Global Guide – Outsourcing World Tour 2004

Halfway through 2004, the offshore outsourcing trend is still gathering momentum.

By the end of the year, Gartner predicts that one out of every 10 jobs with U.S.-based IT vendors and service providers will be staffed offshore. Eighty-six percent of the 101 IT executives surveyed last year by CIO said they already offshore application development, and 26 percent offshore their call centers. And they predicted those numbers will rise.

We first ran this global outsourcing guide in November 2002. What’s changed since then?

For starters, the gap between India’s market share and that of other countries keeps growing. Companies increasingly feel comfortable sending bigger and bigger projects to India; companies that have never before outsourced feel comfortable dipping their toes in Indian waters.

Another trend is U.S. companies balancing their offshore risk by going to neighbors like Canada and Mexico. Canadian suppliers can handle highly complex projects better than other nations, and our neighbor to the north has a deep familiarity with U.S. business mores. And Mexico continues to offer an attractive cost structure. Both have geographic proximity going for them in the race for U.S. outsourcing contracts.

Finally, new members of the European Union—such as the Czech Republic, Poland and Hungary—are an enticing nearshore option for Western European enterprises and Europe-based U.S. businesses. Their costs are low now, but they won’t stay that way.

This guide covers the strengths and weaknesses of the outsourcing market in 24 countries, and can serve as a primer for navigating an increasingly globalized marketplace.