“Global Sourcing in the New Normal: Adapting to Economic Uncertainty, Changing Markets and Competitive Dynamics”
Posted on August 25, 2010 by AtulNo Comments
“Global Sourcing in the New Normal: Adapting to Economic Uncertainty, Changing Markets and Competitive Dynamics”
by Atul Vashistha
Staffing augmentation. Labor arbitrage. India.
For many out there, outsourcing seems to be defined only by the above – people working for low compensation in locations such as India helping the client save significant monies. That is outsourcing to them. However, the recent and continuing downturn in 2009 and 2010, has upset many notions and models that have been in place for over a decade. What was considered to be the norm or the normal as far as outsourcing is concerned, is now in flux and so requires different responses. The recent downturn has fundamentally changed how firms look at outsourcing. This period also revealed the challenges with current models and practices.
Over the next ten or so articles, I will touch on a topic each time and explore it in more detail. This blog’s topic is
Trend: Location
Take for instance, the call center business. There was a time when India was the only market given due consideration, as far as setting up call center operations was concerned. That notion has been dispelled by other markets such as the Philippines and Costa Rica, which have showcased themselves in exemplary fashion as far as the provision of voice-based customer support services is concerned.
In similar manner, we see the rise of engineering services and local players in Brazil and Russia, increasingly emerging as a premier destination for the outsourcing of complex engineering and applications activities.
The above instances are just some of the many shifts and changes we are likely to continue to witness. In particular, they point towards an endeavor to be on the lookout for markets with newer skill sets, and not just go by established norms wherein predestinated markets such as India have long been considered to be the haven for any and every kind of outsourcing. In the same breath, it is vital that markets with access to equal or better technology processes are also identified. The situation is akin to the age old maxim wherein stock diversification is key to a healthy nest egg; depending on just one or more markets for all of one’s outsourcing needs is really not a very good idea. Increased attrition and competition for resources point to the need for geographic diversification.
Besides skill sets and technology, there are other reasons for which alternate markets also need to be actively considered. Take for instance the aspect of time zone. Many of the Latin American locations lie at the same time zones as the US. There are various outsourcing opportunities that may be tapped here, especially if we are to look at the large Spanish speaking population of the region and juxtapose it with the equally large Hispanic population of the US.
We see the following clusters developing:
Asia Pacific: The key locations in this cluster are India, Philippines, China, Malaysia and Vietnam. Others such as Thailand, Sri Lanka and Indonesia are expected to contribute too.
Europe: The key locations in this cluster are Czech Republic, Poland, Russia, Hungary, Ireland and Romania.
Middle East/Africa: The key locations in this cluster are Egypt, South Africa, Jordan and Ghana. Other locations such as Kenya, Nigeria and Morocco can contribute too.
North America/South America: The key locations are USA, Canada, Mexico, Brazil, Colombia, Chile, Costa Rica and Argentina. Panama and Guatemala can contribute too.
I will be doing a key note at the Global Sourcing Forum in NYC on the 13th of October. Join me in NYC and learn from an industry expert and I on the trends, traps and emerging opportunities that will be the “New Normal” and what you can do to leverage it to your benefit. Learn about rising destinations, new pricing models, leading engagement models, governance technologies and knowledge management models. This keynote is led by Former J&J business unit CIO and Head of eJNJ, John Hammitt and I.
Filed Under: Global Work, Trends
