Thailand has moved up one spot in the latest Global Services Location Index (GSLI) conducted by management consultancy Kearney, thanks to the country's financial attractiveness, business environment and potential to become an innovation hub.
The country joins seven other Asia-Pacific nations listed on the top 15 most attractive destinations for offshore services globally.
India, China and Malaysia continued to lead the index based on critical factors that make countries attractive as potential locations for offshore services.
Thailand moved from 10th in the 2021 index to ninth this year. Other Asian countries in the top 15 include Indonesia, Vietnam, the Philippines and Singapore.
The GSLI ranks 78 countries based on 52 metrics that cover four dimensions: financial attractiveness, people's skill and availability, business environment and digital resonance.
"Thailand jumped one spot based on its financial attractiveness and business environment," said the report.
The country's future lies in capitalising on the population's digital skills to become an innovation hub, according to the report.
Thailand's digital transformation efforts have been intensifying, with the Labour Ministry partnering with public firms to upskill about 4 million residents and launching a smart skills programme to provide access to online courses on digital skills such as IT support and data analytics.
The report said offshoring of business services continues to see strong growth across borders as companies seek to lower costs, scale their talent and become more efficient by using more of the global talent base.
The global market for business services grew from US$624 billion in 2022 to a projected $681 billion this year. The market has a compound annual growth rate of 8% through 2027, said the report.
"Continuing their strong showing, Asia-Pacific countries lead this year's index, with India, China and Malaysia in the top three largely because of cost advantages, talent availability and strong skills," noted the report.
Singapore jumped 24 spots from 38th to 14th in the ranking, the highest upgrade of any country. The city-state shines as the region's premier emerging technology destination, as well as an innovation hub, according to the index.
"Geopolitical, economic and technological forces have spurred significant changes in the global labour market. A country's ability to reskill and redeploy its workforce in response to changing market demands and technological disruptions is key to improving its attractiveness as an offshore location for business services," said Arjun Sethi, global vice-chair of digital transformation and regional head and chairman of Kearney's Asia-Pacific region. He also co-authored the report.
"Talent regeneration will be the most crucial game-changer as Industry 4.0 continues to reshape the demand for future skills and jobs. This is what has kept the top three countries -- India, China and Malaysia -- solid in the index for a few years now, while the rest have been fairly fluid in their positions."
Traditional offshoring leaders in the region such as India, China, Malaysia, Indonesia, Vietnam and Thailand will need to invest heavily in talent regeneration as the labour cost advantage becomes less relevant with technological disruptions and socioeconomic factors, he said.