US towns, Mexico challenge India's BPO dominance:

The trend, if it gathers pace in the coming months, has the potential to challenge India’s dominance in the global business process outsourcing (BPO) industry. While customers such as GE and Citi continue to send more IT work to offshore locations such as India, some customers and vendors are discovering that tier-II towns in the US, apart from cities in Mexico, are offering similar cost advantages apart from better proximity to customers. "For BPO services, US is still in the game," Phil J Fersht, research director at AMR Research told ET in an interview on Monday. According to research firm Everest, the global BPO industry will be worth around $220-280 billion by 2012, with India accounting for almost $50 billion of the opportunity.

Annual wages in Albuquerque, New Mexico for bilingual associate staff delivering business support services range from $20,000 to $35,000 per annum, which is almost on a par with costs in most locations in Latin America and only a small percentage greater than locations such as Philippines and India.

US cities of Kansas in Missouri and Tulsa in Oklahoma are among other destinations offering similar cost advantages apart from availability of skilled professionals for outsourcing of back-office work. "One can hire staff in low-cost US locations for a low as $25K a year for back-office administrative work and reduce that further, to $22K a year as a result of tax incentives," Mr Fersht added.
According to the US Department of Labor, the unemployment rate during December last year rose from around 6.8 to 7.2% with almost 2 million workers losing their job between September to December. US president Barack Obama has already announced that his administration would offer tax benefits to companies creating more local jobs.

"Since the start of the recession in December 2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points," the US Department of Labor said earlier this month. Fidelity, one of the biggest providers of human resource and payroll outsourcing to customers such as IBM, GM and ABB, established its nearshore centre in Albuquerque despite incremental costs of employee healthcare in order to mitigate risks of moving the work offshore, where attrition rates can run higher than 30%, and also keep the intimate BPO work closer to customers.