India and the UK top the offshore charts as number one destination and outsourcer respectively.
Despite recent reports of a looming skills crisis, fraud and rising costs, analyst firm Gartner predicts India will continue to take the biggest slice of the outsourcing pie.
Its technology infrastructure and cheap resources still make it the biggest honey pot for outsourcing, attracting big names. Earlier this month Microsoft announced it would double its India-based staff over the next six months.
But China is nipping at the heels of India as an outsourcing destination. Brazil and Mexico are also rising fast, alongside “near shore” countries in Eastern Europe.
Before choosing any country, Gartner said firms should assess each outsourcing destination on a cost-versus-risk basis and monitor labour costs.
Forrester Research also urged companies to think about new ways to assess potential outsourcers, in its report, “Europe’s Services Firms Seek Outsourcing Success”.
UK companies – particularly in the financial and public sector – are the biggest outsourcers in Europe, accounting for 39% of all deals, according to Forrester. That fast growth means that outsourcers may have had to cut corners to meet demand.
“Due to rapid expansion, the outsourcing activity of some providers may be immature, insufficiently structured and staffed, and reveal a lack of skills,” said the report.
This could lead to a lack of technical expertise at service providers. Service providers are reallocating project managers and developers in declining business areas into outsourcing, specifically applications management and system operations.
Companies should check the technical qualifications and experience of staff and ensure that if they have been moved from other areas, they have been through proper re-education and training..