MBA

MBA & E – Automotive Management

Longitudinal study of global location selection data with
focus on emerging countries

Winter Semester 2017 / 20178
Ankit Kumar
Matrikel Nummer: 5509885

Prof. Dr. Soeren Dressler
AbstractsThis study focuses on the location selection parameters which are important for outsourcing. This study is the part of research conducted by Prof. Dr. Soren Dressler and Prof. Sandra Dressler. In this study, location selection parameters for selected countries have been investigated again to see the changes occurred in them so far. The occurred changes have been analyzed in the context of global financial crisis, FDI inflow, change in world development indicators like unemployment rate, gross enrollment ratio, university enrollment rate, labor market efficiency. A benchmarking table has been formed based on location selection parameters. The result of benchmarking table shows that India and Egypt are the most attracting location for outsourcing.

Key Words
Outsourcing, Wages, Salaries, FDI, Unemployment rate
List of Table TOC h z c “Table” Table 1: List of countries from Asia with GDP growth rate PAGEREF _Toc514752542 h 5Table 2: Countries with GDP more than mean GDP PAGEREF _Toc514752543 h 5Table 3: KPI’S of selected countries of Asia PAGEREF _Toc514752544 h 6Table 4: Selected countries based on KPI rating PAGEREF _Toc514752545 h 6Table 5: List of Countries from Africa with GDP Growth rate PAGEREF _Toc514752546 h 6Table 6: Selected Country from Africa PAGEREF _Toc514752547 h 6Table 7: Countries with GDP more than mean GDP PAGEREF _Toc514752548 h 7Table 8: List of countries from Eastern Europe with GDP Growth rate PAGEREF _Toc514752549 h 7Table 9: KPI’S of selected countries of eastern Europe PAGEREF _Toc514752550 h 7Table 10: KPI rating PAGEREF _Toc514752551 h 8Table 11: Selected country from North America PAGEREF _Toc514752552 h 8Table 12: List of countries from North America with GDP growth rate PAGEREF _Toc514752553 h 8Table 13: Values of selected KPI’S of selected countries PAGEREF _Toc514752554 h 8Table 14: List of countries from South America with GDP growth rate PAGEREF _Toc514752555 h 8Table 15: Values of selected KPI’S of selected countries PAGEREF _Toc514752556 h 9Table 16: KPI rating PAGEREF _Toc514752557 h 9Table 17: Selected country from Western Europe PAGEREF _Toc514752558 h 9Table 18: List of Countries from Western Europe with GDP Growth rate PAGEREF _Toc514752559 h 9Table 19: Selected cities from China PAGEREF _Toc514752560 h 10Table 20: Selected cities from India PAGEREF _Toc514752561 h 10Table 21: Selected cities from Poland PAGEREF _Toc514752562 h 11Table 22: Selected city from Spain PAGEREF _Toc514752563 h 11Table 23:Selected cities from Chile, Costa Rica, Slovakia PAGEREF _Toc514752564 h 11Table 24:List of selected countries and cities PAGEREF _Toc514752565 h 12Table 25: List of designations along with the area of operation considered to determine labor cost PAGEREF _Toc514752566 h 13Table 26: Comparison of mean salaries in the year 2007 and 2018 PAGEREF _Toc514752567 h 23Table 27: Sector-wise distribution (%) of the workforce in Chile between 2006 and 2017 PAGEREF _Toc514752568 h 25Table 28: Growth in real minimum wages (in $) in Chile between 2006 and 2016 PAGEREF _Toc514752569 h 26Table 29: Labor market efficiency of Chile between 2007 and 2017 PAGEREF _Toc514752570 h 26Table 30: Sector-wise distribution (%) of the workforce in China between 2006 and 2017 PAGEREF _Toc514752571 h 26Table 31: Growth in real minimum wages (in RMB) in China between 2006 and 2016 PAGEREF _Toc514752572 h 27Table 32: Labor market efficiency of China between 2007 and 2017 PAGEREF _Toc514752573 h 27Table 33: Sector-wise distribution (%) of the workforce in Costa Rica between 2006 and 2017 PAGEREF _Toc514752574 h 27Table 34: Growth in real minimum wages (in $) in Costa Rica between 2006 and 2016 PAGEREF _Toc514752575 h 27Table 35: Labor market efficiency of Costa Rica between 2007 and 2017 PAGEREF _Toc514752576 h 28Table 36: Sector-wise distribution (%) of workforce in Egypt between 2006 and 2017 PAGEREF _Toc514752577 h 28Table 37: Average weekly wages in (L.E.P) in Egypt between 2006 and 2016 PAGEREF _Toc514752578 h 28Table 38: Labor market efficiency of Egypt between 2007 and 2017 PAGEREF _Toc514752579 h 28Table 39: Sector-wise distribution (%) of the workforce in India between 2006 and 2017 PAGEREF _Toc514752580 h 29Table 40:Sector-wise distribution (%) of workforce in Poland between 2006 and 2017 PAGEREF _Toc514752581 h 30Table 41:Growth in real minimum wages (in $) in Poland between 2006 and 2016 PAGEREF _Toc514752582 h 30Table 42:Labor Market Efficiency of Poland between 2007 and 2016 PAGEREF _Toc514752583 h 30Table 43: Sector-wise distribution (%) of workforce in Spain between 2006 and 2017 PAGEREF _Toc514752584 h 30Table 44: Growth in real minimum wages (in $) in Spain between 2006 and 2016 PAGEREF _Toc514752585 h 31Table 45: Labor Market Efficiency of Spain between 2007 and 2016 PAGEREF _Toc514752586 h 31Table 46: Sector-wise distribution (%) of workforce in Slovakia between 2006 and 2017 PAGEREF _Toc514752587 h 31Table 47: Growth in real minimum wages (in $) in Slovakia between 2006 and 2016 PAGEREF _Toc514752588 h 31Table 48: Labor Market Efficiency of Slovakia between 2007 and 2016 PAGEREF _Toc514752589 h 31Table 49: Sector-wise distribution (%) of the workforce in the USA between 2006 and 2017 PAGEREF _Toc514752590 h 32Table 50: Growth in real minimum wages (in $) in the USA between 2006 and 2016 PAGEREF _Toc514752591 h 32Table 51: Market efficiency of the USA between 2007 and 2017 PAGEREF _Toc514752592 h 32Table 52: Average Labor market size(total) and labor market size(%) of selected countries PAGEREF _Toc514752593 h 35Table 53: Average unemployment rate in selected countries PAGEREF _Toc514752594 h 43Table 54: Average Talent pool in selected countries PAGEREF _Toc514752595 h 51Table 55: Growth in rental and sell prices in selected cities PAGEREF _Toc514752596 h 58Table 56: Location selection parameters of countries PAGEREF _Toc514752597 h 75Table 57:KPI based on location parameters and result of the most attracting countries PAGEREF _Toc514752598 h 75
List of Figures TOC h z c “Figure” Figure 1:Main drivers of outsourcing PAGEREF _Toc514752599 h 3Figure 2: Mean Salaries(in USD) of Account and Finance in selected cities PAGEREF _Toc514752600 h 15Figure 3: Mean Salaries(In USD) for call centers in selected cities PAGEREF _Toc514752601 h 16Figure 4: Mean Salaries(In USD) of Customer Support in selected cities PAGEREF _Toc514752602 h 17Figure 5: Salary of Executive/Director(In USD) in selected cities PAGEREF _Toc514752603 h 18Figure 6: Mean Salaries (In USD) of Engineering and technology in selected cities PAGEREF _Toc514752604 h 19Figure 7: Mean Salaries (In USD) of Human resource in selected cities PAGEREF _Toc514752605 h 20Figure 8: Mean Salaries (In USD) of information technology in selected cities PAGEREF _Toc514752606 h 21Figure 9: Mean Salaries (In USD) of procurement and salaries in selected cities PAGEREF _Toc514752607 h 22Figure 10: Unemployment rate (%) trend of selected countries between 2006 and 2017 PAGEREF _Toc514752608 h 26Figure 11: Labor Market size(Total) of selected cities PAGEREF _Toc514752609 h 33Figure 12: Labor market size(%) of selected cities PAGEREF _Toc514752610 h 34Figure 13: Chile’s working population(15-64) and its % of total population PAGEREF _Toc514752611 h 35Figure 14: China’s working population(15-64) and its % of total population PAGEREF _Toc514752612 h 36Figure 15: Costa Rica’s working population(15-64) and its % of total population PAGEREF _Toc514752613 h 37Figure 16: Egypt’s working population(15-64) and its % of total population PAGEREF _Toc514752614 h 37Figure 17: India’s working population(15-64) and its % of total population PAGEREF _Toc514752615 h 38Figure 18: Poland’s working population(15-64) and its % of tota population PAGEREF _Toc514752616 h 39Figure 19: Slovakia’s working population(15-64) and its % of total population PAGEREF _Toc514752617 h 40Figure 20: Spain’s working population(15-64) and its % of total population PAGEREF _Toc514752618 h 40Figure 21: Spain’s working population(15-64) and its % of total population PAGEREF _Toc514752619 h 41Figure 22: Unemployment rate of selected countries PAGEREF _Toc514752620 h 42Figure 23: Chile ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752621 h 44Figure 24: China ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752622 h 44Figure 25: Costa Rica ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752623 h 45Figure 26: Egypts ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752624 h 46Figure 27: India ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752625 h 46Figure 28: Poland ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752626 h 47Figure 29: Spain ‘s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752627 h 48Figure 30: Slovakia’s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752628 h 49Figure 31: USA’s GDP vs Unemployment rate between 2006 and 2016 PAGEREF _Toc514752629 h 49Figure 32: Business Talent pool in selected countries and cities PAGEREF _Toc514752630 h 50Figure 33: GERTE for Chile, China, India, and Spain PAGEREF _Toc514752631 h 52Figure 34: GERTE for Costa Rica PAGEREF _Toc514752632 h 52Figure 35: Higher education enrollment in Egypt PAGEREF _Toc514752633 h 53Figure 36: University Enrollment in Poland PAGEREF _Toc514752634 h 54Figure 37: GERTE of Slovakia PAGEREF _Toc514752635 h 54Figure 38: University enrollment in the USA between 2006 and 2016 PAGEREF _Toc514752636 h 55Figure 39: Average office rent in the selcted cities PAGEREF _Toc514752637 h 56Figure 40: Average ofice sell prices in the selected cities PAGEREF _Toc514752638 h 57Figure 41: FDIRE and FDI in Chile between 2010 and 2016 PAGEREF _Toc514752639 h 59Figure 42: Historical interest rates in Chile PAGEREF _Toc514752640 h 60Figure 43: FDIRE and FDI in China between 2006 and 2016 PAGEREF _Toc514752641 h 60Figure 44: Historical interest rates in China PAGEREF _Toc514752642 h 61Figure 45: FDIRE and FDI in Costa Rica between 2006 and 2017 PAGEREF _Toc514752643 h 62Figure 46: Historical Interest rate in Costs Rica PAGEREF _Toc514752644 h 62Figure 47: Sector-wise FDI received by Egypt between 2003 and 2015 PAGEREF _Toc514752645 h 63Figure 48:Historical interest rate in Egypt PAGEREF _Toc514752646 h 63Figure 49: FDIRE and FDI in India between 2006-07 and 2016-17 PAGEREF _Toc514752647 h 64Figure 50: Historical Interest rates in India PAGEREF _Toc514752648 h 64Figure 51: Rental performance of prominent CBD in Indian cities between 2005 and 2014 PAGEREF _Toc514752649 h 65Figure 52: FDIRE and FDI in Poland between 2006 and 2016 PAGEREF _Toc514752650 h 66Figure 53: Rental performance of major Polis cities between 2002 and 2015 PAGEREF _Toc514752651 h 67Figure 54: Historical interest rates in Poland PAGEREF _Toc514752652 h 68Figure 55: FDIRE and FDI in Spain between 2006 and 2017 PAGEREF _Toc514752653 h 68Figure 56: Average house prices in Spain between 2004 and 2016 PAGEREF _Toc514752654 h 69Figure 57: Average annual historical interest rates in Spain PAGEREF _Toc514752655 h 69Figure 58:FDIRE and FDI in Slovakia between 2006 and 2015 PAGEREF _Toc514752656 h 70Figure 59: Office rental performance in Slovakia PAGEREF _Toc514752657 h 70Figure 60: Historical interest rates in slovakia PAGEREF _Toc514752658 h 71Figure 61: FDIRE and FDI in the USA between 2006 and 2016 PAGEREF _Toc514752659 h 71Figure 62: Historical interest rates in the USA PAGEREF _Toc514752660 h 72

Contents
TOC o “1-3″ h z u Abstracts PAGEREF _Toc514752783 h IList of Table PAGEREF _Toc514752784 h IIList of Figures PAGEREF _Toc514752785 h IVAbbreviations PAGEREF _Toc514752786 h VIIIIntroduction PAGEREF _Toc514752787 h 12. Literature review PAGEREF _Toc514752788 h 22.1 Business Process outsourcing- An overview PAGEREF _Toc514752789 h 22.2 Key Factors affecting outsourcing decision PAGEREF _Toc514752790 h 22.2.1 Cost Reduction PAGEREF _Toc514752791 h 22.2.2 Improvement in Core-Competency PAGEREF _Toc514752792 h 22.3 Impact of Outsourcing- from the different perspective PAGEREF _Toc514752793 h 32.3.1 Impact on Social Economic growth- from Developing country’s perspective PAGEREF _Toc514752794 h 32.3.2 Impact on productivity- from a company perspective PAGEREF _Toc514752795 h 42.3.3 Impact on skill development/Human resource development- Employees prospective PAGEREF _Toc514752796 h 42.4 Parameters to select the location for outsourcing PAGEREF _Toc514752797 h 42.5 Research Question- PAGEREF _Toc514752798 h 43. Location selection methodology PAGEREF _Toc514752799 h 53.1 Countries selection PAGEREF _Toc514752800 h 53.2 City selection PAGEREF _Toc514752801 h 103.2 Location selection parameters PAGEREF _Toc514752802 h 124. Labor cost and factors affecting labor cost- Country wise analysis PAGEREF _Toc514752803 h 154.1 Labor Cost PAGEREF _Toc514752804 h 154.2. Factor affecting wages – Country wise analysis PAGEREF _Toc514752805 h 235. Labor size and factor affecting labor size- Country wise analysis PAGEREF _Toc514752806 h 335.1 Labor Market PAGEREF _Toc514752807 h 335.1.1 Labor Size Total PAGEREF _Toc514752808 h 335.1.2 Labor Market Size (%) PAGEREF _Toc514752809 h 345.2 Factor affecting labor market Size – Country wise analysis PAGEREF _Toc514752810 h 355.3 Unemployment rate (%) PAGEREF _Toc514752811 h 425.4 Factor affecting Unemployment rate- Country wise analysis PAGEREF _Toc514752812 h 435.5. Talent Pool Business and factors affecting talent pool- Country wise analysis PAGEREF _Toc514752813 h 505.5.1 Talent Pool total PAGEREF _Toc514752814 h 505.6 Factor affecting talent pool- County wise analysis PAGEREF _Toc514752815 h 516. Infrastructure cost and factor affecting infrastructure cost-Country wise analysis PAGEREF _Toc514752816 h 566.1 Infrastructure Cost PAGEREF _Toc514752817 h 566.1.1 Average office rent per m2 (p.a) PAGEREF _Toc514752818 h 566.1.2 Average office Sell per m2 (p.a) PAGEREF _Toc514752819 h 576.2 Factor affecting infrastructure cost– Country wise analysis PAGEREF _Toc514752820 h 58Conclusion PAGEREF _Toc514752821 h 73References PAGEREF _Toc514752822 h 76
AbbreviationsBPO- Business Process Outsourcing
FDI- Foreign Direct Investment
FDIRE- Foreign Direct Investment in Real Estate
GDP- Gross domestic product
HDI- Human Development Index
ILO- International labor organization
IMF- International Monetary Fund 
KPI- Key Performance Indicators
OECD- Organization for Economic Co-operation and Development 
NASSCOM- National Association of Software and Services Companies
IT-BPM – Information technology- Business Process management
UNCTAD- United Nations Conference on Trade and Development
Introduction”The important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles.” (Azim Premji)
A country’s economy to grow, there is a need for capital, resources and the knowledge of technology and market. There are a lot of countries where they have abundant resources, but they lack because of capital and in some cases and the knowledge of technology. To turn on their vehicle of the economy they need capital and technological knowledge. In that case, they look for FDI (Foreign Direct Investment). FDI can be either in forms of Capital or technology transferCITATION OEC021 l 1033 (OECD, 2002)There is evidence that FDI can boost the economy of a country CITATION EBo991 l 1033 (E. Borenstzien, 1999).
However, there are several factors to be considered before actual FDI takes place. They are labour costs, infrastructure costs, talent availability, real estate costs. These factors vary from location to location and depend upon the economic condition of that location. While finalizing the location for investment, it is always better to compare several locations based on the above parameters. To do the comparison, a database which consists of all the labour costs, infrastructure costs, talent availability, real estate costs comes handy to speed up the process.
In the years 2004-2007, a database with location data had been created by Prof. Dr. Soeren Dressler and Dr. Sandra Dressler for 38 countries and around 100 different location with 120 decisive location-specific data elements per location.
This paper is an effort to visit some locations again and conduct the longitudinal study to measure the values again and see the effects of several relevant economic events like financial crises 2008, the effect of inflation and changes in several geopolitical situations of the locations mentioned in the data.

2. Literature review2.1 Business Process outsourcing- An overviewBusiness Process Outsourcing can be defined as contract-based transferring of services to third-party service provider and when the service providers are from different countries then it is called outsourcing or offshoring CITATION ALP05 l 1033 (ALPESH B. PATEL, 2005). Generally, companies outsource the services or functions which are labor intensive and does required to have the core-competent workforce for example call centers or logistics services, financial service, banking services, accounts payable and accounts receivable, customer support. The services or the functions that companies outsource can be broadly classified into two categories horizontal and vertical. Horizontal services cover a wide range of services and it is more common in back office process, for example, finance and accounting, Customer care, HR, R&D. Vertical services are specialized services and specific to industry for example financial services, insurance, healthcare CITATION ALP05 l 1033 (ALPESH B. PATEL, 2005).

2.2 Key Factors affecting outsourcing decisionThere are several factors that affect outsourcing decision (Figure 1) in a country. Most important factors that affect outsourcing decision is cost reduction and a need to focus on core operations to improve core-competency CITATION ALP05 l 1033 (ALPESH B. PATEL, 2005). Deloitte’s 2016 Global Outsourcing Survey reviled that 59% of their responders believe that outsourcing is a cost-cutting tool and 57% sees outsourcing enable them to focus on their core business CITATION Del16 l 1033 (Deloitte, 2016).

2.2.1 Cost ReductionThe main driver that makes cost reduction possible are the availability of low wages workforce, the economy of scale and continuous improvement in the process. The cost reduction can also be realized by the paying for the services, not for the setting up the infrastructure. For example, if a company set up a facility in their own country, it will be the fixed cost and that will have depreciation into it. But if they outsource service, it will be variable cost as they will not have to pay the setup cost. They will only for the service they use CITATION ALP05 l 1033 (ALPESH B. PATEL, 2005).
2.2.2 Improvement in Core-CompetencyTo hold ground in the competitive market and meet the standards like Six Sigma, Compatibility Maturity Model(CMM) companies needs to focus more on their core product. As outsourcing frees up management time as well as capital which can be invested to improve core competency CITATION ALP05 l 1033 (ALPESH B. PATEL, 2005).

Figure SEQ Figure * ARABIC 1:Main drivers of outsourcing Source: Aranca
2.3 Impact of Outsourcing- from the different perspective2.3.1 Impact on Social Economic growth- from Developing country’s perspectiveFrom the very inception of Outsourcing, there has been a widespread academically and political debate on the impact of outsourcing on the economy of developing countries and developed country who outsource. The impact of outsourcing can be seen from two perspectives, from the developed country and the developing country. Although there is considerable disagreement about the benefits and cost saving for developed countries, there seems to be an agreement that outsourcing has a positive impact on developing countries CITATION Lui07 l 1033 (Majluf, 2007). A study conducted by Wang Tingting shows that the Outsourcing is positively related to productivity, trade, employment and innovation in China CITATION Wan14 l 1033 (Tingting, 2014). Outsourcing has a major role in employment creation in developing countries and alleviating the large population from the poverty. Since 1980, China has managed to pull out 680 million people from extreme-poverty because of outsourcing CITATION Mar14 l 1033 (Gunther, 2014). National Association of Software and Services Companies (NASSCOM) has estimated that Indian IT-BPM sector (Business process management) will have CAGR of 17% with respect to 2001. It is expected that IT-BPM sector will have revenue of 350bn USD in 2025 and that will create 650,0000-700,0000 direct employment CITATION NAS17 l 1033 (NASSCOM, 17). According to a report publish by UNCTAD (United nation conference of trade and development) service sector accounts 60% of world output and 44% of world employment CITATION UNC13 l 1033 (secretariat, 2013). These numbers prove that outsourcing has a huge potential to improve the socio-economic condition of developing country.

2.3.2 Impact on productivity- from a company perspectiveOutsourcing can have a positive effect on the productivity of the companies who outsourced the service. As companies outsource their non-core activities to specialized service providers, it helps them to improve their productivity. Evidence from Irish manufacturing firm suggests that in outsourcing of non-core activities can enhance the firm’s productivity CITATION McC08 l 1033 (McCann, 2008).

2.3.3 Impact on skill development/Human resource development- Employees prospectiveOutsourcing provides an opportunity to the workforce of developing country to enhance their skill set. To be competitive developing countries focus more on learning new skills that are required/may require. Research evidence says that FDI has a significant impact on HDI (Human Development Index) in Nigeria CITATION Kor18 l 1033 (Korhan K. Gökmeno?lu, 2018)
2.4 Parameters to select the locations for outsourcingWhile selecting a country or city for outsourcing there are several parameters that should be considered. They are cost, talent pool, Culture and language, technology infrastructure, geopolitical risks production and legal maturity CITATION Sha10 l 1033 (Malhotra, 2010). Cost included labor cost, infrastructure cost and talent pool include labor market size, workforce suitable for the type of services to be outsourced. Values of these parameters vary with location and are affected by economic events like the financial crisis, change in geopolitical scenario, changes in worlds development indicators like FDI inflow, change in labor market efficiency and some local situation like Spanish real estate bubble, Arab spring. Therefore, below research question can be raised
2.5 Research Question-Research question of this paper is –
1. What are the current values of location selection parameters labor cost, infrastructure cost, labor market size, availability of talent pool?
2. what are the factors that affect location selection parameters in specific.

3. Location selection methodology3.1 Countries selection
For selecting the countries, average GDP rate is the primary criteria. List of countries has been taken from the existing database and segregated based the continents. After that, the average GDP of each continent has been calculated and the countries whose GDP is either equal or more than average has been selected. After that other KPIs like Forecast GDP, Ease of Doing Business IndexCITATION Doe13 l 1033 (Jayasuriya, JANUARY 2011), Corruption Perception Index CITATION Sha16 l 1033 (Hossain, 2016), Combined credit rating from Moody’s, Fitch and S&P CITATION Pei16 l 1033 (Peilin Cai, February 2016), Corporate income tax rateCITATION OEC08 l 1033 (OECD, 2008), IP Security Index CITATION Dav06 l 1033 (Hindman, 2006), Global Innovation Index, and Exchange rate CITATION Gol06 l 1033 (Goldberg, 2006). Then based on these KPIs, a score (1 for poor and 4 for best) has been given and then the corresponding ranking. After selection of the countries, cities selection has taken place. Based on the above-discussed criteria below countries have been selected. Below is the explanation of selection process of countries from the existing database.

Asia
Table SEQ Table * ARABIC 1: List of countries from Asia with GDP growth rateCountry GDP Growth rate (%)
China 6.7
India 7.1
Iran -1.5
Malaysia 4.2
Philippines 6.9
Singapore 2
Thailand 3.2
Vietnam 6.2
Average 4.35
Table SEQ Table * ARABIC 2: Countries with GDP more than mean GDPCountry GDP Growth rate (%)
China 6.7
India 7.1
Philippines 6.9
Vietnam 6.2
343852510731500
Table SEQ Table * ARABIC 3: KPI’S of selected countries of AsiaCountry Forecasted GDP Ease of doing business index Corruption index Credit Ratings Average Credit Ratings
(S;P + Moody’s + Fitch)/3 Corporate Income Tax rate IP security index Innovation index
S&P Moody’s Fitch China 5.90% 78 40 AA- A1 A+ 81.67 25% 5.712 52.54
India 7.90% 130 40 BBB- Baa3 BBB- 55 34.60% 5.564 35.47
Philippines 7% 99 35 BBB Baa2 BBB- 58.33 30% 5.331 32.48
Vietnam 6.20% 82 33 BB- B1 BB- 38.33 20% 4.93 NA
Table SEQ Table * ARABIC 4: Selected countries based on KPI ratingCountry Forecasted GDP Ease of doing business index Corruption Perception index(Score) Credit rating Corporate Income Tax rate IP security index Innovation index Average Ranking
China 1 4 4 4 3 4 4 3.42
India 4 1 4 2 1 3 3 2.57
Philippines 3 2 3 3 2 2 2 2.42
Vietnam 2 3 3 1 4 1 2.33
Africa
2625090551815Table SEQ Table * ARABIC 5: List of Countries from Africa with GDP Growth rateCountry GDP Growth rate (%)
Egypt 2.2
Table SEQ Table * ARABIC 6: Selected Country from AfricaCountry   GDP Growth rate
Africa Egypt 2.2
Morocco 1.1
Tunisia 1.2
Average GDP 1.5

Eastern Europe
Table SEQ Table * ARABIC 7: Countries with GDP more than mean GDP297751513595350Table SEQ Table * ARABIC 8: List of countries from Eastern Europe with GDP Growth rateContinent Country GDP Growth rate
Eastern Europe Bulgaria 3.4
Czech Republic 2.4
Estonia 1.6
Hungary 2
Latvia 2
Lithuania 2.3
Moldova 4.1
Poland 2.7
Romania 4.8
Russia -0.2
Slovakia 3.3
Slovenia 2.5
Ukraine 2.3
Average GDP Growth Rate 2.553
Country GDP Growth rate
Bulgaria 3.4
Moldova 4.1
Poland 2.7
Romania 4.8
Slovakia 3.3
Table SEQ Table * ARABIC 9: KPI’S of selected countries of eastern EuropeCountry Forecasted GDP Ease of doing business index Corruption Perception index(Score) S&P Moody’s Fitch Credit Rating Corporate Income Tax rate IP security index Innovation index
Bulgaria 2.5 39 41 BB+ Baa2 BBB- 55 10% 4.81 42.84
Moldova 3.8 44 30   B3   25 12% 3.18 36.84
Poland 2.9 24 62 BBB+ A2 A- 70 19% 6.25 41.99
Romania 3.3 36 48 BBB- Baa3 BBB- 55 16% 5.04 39.16
Slovakia 3.5 33 51 A+ A2 A+ 78.33333 21% 6.40 43.43
Country Forecasted GDP Ease of doing business index Corruption Perception index(Score) Credit rating Corporate Income Tax rate IP security index Innovation index Average Ranking
Bulgaria 1 2 3 3 5 2 7 3.29
Moldova 5 1 2 2 4 1 1 2.29
Poland 2 5 5 4 2 4 7 4.14
Romania 3 3 4 3 3 3 4 3.29
Slovakia 4 4 1 5 1 5 8 4
Table SEQ Table * ARABIC 10: KPI ratingNorth America
Table SEQ Table * ARABIC 11: Selected country from North America281559055753100Table SEQ Table * ARABIC 12: List of countries from North America with GDP growth rateContinent  Country GDP Growth rate
North America Canada 1.5
USA 1.6
Average GDP Growth Rate 1.55
 Country GDP Growth rate
USA 1.6
Country GDP Growth rate
Chile 1.6
Colombia 2
Costa Rica 4.3
El Salvador 2.4
Guatemala 3.1
Mexico 2.3
South America
Table SEQ Table * ARABIC 13: Values of selected KPI’S of selected countries3310890119126000Table SEQ Table * ARABIC 14: List of countries from South America with GDP growth rateContinents Country GDP Growth rate
South and Central America Argentina -2.3
Brazil -3.6
Chile 1.6
Colombia 2
Costa Rica 4.3
El Salvador 2.4
Guatemala 3.1
Mexico 2.3
Average GDP Growth Rate 1.225
Table SEQ Table * ARABIC 15: Values of selected KPI’S of selected countriesCountry Forecasted GDP Ease of doing business index Corruption Perception index(Score) S;P Moody’s Fitch Credit Rating Corporate Income Tax rate IP security index Innovation index
Chile 2.9 57 66 A+ Aa3 A 80 25.50% 6.93 38.7
Colombia 3.6 53 37 BBB Baa2 BBB 60 34% 5.36 34.78
Costa Rica 3.9 62 58 BB- Ba2 BB 41.67 30% 6.06 37.09
El Salvador 2 95 36 CC Caa1 CCC 16.67 30% 4.95 26.68
Guatemala 3.9 88 28 BB Ba1 BB 46.67 25% 5.08 27.9
Mexico 2.7 47 30 BBB+ A3 BBB+ 66.67 30% 5.19 35.79
Table SEQ Table * ARABIC 16: KPI ratingCountry Forecasted GDP Ease of doing business index Corruption Perception index(Score) Credit Rating Corporate Income Tax rate IP security index Innovation index Average
Chile 4 4 6 6 5 6 6 5.29
Colombia 5 5 4 4 2 4 3 3.86
Costa Rica 6 3 5 2 3 5 5 4.14
El Salvador 2 1 3 1 3 1 1 1.71
Guatemala 6 2 1 3 6 2 2 3.14
Mexico 3 6 2 5 3 3 4 3.71
260985010058400Western Europe
Table SEQ Table * ARABIC 17: Selected country from Western EuropeTable SEQ Table * ARABIC 18: List of Countries from Western Europe with GDP Growth rateCountry GDP Growth rate
Spain 3.2
Country Country GDP Growth rate
West and Central Europe Germany 1.9
Portugal 1.4
Spain 3.2
United Kingdom 1.8
Average GDP Growth Rate 2.075
3.2 City selectionTo select the cities from the above list of countries two criteria have been used. First criteria are the GDP of the city itself and the commercial Attractiveness Index(CAI) by JLL CITATION JLL17 l 1033 (JLL, 2017) a fortune 500 company which provides the service in investment management and real estate. Based on the value; a ranking has been provided and the best city has been selected.

Table SEQ Table * ARABIC 19: Selected cities from ChinaCountry City GDP (In B) CAI
China Beijing $375 9
Shanghai $414 6
Shenzhen $284 39
Chengdu 163.70 72
Dalian $119.76 161
Xian $94.22 125
City GDP Ranking CAI Ranking Average
Beijing 5 5 5
Shanghai 6 6 6
Shenzhen 5 4 4.5
Chengdu 3 3 3
Dalian 2 1 1.5
Xian 1 2 1.5
Table SEQ Table * ARABIC 20: Selected cities from IndiaCountry City GDP (In B) CAI
India Pune $69 155
Bangalore $110 69
Chennai $78.6 79
Hyderabad $75.2 109
Kolkata $150.1 90
Jaipur $24  
New Delhi $293.6 26
Mumbai $310 24
City GDP Ranking CAI Ranking Average
Pune 2 2 2
Bangalore 5 6 5.5
Chennai 4 5 4.5
Hyderabad 3 3 3
Kolkata 6 4 5
Jaipur 1 1 1
New Delhi 7 7 7
Mumbai 8 8 8
Table SEQ Table * ARABIC 21: Selected cities from PolandCountry City GDP (In B) CAI
Poland Katowice $197 Warsaw $295 89
Breslaw $154 290
Krakow $155 233
City GDP Ranking CAI Ranking Average
Katowice 3 1 2
Warsaw 4 4 4
Wroclaw 1 3 2
Krakow 2 2 2
Table SEQ Table * ARABIC 22: Selected city from SpainCountry City GDP (In B$) CAI
Spain Barcelona $35.80 49
Madrid $281.71 29
City GDP Ranking CAI Ranking Average
Barcelona 1 1 1
Madrid 2 2 2

Table 23: Selected city from Egypt
Country City GDP (In B) CAI
Egypt Cairo $336.3 54
Alexandria 276
City GDP Ranking CAI Ranking Average
Cairo 2 2 2
Alexandria 1 1 1
Table 24: Selected cities from USA
Country City GDP (In B) CAI
USA Orlando $126,797 86
Minneapolis
$248,779 52
Kansas City $125,618 138
City GDP Ranking CAI Ranking Average
Orlando 2 2 2
Minneapolis 3 3 3
Kansas City 1 1 1
Table SEQ Table * ARABIC 23:Selected cities from Chile, Costa Rica, SlovakiaCountry City
Chile Santiago de Chile
Costa Rica San Jose
Slovakia Bratislava
Table SEQ Table * ARABIC 24:List of selected countries and citiesContinent Country City 1 City 2 City 3 City 3
Asia China Beijing Shanghai Shenzhen India New Delhi Mumbai Bangalore Kolkata
Africa Egypt Cairo     Eastern Europe Poland Warsaw   Slovakia Bratislava     North America USA Orlando  Minneapolis   South America Chile Santiago de Chile     Costa Rica San Jose     Western Europe Spain Madrid     3.2 Location selection parametersBelow parameters has been selected for this research.

Main Parameter Sub-Parameter
Financial Labor Cost
People Size of labor market
Talent Pool- Business
Infrastructure Real Estate Cost
Labor Cost
For labor cost, below designations (Table 26) has been considered and has been segregated in to areas they belong to, like Customer care(CC), E&T (Engineering and Technology), A&F (Account and Finance), Human resource(HR), Information Technology(IT), P&L (Procurement and logistics), CS (Customer Support). To find out the labor cost various website like Salary Expert, Glass-door, LinkedIn, Hays, Michael-Pages has been taken and below model has been used to find out the final value.

Source 1
Min Max 40% of Min + 60% of Max
Source 2
Min Max 40% of Min + 60% of Max
Final Value of wages = 60% of Max (Final Value Source 1, Source 2) + 40% of Min (Final Value Source1, Source2)
Table SEQ Table * ARABIC 25: List of designations along with the area of operation considered to determine labor costDesignation Designation Type Area of Operation
Executives/Directors E Direction
Call Center Manager M Call Center
Call Center Supervisor S Call Center Operator/Agent/Telemarketer A Engineering and Technical Manager M E&T
Engineer S Technician A Accounts/Finance Manager M A&F
Financial Analyst S Accounts Clerk A Human Resources Manager M HR
Human Resources Specialist S Human Resources Clerk A IT/Project Manager M IT
IT/Database/Network Administrator S Assistant/Software Engineer S Programmer/Developer S Helpdesk Analyst A Procurement/Logistics Manager M P&L
Procurement/Logistics Coordinator S Procurement/Shipping Assistant A Customer Support Manager M CS
Market Researcher S Customer Service Assistant A Infrastructure Cost
To find out rental cost data and vacancy rate, market office reports from real estate agencies like CBRE, Cushman & Wakefield, JLL, Colliers, Knight Frank has been used. They provide the rental information of areas along with their category they belong to like downtown, City and Metropolitan. To find out sale prices local real estate websites have been used. To determine the final value for rental and sales price below model has been used.

Final rental/Sales Price = (Source1 + Source 2 + Source 3) / 3
Size of Labor Market
To determine the size of the labor market, the population of age group 15-64 years, of selected cities has been determined from the national statistics websites.

Talent Pool Business
To determine the talent pool business, at first all the number of university graduates has been determined using below methods
For some cities, statistics office publishes the number of university graduates in a specific year, for example, Orlando, Bratislava, Krakow, Beijing, Shanghai, Shenzhen, San Jose.

For some cities, the ministry of education publishes annual report/survey which provides information about the number of university graduates, for example, New-Delhi, Mumbai, Kolkata, Bangalore, Cairo, and Madrid, Santiago.

For Minneapolis, total population which has either bachelor or better education has been determined from the census bureau.

After that it has been considered that 30% of total number of university graduates are business graduates.

4. Labor cost and factors affecting labor cost- Country wise analysis4.1 Labor CostTo analyze the changes in salaries, mean salary has been considered. To determine mean salary, average of all salary that belongs to same designation area (Table 25) has been calculated. For example, to determine mean salary of Account and finance, average salary of Account/finance manager, Financial Analyst, and Account clerk has been used.

Account and Finance

Figure SEQ Figure * ARABIC 2: Mean Salaries (in USD) of Account and Finance in selected citiesInsights:
In the year 2018, Minneapolis, Orlando, Madrid, Beijing, and Shanghai have the highest mean salary for account and finance.

The highest growth in account and finance salaries have been reported in Beijing (133.2%), Shenzhen 116% and San Jose (109.8%) in comparison to 2007.

In the year 2018 Bangalore, Cairo, Kolkata, Mumbai, New Delhi have the lowest account and finance salaries.

Bangalore (-22.8%), Cairo (-31.3%), Kolkata (-12.4%), Mumbai (-16.5%) and New-Delhi (-26.7%) witnessed negative growth in salaries in comparison to 2007
Bratislava has reported slowest growth (2.7%) in account and finance salaries in comparison of 2007.

Call Centres

Figure SEQ Figure * ARABIC 3: Mean Salaries (In USD) for call centers in selected citiesInsights:
In the year 2018 Minneapolis, Orlando, Krakow, and Bratislava have the highest call center salaries.

The highest growth rate has been reported is Shanghai (98.6%), Krakow (94.4%), Shenzhen (75.7%) and Beijing (55.1%) in comparison to 2007.

In the year 2018 Bangalore, Cairo, Kolkata, Mumbai, New Delhi have the lowest call center salaries.

Bangalore (-38.7%), Cairo (-24.9%), Kolkata (-30.3%), Mumbai (-35.3%), New Delhi (-39.5%), San Jose (-31.4%), and Santiago (-20.1%) witnessed negative growth rate in call center salaries in comparison to 2007.

Minneapolis (10.7%) has the lowest growth rate in call center salaries in comparison of 2017.

Customer Support

Figure SEQ Figure * ARABIC 4: Mean Salaries (In USD) of Customer Support in selected citiesInsights:
In the year 2018 Minneapolis, Orlando, Beijing, and Madrid have the highest customer support salaries
The highest growth rate has been reported is Shanghai (84.1%), Santiago (25.9%), and Beijing (214.9%) in comparison to 2007
In the year 2018 Bangalore, Cairo, Kolkata, Mumbai, New Delhi have the lowest call center salaries.

Bangalore (-28.4%), Cairo (-46.3%), Kolkata (-12.0%), Madrid (-11.55), Minneapolis (1.0%), Mumbai (-34.4%), and New Delhi (-24.2%) have negative growth with respect to 2007.

Orlando (4.8%) has the lowest growth rate in call center salaries
Executive/Director

Figure SEQ Figure * ARABIC 5: Salary of Executive/Director(In USD) in selected citiesInsights:
Shanghai, Minneapolis, Orlando, Shenzhen, and Madrid have the highest salaries for director/executive in the year 2018
Shenzhen (508.5%), Shanghai (442.9%), Beijing (112.5%), Krakow (100.4%) reported the highest growth rate in salaries for director/executive
In the year Bangalore, Cairo, Kolkata, San Jose have the lowest salaries for director/executive
Bangalore (-17.7%), Kolkata (-20.2%), Mumbai (-5.0%), New Delhi (-18.9%) negative growth in 2018 for executive/director salaries.

Orlando (28.7%) has the lowest growth rate in the salaries of executive/director.

Engineering and Technology

Figure SEQ Figure * ARABIC 6: Mean Salaries (In USD) of Engineering and technology in selected citiesInsights
Orlando, Minneapolis, Madrid, Beijing have the highest salaries for engineering and technology in the year 2018.

In the year Bangalore, Cairo, Kolkata, Mumbai, New Delhi has the lowest salaries for engineering and technology.

Beijing (101.7%), Krakow (88.9%), Shenzhen (64.1%), Madrid (60.5%) has reported the highest growth rate in engineering and technology salary with respect to 2007.

Bangalore (-9.2%), Kolkata (-0.1%), Mumbai (-13.3%), New Delhi (-10.3%) has negative growth in salaries in comparison to 2007.

Orlando (19%) has the lowest growth in engineering and technology salaries.

4.1.6 Human Resource

Figure SEQ Figure * ARABIC 7: Mean Salaries (In USD) of Human resource in selected citiesInsights
Minneapolis, Orlando, Madrid, Beijing has the highest human resource salaries in the year 2018.

Shenzhen (151.4%), San Jose (138.9%), Shanghai (91.7%) Beijing (89.8%), Madrid (70.7%) has the highest growth is human resource salaries with respect to 2007.

In the year 2018 Bangalore, Cairo, Kolkata, Mumbai, New Delhi has the lowest HR salaries.

Bangalore (-33.6%), Kolkata (-18.9%), Mumbai (-36.4%), New Delhi (-34.5%), Bratislava (-0.4%) have negative salary growth for HR in comparison to 2007
Orlando (9.2%) has witnessed the slowest growth rate.

Information Technology

Figure SEQ Figure * ARABIC 8: Mean Salaries (In USD) of information technology in selected citiesInsights
Orlando, Minneapolis, Madrid, Beijing have the highest salaries for information and technology in 2018.

Beijing (159.3%), Shenzhen (128.5%), Shanghai (57.6%), Cairo (46.5% has the highest salary growth rate for information and technology in comparison to 2007.

Bangalore, Cairo, Kolkata, Mumbai, New Delhi has the lowest salaries for information and technology in 2018.

Bangalore (-35.1%), Kolkata (-31.5%), Mumbai (-38.8%), New Delhi (-36.3%) negative growth rate in IT salaries in comparison to 2007.

San Jose (1.5%) has the slowest growth rate in IT salaries
Procurement and Logistics

Figure SEQ Figure * ARABIC 9: Mean Salaries (In USD) of procurement and salaries in selected citiesInsights
In 2018 Orlando, Minneapolis, Beijing has the highest salaries for procurement and logistics
Chinese cities Beijing (129.6%), Shenzhen (120.1%) and Shanghai (73.2%) have the highest salary growth rate for procurement and logistics with respect to 2007.

Bangalore, Cairo, Kolkata, Mumbai, New Delhi has the lowest salary for procurement and logistics in 2018.

Bangalore (26.8%), Kolkata (-13.4%), Krakow (-12.6%), Madrid (-11.6%), Mumbai (-36.6%), New Delhi (-46%), Santiago (-24.2%) has the negative growth rate for procurement and logistics salary in comparison to 2007.

Bratislava (2.3%) has the slowest growth rate for procurement and logistics salary in comparison of 2007.

4.2. Factor affecting wages – Country wise analysisWages are one of the important factors when it comes to outsourcing in a country. Countries with lower labor cost have always been an attraction for outsourcing. In this research project, salaries for the year 2018 has been found out from various sources and has been compared with the respective salaries for the year 2007. The preliminary view shows that there are changes in the two datasets of salaries. To analyze the changes in wages in selected countries’ mean salary has been considered. Mean salaries have been calculated using below formula.

Mean Salary=Sum of all salaries in a selceted country÷Number of SalariesThe table shows the value of mean salaries in selected countries in the year 2007 and 2018 along with change (%).
Table SEQ Table * ARABIC 26: Comparison of mean salaries in the year 2007 and 2018Country Mean Salary (in USD) in 2007 Mean Salary (in USD) in 2018 % Change
Chile 24844.24 32442.29 30.58%
China 18748.37 41388.97 120.76%
Costa Rica 19985.37 26186.74 31.03%
Egypt 11803.37 13173.45 11.61%
India 18940.63 14169.05 -25.19%
Poland 23416.63 42412.37 81.12%
Slovakia 31328.96 35608.61 13.66%
Spain 41215.89 52928.47 28.42%
USA 71042.01 85192.71 19.92%
From the table, it can be concluded that every country has witnessed growth (%) in salaries except India where growth (%) in negative. China (120.76%), Poland (81.12%) have witnessed the highest growth.

There are many factors like the ease of doing business index, Innovation index, GDP growth rate, FDI inflow, Inflation rate, unemployment rate, changes in minimum wages, labor market efficiency, labor productivity, educational qualification, which affects the wages and salaries. The degree of effect of the above factors is different for different countries because of difference in the geopolitical situation. A single factor alone cannot explain the changes in mean salaries. For this research Unemployment rate (%), Minimum wages, and labor market efficiency has been considered.

1.Unemployment rate (%)
There are several types of unemployment rate like Cyclical unemployment or, Demand deficit unemployment, Structural unemploymentCITATION Tej l 1033 (Pettinger, 2017). For this research, Demand deficit unemployment has been considered and the official unemployment rate represents the demand deficit unemployment. If the supply is more than demand, then the wages come down and vice versa CITATION Ker17 l 1033 (Zias, 2017). So, it can be said that a higher unemployment rate has the negative effect on wages.

2. Minimum wages
Minimum wages are the “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract” CITATION Int171 l 1033 ((ILO), 2017). The Rise in minimum wages also affect the skilled and senior workers with higher earning. CITATION Org18 l 1033 (Organization, 2018)3. Labor Market Efficiency
Labor market can be said to be efficient if workforce finds the job matching with the skillset. An efficient labor market incentivizes employee and employer. It incentivizes the employee to be more productive because of their job matches with their skillset and employer to provide the right incentive CITATION Wor161 l 1033 (World Economic Forum, 2015-2016).

Chile
Mean salaries in Chile has grown by 30.585% in comparison of 2007 (Table 26). Last 10 years data shows that Chile’s Service sector employs most of Chile’s employed population (Table 27). Employment in the service sector has grown up by 5.90% with respect to 2006. Chile has a higher unemployment rate which affects negatively on salaries (Figure 10). OECD data of annual real minimum wages (In 2015 Constant Prices at 2015 USD PPPs) shows that the minimum real wages rose up to 30.81% in 2016 in comparison to 2006(Table 28) which gave a rise in salaries. The average labor market efficiency in last decade is 4.60 which says that workforce could find a job matching their skill set easily which also contributed to the rise in wages and salaries.

China
Mean salaries in China has grown up by 120.76% in comparison of 2007(Table 26). Data from 2006 to 2016 shows that industry and service sector is the main employer for Chinese workforce (Table 30). Between 2006 and 2016 employment by service sector grew steadily and posted overall growth of 52.73% in employability. The unemployment rate in the same period has not shown any dependency upon any sector. The Unemployment rate has not shown more variation (Figure 10). The low variation in unemployment rate and dependency on all sectors gave an upward push in wages and salaries. Data between 2006 to 2016 shows a massive growth of 224% in minimum wages which is the main driver of growing mean salaries by 120.76%(Table 31). An efficient labor market has also given an upward push to wages and salaries (Table 32).
Table SEQ Table * ARABIC 27: Sector-wise distribution (%) of the workforce in Chile between 2006 and 2017Source: International Labor Organization; (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 12.9 12.31 11.72 12.65 10.61 10.26 9.98 9.48 9.4 9.38 9.48 9.6
Industry 23.29 23.38 23.54 23.47 22.96 23.38 23.83 23.88 23.49 23.28 23.01 22.82
Services 63.86 64.31 64.74 63.88 66.44 66.36 66.19 66.65 67.11 67.34 67.51 67.63

Figure SEQ Figure * ARABIC 10: Unemployment rate (%) trend of selected countries between 2006 and 2017Source: Own creation based on World Development Indicators, World Bank (2015)
Table SEQ Table * ARABIC 28: Growth in real minimum wages (in $) in Chile between 2006 and 2016Source: https://stats.oecd.org/Index.aspx?DataSetCode=RMW#
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RMW 5201.6 5295.2 5289.6 5573.6 5710.6 5804.7 5969.6 6302.3 6459.1 6633.6 6998.3
Table SEQ Table * ARABIC 29: Labor market efficiency of Chile between 2007 and 2017Source: OECD
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Chile 4.96 4.9 4.69 4.63 4.64 4.68 4.53 4.36 4.29 4.41 4.42
Table SEQ Table * ARABIC 30: Sector-wise distribution (%) of the workforce in China between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 33.5 31.2 29.6 27.9 26.2 24.5 23.2 21.9 20.7 19.6 18.4 17.5
Industry 30.0 30.0 30.1 30.1 30.2 30.0 29.5 28.8 28.1 27.1 26.8 26.6
Services 36.6 38.8 40.4 42.1 43.6 45.5 47.4 49.2 51.2 53.4 54.9 55.9
Table SEQ Table * ARABIC 31: Growth in real minimum wages (in RMB) in China between 2006 and 2016Source: China Statistical Year Book 2006 to 2016
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Wages 20856 24721 28898 32444 36539 41799 46769 51483 56360 62029 67569
Table SEQ Table * ARABIC 32: Labor market efficiency of China between 2007 and 2017Source: TCdata360
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LME 4.4 4.49 4.74 4.7 4.68 4.6 4.63 4.55 4.5 4.53 4.55
Costa Rica
Mean salaries in Costa Rica has grown up by 31.03% (Table 26). The service sector has been the major employer in Costa Rica from 2006 to 2016(Table 33). In 2010 and 2015 service sectors have witnessed a downfall but after that, it gained momentum and it has gone upward with respect to 2006. The unemployment rate has not shown any dependency of any sector. Data show a high degree of variation in the unemployment rate which gives downward push to wages (Figure 10). OECD data shows that there is a growth of 21.565% in minimum wages of Costa Rica’s workforce which gave an upward push to mean salaries in the period 2006-2017(Table 34). Labor market efficiency has declined which has caused negative growth in salaries (Table 35).

Table SEQ Table * ARABIC 33: Sector-wise distribution (%) of the workforce in Costa Rica between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
  2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 14.0 13.3 12.4 14.1 15.1 10.9 10.3 9.9 11.2 12.3 12.2 12.0
Industry 21.8 22.3 21.7 20.0 19.6 19.3 18.2 16.5 17.7 19.2 18.6 18.6
Services 64.2 64.5 66.0 65.9 65.3 69.9 71.6 73.6 71.2 68.5 69.2 69.5
Table SEQ Table * ARABIC 34: Growth in real minimum wages (in $) in Costa Rica between 2006 and 2016Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RMW 6689.3 6748.20 6884.3 6967.60 7215.0 7307 7431.2 7495.20 7463.20 7908.3 8131.6
Source: OECD
Table SEQ Table * ARABIC 35: Labor market efficiency of Costa Rica between 2007 and 2017Source: TCdata360
Labor Market Efficiency
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LME 4.93 4.68 4.71 4.62 4.51 4.51 4.48 4.29 4.23 4.26 4.22
Egypt
Mean salaries in Egypt has grown up by 11.61% in the comparison of 2007(Table 26). Service sector has been the major employer for Egypt’s workforce. Employment in Egypt’s service sector has grown up by 6.20%(Table 36). High unemployment rate gives a downward push to wages and salaries (Figure 10). Official data from Egypt government shows a massive growth of 311.53% in minimum wages which was the main driver in the rise mean salaries (Table 37). A poor labor market efficiency gave a downward push to mean salaries (Table 38).

Table SEQ Table * ARABIC 36: Sector-wise distribution (%) of workforce in Egypt between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 31.2 31.8 31.7 30.0 29.1 29.2 27.1 28.0 27.6 25.8 25.6 24.8
Industry 22.1 22.2 22.9 23.8 24.0 23.6 24.9 24.1 24.4 25.1 25.5 25.5
Services 46.7 46.1 45.4 46.3 46.9 47.2 48.1 47.9 48.1 49.1 48.9 49.6
Table SEQ Table * ARABIC 37: Average weekly wages in (L.E.P) in Egypt between 2006 and 2016Source: CAMPUS
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RMW 229 252 329 362 439 534 641 761 806 879 942
Table SEQ Table * ARABIC 38: Labor market efficiency of Egypt between 2007 and 2017Labor Market Efficiency
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LME 3.21 3.26 3.46 3.43 3.19 3.06 3 3.08 3.15 3.15 3.22
India
A downfall of -25.195% in the mean salaries has been seen in India (Table 26). The agriculture sector has been the main employment sectors throughout 2006 to 2017 (Table 39). Although employability in services sectors and industry sectors has grown up by 31.37% and 20.20% respectively, agriculture sector remains the main employer. The reason of downfall in the mean salaries is the lack of uniform implementation of minimum wages law CITATION GSa16 l 1033 (G.Sampath, 2016) which could have made sure wage to go up with inflation and other factors. In case of India, unemployment rate cannot be considered as the indicator of supply and demand gap because the majority of Indian workforce is employed in informal sectors CITATION She16 l 1033 (Sher Verick, 2016) which makes it unfeasible to use as an indicator to determine demand -supply gap in formal sector. In the same period, the working-age population has grown up 19.90%(World Bank) and university enrollment has grown up by 95.21%. The abundance of labor supply, constant but low growth in demand and lack of fully implemented minimum wages law has given downward push to minimum wages.

Table SEQ Table * ARABIC 39: Sector-wise distribution (%) of the workforce in India between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 54.7 53.7 53.2 52.4 51.5 48.8 47.0 46.7 45.5 44.4 43.4 42.7
Industry 19.8 20.6 20.7 21.3 21.8 23.5 24.4 23.8 23.9 23.9 23.7 23.8
Services 25.5 25.7 26.1 26.3 26.7 27.8 28.6 29.6 30.5 31.7 32.8 33.5
Poland
Mean salaries in Poland has grown up by 81.21% (Table 26). Data shows that service sector has been the major employer in the years 2005-2015 and it grew by 8.24% at the end of 2015 (Table 40). Between the years 2006 and 2013 Poland had high unemployment rate but after that, a significant decline has taken place (Figure 10). A significant decline has given an upward push to wage. Minimum wages in the years 2006 to 2017 grew up by 72.46% which is the main driver in the rise of growth in mean salaries (Figure 41). Poland has an efficient labor market which gives upward push to wages (Table 42).
Table SEQ Table * ARABIC 40:Sector-wise distribution (%) of workforce in Poland between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 15.8 14.8 14.0 13.3 13.1 12.9 12.6 12.0 11.5 11.5 10.6 10.6
Industry 30.0 30.7 31.9 31.1 30.3 30.7 30.4 30.5 30.5 30.5 31.5 31.3
Services 54.2 54.5 54.1 55.6 56.6 56.4 57.0 57.5 58.0 57.9 58.0 58.1
Table SEQ Table * ARABIC 41:Growth in real minimum wages (in $) in Poland between 2006 and 2016Source: OECD
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
RMW 2477 2691 2944 3103 3225 3400 3522 3650 3783 3900 4047 4272
Table SEQ Table * ARABIC 42:Labor Market Efficiency of Poland between 2007 and 2016Source: TCdata360
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
LME 4.44 4.4 4.54 4.58 4.48 4.48 4.2 4.14 4.11 4.13
Spain
Mean Salaries in Spain grew up by 28.42% (Table 26). Data shows that Spanish Workforce depends on service sector of employment. Service sector has been the major employer for Spanish workforce and its contribution has grown up by 15.77% between the years 2006-2016 (Table 43). Spain has witnessed higher unemployment rate which gave downward push to wages and salaries (Figure 10). OECD data shows that there is a growth of 4.91% in minimum wages which gave a small upward push to wages (Table 44). An improved labor market efficiency has given an upward push to wages (Table 45).

Table SEQ Table * ARABIC 43: Sector-wise distribution (%) of workforce in Spain between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 4.8 4.5 4.1 4.1 4.2 4.1 4.2 4.3 4.2 4.1 4.2 4.1
Industry 29.4 29.1 27.8 24.6 23.0 21.8 20.7 19.8 19.5 19.9 19.6 19.5
Services 65.8 66.4 68.1 71.3 72.8 74.1 75.1 76.0 76.3 76.0 76.2 76.4
Table SEQ Table * ARABIC 44: Growth in real minimum wages (in $) in Spain between 2006 and 2016Source: OECD
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RMW 11740 12048 12173 12696 12658 12425 12127.9 12030 12050 12171 12317
Source: OECD
Table SEQ Table * ARABIC 45: Labor Market Efficiency of Spain between 2007 and 2016Source: TCdata360
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LME 4.08 4.11 4.08 3.88 3.84 3.98 3.93 3.92 4.04 4.25 4.21
Slovakia
Mean salaries in Slovakia grew up by 13.66% (Table 26). Slovakian service sector provides major employment and its contribution has grown up by 7.75%(Table 46). Slovakia has higher the unemployment rate with large variation in the years 2005 and 2015 which gave downward push to wages (Figure 10). Minimum wages in Slovakia grew up by 44.60% in the years 2006 and 2016 which gave upward push to wages (Table 47). Slovakia’s labor market efficiency has come down in recent years which has given the negative push to wages (Table 48).

Table SEQ Table * ARABIC 46: Sector-wise distribution (%) of workforce in Slovakia between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 4.4 4.2 4.0 3.6 3.2 3.1 3.2 3.3 3.5 3.2 2.9 2.9
Industry 38.8 39.4 40.1 37.9 37.1 37.5 37.5 35.8 35.5 36.1 36.5 36.3
Services 56.8 56.4 55.9 58.5 59.7 59.4 59.2 60.9 61.1 60.7 60.6 60.8
Table SEQ Table * ARABIC 47: Growth in real minimum wages (in $) in Slovakia between 2006 and 2016Source: OECD
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RMW 6210.8 6599.5 6615.6 7155.3 7380.1 7316.4 7288.9 7418.9 7739 8381.9 8980
Table SEQ Table * ARABIC 48: Labor Market Efficiency of Slovakia between 2007 and 2016 Source: TCdata360
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LME 4.76 4.67 4.78 4.66 4.47 4.2 4.24 3.95 3.9 3.98 4.01
United States
Mean salaries in the USA has grown up by 19.92% (Table 26). The service sector is the major generator of employment for USA’s workforce (Table 49). After a rise in between 2006 to 2010, the unemployment rate has come down significantly which has given upwards push to the wages (Figure 10). Minimum wages have grown up by 18.24% which has given an upward push to wages (Table 50. A higher labor market efficiency has given the upward movement to the mean salaries (Table 51).

Table SEQ Table * ARABIC 49: Sector-wise distribution (%) of the workforce in the USA between 2006 and 2017Source: International Labor Organization (http://www.ilo.org)
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Agriculture 1.6 1.5 1.5 1.5 1.6 1.7 1.6 1.5 1.6 1.7 1.7 1.7
Industry 21.2 21.0 20.3 18.9 18.5 18.6 18.5 18.8 19.0 18.9 18.8 18.9
Services 77.3 77.5 78.2 79.6 79.9 79.8 79.9 79.7 79.4 79.5 79.6 79.5
Table SEQ Table * ARABIC 50: Growth in real minimum wages (in $) in the USA between 2006 and 2016Source: OECD
Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
RMW 12594 12974 14098 15756 16391 15890 15568 15343 15098 15080 14892
Table SEQ Table * ARABIC 51: Market efficiency of the USA between 2007 and 2017Source: TCdata360
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LME 5.71 5.79 5.76 5.63 5.57 5.37 5.37 5.3 5.4 5.48 5.64
5. Labor size and factor affecting labor size- Country wise analysis5.1 Labor Market5.1.1 Labor Size TotalLabor market size(Total) is the working-age population i.e. 15-65-year-old population of a country.

Figure SEQ Figure * ARABIC 11: Labor Market size(Total) of selected citiesInsights
Beijing, Shanghai, New Delhi, Mumbai has the largest labor market size(Total)
Bangalore (79.2%), Mumbai (62.2%), New Delhi (78.9%), San Jose (64.9%), Orlando (55%) has the highest growth (%) in labor market size(Total).

Krakow, Bratislava, Minneapolis has the smallest labor market size(Total)
Madrid (-13.5%), Cairo (-31.0%) has the negative growth (%) in labor market size(Total).

Santiago (8%) has the lowest growth (%) in labor market size(Total)
5.1.2 Labor Market Size (%)Labor market size(%) is the proportion of working-age population in the total population.

Figure SEQ Figure * ARABIC 12: Labor market size(%) of selected citiesInsights
Beijing (79.22%), Shanghai (77.83%), Shenzhen (76.61%), New Delhi (72.71%) has the largest labor market size (%)
Santiago (64.50%), Kolkata (62%), Bangalore (61%), Mumbai (66.37%) has the smallest labor market size (%)
New Delhi (121.7%), San Jose (65.3%), Kolkata (68%) has the highest growth rate (%)
Madrid (-18.7%), Shenzhen (-14.5%), Shanghai (-1.4%), Santiago (-0.8%) has negative growth rate (%)
Cairo (10.7%) has the lowest growth in comparison of 2007.

5.2 Factor affecting labor market Size – Country wise analysisTable SEQ Table * ARABIC 52: Average Labor market size(total) and labor market size(%) of selected countriesLabor Market Size (Total) Labor Market Size (%)
Country 2007 2018 % Change 2007 2018 % Change
United States 2924830 1969139 -32.68% 56.22% 72.10% 28.25%
Egypt 8,930,000 13177744 47.57% 66.00% 66.40% 0.61%
India 20208560 28779285 42.41% 39.15% 67% 71.14%
China 33572200 44229633 31.74% 82.51% 77.89% -5.59%
Chile 3,321,720 3,587,011 7.99% 65.00% 64.50% -0.77%
Costa Rica 692,730 1,142,608 64.94% 43.00% 71.09% 65.33%
Poland 409,344 516,601 26.20% 52.48% 67.40% 28.43%
Slovakia 199,822 288,117 44.19% 47.00% 67.60% 43.83%
Spain 5,086,000 4,399,213 -13.50% 83.12% 67.61% -18.66%
Chile
Labor market size(Total) in Chile(Santiago) has grown up by 7.99% and labor market size (%) has increased by 5.69% in comparison to the year 2007 (Table 52). Growth in labor market(total) size and labor market size (%) is because of growth in the working-age population of Chile by 11.69% and its percentage in total population by 1.78% (Figure 13).

Figure SEQ Figure * ARABIC 13: Chile’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators
China
Chinese (Beijing, Shanghai, Shenzhen) labor market size(total) has been grown up by 31.74% but labor market size (%) has come down by -5.59% in comparison to 2007 (Table 52). Growth in labor market size(total) in because of growth in working-age population which has grown up by 4.11%. Labor market size (%) witnessed a downfall because of there is a declining trend in growth (%) of working age population with respect to total population (Figure 14).

Figure SEQ Figure * ARABIC 14: China’s working population(15-64) and its % of total populationSource: Source:Own creation based on World Bank development indicators
Costa Rica
Labor market size(total) has grown up by 64.94% and labor market size (%) has grown up by 65.33% in comparison of 2007 (Table 52). Growth in working population which has increased by 16.56% is the main driver in the significant growth (Figure 15). Increasing proportion of working age population in total population has pushed the labor market size (%).

Figure SEQ Figure * ARABIC 15: Costa Rica’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators
Egypt
Egyptian(Cairo) labor market size(total) has increased by 47.57% in comparison of the year 2007 and labor market size (%) has a growth of 10.67% (Table 52). This growth is because of the rapid growth in the working-age population which has grown up by 20.99%. The proportion of working-age to the total population has reduced by -1.17% which has cause small growth in labor market size (%) (Figure 16).

Figure SEQ Figure * ARABIC 16: Egypt’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators
India
Indian cities (Bangalore, Kolkata, Mumbai, New-Delhi) has witnessed an average growth of 42.41% and 71.14% in labor market size(total) and labor market size (%) respectively (Table 52). This significant growth is because of significant growth of 19.903% in working-age population (Figure 17). In the same period proportion of working-age to the total population has also grown by 5.21%.

Figure SEQ Figure * ARABIC 17: India’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators
Poland
Krakow has witnessed a growth of 26.20% in labor market size(total) and 28.43% in labor market size (%) (Table 52). Although the working-age population has gone down by 3.33%, the growth in labor market(total) size and labor market size (%) can be attributed to the growth between the year 2006 and 2010 (Figure 18).

Figure SEQ Figure * ARABIC 18: Poland’s working population(15-64) and its % of tota populationSource: Own creation based on World Bank development indicators
Slovakia
Labor market size (total) and labor market size (%) has been grown up by 44.19% and 43.83% respectively in comparison of 2007. This growth is because of growth in working-age population between 2006 and 2010(Figure.19).

Spain
Labor market size(total) and labor market size (%) in Spain has reduced -13.50% and -18.66%. This downfall can be seen from the below graph (Figure.20) which depicts that the final growth in the working age population in the year 2016 in comparison is only 0.4%. The working age to population ratio has also reduced -4.09%.

Figure SEQ Figure * ARABIC 19: Slovakia’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators

Figure SEQ Figure * ARABIC 20: Spain’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators
USA
American cities (Minneapolis and Orlando) has witnessed an average negative growth of -32.68% in labor market size(Total) but the average growth of 28.25% in labor market size (%) (Table 52). This reduction in the labor market size(total) is because of data from Minneapolis. In 2007 Minneapolis was reported to have the market size(total) of 1848610 persons but in 2018 the total population of Minneapolis is only 413651 CITATION Wor173 l 1033 (Review, 2017) which shows the discrepancy. Orlando has witnessed growth in labor market size(total) as well as labor market size (%). The growth in average labor market size (%) is because of growth in the working age population which has grown up by 6.86% (Figure.21).

Figure SEQ Figure * ARABIC 21: Spain’s working population(15-64) and its % of total populationSource: Own creation based on World Bank development indicators
5.3 Unemployment rate (%)
Figure SEQ Figure * ARABIC 22: Unemployment rate of selected countriesInsights
Madrid, Cairo, Santiago has the highest unemployment rate.

Minneapolis, Krakow, Orlando, Shenzhen, Beijing has the lowest unemployment rate.

Krakow, Minneapolis, Orlando, Bangalore has managed to reduce the unemployment rate in great extent.

Madrid, New Delhi, Cairo has witnessed an increase in unemployment rate.

5.4 Factor affecting Unemployment rate- Country wise analysisTable SEQ Table * ARABIC 53: Average unemployment rate in selected countriesUnemployment Rate (%)
Country 2007 2018 % Change
United States 6.05% 2.64% -56.36%
Egypt 10.30% 15.00% 45.63%
India 5.86% 5.29% -9.73%
China 3.03% 2.63% -13.20%
Chile 7.00% 6.76% -3.43%
Costa Rica 6.60% 7.80% 18.18%
Poland 7.00% 2.80% -60.00%
Slovakia 4.50% 5.68% 26.22%
Spain 7.20% 13.40% 86.11%
The above table shows that Egypt (15%), Spain (13.40%), Costa Rica (7.80%) have the highest unemployment rate among the peers whereas China (2.63%), United States (2.64%), Poland (2.80%) are have the lowest unemployment rate among peers.

Okun’s Law of Unemployment
Okun’s law state that there is a strong correlation between the economic growth(GDP) and unemployment label in a country CITATION Dav15 l 1033 (Tulip, 2015). Okun’s law says that output of a country(GDP) depends on the labor used in production so if production(GDP) growth is high then labor employment is high and vice versa. The original law has two relationships between economic growth and unemployment rate; the first relationship said that 1% fall in unemployment rate causes 3% rise in GDP. The second estimation said that 1% increase in unemployment rate causes 2% fall in GDP CITATION Rya18 l 1033 (Ryan C. Fuhrmann, 2018). Although the coefficient by which unemployment rate and GDP growth are related, is different for different countries CITATION Ima97 l 1033 (Moosa, 1997) it still holds.
For this research project, Okun’s law without considering the coefficient has been used to investigate the reasons of change in unemployment rate.
Chile
Chilean unemployment rate (%) follows the GDP growth rate (%). Data(Fig.23) shows that in 2009 when GDP growth rate was -1.56% then unemployment rate was highest 9.69%. When it recovered between the year 2010 and 2012 unemployment rate (%) also got reduced. The last 3-year data shows that again GDP growth rate is declining hence the unemployment rate is increasing.

Figure SEQ Figure * ARABIC 23: Chile ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
China
Okun’s law holds in case of Chinese economy but with different coefficient (Figure 24). A large change in GDP (%) cause a small change in unemployment rate. Between 2006 and 2010 the unemployment rate has shown a very small fluctuation whereas GDP rate has shown large fluctuation. Though in small degree but the unemployment rate is increasing with decreasing GDP growth rate.

Figure SEQ Figure * ARABIC 24: China ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
Costa Rica
The unemployment rate in Costa Rica follows the GDP growth rate but with a different coefficient (Figure 25). Between 2007 and 2009 when GDP was declining, the unemployment rate was increasing. Although between the years 2009 and 2010 growth in GDP has not improved the level of unemployment because of recovery from negative GDP growth in 2009, after 2010 unemployment rate followed GDP growth rate (%).

Figure SEQ Figure * ARABIC 25: Costa Rica ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
Egypt
Egyptian unemployment rate follows GDP growth rate. Between the years 2006 and 2011 unemployment rate has shown sensitivity to the changes in GDP growth rate (%) (Figure 26). Between 2011 and 2012 unemployment rate has not affected by the growth in GDP rate. This is because that the Arab spring started in December 2010 and lasted up to December 2012 which has caused a rise in the unemployment rate CITATION Wor172 l 1033 (Worldatlas, 2017). After 2012, again the unemployment rate has followed the pattern of GDP growth rate.

Figure SEQ Figure * ARABIC 26: Egypts ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
India
The unemployment rate in India has shown least sensitivity to the GDP growth rate (%) (Figure 27). This is similar to Chinese unemployment rate response to GDP growth rate. In the years 2006-2007,2008-20010 and in the 2012-2014 unemployment rate has decreased with improved GDP growth rate (%).

Figure SEQ Figure * ARABIC 27: India ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
Poland
The unemployment rate in Poland follows the GDP growth (Figure 28). The below graphs show that the improvement in GDP growth (%) has causes reduction in the unemployment rate. Last 5-year data show that in the year 2012 and 2013 when GDP growth rate where 1.61% and 1.39%, the unemployment rates were also high. Between the years 2014 and 2015 improvement in GDP growth (%) has affected unemployment rate positively.

Figure SEQ Figure * ARABIC 28: Poland ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
Spain
Data from World Bank shows the dependency of Spanish unemployment rate on its GDP growth rate (Figure 29). Between the year 2006 to 2011 when GDP started to decline, the unemployment rate started going up. After 2013 the as GDP growth rate is improving, unemployment rate is showing declining trend (Figure 29).

Figure SEQ Figure * ARABIC 29: Spain ‘s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
Slovakia
The data shows that in the last 5 years unemployment rate has followed its GDP growth rate (Figure 30). When GDP growth rate was going down between the years 2011 to 2013, the unemployment rate was going up. After 2013 the effect of an upward trend in GDP growth (%) can be seen on the declining trend on unemployment rate.

USA
Data shows that the unemployment rate in the USA has the dependency on GDP growth (%) (Figure 31). Between the years 2006 and 2009 declining trend of GDP has increased unemployment rate significantly. After 2013 the improved GDP growth (%) has improved the unemployment rate.

Figure SEQ Figure * ARABIC 30: Slovakia’s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators

Figure SEQ Figure * ARABIC 31: USA’s GDP vs Unemployment rate between 2006 and 2016Source: Own creation based on World bank development indicators
5.5. Talent Pool Business and factors affecting talent pool- Country wise analysis5.5.1 Talent Pool total
Figure SEQ Figure * ARABIC 32: Business Talent pool in selected countries and citiesInsights
New Delhi, Bangalore, Mumbai, Kolkata has the largest business talent pool.

Shenzhen (561.6%), San Jose (365.4%), Cairo (221.4%) has witnessed the steepest growth (%) in business talent pool.

Santiago, Minneapolis, Poland, Cairo has the smallest business talent pool.

Santiago (-35.7%), Shanghai (-24.7%), Madrid (-40.2%) has negative growth (%) in business talent pool
Kolkata (8.0%) has the slowest growth rate.

5.6 Factor affecting talent pool- County wise analysisTable SEQ Table * ARABIC 54: Average Talent pool in selected countriesAverage Growth in Talent Pool Business
Country 2007 2008 % Change
United States 91824 226563 146.74%
Egypt 28750 92412 221.43%
India 3600847 5802938 61.15%
China 881189 1538210 74.56%
Chile 195049 231444 18.66%
Costa Rica 40500 188479 365.38%
Poland 59330 50757 -14.45%
Slovakia 26790 69794 160.52%
Spain 257733 620748 140.85%
Above table shows the growth (%) in the business talent pool from the year 2007. From the, table it can be deduced that Costa Rica, Egypt, Slovakia, and the USA has the highest growth (%) in talent pool business and Chile has the lowest growth (%) whereas Poland has the negative growth (%) with respect to peer countries.

Analysis of factor affecting business talent pool
GERTE (Gross enrollment ratio tertiary education)
World bank defines Gross enrollment ratio is the ratio of the total number of enrolled students in tertiary education irrespective of age to the population who officially enrolled in the education system. Tertiary or higher education plays a great role in fostering economic growth by the skilled workforce that makes an attracting economy for investment. There is evidence that growth in enrollment ratio has a positive and significant effect on economic growth CITATION Coo09 l 1033 (Cooray, 2009).

For this research GERTE data was available for some countries so it has been used as it is. In some cases where GERTE information was not available in that case, university enrollment rate has been considered. For this research it has been considered that growth in gross enrollment tertiary education will have positive effect on graduation rate in tertiary education.

Chile
Chile has witnessed 18.63% growth in business talent pool (Table 54). This growth is because of a growth of 66.30% in the gross enrollment ratio in GERTE (Figure 33).

Costa Rica
There is a massive growth of 365.38% in business talent pool in Costa Rica (Table 54). The latest data shows that there is a 14.34% growth rate in GERTE (Figure 34).

Figure SEQ Figure * ARABIC 33: GERTE for Chile, China, India, and SpainSource: Own creation based on World bank development Indicators

Figure SEQ Figure * ARABIC 34: GERTE for Costa RicaSource: Own creation based on World bank development indicators
China
The business talent pool in Chinese cities (Beijing, Shanghai, Shenzhen) has been a grown up by 76.45% (Table 52). This growth is because of a rapid growth of 132.39% in GERTE (Figure 33).

Egypt
In Egypt, business talent pool has grown up by 221.43% between with respect to 2007 (Table 52). The growth in business talent pool is because of the growth in the university enrollment in Egypt which has grown up by 9.31%(Figure 35).

Figure SEQ Figure * ARABIC 35: Higher education enrollment in EgyptSource: http://www.capmas.gov.eg
India
The business talent pool in India has grown up by 61.15% with respect to 2007 (Table 52). The reason behind this growth is the growth in GERT which has grown up by 104.19% between the year 2007 and 2016 (Figure 33).

Poland
Poland has witnessed a downfall of -14.45% in business talent pool (Table 52). This is because of the downfall in university enrollment ratio which has come down by -29.92% (Figure 36).
Spain
The business talent pool in Spain has grown up by 140.85% (Table 52). This growth is because of growth in GERT which in the same period has grown up by 30.81% (Figure 33).

Figure SEQ Figure * ARABIC 36: University Enrollment in PolandSource: Own creation based on data from Statistics Poland
Slovakia
Slovakia has witnessed 160.52% growth in business talent pool (Table 52). This growth is because of growth in GERT which has grown up by 17.81% between the year 2006 and 2014 (Figure 37)

Figure SEQ Figure * ARABIC 37: GERTE of SlovakiaSource: Own creation based on World Bank development indicators
United States
The average business talent pool in the USA has witnessed a rise of 146.74% (Table 52). This growth is because of growth in university enrollment between 2006 and 2011 which was 13.63 % (Figure 38).

Figure SEQ Figure * ARABIC 38: University enrollment in the USA between 2006 and 2016Source: Own creation based on Statista

6. Infrastructure cost and factor affecting infrastructure cost-Country wise analysis6.1 Infrastructure Cost6.1.1 Average office rent per m2 (p.a)
Figure SEQ Figure * ARABIC 39: Average office rent (In USD) in the selcted cities6.1.2 Average office Sell per m2 (p.a)
Figure SEQ Figure * ARABIC 40: Average ofice sell prices(in USD) in the selected cities6.2 Factor affecting infrastructure cost– Country wise analysisTable SEQ Table * ARABIC 55: Growth in rental and sell prices in selected citiesCountry City Rental Growth (%) Sell Growth (%)
Chile Santiago 25.90% 226%
Costa Rica San Jose 7.10% 91%
China Beijing 107.10% 1484%
China Shanghai 29.30% 1696%
China Shenzhen 170.50% 1579%
Egypt Cairo -11.00% 583%
India Bangalore -8.40% 161%
India Kolkata -22.30% 57%
India Mumbai -36.80% -26%
India New Delhi -32.60% -37%
Poland Krakow 15.00% 535%
Spain Madrid -27.20% 275%
Slovakia Bratislava -14.30% 5%
USA Minneapolis -30.70% 43%
USA Orlando 9.30% 69%
Factors affecting infrastructure cost
Infrastructure cost plays a very significant role in outsourcing. There are several factors which affects the cost of infrastructure in a country. Some of them are economic indicators like growth rate of economy, inflation, mortgage rate, FDI inflow in real estate, cap rate, consumer confidence index and some of them are from customer perspective like property location, population growth and appraisal value. However, these factors affect differently to different location. No single factor can alone describe the changes in the cost of infrastructure. For these research below factors have been used.

1. FDI in real estate- FDI in real estate means the foreign investors can invest in the real estate sectors of an economy. Countries allows FDI in real estate to boost the infrastructure development to attract. However, this is the matter of concern for many researchers that how the FDI in real estate affect prices. This is the market anticipation that the foreign investors increase the demand, so the prices go up. There is an evidence from the UK that “one percentage point in the volume share of residential transactions registered to overseas companies leads to an increase of about 2.1% in house prices” CITATION Fil17 l 1033 (Sá, 2017).

2. Interest rate- Interest rate is another important factor for infrastructure. Lower interest rate increases the affordability thus increasing the demand. The increase in demand have the positive effect on the prices. Manuel argued that a rise in interest rate has a negative effect on the consumption CITATION Man12 l 1033 (Manuel Leon Navarro, 2012). If the consumption goes down with increasing interest rates the prices will come down.

Chile- Chile has witnessed 25.90% and 226% growth in rental and the sell prices respectively (Table 55). Last 6-year data show (refer table) that Chile’s real estate has received an average 5% of total FDI (Figure 41). The constant demand has given an upward movement to the prices. Interest rate data from Central Bank of Chile shows a favorable downfall in comparison of 2012-2013 which have given boost to affordability hence the demand (Figure 42).

Figure SEQ Figure * ARABIC 41: FDIRE and FDI in Chile between 2010 and 2016Source: Own creation based on data from Central Bank of Chile

Figure SEQ Figure * ARABIC 42: Historical interest rates in ChileSource: Own creation based on data from Central Bank of Chile
China
Rental prices and sell price grown up steeply with the average growths 102.30% and 1586% respectively (Table 52). Data from 2006 and 2016 shows are massive and constant FDI growth (%) in real estate which has given an upward push to the prices to Chinese real estate (Figure 43). A look at the interest rate shows that from 2012 onwards interest rates are low with respect to 2006-11 which have given bolster to the demand and hence the upward push to the prices (Figure 44). In 2008 Chinese government relaxed down the mortgage policies to which has also given a boost to demand to real estate sector CITATION Chi08 l 1033 (Chiang, 2008).

Figure SEQ Figure * ARABIC 43: FDIRE and FDI in China between 2006 and 2016Source: Statistical year book China

Figure SEQ Figure * ARABIC 44: Historical interest rates in ChinaSource: Own creation based on data of Bank of China
Costa Rica
In Costa Rica, rental prices and the sell prices have grown up by 7.10% and 91% (Table 52). Last 10-year data shows a cyclic pattern in FDIRE (Figure 45). Before financial crisis was on the peak and then it came down to the lowest value in 2012. In 2013 in gained a rapid momentum and reached up to 47% and after that it lost the momentum and started coming down. This cyclic volatility has an adverse effect on Costa Rica’s real estate. However, it got an upward push from lowering interested rates (Figure 46).

Egypt
Rental growth and sell price growth in Egypt are -11.03% and 583% respectively (Table 52). The massive growth in the sell prices is because the difference between rent and sell price in the year 2007 was very less. For example, rent and the sell prices of downtown office in the year 2007 were 515.49$ and 586.84$ respectively which is very less in the comparison of other cities. Data from Dhaman (The Arab Investment ; Export Credit Guarantee Corporation) shows that between the year 2003 and 2015 real estate has received 32.4% (let’s consider this is the average % of FDIRE of all the year) of total FDI received so far which point out that demand was always significant (Figure 47). The constant high demand gave rise to the prices, but it does not get much support from interest rates which were (Currently upward trend) always significantly high.

Figure SEQ Figure * ARABIC 45: FDIRE and FDI in Costa Rica between 2006 and 2017Source: Own creation based on data FROM central bank of Costa Rica

Figure SEQ Figure * ARABIC 46: Historical Interest rate in Costs RicaSource: Own creation Based on the data of Central Bank of Costa Rica

Figure SEQ Figure * ARABIC 47: Sector-wise FDI received by Egypt between 2003 and 2015Source: http://dhaman.net/wp-content/uploads/2016/02/Egypt.pdf

Figure SEQ Figure * ARABIC 48:Historical interest rate in EgyptSource: Central Bank of Egypt
India
India cities have witnessed a downfall in rental prices -25.03% and 39% growth in sell price (Table 52). A look on the FDIRE patter shows that after 2011 amount of FDIRE has reduced significantly and in 2016-17 it is at the lowest point (Figure 49). This pattern shows a reduction in demand which ultimately the reason of fall in prices. A significantly high-interest rate has also hindered the demand which has also contributed to the fall of prices (Figure 50). CBRE research shows that the rental performance of all the major CBD has come down significantly (Figure 51).

Figure SEQ Figure * ARABIC 49: FDIRE and FDI in India between 2006-07 and 2016-17Source: Reserve Bank of India

Figure SEQ Figure * ARABIC 50: Historical Interest rates in IndiaSource: Reserve Bank of India

Figure SEQ Figure * ARABIC 51: Rental performance of prominent CBD in Indian cities between 2005 and 2014Source: CBRE research, Q2 2014
Poland
Sell prices in Poland has grown up by 53 % and rental prices has grown up by 15%. (Table 52) Between 2006 to 2009 Polish real estate sector attracted FDI inflow in a large extent along which with comparatively low interest-rate created an upward push to the prices (Figure 52). Data from the National Bank of Poland shows that all major polish cities witness a growth in housing prices between 2005 to 2010 (Figure 53). After recovery from 2011 FDIRE gained momentum but again went down. This cooling period caused to fall in demand, but lower interest rates gave rise to demand (Figure 54).

Figure SEQ Figure * ARABIC 52: FDIRE and FDI in Poland between 2006 and 2016Source: National Bank of Poland
Spain
Spain has witnessed a downfall of -27.20% in rental growth and a rise of 27% in sell prices (Table 52). Spanish real estate affected by financial crises in 2007 which lasted till 2011 (Figure 55). Before financial crisis, the property prices went up rapidly (Figure 56) but after 2008 it came to its lowest point in 2014. The declining interest rate and a significant gain in FDIRE momentum has given upward push to the sell prices (Figure 57).

Slovakia
Slovakian rental performance faced a negative growth rate of -14.30% but a slow growth of 5% in sell prices (Table 52). FDI data from National bank of Slovakia show a cyclic pattern in the FDIRE (Figure 58). Between the year 2008-2010 FDIRE grew significantly and after that it came down. So, the total effect on prices is less. The upwards push in the prices is because of lowering interest rates (Figure 60). A research from Cushman Wakefield shows negative rental growth in between the years 2007 to 2013 which is the main reason for negative growth in rental performance (Figure 59).

Figure SEQ Figure * ARABIC 53: Rental performance of major Polis cities between 2002 and 2015Source: https://www.tandfonline.com/doi/full/10.1080/1406099X.2017.1344482

Figure SEQ Figure * ARABIC 54: Historical interest rates in PolandSource: Own creation based on data of National Bank of Poland

Figure SEQ Figure * ARABIC 55: FDIRE and FDI in Spain between 2006 and 2017Source: own creation based on data from Ministry of economics, Industry and Competition Spain

Figure SEQ Figure * ARABIC 56: Average house prices in Spain between 2004 and 2016Source: https://www.globalpropertyguide.com/real-estate-house-prices/S#spain

Figure SEQ Figure * ARABIC 57: Average annual historical interest rates in SpainSource: National Statistics Institute Spain

Figure SEQ Figure * ARABIC 58:FDIRE and FDI in Slovakia between 2006 and 2015Source: Own creation based on data from the National Bank of Slovakia

Figure SEQ Figure * ARABIC 59: Office rental performance in SlovakiaSource: http://www.cushmanwakefield.com/~/media/marketbeat/2018/02/slovakia_off_4q17.pdf

Figure SEQ Figure * ARABIC 60: Historical interest rates in slovakiaSource: National bank of Slovakia
United States
American cities included in this research has witnessed average negative growth (-21.40%) in rental and growth (56%) in sell prices (Table 52). The American economy has an average inflow of FDIRE of 4% between the year 2006 and 2016 (Figure 61). A look at interest rates the sharp decline between 2007 and 2009 and it was constant till 2016 (Figure 62). This constant demand and the constant interest rate has given upward push to the sell prices.

Figure SEQ Figure * ARABIC 61: FDIRE and FDI in the USA between 2006 and 2016Source: Bureau of economic analysis USA

Figure SEQ Figure * ARABIC 62: Historical interest rates in the USASource: Federal reserve bank of ST. Louis
ConclusionOutsourcing is the transferring the non-core activities to third party services provider from another country. There are several reasons of outsourcing some of them are cost reduction, and improvement in core-competency. Survey conducted by Deloitte says that 59% of their responders believe that outsourcing is cost cutting tool and 57% sees outsourcing enable them to focus on their core business. Although outsourcing is the matter debate for many scholars for its implication on the developed and developing country but majority of them are agreed that outsourcing has a very important role for developing countries. Outsourcing provide sources, knowledge, technology which is the main requirement for a country to grow. Outsourcing have a vital role in upliftment of large population from extreme poverty as it provides employment to large amount of people, which in results stimulates the economy and improve the livelihood of the country. There have been proof that many African countries have get benefitted from outsourcing and their large population has come out of extreme poverty. Outsourcing activity in Nigeria has added $300m to its economy CITATION Pri16 l 1033 (Osuagwu, 2016). A report from Nasscom says that Outsourcing is expected to add 650,0000-700,0000 jobs in India. As the potential of benefits of outsourcing is vital, every country tries to look attractive. To assess the attractiveness there are several parameters which is in use. They are labor cost, infrastructure cost, availability of work-force and specialized talent pool for services to be outsourced.
Labor cost is one of the most important factor in outsourcing. The investigation in this research shows that Egypt and India offer low labor cost advantage. Although mean salaries have grown by 11.61%, Egypt has the lowest salaries in comparison to its peers. India have low cost advantage because the lack of implementation of minimum wages law along with majority of workforce is employed in informal sector which is an advantage for employer in wages negotiation. Although USA has small growth in the mean salaries in comparison of China (120.76%), Chile (30.58%), Poland (81.12%), it still has the highest mean salary for each sector considered in this research.

Low infrastructure cost attracts investors. Finding of this research shows that India, Egypt, Chile, Costa Rica have lowest office rental prices. Rental performance of Indian cities Bangalore, Kolkata, Mumbai, New Delhi have negative rental performance which makes it more attractive. Minneapolis has also negative rental performance. Chinese cities Beijing, Shanghai, Shenzhen have the highest rental growth. In case of sell prices Spain has highest price despite of moderated growth in comparison to its peers. China (1588%), Egypt (583%) and Chile (226.07%) has the highest growth in sell prices whereas India (-4.23%) has negative growth.

Labor market size is another important factor which attracts outsourcing. Outcomes of this research shows that China and India have the largest labor market which is because of their large working population in comparison of their peers whereas Slovakia and Spain have the lowest market size. In terms of growth in labor market size Costa Rica (64.94%), Egypt (47.57), India (42.41%), Chile (38.72%) has the highest growth whereas United states (-32.68%), and Spain (-13.50%) have the negative growth.

Business talent pool is also important factors when it comes to outsource the service which requires workforce to have degree in Economics, International Business, Account and Finance. Finding of this research shows that India and China have the highest number of business talent pool whereas Slovakia, Egypt and Poland have the lowest number of business talent pool. In comparison of 2007, Costa Rica (365.38%), Egypt (221.43%), Slovakia (160.52%) witnessed the largest growth in business talent pool whereas Chile (18.66%) has the lowest growth.

Based on above finding below benchmarking model has been developed to find-out the most attracting country for outsourcing. The outcome of benchmarking model suggest that India and Egypt are the most attracting location for outsourcing
Table SEQ Table * ARABIC 56: Location selection parameters of countriesCountry Financial Infrastructure Cost People
Labor Cost Real Estate Cost(USD) Mean Salaries (in USD) Rental Sell Size of labor Market Talent Pool-Business
Chile 32,442 232.63 4331.01 3,587,011 231,444
China 41,389 655.47 49535.5 44,229,633 1,538,210
Costa Rica 26,187 236.1 2962.38 1,142,608 188,479
Egypt 13,173 225.08 2388.38 13,177,744 92,412
India 14,169 249.75 3526.76 28,779,285 5,802,938
Poland 42,412 210.42 2196.99 516,601 50,757
Slovakia 35,609 272.56 2859.17 288,117 69,794
Spain 52,928 331.31 9973.1 4,399,213 620,748
United States 85,193 213.08 2712.67 1,969,139 226,563
Table SEQ Table * ARABIC 57:KPI based on location parameters and result of the most attracting countriesCountry Benchmarking Model
Mean Salary Rental Sell Size of labor Market Talent Pool-Business Final Ranking
Chile 6 5 3 5 6 5
China 4 1 2 9 8 5
Costa Rica 7 6 5 3 4 5
Egypt 9 7 8 7 3 7
India 8 4 4 8 9 7
Poland 3 9 9 2 1 5
Slovakia 5 3 6 1 2 3
Spain 2 2 1 6 7 4
United States 1 8 7 4 5 5
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