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A few years back, top of mind outsourcing destinations began seeing a shift from the U.S.A., Canada and Ireland to China and India. Now customers are increasingly finding themselves being serviced out of countries such as Brazil, Malaysia, Poland and the Czech Republic.
The interesting part is that it is not simply these countries that are competing for a larger share of IT and business process outsourcing (BPO) services, but the cities within each country are becoming competitive too. Halifax, Toronto and Montreal, for example, compete in Canada; while Bangalore competes with Mumbai and Chennai in India.
Another example is that of San Antonio in Texas and Oklahoma City in Oklahoma. San Antonio has a robust business environment and a diverse population of about 1.4 million, making it a contender for an outsourcing destination. It faces strong competition from Oklahoma City, a city traditionally oriented towards manufacturing, but which has now opened up to services. It offers a large talent pool and is relatively low cost.
Since different cities cater to different requirements, here are key differentiators of some cities that are emerging as prime outsourcing destinations:
Bucharest (Romania)
Key processes: IT Testing, applications development, multilingual call centers
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Excellent talent pool with strong foundation in mathematics and science |
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European-language capability apart from English |
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Relatively low political stability |
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Lags behind in infrastructure. |
Santiago (Chile)
Key processes: IT infrastructure, contact centers
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Low cost of living compared to other cities within the region |
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Low telecom costs |
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Spanish-language capabilities |
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Relatively higher set-up costs |
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Low on service maturity. |
Toronto, Halifax (Canada)
Key processes: IT services, contact centers
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Mature and diverse IT services market |
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Infrastructure at par with the U.S.A. (low risk profile) |
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Low attrition rates |
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High cost of labor |
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Shortage of talent pool. |
Dalian (China)
Key processes: Contact centers
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Self sufficient internal markets |
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Cost competent and skilled workforce |
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Nearshore to Japan and Korea |
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Scarce English-language capability, ruling out large business opportunities |
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High intellectual-property risks |
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Insufficient process and project management skills. |
Moscow (Russia)
Key processes: Engineering services, game development, Research and Development (R&D)
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Large technically competent workforce to perform high-end engineering services and R&D |
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Maturing IT industry |
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High cost of labor with insufficient project management skills |
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Data security and intellectual property threats |
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Scarce English-speaking capability. |
Ho Chi Minh City (Vietnam)
Key processes: Web development, applications maintenance
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One of the lowest production costs |
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Strong labor pool (97% literacy — one of the highest in the world) with IT skills |
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Significantly low attrition rates |
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Ranks low in client perception |
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Poor IT infrastructure and physical infrastructure (such as roads, power) |
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High telecom costs. |
Kuala Lumpur (Malaysia)
Key processes: Engineering services, health care
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One of the best in physical infrastructure |
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Low attrition rate compared to China and India |
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Extended government support |
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Availability of skilled labor |
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High cost of operations. |
