There is more to location analysis than salary cost and labor pool — the two factors that are most often considered when evaluating a location. For one, analysis needs to be done at the city, not country level. Moreover, while one location may be ideal for a particular process, it may not be for all. This is definitely a case of one size not fitting all. Below is an overview of six such considerations that are key to selecting an offshore location.

Salary Costs Don’t Tell the Complete Picture

Most of us have seen salary comparisons for similar job positions across different countries. However, wage comparisons are just the start. There are many elements of cost, most of which vary between different locations — real estate and telecom costs being prime examples. A robust cost analysis of a location must include all operating costs of a center, and not just the salary costs. It should also factor in the impact of government incentives such as tax breaks and investment subsidies, which can have up to 10% impact on operating costs.

While direct salary costs account for between 44%-57% of loaded-operating costs, the remaining cost elements can account for more than 50% of costs (Exhibit 1).

A Complete Analysis of Maturity Is Critical

A complete assessment of the location’s capabilities, risks and current levels of outsourcing activity is important. There are multiple factors, ranging from location-specific factors like telecom infrastructure to customer-specific factors like language, which customers must consider.