Along with the promise of IT cost reductions and the potential for increased efficiency made possible through outsourcing also comes the need to understand risks such as geopolitical stability and scalability when sending critical operations overseas. Deciding where to outsource today is about more than just labor arbitrage.
While traditional players such as India and the Philippines remain strong destinations for IT and business process outsourcing (BPO), several other offshore regions are catching up as viable options for a number of business functions. Countries in Latin America, Asia, Europe and Africa continue to develop their national capabilities as technology and business process outsourcing providers, while global vendors continue searching for opportunities to establish service centers worldwide.
Continental Asia
India remains a dominant player in IT outsourcing and BPO. It has the population, education, scalability and stability required by many companies’ IT operations.
Like India, China has a large workforce and offers the type of scalability that smaller countries simply can’t equal. While China and Taiwan are known for manufacturing, they can be a source of IT outsourcing as well.
With China, however, language challenges and intellectual property issues, for example, can stand in the way.
Southeast Asia
Among the top benefits of doing business in Southeast Asia is the local population’s general skill with the English language. Another reason for the region’s success as an outsourcing provider is the general understanding of U.S. culture and the ability for some employees to mirror the accent.
Latin America
Some opportunities for offshoring in the Western hemisphere exist in Central America and South America, in countries such as Costa Rica, Guatemala, Brazil, Argentina and Chile. Because of time zones aligned with North America, doing business with South American countries means there is not a large shift in working hours for overseas operations.
Eastern Europe
For European banks and financial institutions, as well as some North American-based companies, Eastern Europe presents an option for outsourcing that is advantageous in proximity, education and language proficiency. Favorable governments also make doing business in those countries somewhat easier. Eastern European governments increasingly are promoting the region as an option for outsourcing to its neighboring countries to the west.
Africa
Another region that’s grown recently as an IT outsourcing and BPO destination is Africa. South Africa, in particular, has been promoting itself more recently and gained attention from hosting the 2010 World Cup.
While cost can be favorable in Africa, there is less infrastructure and some additional political instability within its nations that are slowing growth of outsourcing capabilities, Deloitte’s Prakash says. “Ghana is relatively stable, and some U.S. companies have gone there,” he adds.
But outsourcing to Africa is not occurring on the same scale, he contends. “Africa is potential, but it’s not [there] in the near future.”
Source: www.insurancetech.com
See also: European IT Outsourcing Predictions and Expectations
