Regulation can be a significant burden to businesses across the globe.  In many cases, these burdens are higher in the more popular offshore outsourcing locations.  The cost of regulation directly impacts captive operations, but those firms outsourcing to a third parties also bear the cost through higher rates.

The leading comparative measure of the impact of regulation on small and medium business is the World Bank/IFC Doing Business report.  The 2009 study covers ten sets of quantitative indicators across 181 countries.  The indicators cover all stages in the life of a company from starting a business, getting permits and credit, protecting investors, paying taxes, trading, enforcing contracts, and closing a business.

The report rank orders all 181 countries with the lowest score being the least burdensome environment and the highest being the most costly.  Figure 1 below illustrates the rank for leading offshore locations.

Doing Business Rank for Leading Offshore Outsourcing Locations - Figure 1

All leading offshore locations are ranked lower than the United States.  Canada ranks a close second followed by Thailand and Malaysia.

Eastern and Central Europe generally rank well with Hungary, Bulgaria, Romania, and the Czech Republic in the top half.  As one moves east, the regulatory burden goes up. Russia and Ukraine are in the bottom half.

Asia is highly variable. Thailand and Malaysia score very well however, most Asian nations are in the bottom half.  India, while improving, is still one of the most difficult countries for starting and running a business.

Latin America also has a variety of business environments.  Chile and Mexico are in the upper half, but Argentina and Brazil have a poor environment.