India continues to be world’s most preferred destination for offshore outsourcing, a new study by Gartner Inc said.

The technology research firm, however, said attractive cost structures in the Philippines, Vietnam and Indonesia besides the rapid business growth in China were posing tough competition to the world’s second most populous country.

The study identified top 30 countries around the world for globally outsourced activities in 2010-11 and rated them on the basis of a few criteria.

The technology research and advisory firm analyzed these countries to assess their capabilities and potential as offshore locations as many organizations that choose to outsource services to lower-cost countries were daunted by the task of determining which country or countries best suited their requirement.

India scored well in all criteria and retained its position as the most successful global offshore locations, the study said.

Gartner study said though India’s cost-competitiveness is being challenged due to the rising rupee, this is being compensated by its strength in other areas.

“Clients continue to seek a portfolio of offshore countries and with India again experiencing increasing labor costs and attrition, this is creating opportunities for other offshore locations to target the services needs of more-mature Asian clients,” Gartner Research Vice-President Ian Marriott was quoted as saying in the report.

The world’s most populous country, China, improved its rating for political and economic environment to ‘very good’ from ‘good’ and for ‘cultural compatibility’ to ‘good’ from ‘fair’ largely due to its rising global political and economic leverage in the wake of the recent global economic crisis.

The study said China experienced a steady positive growth rate, spurred by a $583.9 billion stimulus package in 2009. The Shanghai 2010 World Expo has helped increase cultural awareness within China, which has helped the growth of the business in the country.

Ratings for the Philippines remained largely unchanged although Gartner's scores for global and legal maturity fell to ‘fair’ from ‘good’.

The research firm continues to see foreign companies being attracted to the Philippine's young, experienced labor pool specializing in contact centers and finance and accounting (F&A), business process outsourcing (BPO), complemented by its good language and cultural compatibility with western economies.

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