When one thinks of outsourcing and offshoring, one automatically thinks of India and the Philippines as the primary and most logical destinations. However over the last few years, many new localities have opened up, with outsourcing operations setting up across a diverse range of geographical locations, including Central and South America, Africa, Eastern Europe and even regional Australia.
Initially, the principal driver for BPO was as a business practice to reduce costs. More recently it is increasingly viewed as an instrument to add value and quality. Rather than off shoring, companies from Australia, US and Western Europe are looking to ‘right shore’ which translates into near shore or on-shoring their outsourcing relationships. For the US, near shoring options include Canada, Central and South America.
To meet these new demands and to compete against competition from areas like the Philippines and South America, Indian outsourcers are looking to invest in delivery centres across the world thus becoming Pan Global. The India BPO market has bred some extremely large players who are cashed up and scouring the planet looking for acquisitions as they look to offer an end-to-end BPO supply chain. According to Deepak Patel CEO, Aditya Birla Minacs, if you are going to be a significant global player, one will have to have a near shore option as well as offshore solutions to offer.
Indian outsourcer, Wipro BPO now has centres in Philippines, Eastern Europe and Australia among others, and plans to tap newer geographies like Japan. During 2010, Aditya Birla Minacs and other Indian outsourcers have been establishing and strengthening their delivery centres in North America.
In a recent interview Wipro BPO’s senior vice-president Ashutosh Vaidya said, “We have set up 15 overseas delivery centres and parked 3,000 people there to neutralise near shoring by global outsourcing firms like Accenture and CapGemini.”
Australia
Though labour costs are similar to the US and Europe, real estate costs, particularly in regional areas, are significantly less expensive considering the skill level of the workforce and level of infrastructure. Geoff Hill, Manager Economic Development for Latrobe City (Eastern Victoria – Australia) believes that regional areas like Latrobe City can offer great commercial opportunities for Greenfield sites, with existing floor plates ready for fit out and very competitive and workable costs.
Many Australian rural areas have impressive high quality educational facilities and infrastructure, giving outsourcers access to labour resources that are highly educated and skilled. It means organisations in Europe and North America can outsource to a location that is cheaper, yet has all the advantages of being part of an advanced economy with a stable political system. Hill comments, “Regional areas like Latrobe City do not have highly saturated markets, and therefore can offer prospective outsourcers access to a labour force with a low attrition rate.” Needless to say that people in rural and regional areas want to stay in those areas and be close to family and tend to stay as employees for longer. In a full employment economy like Australia, it’s hard to get staff in metropolitan areas and it brings the rural areas into play.
Recently, UK outsourcer Vertex, who employs 10,000 people across 70 locations in the UK, North America, Australia and India, announced the building a new facility in Ballarat (Western Victoria) representing millions of dollars of investment in regional Australia, the new facility will employ 600 people in the next two years. The Victorian Office of Housing Maintenance established a customer care call centre in La Trobe, generating 60 new jobs in the region. “The successful attraction of these organisations will enhance and diversify the local economy and have an enormous positive impact on existing businesses,” said a delighted Hill.
Brazil and South America
Since 2008, Brazil and other South American countries have been getting in on the BPO and outsourcing market. Their proximity to North America make them very desirable as near shoring options. Companies such as IBM, Unisys, HP, EDS, Accenture, Deloitte, Motorola, Intel and Nokia all have offshore centers in Brazil, Guatemala, Chile and Argentina. Indian outsourcers such as Tata and TCS have also setup delivery centres in South America.
Labour costs in South America are cheaper than in the US or Europe, where on average there is a 30% salary advantage cost over the US. However, labour costs are not as cheap as they are in India or China.
Eastern Europe
According to consulting firm McKinsey, between 2005 and 2007, the BPO industry in Eastern Europe nearly tripled, becoming a favorite location for offshore outsourcing. The region offers low wage levels, is a relatively low risk location for investing, and has a reasonable and reliable level of infrastructure in place.
The other benefit is the region’s geographical and cultural proximity to Western Europe, making the process of setting up offices much easier. There is also fewer language barriers compared with elsewhere, with German and French both being widely spoken.
The industry is becoming a truly global industry, where there is a diverse range of suitable locations offering different benefits and advantages. And now it’s more a question of finding the right ‘shore’ rather than the cheapest ‘shore.’
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[...] When one thinks of outsourcing and off shoring, one automatically thinks of India and the Philippines as the primary and most logical destinations. However over the last few years, many new localities have opened up, with outsourcing operations setting up across a diverse range of geographical locations, including Central and South America, Africa, Eastern Europe and even regional Australia…more [...]