The Asian Pacific region is consistently thought of as the primary destination for outsourcing and offshoring of business processes across many industries. In the past, India and China have received the majority of the attention for these practices due in part to their large workforces. However, based on overall workforce objectives the top five markets in the APAC region consistently out preform both India and China over the past five years. These markets present a combination of quality skills, capability, English proficiency and availability plus a more flexible regulatory environment.
Hong Kong returned to the top ranked position in both the global and regional rankings in 2018. In the past Hong Kong dropped out of the top spot due to the addition of factors to the Total Workforce Index™ related to the overall operating costs. Factors such as the cost of doing business and the operational costs in Hong Kong can be higher than many other markets in this region.
However, a steady increase in female workforce participation and continuing efforts to close the gender gap contributed to Hong Kong’s rise to the top spot. While the work week in Hong Kong has shortened and is no longer an average of 50 hours, it is still higher than most in the region with a higher number of work hours in the work week. Higher unemployment in some parts of the labor force represent an opportunity for investment to the right employers.
Top 5 Markets in the APAC Region
Average wage, though a great tool comparison, is predominantly driven by the ratio of highly skilled jobs to lower skilled jobs. Markets with a higher volume of highly skilled jobs will average higher wages than markets with a high volume of low skilled jobs. Therefore, not all markets with lowest wage are the lowest for rates for a given skill.
Manufacturing wages are a leading indicator of rising costs as they typically rise before the wages of professional skills. Manufacturing wages are particularly sensitive to inflation and statutory burdens. Therefore, though the cost of manufacturing skills may be much lower than more highly skilled jobs, they are generally the first to reflect the rising cost of wages in a particular market. Due to increased digitization and automation some markets are showing higher wage increases than others. In particular, those driven by other industry production such as automotive and pharmaceutical. With reference to the automotive industry in the APAC region, China, Japan and India display these higher manufacturing wages. With regard to the pharmaceuticals industry, South Korea, China and India are impacted by these higher manufacturing wages.
Employment tax is a basic statutory burden that employers need to add to wages when calculating the cost of skills in a workforce market. It is typically the first metric of consideration beyond the wages themselves. Wages largest component of total labor cost. However, taxes are the best indicator for total cost. They are also more representative of the labor cost per market than insurance as insurance appears more standardized, while taxes are unique to each market.
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