Global management consultancy Kearney has today published the 12th edition of its Global Services Location Index (GSLI), which studies the vital factors that make countries attractive as potential locations for offshore business services.

India, China, and Malaysia continue to lead this year, with Brazil and the United Kingdom rounding out the top five.

While Asia Pacific countries continue to lead thanks to their immense cost advantage, abundant talent pool, and strong skills, the UK’s rise to fifth position from eighth is a noteworthy milestone and marks the first instance of a Western economy entering the top five.

In an era of rapidly evolving technology and ever-changing trends, business services such as information technology, business process outsourcing, and engineering are increasingly being delivered across borders as companies seek to lower their costs, scale their talent, and become more efficient by using more of the global talent base.

The global market for business services has also grown from US$624bn (£476bn) in 2022 to US$681bn (£519bn) in 2023 and is expected to rise at a compound annual growth rate of eight percent through 2027, which will increase the demand for such services.

To evaluate and compare potential locations for offshoring, this year’s GSLI ranks 78 countries based on 52 metrics, across four dimensions: financial attractiveness, people skills and availability, business environment, and digital resonance.

A key trend in this year’s GSLI is the criticality of talent regeneration. With the emergence and adoption of digital technologies, cost-centric service locations are at risk of losing their competitiveness to more developed and technologically advanced countries as more work and processes will be automated. Talent regeneration, therefore, will serve as the backbone of this shift.

The UK’s tech sector has become a $1 trillion (£800bn) economy, trailing only the US and China, and is one of the strongest ecosystems in Europe. Earlier this year, the government announced it would invest £100 million in funding for its Foundation Model Taskforce responsible for accelerating the UK’s capability in rapidly-emerging types of artificial intelligence.

The investment is part of the UK’s ambition to be a science and technology superpower by 2030, providing a boost to a sector that already employs three million UK workers and includes leading companies.

The country boasts the highest number technology patents filed in emerging technology such as AI/ML, automation, blockchain, robotics, and other digital technologies, which makes them frontrunners in technology in the region.

Further, the UK government’s plans to invest in digital skills training and other programmes, such as funding 1,000 PhDs and scholarships in AI, have helped boost apprentice and digital skills readiness, according to Kearney.

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According to the report, the country’s 3,000 ed-tech start-ups are helping people upskill and reskill themselves in technology roles.

Ramyani Basu, partner, digital transformation at Kearney said: “Digital skills of the labour force and digital outputs of business activity are increasingly becoming key differentiators of a country’s performance. The UK’s climb up the ranking is partly due to its heavy investment in digital training, newly announced government programs and funding for businesses which have helped boost its talent regeneration potential.

“Harnessing the potential of technological advancements like AI provides enormous opportunities to grow our economy, create more jobs and continue to lead in the region. It’s important that countries build a strong talent pipeline and solid business environment not just for today’s needs but for those of our future generations. We’re seeing a large shift in Asia’s previous dominance and could see Europe and the Americas climb up the rankings in the next decade.”