Q2 2019 Supply Wisdom Index: Location Risk Monitor covers global outsourcing markets and ranks key locations based on the Composite Risk score, a comprehensive measure of important location risk criteria.

Q2 2019 Country in Focus:

India

• India successfully conducted its 17th General Election with the BJP-led National Democratic Alliance returning to power for the second term. On May 30, Narendra Modi was sworn in as the Prime Minister of the country for his second term.

• In June 2019, US terminated duty-free benefits for India worth US$260 M. India imposed retaliatory tariffs on 29 US goods worth US$241 M which heightened trade tensions.

• In June 2019, Reserve Bank of India lowered the interest rate for the third time in the last six months to 5.75% in a move to increase the probability of consumer demand to stimulate the Indian economy.

• India in its ‘Draft Personal Data Protection Bill’ stated that the personal data of Indian users must be stored and processed locally, which if implemented, might impact global technology companies with more regulatory scrutiny and increased cost associated with collecting and managing user database.

• India was on high alert during the period after tensions with Pakistan escalated to its highest point following a bombing in the Pulwama district of Kashmir and an aerial dogfight between the nations.

• During the quarter, some parts of the country such as Odisha, Gujarat, and Kerala witnessed episodes of cyclones, heavy rainfalls, and floods. India also issued a severe warning for cyclone ‘Fani’ in Odisha, which caused travel and power disruptions across the state.

Rank	Country		Overall Risk Score
			Q2 2019	Q1 2019
#1	India	0	4.02	4.03
India, to strengthen its data protection laws, proposed a bill which if implemented might impact global technology companies with more regulatory scrutiny and increased costs. On the geo-political front, several states were put on high alert due to terror threats. Additionally, the region witnessed a surge in number of swine flu cases. Macro-Economic Risk Macro-Economic Risk decreased driven by drop in the interest rate. Financial Risk Financial Risk increased owing to increase in rental growth rate Quality of Life Risk Quality of Life Risk witnessed minor increase due to rise in pollution level and heatwave conditions
#2	China	0	4.19	4.25
The trade war between the US and China resurfaced with both the countries imposing new tariffs on each other’s imports. However, in June, both countries agreed to continue trade negotiations. To support the development of the domestic IT industry, China announced new tax incentives for integrated circuit design and software companies. Financial Risk Financial Risk increased during the quarter driven by surge in salary numbers of IT/BPO professionals Quality of Life Risk Quality of Life improved marginally due to reduced internet costs Geo-Political Risk Geo-Political Risk declined owing to increase in political stability
#3	Poland	0	4.56	4.54
Poland witnessed a slight decrease in its economic growth as a result of shifts in consumer demand and increasing inflation. Widening budget deficit also remains a cause of concern for the country. However, Poland recorded a trade surplus during the period. Macro-Economic Risk Macro-Economic Risk decreased due to positive trade balance Geo-Political Risk Geo-Political Risk increased due to rise in measles cases Quality of Life Risk Quality of Life Risk increased slightly due to persisting heatwave conditions
#4	Ireland	0	4.59	4.62
Ireland and United Kingdom signed a deal to continue the Common Travel Area (CTA) after Brexit and facilitate free movement of goods and people. Government also approved a National Broadband Plan to bring high-speed internet across country. Macro-Economic Risk Macro-Economic Risk decreased due to positive trade balance and stable currency exchange rates Financial Risk Financial Risk declined during the quarter driven by drop in annual salary growth rate Geo-Political Risk Geo-Political Risk decreased as no major protest or social unrest were reported during the quarter
#5	Philippines	0	4.78	4.76
Despite Philippines’ stable and growing economy, World Bank and IMF lowered its 2019 growth forecast as public spending is expected to soften along with the ongoing issue of dry spell in the country. Also, moratorium on approval of new IT-BPM ecozone projects in Metro Manila raised investors’ concern. However, companies like Amazon and Deloitte continue to scale their operations in the country. Financial Risk Financial Risk climbed during the quarter owing to increase in salary numbers of IT/BPO professionals Geo-Political Risk Geo-Political Risk declined as no major flood, storm or cyclone was reported during the quarter Infrastructure Risk Infrastructure Risk increased owing to insufficient power reserves in Luzon grid
#6	Brazil	+4	4.97	5.09
Brazil offers competitive operating costs among the LATAM countries and labor costs reduced further during the quarter as a result of currency volatility. On the geo-political front, the homicide rate fell by 25% in the first two months of 2019 compared with the same period last year. However, the economy of Brazil recorded its weakest growth rate in Q1 2019 in the last two years. Notably, this led to a downgrade in growth forecast to 1.2% for 2019, from an earlier estimate of 2.6%. Geo-Political Risk Geo-Political Risk registered a drop as no major earthquakes were reported during the quarter Macro-Economic Risk Macro-Economic Risk witnessed a notable increase during the quarter owing to rise in inflation rate Financial Risk Financial Risk declined during the quarter driven by lower salary numbers in terms of US dollars due to volatility in exchange rates
#7	Mexico	-1	4.97	4.92
Mexico announced new investments in energy, infrastructure, and social development projects and also ratified the new trade deal with the US and Canada in order to boost economic growth. On the geo-political front, a travel warning was issued by UK citing violence, migration issues, hurricane season, and the Zika virus. Macro-Economic Risk Macro-Economic Risk declined owing to increase in foreign investments and improved trade balance surplus Financial Risk Financial Risk witnessed a small increase owing to rise in fuel prices Geo-Political Risk Geo-Political Risk climbed during the quarter mainly due to the travel warning issued by UK
#8	Colombia	-1	5.03	4.97
Colombia recorded a 7-month high inflation rate in May 2019. Nevertheless, it remained within the central bank’s target rate of 2% to 4%. On the geo-political front, the risk associated with epidemic outbreaks remained high due to dengue. Further, the country faces key challenges such as corruption, large scale protests and drug cartel crimes. Macro-Economic Risk Macro-Economic Risk increased significantly primarily driven by high volatility in currency exchange rates during the quarter Financial Risk Financial Risk increased owing to notable rise in rental growth rate Infrastructure Risk Infrastructure Risk declined driven by improved internet speed during the quarter
#9	Vietnam	-1	5.06	5.06
Vietnam’s economic growth remained strong and the country reported an increase of 8% in FDI in H1 2019, compared to the previous year. However, cybercrime continues to be area of concern. In May 2019, the country witnessed more than 700 cyber-attacks including 425 cases of website defacement. Financial Risk Financial Risk increased during the quarter due to increase in salary for IT-BPO professionals Geo Political Risk Geo-Political Risk declined as no major flood or storm was reported during the period Infrastructure Risk Infrastructure Risk dropped as no major power outage was reported during the quarter
#10	Hungary	-1	5.11	5.06
Hungarian GDP recorded second highest growth since 1996 supported by rapid wage increase and employment growth. With respect to geo-political front, the country reported heavy rains that caused flooding and travel disruptions. Financial Risk Financial Risk increased marginally due to increase in average annual labor cost growth rate Geo-Political Risk Geo-Political Risk increased due to slight increase in crimes during the period Scalability Risk Scalability Risk remained High. Limited talent pool remains a bottleneck for large scale operations.