The 2005 A.T.Kearney study of outsourcing's most remarkable change is likely to be a quantum leap in the number of countries vying for this back-office work, which increasingly is being outsourced by U.S.,Western European and Japanese companies. Excerpts with edits and my comments added:
As many as 40 countries are being considered for next year's list, says Janet Pau, policy analyst for A.T. Kearney's Global Business Policy Council, a roundtable for corporate chief executives.The trend is toward "more offshore activity in countries besides India, such as some of the smaller players like the Czech Republic and Malaysia," Pau notes. Moreover, she adds, there is likely to be a farther eastward push within Eastern Europe, to countries such as Romania and Bulgaria, as work spills over from places such as the Czech Republic and Hungary.A similar expansion is expected in other regions of the world. Several of the nations the A.T. Kearney experts are currently considering for inclusion in their spring 2005 survey are unlikely to leap to mind when Western executives contemplate potential off-shoring locations. Among these are Morocco, Tunisia, Ghana and Uruguay.
A longer list of contenders will only reflect the rapidly spreading interest around the world in getting a piece of the BPO action. While the amount of back-office work that is currently sent outside their national borders by Western, European and Japanese companies is still a tiny fraction of the total amount of such work that these companies outsource, it can constitute a substantial source of revenue and employment for recipient countries, as India has demonstrated.locations as disparate as Dubai, Mauritius and Sri Lanka are making plans to capture some of this economic upside. Dubai, a component of the United Arab Emirates, is setting up a Dubai Outsourcing Zone where wholly foreign-owned companies can operate tax-free. Dubai is also promoting its efficient transportation infrastructure and westernized lifestyle to potential outsourcers.Mauritius, already a destination for tourists drawn to its sparkling Indian Ocean beaches, is working on creating a high-tech enclave and touting the multilingual skills of its population. Because of periods of both French and English rule, many of its 1.2 million people are comfortable in both French and English. "I think the next big emerging phenomenon is a hub-and-spoke model in globalization of services," Aron says. Singapore already has become a BPO off-shoring hub whose spokes extend to India, China and the Philippines, and some day could reach out to Sri Lanka and Vietnam, he says. Dubai has the potential to be a Singapore-like hub in the Middle East. It is "stable, forward looking and technological advanced," he says.
Singapore and India bear a symbiotic relationship, Aron adds. So far as business process off-shoring is concerned, one couldn't exist without the other. India has depth and breadth of technologically skilled labor, available at a low cost; English language skills that facilitate communications with the developed English-speaking countries; an improving telecommunications infrastructure and extensive IT experience.Singapore has a far smaller population but it has deeper ties to the West, including a free trade agreement with the U.S., and a highly advanced transportation and internet infrastructure. It also has "squeaky clean markets and judicial systems," Aron says, adding that frequently, when Indian companies export software, the contracts include clauses that provide for arbitration of disputes in Singapore courts. Singapore also has sophisticated managerial talent attuned to Western standards and provides a standard of living that is more attractive to expatriate Western managers than locations in India.Add its geographical location, virtually "next door" by air, and Singapore increasingly is serving as the "natural hub for doing long-term strategic control," Aron says, providing services in such areas as regulatory compliance, auditing, data security, and risk mitigation that overlay nitty-gritty call center and back office work.More than 300 Indian IT-services companies - including giants Satyam Computer Services and Tata Consultancy Services - have located in Singapore, in part to insure themselves against adverse U.S. legislation on trade issues."Singapore is a natural shelter because of its free trade agreement with the U.S.," Aron says. If needed, Indian BPO companies' computers can route their TCP/IP packets of data to the United States via Singapore. Besides, Singapore's extraordinary telecom and physical infrastructure also makes it a prime location for business data continuity and disaster recovery operations of Indian and other companies offering BPO services. Latin America and Eatern Europe shall also be powerful contenders. My Take: I still beleive that India shall retain a marketshare of 65% to 70% for atleast the next 5-6 years. Maturity, process advantage, manpower availability, mindshare - all shall help India maintain the momentum - but the race is getting tougher with every passing day - India has to create world class infrastructure and become more and more and more business friendly -otherwise this could become the case of another missed opportunity.