All six major Asean markets, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, are ranked among the top 20, says the latest survey by global management consulting firm AT Kearney.

Among the six nations, Thailand is ranked fifth.

Major findings in the Global Services Location Index show India and China continue to lead by a wide margin, with declines in cost advantage offset by further improvements in talent supply and business environment.

Countries in Latin America, Central and Eastern Europe, the Middle East and Africa are rising up the rankings.

While most onshore or near-shore locations in developed countries improved their absolute scores, almost all fell in the rankings, as emerging markets improved their people skills and environment scores at a faster rate.

Boosting the trend is the wage-cost advantage of offshore locations for office services, which is set to last for another 20 years, AT Kearney said.

Even though wages in offshore locations for services, such as IT, business processes and call centres, have started to rise, they will remain cheaper for the foreseeable future under the most aggressive projections of wage inflation and currency appreciation in developing countries.

Changes in labour costs are partly the result of accelerating wages and currency appreciation in offshore hotspots, as well as downward pressure on wages in impacted sectors in developed countries. At the same time, key emerging markets have continued to improve their attractiveness in terms of access to talent, industry experience and quality certifications and their regulatory environment.

"What is most striking about the results of this year's index is how the relative cost advantage of the leading offshore destinations declined almost universally while their scores for people skills and business environment rose significantly," said Paul Laudicina, managing officer and chairman of AT Kearney.

"These findings reinforce the message that corporations making global location decisions should focus less on short-term cost considerations and more on long-term projections of talent supply and operating conditions."

The findings also send a message to policy-makers that the key to maintaining and enhancing long-term competitiveness lies in skill development, infrastructure investment and the regulatory environment, not in attempts to control wages.

Virtually every country on the index, even those that fell in the rankings, improved their absolute score in the last year, confirming that competition is intensifying and that simply maintaining current performance levels is no longer sufficient to attract and retain the world's fast-growing remote-services business.

In its fourth year, the survey comprises more than 40 metrics comparing the financial attractiveness, people skills and business environment of 50 countries. The latest index is based on full-year data for 2006.

"While total compensation costs for sample positions like IT programmers or call-centre representatives rose by 5 to 10 per cent in most developed countries, average wages for similar positions in India, China, the Philippines and parts of Eastern Europe and Latin America grew anywhere from 20 per cent to 40 per cent," said Martin Walker, senior director the Global Business Policy Council, the AT Kearney sponsor of the research.

Telecom costs in many emerging markets dropped by 25 per cent or more, as competition and volumes in the telecom market increased. University enrolment in countries like China, Brazil and Egypt also saw double-digit growth and the number of firms with quality endorsements, such as Carnegie Mellon's CMMI certification and the ISO 27001 data-security certification, almost doubled in several emerging markets.

"The clear message is that short-term cost advantage should not be the primary driver of location decisions," Laudicina concluded.

"Currency appreciation and demand growth in key locations will gradually erode their cost advantage. At the same time, continued improvements in infrastructure and policy-making in emerging markets will slowly erode the business-environment competitive advantage of developed countries.

"The key differentiator in the future will be the talent base, and future projections of skilled labour supply will be imperative for companies making long-term location decisions."

Walker said education and training would be the key for policy-makers.

"Investing to expand the quantity and quality of tertiary education, designing training and certification programmes in collaboration with industry players, attracting skilled workers from outside the country, opening labour markets within the country - all will be key to ensure a supply of skilled labour that is responsive to ever-changing global needs," he added.