost and political and economic environment.
Cultural compatibility, global and legal maturity and the security and privacy of data and intellectual property were also factored in.
Although it is seen as India's greatest challenger in terms of its potential scale, China fared poorly for language skills, Gartner said.
China, India and Singapore all had strong government support for the promotion of their country as an offshore services location.
The political and economic environment remains a concern for many firms when moving work offshore, so Pakistan, the Philippines, Sri Lanka and Vietnam rated poorly, Gartner said.
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