SMEs must go global for outsourcing

In my last column, The LaaS frontier, I described the 3500 IT freelancers in Bangladesh who, courtesy of the Web and the US enabling venture oDesk, are working for a diversity of global clients.

I suggested the acronym Labour-as-a-Service (LaaS) be added to the growing portfolio of cloud sourcing possibilities.

I have now learnt, from a June 2011 investor presentation, of AOL’s drive to “empower our engineers to be smarter, faster, more efficient” by approaches that include “oDesk brain extension”.

Each established AOL developer can directly engage up to three freelancers from across the globe to support his or her work – essentially AOL delegating the ability to offshore to its front line.

But back to Bangladesh. I am currently advising the International Trade Centre (ITC) on the development of the Bangladesh offshoring proposition.

A joint venture of the UN (in the form of its trade and development body UNCTAD) and the World Trade Organisation (WTO), the ITC’s remit is the development of trade as a means of speeding economic development.

IT offshoring is the natural development of international trade in technology-enabled services.

For all the push-back there is in the UK against IT offshoring (‘losing jobs to India’, for instance) the reality is that the UK, in turnover terms, exports well over twice as much in computing and software services as it imports.

The UK is a competitive offshoring location: we gain many more jobs than we lose, so cost is clearly not the only factor in the equation.

For Bangladesh, however, cost is clearly a competitive factor.

A country of 162 million people, it has inherited good universities from its colonial days as East Bengal, and with it a fast-growing pool of well trained IT engineers that can be recruited at salary levels well below those of neighbours India.

The quality of these technical professionals is attested to by Samsung, which has set up a 250-strong R&D centre near the capital, Dhaka.

But Bangladesh has another significant competitive factor. Its IT software sector is a mass of some 800 small enterprises, only 10 of which employ more than 100 professionals (the largest employs just over 400).

A quarter of these companies are engaged internationally and there are significant success stories. One example is GraphicPeople, whose state-of-the-art studio located in Dhaka provides offshore print and digital production services to global clients that include Dell.

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