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Global outsourcing: risks and opportunities

Aditya Verma shares to us some global trends in the IT and business process outsourcing industry from some top destinations. This article is taken from CIO.com’s interview with Verma.

  1. United States

For some companies like JPMorganChase, Bank of America, HP, USAA, Wells Fargo, Amazon, Intel, Shell, Accenture, CSC, CGI and IBM prioritize hiring former military personnel. Aditya Verma from Everest Group says that hiring veterans is a key focus for these US companies in IT and BPO departments.

In the simplest perspective, it has become a win-win situation for both the veterans and the companies. It’s a continuous source of income for military veterans and a non-stop source of talent pool for companies especially now with the increase of demand in the IT and BPO sectors.

The US government is in full support of this initiative by providing incentives to companies who hire and train veterans with additional negotiated benefits.

  1. Brazil and Colombia

Currency fluctuations that affected almost all leading offshore destinations in 2015 had a more serious impact on certain Latin American countries especially Brazil and Colombia. Brazil’s labor arbitrage benefits doubled while Colombia’s peso depreciation made the country relatively more attractive to the outsourcing world.

Verma says, “This fluctuation has impacted both countries in a positive manner, improving their relative attractiveness for global services, and is likely to impact both existing players and companies considering these countries.”

“This fluctuation has impacted both countries in a positive manner, improving their relative attractiveness for global services, and is likely to impact both existing players and companies considering these countries.”

~Aditya Verma, Everest Group

However, some key BPO players have remained cautious in making fresh investments in Brazil because of its macroeconomic instability scenario and some changes in tax regulations that impact the IT and business process services sector.

  1. Ukraine

An article by Kathleen Hall features figures from the Ukrainian Hi-Tech Initiative that reported an estimated growth in Ukraine’s outsourcing industry by 20% in 2010.

“Ukraine has been an important location for global services, especially for IT services,” says Verma. The country offers one of the best IT services globally in a low cost and has established a name for companies that need outsourcing work within Europe.

However, the geopolitical situation, the problems on corruption and the possibility of social unrest have its drawbacks. Verma says, “The geopolitical situation in Ukraine has also led players (both foreign and Ukraine-based) to adopt a wait and watch approach to Ukraine and consider alternate locations in for expansion or new operations.”

  1. India

The Indian government just launched Digital India in 2015 – a national project that aims to digitize all government processes in India both in urban and rural areas. Moreover, the project will allow rural areas to get connected with high-speed Internet networks allowing it to create digital infrastructure, to deliver services digitally and for digital literacy to increase.

India is already known in the business process outsourcing industry. Although the country was said to have declined in stats, this initiative has definitely reshaped India’s potential to grow more in the BPO industry.

  1. China

China believes that currency fluctuation is due to market-driven currency movement. In 2014-2015, Renminbi has dropped roughly 4% compared to the US dollar. The depreciation is expected to continue on giving an attractive opportunity for both buyers and service providers operating in China. If currency movements remain in line with the current projections, the IT-BPO companies will likely benefit due to an increased cost arbitrage over the next two years.

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