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Outsourcing: Where the Jobs Are

When the going gets tough, it's the jobs that get going -- increasingly overseas.

Gartner Inc.'s report late last year highlighted the top 30 hotspots. The market watcher's list has a few surprises as it attempts to account for geopolitical unrest -- particularly in the usual outsourcing locations such as India and China -- which it noted can impact outsourcing operations. Gartner touted a list of alternative countries including Mexico and Poland that have merged as credible competitors to both India and China, as well as Brazil and Russia.

"Countries such as Mexico, Poland and Vietnam have continued to strengthen their position against leading alternatives, while others have forced their way into the 'Top 30.' These countries will be seeking to take advantage of the opportunity created by the increased focus that many organizations now have on cost optimization, as a result of the current economic crisis," said Ian Marriott, research vice president at Gartner, in a statement.

Gartner gave the impression of an offshore free-for-all, with many would-be contenders jockeying to position themselves for an expected surge in offshore activity. "As a result, four countries have dropped out of the 'Top 30' and have been replaced by four that were just outside the 'Top 30' 12 months ago," Marriott said. "This does not mean that the four 'relegated' countries have underperformed this year, but the dynamic nature of the market has seen others making strong progress."

Gartner ranks its top 30 in terms of region. Its listing for the Americas, for example, includes both the obvious (Brazil, Canada and Mexico) and the not-so-obvious, including Argentina, Chile, Costa Rica and Panama (the latter is new to Gartner's top 30).

Ditto for the outsourcing-centric Asia-Pacific region, where -- in addition to mainstays China, India, Malaysia and Singapore -- Pakistan, the Philippines, Thailand (new to Gartner's list) and Vietnam have come to the fore. These countries join the pricier ANZAC axis of Australia and New Zealand to round out a teeming Asia-Pacific outsourcing market.

The combined African and EU region (which market watchers like to dub Europe, the Middle East and Africa, or EMEA) comprises an especially rich outsourcing field, with the Czech Republic, Poland, Romania, Slovakia and Spain challenging traditional powers Ireland, Israel and Russia. Rising powers in the EMEA region include Hungary, Morocco, South Africa and Egypt. In fact, two of Gartner's new top 30 entrants -- Egypt and Morocco -- hail from the EMEA region.

Dropping off of Gartner's list were Northern Ireland, Sri Lanka, Turkey and Uruguay.

The outsourcing landscape is changing, according to Gartner. When the United States was the prime driver of outsourcing activity, outsourcing centers with strong English language skills tended to predominate. Although the United States is still a major buyer of outsourced services, other countries -- notably France -- have also ramped up their own outsourcing engines. One upshot of this is that countries with significant French-speaking populations (e.g., Canada, Morocco and Vietnam) are emerging as centers of offshore activity.

Gartner also remarked on a shift toward near-shore locales, largely to help mitigate the disruptions posed by time zone differences and travel requirements. As a result, near-shore centers such as Egypt, Panama and Thailand made their first appearances on Gartner's list.

Elsewhere, Gartner highlighted the growing importance of offshore outsourcing centers in the Americas, largely because the United States -- still the prime mover in global outsourcing -- itself is home to a growing Spanish-speaking population.

"Latin-American countries are able to leverage their Spanish-language skills increasingly in the U.S. as more organizations now require Spanish language from their providers for communication with parts of their workforce who speak Spanish as a first language," the Gartner release said.

As time goes on -- and if the economic crisis worsens -- Gartner expects that outsourcing providers will increasingly cultivate non-traditional outsourcing locales chiefly as a means of enhancing their proximities relative to emerging outsourcing customers, such as (especially) Scandinavia and France. "Given the current financial turmoil, cost will remain an important factor. However, having the right balance between lower cost and higher risks, and lower risks and higher costs, will be critical in times of recession and uncertainty," Marriott concluded.

About the Author

Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.

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