An Opinion on Outsourcing Destinations
Outsourcing destinations are important because these locations would provide the service that companies would need in their outsourcing deals. An interview done with Dennis McGuire, the co-founder of TPI caught my eye.
The said interview focused on the outsourcing industry in general and its future direction. Here is the question which caught my eye:
What are the biggest threats facing Indian offshoring majors today? Who are the strongest competitors?
China is strong but they are at least three to five years behind; Philippines is good with language content; Vietnam for low-end work and Eastern European companies like Poland and Czechoslovakia are also strong but India should be going strong for another four to five years.
I have to agree in what he is saying. China has a great potential but it only started developing its outsourcing opportunities. Vietnam, Poland, and other outsourcing countries also have value-end which makes them an eligible choice. On the other hand, the Philippines offer quality service in outsourcing. Though that is the case, there is no doubt that India holds both factors (value and quality) when it comes to outsourcing.
I think that by next year the views which I expressed today would change as these outsourcing destinations would grow and develop-hopefully for better outsourcing.
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Deciding on the best destination(s) for outsourcing also has to take into consideration the ‘type’ and ‘level’ of sourcing to be outsourced. Service-based business process outsourcing (BPO) requires far less capex and infrastructure investment than outsourcing of electronics hardware, (i.e., electronics contract manufacturing)
While India may be attractive for BPO-based work (along with other regions on the globe), she still remains dependent on many of the MNCs doing business in/with the sub-continent to help her make electronic hardware outsourcing manufacturing successful for foreign, as well as many smaller Indian-based, electronics contract manufacturers.
Take, for example, the electricity-intensive electronics / semiconductor markets. Many foreign companies with operations in India still currently find it best to build their own energy facilities to get the required level of confidence in an uninterrupted power supply (UPS) source for their operations than to rely 100% on Indian-based energy sources available to them, locally.
This aside, electronics contract manufacturing in India is booming.
As with any fast-growing business region with an equally fast-rising economic base…local employers also need to carefully monitor product and service quality extra closely. This is because as competing companies spring up in this fertile business ground across the street, offering similar types of work, companies begin losing carefully-trained employees to these new competitors — for even a slight increase in pay. Attrition in these companies can complicate things further when these employees that left also take with them months (sometimes years) of training as well as process and knowledge expertise.
Comment by Mark on February 12, 2007 8:21 pm
Generic outsouring is almost an oxymoron. There are some typical activities that have been standardized and that can be outsourced easily to Indian companies who have quite an edge.
Non-typical projects that require specific skills need to be targed to niche players in the outsourcing market. My usual example is with some of the great hackers who came from Bulgaria and Russia and have moved on resolving complex problems in R&D type labs. It’s outsourcing and offshoring but it’s main focus is quality rather than quantity.
Read more about Bulgaria & outsourcing:
http://www.outsourcebulgaria.com/
Comment by Outsource Bulgaria on February 23, 2007 2:24 am