Asia-Pacific's thriving offshoring hubs: a snapshot of key players

India has long been a front-runner in the global offshoring industry, with cities like Bengaluru and Hyderabad emerging as prominent outsourcing hubs in the 1990s. However, with rising wages and operational costs exerting pressure on the Indian market, businesses increasingly seek alternative offshoring locations. Although India has honed its capabilities in advanced processes, the Asia-Pacific region's diverse economies provide companies with various options, enabling them to tailor their offshoring strategies to meet specific priorities.

In this section, we examine the unique strengths and advantages of four prominent offshoring destinations: India, the Philippines, Malaysia, and Vietnam.

The composite offers a high-level overview of the key factors that set each outsourcing and offshoring location apart during the preliminary stages of site selection. Organisations can delve into city-level indicators to further refine the decision-making process, as price pressures and investment incentives may vary within a country. Our next article explores the composite further.

Overall, businesses must take a more granular approach to make well-informed choices. According to Knight Frank's latest (Y)OUR SPACE survey, occupiers increasingly recognise the strategic importance of their real estate decisions, with the war for talent being a top driver of CRE strategies among Asia-Pacific respondents. Consequently, organisations must prioritise property-specific factors that enhance the workplace experience to attract and retain top talent.

Digital skills

There are close to five million software developers in India, positioning it as a global leader in software development workforce size, second only to China, according to Statista. While India may trail behind other countries regarding average workforce education, its competitive edge lies in the sheer scale of its resource base.

In an increasingly digital world, India’s ability to leverage digital technologies effectively is a critical success factor. India's vast labour pool, comprising professionals with strong science, technology, engineering, and math (STEM) backgrounds, aligns well with this requirement, reinforcing the country's position as a strategic offshoring destination for businesses seeking skilled talent in the technology sector.

Wage costs (offshoring-related)

While wage costs in the region remain competitive, it is essential to recognise the potential for increasing expenses as local economies continue to grow. In light of this, the scaleability and adaptability of a location's workforce become crucial factors in ensuring businesses can effectively manage costs while staying agile in response to evolving trends and technological advancements.

Prime office rent

Office rent constitutes a significant portion of operational expenses for most firms, often ranging from 10% to 15%, which can directly impact the feasibility of an outsourcing facility. Current market trends indicate that office rents in Indian cities will likely surpass those in Ho Chi Minh City (HCMC) within the next three years.

In HCMC, the establishment of an alternative business district in Thu Duc City is expected to increase the supply of office spaces, potentially leading to a decline in rents by over 20% by 2026. Similarly, Kuala Lumpur is anticipated to maintain its attractive rental rates, offering businesses a range of cost-effective options for their offshoring ventures.