How to Source What Info?

Most of the ready-made lists of cities available to you (often with scores assigned to them) including ours (in conjunction with Tholons) are based on common considerations. Naturally, they may not satisfy all of your requirements.

Here is a classification on services that you plan to outsource and how to proceed on sourcing city information when you are choosing a location.

Category I: Commonly offshored services. If you are looking to outsource common processes such as call centers, IT applications development or business-processing services such as claims processing, by and large, ready-made offshore location lists get the job done. A Google search will help you identify these locations. Of course, you will need to drill down from there on the basis of criteria you set for talent pool, cost of living, wages, available infrastructure, distance from headquarters and so on.

Category II: Services requiring specialized skills. If you are looking at outsourcing activities that are fairly specialized, noncommoditized, but not completely new such as engineering design, equity research and market research — the easiest way to get started is to identify locations that have proven capability in those areas. For example, Moscow today has proven itself in engineering design, Mumbai in equity research and Gurgaon (near New Delhi) in market research.

So how do you proceed? “When we looked at location selection, we did not even spend time in country selection,” says the head of operations of a captive center for an investment-banking company. “Within India, we tried to look where we could ramp up fastest.” And their approach: They researched not the typical location-selection parameters such as risk, infrastructure and business environment (“they are more or less same everywhere in India”), but for places where that kind of work is already happening. They decided on Mumbai, despite higher costs for talent and real estate compared to Delhi and Bangalore. Many service providers often work that way. Today, most service providers that seek to set up knowledge-service divisions (the umbrella term for market research, analytics, specialized content creation), end up in Gurgaon.

What’s surprising is that even standard data points might cause two different organizations to arrive at completely opposite conclusions. Some large companies may decide to take a longer-term view and sustaining growth may be a higher priority for them than immediate availability of people. In that case, they often choose to develop a new location and have to look for different data points (very similar to Category III). This approach is time consuming but pays in the long run. For smaller companies wanting to quickly get operational, this may not be the best path.

Category III: Services not historically offshored. If you are offshoring some services that have rarely been offshored, then the decision is often based on what are the raw inputs needed for a possible delivery of these services such as specific skills in manpower and specific infrastructure (like telecom) required.

Today, most of the new outsourcing efforts of large corporations would fall into Category II.

Keeping an Eye on Emerging Trends

Past studies and easily available secondary information may not give you the whole perspective on the latest destination sourcing trends. Most outsourcers depend on the sourcing consultants and traditional research agencies to help with destination-sourcing decisions.

Yet, one set of service providers that buyers and decision makers might evaluate are real-estate consultants such as CB Richard Ellis and Jones Lang La Salle.

Most corporations — when they set up a captive unit — go to such firms among others for real-estate consulting. (Some companies, especially larger multinationals, employ specialists).

Yet, because of their continuous research on real estate, the knowledge base that they have on who is going where on a global basis (as most of them operate in major cities around the world), how much space they are taking, at what cost and for what reason makes them a great source of information on emerging location choices.