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Geo-Political Risks & Business Climate of Nearshore & Offshore Call Centers

by King White, on Apr 6, 2023 8:00:00 AM

As companies continue to expand their call centers, shared service centers and back-office operations into nearshore and offshore locations, they must consider changing geo-political risks and business climate conditions — both critical factors to evaluate during the site selection process. These are fundamental criteria that can often eliminate locations early during the site selection process before you even begin to consider other criteria such as labor availability, labor cost, real estate and economic incentives. Site Selection Group monitors this data and has provided a summary of the latest 2023 geo-political risk data that we utilize during the site selection process.
 

Geo-political risks include corruption, terrorism, security and political stability

Companies typically have to make a significant capital investment of between $5,000 to $10,000 per workstation (construction, furniture, equipment, shared amenities, etc.) when expanding into new international geography which makes it critical to assess the risks of losing that investment. Their assessment should include evaluating geopolitical factors such as corruption, terrorism and political stability in addition to traditional labor factors. As a result, it is important to review unbiased independent ranking data, like that included in the below table, as well as conduct original market research when evaluating these factors. 

Identify the business climate factors specific to your project

You should consider business climate factors that are based on project type and your company profile. Some of the typical factors include labor laws and tax conditions while some of the more complex factors include data security and patent rights. It is critical to identify which factors are important to your project before embarking on the site selection process so you understand what data and information are needed to properly evaluate a location’s business climate.

Comparison of nearshore and offshore locations

The following table compares some of the hottest onshore, nearshore and offshore locations based on several critical geo-political risk factors that are often utilized when looking to open a new call center, shared-service center or related back-office operation.

Geo-Political Risk & Business Climate Comparison
City
Country
Terrorism Incidence
Perceived Level of Public Corruption
Political Stability & Absence of Violence / Terrorism
Safety & Security Index
Efficiency of Legal Framework
Sofia
Bulgaria
99.9
43
2.96
76.72
3.3
Bogotá
Colombia
85.6
39
1.59
37.23
3
San José
Costa Rica
100
54
3.37
77.15
3.7
Zagreb
Croatia
100
50
3.21
86.8
1.9
Prague
Czech Republic
99.8
56
3.46
90.74
3.5
Santo Domingo
Dominican Republic
99.9
32
2.64
61.66
3.3
Cairo
Egypt
41.6
30
1.48
43.56
3.9
Guatemala City
Guatemala
100
24
2.11
60.67
2.7
San Pedro Sula
Honduras
99.9
23
1.89
55.7
3.2
Budapest
Hungary
100
42
3.36
83.41
3.4
Mumbai
India
26.3
40
1.88
50.67
4.1
Kingston
Jamaica
99.9
44
2.72
60.64
3.6
Kuala Lumpur
Malaysia
99.3
47
2.64
71.64
5.1
Mexico City
Mexico
98.1
31
1.86
43.87
3
Managua
Nicaragua
99.9
19
2.03
62.03
2.3
Lagos
Nigeria
N/A
24
0.72
38.56
3.1
Panama City
Panama
100
36
2.79
76.82
3
Manila
Philippines
26.7
33
1.57
44
3
Kraków
Poland
99.9
55
3.01
88.37
3
Bucharest
Romania
100
46
3.03
84.15
3.9
Cape Town
South Africa
97
43
1.79
51.02
4.6
Tunis
Tunisia
97.7
40
1.8
58.9
3.7
 

 

Data Variable Definitions & Ranking Methodology

Terrorism Incidence

Assesses the frequency and severity of terror attacks. The scale ranges from 0 (highest incidence) to 100 (no incidence).

Perceived Level of Public Sector Corruption

From the Corruption Perceptions Index. The Corruption Perceptions Index measures the perceived levels of public sector corruption in countries and territories around the world. Countries are scored on a scale of 0 (highly corrupt) to 100 (very clean).

Political Stability and Absence of Violence/Terrorism

The likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism. Estimate gives the country’s score on the aggregate indicator ranging from 0 (more likely) to 5 (less likely). This metric was originally collected on a scale of -2.5 to +2.5. Data values are rounded to two decimal places. Not every metro has a value.

Safety & Security Index

The Safety & Security Index measures a country’s performance in three areas: national security, personal precariousness and personal safety. The index measures various safety and security factors within countries including; food availability, shelter availability, violence (war/murder), terrorism (violent/political), safety of property, road deaths and nighttime safety. The Safety & Security Index is a component pillar of the Legatum Prosperity Index. The scale ranges from 0 (worst performance) to 100 (best performance).

Efficiency of Legal Framework

The efficiency of the legal framework for private businesses in settling disputes (1= extremely inefficient; 7= highly efficient).

Data Source: Legatum Prosperity Index, Transparency International, World Bank Doing Business, World Economic Forum

Topics:Call CenterReal EstateSite Selection GroupSite SelectionNearshoreOffshoreShared Service CentersLabor AvailabilityLabor CostBusiness ClimateCrime RiskGeo-Political RiskTerrorism Risk

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