Overseas Outsourcing in the 21st century: Different Countries, Diverse Benefits?

The notion of outsourcing work to overseas companies is, of course, not a new one. For many years, a large number of American businesses have selected to recruit talent from abroad rather than enlist assistance from within the US itself; for a variety of reasons; tax benefits being among the most prevalent. For many years, India has dominated the face of outsourcing; and in recent times, India’s economy has witnessed an incredible $69 billion boom from outsourcing alone; causing previously unheard of destinations such as Hyderabad and Chennai growing to become thriving business cities. However, as the 21st century marches on, the stronghold that India holds on the outsourcing market begins to loosen. Other up and coming countries are staking their claim; and US companies are gradually broadening their horizons and exploring outsourcing opportunities in other lands. So just what are the countries currently challenging India’s position as number one outsourcing nation in the world, and what are the benefits to working with them?

Countries on the Rise

In recent months, the US has witnessed a number of relative ‘newcomers’ to the outsourcing scene, making distinctive impact on the market. ComputerWeekly.com identifies five particular countries on the rise in the IT sector; including unsurprisingly, China, but perhaps more surprisingly, countries such as Bulgaria and Egypt. Interestingly, a number of global companies in the US are turning to Middle Eastern outsourcing services; partially due to the ‘skilled programming workforce’, but also due to the considerable tax incentives that the Egyptian government (and others) are offering to outsourcing prospects. Interestingly, large Indian companies are also outsourcing to the Middle East, such as Wipro and Satyam. BusinessWeek.com also identifies other up and coming major players in the outsourcing arena, such as Poland, Brazil and Argentina.

Knowing Where to Hire

Now that the playing field has leveled out, and India is no longer the only viable option for a US company looking to outsource, the question on every business owner’s mind is ‘where to head to for outsourcing work now?’ With a number of excellent options now available, the company must now start to take a number of things into consideration. Of course, wages are as relevant as ever, but it is also worthwhile to consider other aspects, such as performance; for example, if outsourcing call center services, how adept is the center at US English, and how understandable is the accent? (Many customers cite ‘hard to understand’ call center workers as a pet hate when communicating with a company). Consider turnaround time too. A lower wage rate may look appealing on paper, but if the job takes twice as long to complete, then it may well be false economy. It is a good idea, before committing to a large-scale outsourcing venture, to visit the establishment and get in-depth knowledge of their working arrangements, level of commitment and working conditions. Of course, this can be a straight-forward business trip, or it can be combined with pleasure; giving you a valuable opportunity to not only familiarize yourself with the company, but to learn about the culture of the country you are about to enter into a working alliance with.

Harnessing the Power of Outsourcing

Used appropriately, outsourcing still remains one of the most cost-effective decisions that a US company can make. For example, a Chinese manufacturer earns on average, around 60 cents an hour; considerably less than their US counterparts. With savings such as this, it is clear to see why outsourcing is such an appealing option. Obama recently spoke out against outsourcing, and recommended revamping the federal tax code to encourage more work to stay on US soil. But even with tax laws relaxed, it would be hard for comparable US outsourcing services to compete with those from abroad. Quite simply, the current international economic structure supports outsourcing from overseas. For US companies, outsourcing also means being able to hire from a greatly increased pool of talent. For example, Brazil currently boasts a huge number of professionals who are expert in JAVA programming, but will offer their services for a considerable amount less than their US counterparts. It is unsurprising why more and more US companies are broadening their outlook and turning to overseas companies to develop their products and improve their productivity.

(1) India has dominated the outsourcing scene for years. But, Bulgaria and Egypt are on the rise!
(2) Getting a good price on outsourcing is one thing, but what if the turnaround is slow?

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