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Offshore IT Outsourcing Markets

On a broad scale the best markets for offshore IT outsourcing are:

  • Asia Pacific
  • Africa
  • America
  • Europe

Asia Pacific:

The Asian countries have not embraced IT Outsourcing as rapidly as the other regions of the world like the US and Western Europe. The exception in Asia Pacific has been Australia and New Zealand - countries that are culturally western. Cultural differences may explain why many countries in the region are hesitant to Outsource. They prefer to keep their IT operations in-house. How ever in view of increased global competition, countries in the region are increasingly outsourcing to gain a strategic advantage. India being one of the fastest growing markets in the software development area also happens to be the best market for IT outsourcing according to sources. Japan and China come second in the lead with regards to the Asian markets for outsourcing.

Africa - Emerging as a noticeable destination.

The much-touted isolation of the South African market is turning out to be a boon in disguise. The IT manpower that was homegrown to achieve self-reliance is now beginning to be leveraged to serve global markets. The major reasons being:

  • Test-bed for emerging technologies

SouthAfrica has traditionally been a good test-bed for emerging technologies, and an ideal launching pad for new and enhanced products. This is because it has been a relatively isolated market. A case in point is ERP.
SAP and BAAN have been involved in the South African market since 1994. And the country has been a good test bed for new products.

  • Large, active local market

Major IT outsourcing vendors like IBM Global Services, EDS and CSC have established a South African presence. There are others like BizSoft Group and Goldstone Technologies that have started offshore outsourcing. In a recent development, The Greater Johannesburg Metropolitan Council has appointed a consortium consisting of IBM South Africa and Masana Technologies as it's IT outsourcing partner in a five-year contract valued at more than Rs.500million.

  • Homegrown players

Dimension Data, a leading player has recently rolled out an IT network in less than 60 days in the US. The network links 400 offices of Randstad North America. Randstad North America is part of Netherlands-headquartered Ranstad Holding, the world's third largest provider of employment services.

CSIPER Consulting is a leading ERP services provider. It offers SAP consulting, implementation, and training to organizations around the world. Johnson & Johnson, Caltex, and Land Rover are among its clients.

  • Government support

IT skills are in high demand. And brain drain is a constant. In order to address the issues of IT education and brain drain abroad, the South African Government and private organizations are working together.

The University of Pretoria has extended its MBA program to include an ERP program. Also, the University of South Africa is launching an IT focused business leadership program. Motorola is promoting engineering and other IT related education programs.

America:

Brazil, Chile and Costa Rica were the highest rated Latin American countries in a recent analysis to stand out as the major outsourcing markets in the US. Having a nearshore outsourcing company has benefits of its own.

Advantages of Near-Sourcing

  • Same time zone with the US and Canada (the largest Outsourcing market).
  • Reduced tariff because of the North American Free Trade Agreement (NAFTA).
  • Cheaper travel costs for North American customers.
  • Wages comparable to countries like India, where rates are on the rise.

Besides these, there are certain country specific factors that make near-shore companies preferable over others. Mexico, for instance, shares the same socio-cultural milieu with the US.

Europe:

When we talk about Europe role in the outsourcing scenario it gives us the role of e-crm outsourcing. This has been the growing trend in the European software companies. Customer Relationship Management (CRM) is used to maximize satisfaction through a bank's knowledge and understanding of customer needs. Internet banking, empowered with CRM strategy, has the potential to let banks attract new customers and boost its revenue generating activities.



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