Outsourcing generally refers to the practice of farming out jobs from their home base to other countries, largely in an effort to cut costs.
The global outsourcing market has evolved over the years and has redefined the approach of doing business. The outsourcing vendors are providing strategic solutions to meet the organization’s needs. The leading organizations are looking beyond data entry and customer’s service and are shifting their focus to high-end analytics.
Many companies are now transferring technology development, customer service, financial and administrative jobs to international markets.
Companies like Citigroup and General Electric were pioneers, having established specialized centers in other countries and sending ever more complex and critical functions to those centers.
India is the leading recipient of the outsourcing of information technology functions like software development and maintenance, and also business process outsourcing. The latter includes back-office functions like accounting, human resources, call centers and data analysis.
“Simple, base-level back-office payroll and data entry will go to rock-bottom-wage countries like Vietnam and Uruguay over time, and countries like India will move up the food chain and take on more complex software and product development services.”
~John McCarthy from Forrester Research
India is the leading global outsourcing hub, but there are many other countries fighting for those contracts.
Offshore IT outsourcing destination depends on 4 reasons: Process and Quality, Government Support, Skilled and Talented Resource, and Education System.
Bellow you can see a list of countries where the outsource industry is flourishing and how they are ranked:
| # | Country | Overall | Cost | Skills | Context |
|---|---|---|---|---|---|
| 1 | India | 7.1 | 8.3 | 6 | 4.2 |
| 2 | Indonesia | 6.9 | 8.6 | 4.3 | 4.4 |
| 3 | China | 6.4 | 7 | 5.6 | 5.6 |
| 4 | Bulgaria | 6.4 | 8.8 | 2.9 | 5.2 |
| 5 | Philippines | 6.3 | 9 | 2.8 | 3.9 |
| 6 | Jordan | 6.2 | 7.6 | 2.7 | 5.7 |
| 7 | Singapore | 6.5 | 6.4 | 5.7 | 9.4 |
| 8 | Thailand | 6 | 8.2 | 2.3 | 5.9 |
| 9 | Lithuania | 5.9 | 7 | 3.9 | 6.5 |
| 10 | Egypt | 5.8 | 9 | 0.9 | 4.3 |
| 11 | Malaysia | 5.8 | 7.9 | 2.2 | 6.9 |
| 12 | Estonia | 5.8 | 7.5 | 5.2 | 6.9 |
| 14 | Chile | 5.7 | 7.2 | 3 | 6.9 |
| 15 | Hungary | 5.6 | 6.9 | 3.4 | 6.3 |
| 16 | Poland | 5.6 | 6.8 | 3.6 | 5.5 |
| 17 | Czech Republic | 5.6 | 6.9 | 3.2 | 6.5 |
| 18 | Ukraine | 5.5 | 6.3 | 3.2 | 3.8 |
| 19 | Romania | 5.5 | 6.8 | 2.7 | 5.2 |
| 20 | Latvia | 5.4 | 7 | 2.7 | 5.6 |
| 21 | Pakistan | 5.4 | 6.6 | 0.8 | 3.1 |
| 22 | Vietnam | 5.4 | 7.4 | 2.5 | 4.5 |
| 22 | Argentina | 5.4 | 7.5 | 2.5 | 4.4 |
| 23 | Mexico | 5.3 | 6.9 | 2.8 | 5.3 |
| 24 | Russia | 5 | 6.4 | 3.4 | 4.7 |
| 25 | Israel | 4.9 | 3.8 | 5.5 | 7 |
| 26 | Ghana | 4.9 | 7.5 | 0.9 | 4.3 |
| 28 | Canada | 4.8 | 2.5 | 6.3 | 8.3 |
| 29 | Costa Rica | 4.8 | 7.3 | 2.3 | 4.8 |
| 30 | South Africa | 4.6 | 6.9 | 0.6 | 6.3 |
| 31 | Jamaica | 4.5 | 6.2 | 3.7 | 4.7 |
| 32 | Kenya | 4.5 | 6.7 | 1.3 | 3.6 |
| 32 | Panama | 4.4 | 5.8 | 1.9 | 5.6 |
| 33 | Senegal | 4.3 | 7.1 | 0.2 | 3.3 |
| 34 | United States | 4.2 | 1.7 | 6.9 | 8.3 |
| 35 | UA Emirates | 4 | 2.8 | 4.7 | 7.9 |
| 36 | Tunisia | 3.9 | 4.7 | 1.9 | 6.3 |
| 37 | Brazil | 3.6 | 4.3 | 2.4 | 4.1 |
| 38 | Sri Lanka | 3.5 | 8.3 | 1.2 | 4.3 |
Scott Hamilton
September 19, 2011
Good points Marcos. I would add that cost-savings is an assumed benefit to outsourcing at this point in the game. An increasingly powerful opportunity is team augmentation via outsourcing. Outsource to operational and process experts to free up the more strategic team from heavy technical and manual tasks so they can focus on higher-level functions; strategy and campaign effectiveness among them. This approach ultimately lets marketers be marketers.