The London School of Economics has produced a detailed
report of the advantages and disadvantages of 14 emerging
destinations foroffshore IT services.
The university this week published a report entitled Beyond
Bric, which presented the case for offshoring services in
destinations other than Brazil, Russia, India and China.
The 14 non-Bric locations studied were: Belarus, Bulgaria, Costa
Rica, Czech Republic, Egypt, Mexico, Morocco, Philippines, Poland,
Romania, Slovakia, Tunisia, Venezuela and Vietnam. The report was
commissioned by the Egypt Information Technology Industry
Development Agency.
Co-author
Leslie Wilcox in the London School of Economics' Outsourcing
Unit, said there is a shortage of information about offshore
destinations other than those in the Bric countries.
But he said there is a huge opportunity for these destinations
if they can get it right and that this does not have to be at the
expense of Bric destinations. He said there is enough business for
Bric locations as well as non-Bric locations in the current
economic climate.
"IT outsourcing is recession-proof," he added. "Businesses find
reasons to do it in recession as they do in good times."
He said as a result of this both Bric locations and non-Bric
locations can win business. "A rising tide lifts all boats," he
said.
The destinations were scored on their costs competitiveness, the
availability of skills, environmental issues, the local
infrastructure, the location risk profiles, as well as their market
potential.
He said these non-Bric locations will become important parts of
the multisourcing strategies of businesses alongside more
established Bric locations. This is to spread risk, he added.
Wilcox said one of the major differences between the current
recession and those before it, in terms of demand for outsourcing,
is the fact that businesses want more innovation. "They are going
to ask for more innovation instead of just going down the cost
cutting route."
He said this is because the current recession is deeper and
outsourcing on cost grounds alone will not work. "Also the
suppliers have improved their capabilities over the last four or
five years."
A measure of this is the fact that more established offshore
service providers in locations such as India are outsourcing to
emerging areas. The processes that involve cost cutting are being
carried out in low cost emerging areas while innovative work is
done in more established locations.