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India, Canada, And China Are Top Outsourcing Destinations: Study

India's skilled labor pool and mature level of services helped the country provide $12 billion in outsourced IT services last year.
U.S businesses looking to place their technology operations offshore should give strongest consideration to India, Canada, or China, according to a report released Tuesday by outsourcing consulting firm neoIT.

Those countries garnered the top three positions in neoIT's ranking of 14 possible IT outsourcing destinations. India, which took the No. 1 spot, offers "cost competitiveness, a highly skilled labor pool ... and a high level of service maturity," the consulting firm says. The country is also tops in the world in IT services exports, with sales topping $12 billion last year.

NeoIT ranked Canada second, noting its "geographic proximity to the U.S." and its "skilled labor force." Canada's IT services exports last year totaled $8.2 billion. China, with its "low cost," "large pool of skilled labor," and "rapidly improving infrastructure," ranked third. In its report, however, neoIT cautions that China's attractiveness is "negatively affected by the lack of English-language proficiency" in the country. China exported $700 million in IT services last year.

NeoIT also looked at some up-and-coming offshoring destinations. Poland ranked fourth with its "low overall business operations cost" and "language and cultural connections with Western Europe." The sixth-ranked Czech Republic is "an emerging contender," neoIT says. Russia ranked seventh, as the consulting firm raised flags over the country's "unpredictable political and business climate.

Romania, Brazil, and South Africa are the least attractive among possible destinations for IT outsourcing, says neoIT, because of their lack of infrastructure and labor skills.