14 Emerging Offshore Outsourcing Markets You Can't Afford to Miss
A recent study by the London School of Economics Outsourcing Unit ranks fourteen up-and-coming offshore outsourcing markets on cost, skills, risk and infrastructure.
Tue, April 21, 2009
CIO — Egypt has the most market potential among emerging providers of global IT services, according to a recent study by the London School of Economics Outsourcing Unit.
The report, "Beyond BRIC," was commissioned by the Information Technology Industry Development Agency of Egypt. But the authors, who compared data on costs, infrastructure, skills and other factors among 14 offshoring up-and-comers, say that Egypt has a good cultural connection with the West, strong language skills, good positioning as a partner with other offshore leaders like India, and convenience for European businesses.
The study compares Egypt to Romania, Bulgaria, Poland, Slovakia, Czech Republic, Belarus, Morocco, Tunisia, Costa Rica, Mexico, Venezuela, Vietnam, and the Philippines. [Don't miss The 25 Most Dangerous Cities for Offshore Outsourcing.]
Mexico and Costa Rica made a strong showing in the Americas. Czech Republic received the highest marks for both quality of infrastructure (telecommunications, power, transportation, and real estate) and risk attractiveness. Poland ranked the highest in terms of a supportive environment for fostering and outsourcing, including government backing, compatibility with the prevailing business culture, quality of life, and accessibility. (For the top countries in six categories of global sourcing advantages, see the lists below.)
The report was based on the LSE Outsourcing Unit's database of 1,000 global sourcing IT studies from 1993 to 2009; a survey of 18 global sourcing analysts; and interviews with more than 50 client organizations, suppliers and analysts.
Report co-author Leslie Wilcocks was surprised by the sheer number of countries—more than 120—eager to develop their business and IT services industries as well as the dynamics of the global sourcing landscape. "Things change quickly—cost, skills availability, political environment," says Wilcocks, a professor at the London School of Economics and Political Science.
IT clients are willing to take on the additional risk that accompanies offshoring to an emerging market in their "constant search for lower costs, skills pools, secure location, and good service," Wilcocks says. Outsourcing buyers are eager to spread their outsourcing portfolio across several geographies to ensure continuity of service, Wilcocks adds, and the increased availability of global sourcing analysis and improving capabilities around the world make that possible.
But there's little chance that India will lose its status as the global IT services powerhouse any time in the foreseeable future. Outsourcing customers are seeking to supplement the services they purchase from India, not replace them.
"Some [countries], like Egypt, are looking to partner and work with Indian companies, and all are looking to be competitive in specific areas," says Wilcocks.