“ Firms are considering outsourcing more than ever before -- and their choices are growing by the minute”
IT outsourcing continues to dominate; however, in the global marketplace, an increasing number of companies, both multinationals and service providers, are heading into the business process outsourcing (BPO) arena.
Outsourcing destinations are grouped into three categories:
- Main destinations
- Upcoming destinations
- Others: Chile , Venezuela , Thailand , South Korea , Malaysia , Vietnam , Singapore and Romania.
The countries have been compared on parameters such as total size, average IT employee costs, total workforce, number of quality certifications, main clients and other considerations.
At present, the most preferred destinations for IT services outsourcing include Ireland , India , Israel , Canada , Philippines and South Africa.
- India is leading the list of the most favored outsourcing destinations across the world has a proven process maturity model and has captured major share of the offshore market. The significant increase in offshore outsourcing is in part, a result of the quality work that India has provided for US companies and others. There are about 300 million English-speaking Indians, so language isn't a barrier, and India 's labor costs, though rising, remain low.
- Ireland is the one of the largest IT services outsourcing destination in the world. There taxes are favorable and infrastructure and educational system is very good. Outsourcing in Ireland is driven mainly by the development centers of large technology companies such as Microsoft, Dell, IBM etc.
- Israel has been ranked as a country that has an extremely skilled programming workforce. Software export sales are under $1 Billion.
- Canada definitely gains owing to close proximity to the US and also due to favorable business climate, greater cultural compatibility and comprehensible legal system.
- Philippines is India 's closest competitor in terms of low average IT employee costs. Here the education system is on par with the US system. The total outsourcing revenues from Philippines is estimated to be under $350million.
- South Africa is emerging as a noticeable destination. The IT manpower that was homegrown to achieve self-reliance is now beginning to be leveraged to serve global markets.
Include Ukraine , Russia , the Czech Republic , Poland , China , Pakistan , Brazil , Argentina and Mexico.
- In terms of size of the industry, the most serious contenders are Argentina , the Czech Republic and China . Pakistan , Russia and Ukraine are still much smaller in size.
- The Ukraine is preoccupied with the challenges of economic transition from the Soviet to the Western economy model and has not as yet fully entered into the Global IT offshore.
- The Czech Republic having cultural affinity with Western Europe , relatively low costs and strong education system are some key factors in its favor.
- In Poland the outsourcing has identified as one of four critical export industries. Here cost is lower than Czech Republic and has good infrastructure and Government working hard to promote IT sector.
- In China the Government has been taking a lot of initiatives in the recent past which has given a boost to the IT sector in China . China has the numbers and the low cost structure.
- Scalability, reliability and low-cost environment makes Pakistan the hot new offshore information technology (IT) destination.
- Argentina is an ideal location for outsourcing, with low costs, large labor pool including solid base of engineering talent.
- Mexico , shares the same socio-cultural milieu with the US .
- Brazil, becoming more popular as destination of Western outsourcing, as well as offshoring activities from Asia and other regions owing to its cheap and efficient labor.
- Most of the East European countries boast of good quality engineers. This may result in high end engineering jobs moving to these locations.
Negatives for these upcoming destinations include unstable economies (Eastern European countries), geo-political risks ( Pakistan ) and problems in retaining talent and poor infrastructure.
- The countries like Chile , Venezuela , Thailand , South Korea , Malaysia , Vietnam , Singapore and Romania are prepared to compete for providing ever-cheaper locations for work.