There are various other factors an organization must consider when assessing how appropriate a given market is for its global sourcing needs, as depicted in Chart 2.

One factor is, which services model an organization is considering. Establishing captive operations, for example, has different market considerations than when sourcing from a local service provider or using a multinational service provider with local operations. Another factor is how an organization is approaching a market from the perspective of its own business. Is it, or will it, for example, also sell its own goods and services into the market or is the market just a source for services? Each of these elements will impact market attractiveness.

As outsourcing buyers become more sophisticated and aggressive in their use of global business services, they must also refine the sourcing process relative to mapping local capabilities to industry or process specific needs. Organizations must determine when, if and how selection criteria change based on what is being outsourced (e.g., human resources, finance and accounting, IT) and in which vertical industry the buyer organization operates.

Software testing, for example, is relatively generic across different types of business processes and vertical industries. Or so it might seem. Testing requirements for software for embedded medical devices is (or should be) more rigorous than for a buyer’s corporate Website. Depending on the device, the industry and country under which the buyer is regulated, there could exist more onerous testing and certification requirements not addressed by common international standards and certifications (e.g., ISO or CMMI). In this case, the buyer must assess and understand the capabilities of the target country/geography/service providers to support these more specialized requirements.

Another example is global banking and financial services companies that operate under a variety of local, national and transnational regulations. Companies affected by Sarbanes-Oxley (SarbOx), for example, are required for certain outsourced processes and functions to prove (though exactly how is not always clear) to regulators and auditors that there are adequate controls in place in outsourced processes to support SarbOx requirements. Here, the outsourcing buyer needs to determine if there is adequate knowledge, execution, transparency and recourse around these regulations in a targeted location and service provider operations.

These enhanced needs highlight the fact that understanding local capabilities and service provider skills has always been an important element in sourcing outsourcing services, it is more an imperative and becomes more complicated as outsourcing becomes global. It is a greater challenge for buyers to assess capabilities across multiple geographies particularly when there is often less or little knowledge of the local market. To the best of their abilities, though, buyers need to develop and maintain a matrix or “global attractiveness index” of target locations based on their own attributes and those of the processes being considered for outsourcing.

For example, what should a U.K.-headquartered buyer of finance and accounting outsourcing services in the pharmaceutical industry consider to be unique skills and knowledge (if any) required to support each functional finance and accounting process being considered for outsourcing? The following represents a sampling of what an outsourcing buyer in this situation should assess.