31 cities with outsourcing potential
Forget Chennai and Mumbai. The outsourcing hubs of tomorrow will be in Guadalajara and Gdansk.
An eclectic mix of 31 cities worldwide will challenge today's best-known outsourcing centers in China and India, according to a new report from professional services giant KPMG.
Faced with overburdened telecommunications infrastructure and overstretched labor markets in traditional offshore locations, these cities are among the alternatives that should be considered by companies, the report says.
The report found that the new cities in the Asia-Pacific region offer lower costs, younger populations, and government incentives such as easy work permits, while those in Europe, Middle East, and Africa promise robust telecommunications and power infrastructures and niche specialization in fields such as data management.
Meanwhile cities in the Americas can draw on large labor pools, a more mature service offering, proximity to major client bases, and multiple language skills.
Size is not a deciding factor among these emerging cities on the list. The cities range from tiny Port Louis in Mauritius with 130,000 residents to the metropolis of Buenos Aires, home to almost 13 million people.
A more important factor is the proportion of computer graduates, the number of research and development institutions, the rate of migration to the cities, and common languages with their target markets.
The full list of cities:
Americas
• Boise, Idaho, USA
• Buenos Aires, Argentina
• Calgary, Alberta, Canada
• Campinas, Brazil
• Curitiba, Brazil
• Guadalajara, Mexico
• Indianapolis, Ind., USA
• Queretaro, Mexico
• Santiago, Chile
• Winnipeg, Manitoba, Canada
Asia-Pacific
• Ahmedabad, India
• Brisbane, Australia
• Changsha, China
• Davao City, Philippines
• Hangzhou, China
• Ho Chi Minh City, Vietnam
• Iloilo City, Philippines
• Jaipur, India
• Nagpur, India
• Penang, Malaysia
Europe, Middle East, Africa
• Belfast, Ireland
• Belgrade, Serbia
• Cairo, Egypt
• Cluj-Napoca, Romania
• Gdansk, Poland
• Lviv, Ukraine
• Port Louis, Mauritius
• Rostov-on-Don, Russia
• Sofia, Bulgaria
• Tunis, Tunisia
• Zagreb, Croatia
Nick Heath of Silicon.com reported from London.
Working with folks in China means a 12-hour lag, with India almost as far off. That tends to play havoc if you're doing development... and works to Central/South America's advantage.
You shouldn't see the time zone difference as a disadvantage. All it is is basically proper resource management. For example, if China is on a 12-hour lag from the US, it really means you get an extended dev period, basically your US team will work on a certain task, and when it is end of the day, prepare some tasks to be continued by the China team (where the work day will be starting shortly) and when they're not done by the end of the day, let them hand of the tasks back to the US team. So in reality, you get an almost full day of productivity.
What should have taken less than an hour to explain wound up taking six days because the DBA on the other end of the Pacific didn't feel like staying up late or getting out of bed early (and I would have met her half-way).
So, it wound up being a rousing game of sending an email, waiting a day, replying to what she returned, etc etc.
You shouldn't see the time zone difference as a disadvantage. All it is is basically proper resource management. For example, if China is on a 12-hour lag from the US, it really means you get an extended dev period, basically your US team will work on a certain task, and when it is end of the day, prepare some tasks to be continued by the China team (where the work day will be starting shortly) and when they're not done by the end of the day, let them hand of the tasks back to the US team. So in reality, you get an almost full day of productivity.
I have Indian friends who have good accents, but they normally came from the big Indian cities though... As for China, english is not their second language too... The best countries are probably Philippines, Canada, Ireland, etc. when it comes to customer interaction...
I don't see all these overpaid executive jobs getting outsourced. Surely an outsourced CEO in India can do the same job for cheaper pay.
This is a trickle down effect and has been proven worthless. Tickle down economy own enriches the already rich. We need a tickle up approach. Billionaires need no more money they can sell everything and their money can supprt their blood line for the next 200 years.
The out-sourcing to many countries do not work because:
1. English becomes a barrier for many. Frankly book knowledge and practical situation is different. Most employers in India do not spend any effort or money to train their resources in communication skills.
2. Most of the employees in India do not get the benefits they deserve like work from home (pathetic infrastructure).
3. The fixed price model for development kills the developers, testers etc. They have to meet the deadline so that the company makes the profits. Hours of working is stretched and most of them work close to 18-20 hour days without extra remuneration. If they protest, they are asked to leave. Only the top management is at gain here because any bonus earned from completing the project on time goes only to them.
4. In order to cut costs, the Indian companies are firing quality and experienced resources. They hire fresh graduates and these resources barely know development. They somehow mange to deliver. You could estimate that the burden of development falls on the shoulders of the couple of experienced developers. The ratio of productive and non-productive resource is usually 2:40.
I have been experiencing all the above and mostly the whole thing is frustrating. As an old developer I sympathize with the poor souls in India. They get a fraction of what we make here but they are not of desired quality most of the time because of the greed of the company top management. The T&M model was better but it is almost gone. We are to be blamed for it too.
Fresh resources deliver bad quality in the long run. There is no emphasis on CMM levels. Agile is misused and mis-understood. Not many understand the concepts of SCRUM. On the long run the American companies will be at loss. What will you do when you do not have quality documentation, designs and effective code?
If you want to out-source then find out the companies in other countries that will hire quality resources. Interview them. Do not just go by cost. I always believe you get what you pay for and nothing good in life comes cheap.
Jobs-Baby-Jobs!
Put "America" First!
Long Live OS/2!
Live Long And Prosper!.
- by nataliebrent March 3, 2009 7:57 PM PST
- outsourcing is an alternative. a business option. up to management to decide what business strategy to take. if it means labor cost savings and economic benefit to further organizational performance through outsourcing, management cannot be faulted for that.
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(25 Comments)much has been said about indian cities in the roster of comments. you might want to check out the outsourcing viability of other cities mentioned like iloilo city and davao city (philippines). the special mention of these cities in the philippines just goes to show that there's more to the philippines than just manila and cebu (cities in the philippines that are already popular outsourcing destinations). quite laid-back and with a cheaper cost of living, you will be surprised to know iloilo and davao are slowly building up a formidable workforce to address the outsourcing boom. indeed, many BPOs have either set up or put up a branch in these cities. check these cities out here:
http://www.iloilocity.gov.ph/iloiloct2009/index.php
http://ilonggos.net/
http://www.davaocity.gov.ph