Offshore Outsourcing Isn't Just India
India is not the only alternative, and companies with experience in offshore outsourcing should consider other countries for the following reasons...
Jan 06, 2005
India is not the only alternative, and companies with experience in offshore outsourcing should consider other countries for the following reasons:
- Overheated labor market in India is driving up labor costs and attrition rates for service providers - High attrition rates results in higher costs for the outsourcing customer. The smaller IT services industries in Latin America, Eastern Europe, and Russia have more stable IT work forces.
- Better cultural fit - One CIO interviewed both Indian service providers and Luxoft, a Russia-based IT service provider. The CEO felt that the Russians were more likely than the Indians to push back and say no when asked to perform against unrealistic expectations. He wanted the bad news at the start of the project and not at the end.
- Establish a relationship within an emerging market - One company selected Objectiva, a China-based service provider for Web development projects in order to gain experience in China in preparation for developing products for the China market.
- Non-English language skills - The Indian service providers offer strong English skills, but have limited non-English capabilities. Latin America-based Neoris was selected by one company because of its Spanish and Portuguese capabilities, as well as its experience with supply chains and J.D. Edwards. Note that the language issue works both ways and Russian, Chinese, and Latin American service providers have weaker English skills than their Indian competitors.
- Hedge geo-political risk - Although India is a stable democracy, many companies are concerned that India's relationship with Pakistan and China, natural disasters, and cultural and religious diversity may destabilize the country and are looking to non-India locations in order to minimize the risk of geo-political destabilization.