Offshoring: The 25 Most Dangerous Cities for Outsourcing in 2010

Karachi, Pakistan, Medellin, Colombia, and Juarez, Mexico will top The Black Book of Outsourcing's 2010 list of the most dangerous cities for offshoring when it's released later this month.

By Stephanie Overby
Thu, June 10, 2010

CIO — What a difference a year makes.

In a few days, the Black Book of Outsourcing will release its annual ranking of the most dangerous outsourcing spots around the globe, as perceived by outsourcing buyers and corporate development leaders. The research, which also recognizes the most reliable offshore outsourcing hot spots, is chock full of changes in the rankings.

Not surprisingly, Karachi, Pakistan, Medellin, Colombia, and Juarez, Mexico earned the dubious distinction of most dangerous outsourcing hubs this year, given the growing geopolitical issues, crime and corruption, the threat of terrorism, and currency fluctuations associated with those cities. (See page 3 for the full list of the 25 most dangerous cities for offshore outsourcing.)

But Bogota, Colombia—2009's most dangerous city for outsourcing—now sits somewhere in the middle of the 160 outsourcing destinations included in the survey. And five of the six Indian cities cited last year as risky bets now rank securely among the 25 safest. (See page 3 for the full list of the 25 safest cities for offshore outsourcing.)

The annual survey of offshore outsourcing location risk, conducted by the Datamonitor Group (formerly the Brown-Wilson Group), asked 3,100 corporate development leaders, including more than 400 outsourcing customers, to indicate their company's inclination to consider specific offshore locations for outsourcing (including IT outsourcing and BPO). The survey also asked respondents to rank those cities on various perceived threats and weaknesses, including geopolitical risk, terrorist threats, climate concerns, legal maturity, environmental waste and pollution, IT and telecom infrastructure security, and crime rates.

For Bogota, whose scores in the areas of local strife, corruption and organized crime, unstable currency, and unprotected infrastructure improved in 2010, the rise in the rankings may be the result of a targeted public relations effort.

"Bogota conducted a message-focused media campaign to separate itself as a safer city from the rest of Colombia and as a location with decreasing risk potential," explains Datamonitor Research Director Doug Brown, noting that the government commissioned reports from consultants, trumpeted improving crime statistics, and purchased advertising.

"[Looking at] actual statistics, Bogota has made some noted improvements in areas which threaten business operations, but it's difficult to say if this perception increase is the result of marketing or actual progress," Brown adds.

India's gains may be more reality-based. Terrorist attacks, infrastructure problems, monsoons, and American protectionism in 2008 may have created a more negative image of the sub-continent last year, says Brown, but positive experiences helped to improve corporate leaders' image of India's outsourcing hubs. Tier two cities Chennai and Pune rose the most of any locations in perceived safety in this year's survey.

"Clearly, Chennai and Pune made major strides at improving their local police organizations, positively affecting safety for vendor operations in those locations," says Datamonitor Research Director Scott Wilson. "Vendors have passed news of these improvements along to their clients while maintaining cost advantages."

Infrastructure stability in those two cities has also improved, with customers reporting fewer outages, Wilson adds.

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