Indonesia's Outsourcing Outlook Dim

Filed in archive Outsourcing News on March 4, 2005

Indonesia's outsourcing industry is hampered by negative perceptions and a limited talent pool.

Utoyo S. Nurtanio, Accenture associate partner, said that foreign-based corporations are hesitant to outsource operations to Indonesia because of recent civil unrest (Jakarta riots in 1998) and terror acts (Bali attack in 2002, Australian Embassy attack in 2004).

Nurtanio explained that the Jakarta riots in 1998 shut down business for almost two weeks. Oil and gas companies who outsource operations lost millions of dollars in just a half-day shut down. He added that people did not go to work because of security precautions.

Aside from these, Nurtario said that current negative factors -- frequent public protests, civil unrest in the Aceh and Ambon regions, and threats of terrorism by radical Islam groups -- hampers Indonesia's corporate productivity and competitiveness. He said that the Indonesia's negative image would take some time to change. The country's security and stability needs to be proven first in order to regain confidence from the international market.

Indonesia's small talent pool of technically proficient university graduates also hinders the country's outsourcing industry. A large talent pool is important to accommodate an outsourcing company's expansion. Nurtanio said, "[Indonesia's] capacity to produce the required number of good quality university graduates...is relatively smaller."