Electronics Production | June 02, 2009

And what about the safest outsourcing destinations?

Part 2 of 2: Outsourcing to India, China, or Eastern Europe? We already look at the riskiest outsourcing locations, so what are safest locations?
The Black Book study also shows the 25 safest locations for outsourcing. Criteria assessed in this study include Corruption, Geopolitical Issues, Unstable Currency, Infrastructure or Legal System Immaturity. The Top10 of the safest locations also make 4 European countries.

Here are the Top10 of the safest outsourcing destinations:

10: Cairo (Egypt): scored best on stable currency and local strife, and has a small risk of climate hazards. However, Egypt still has to improve on such issues as corruption and organized crime, as well as transnational and geopolitical issues.

09: Beijing (China): it scored highest on climate hazards, personal crime rate and police to citizen ratio, or local strife. However, the country needs to improve its uncontrolled environmental waste and pollution, as well as the immaturity of its legal system.

08: Monterrey (Mexico): scored on local strife and transnational and geopolitical issues. They also gained points currency stability. However, the country needs to improve - such as Egypt - on corruption and organized crime.

07: Budapest (Hungary): is gaining high scores on climate hazards, as well as local strife and secure networks, infrastructure, technology and telephone. Hungary however, needs to improve on its crime rate and police to citizen ratio, on corruption and organized crime.

06: Prague/Brno (Czech Republic): scored on stable currency, climate hazards and local strife. However, they need to improve on crime rate, police to citizen ratio and the legal system immaturity.

05: Toronto/Montreal (Canada): scored mainly on the maturity of its legal system, transnational and geopolitical issues and secure infrastructure. Canada could still improve on its crime rate and police to citizen ratio.

04: Krakow/Warsaw (Poland): scored on environmental waste and pollution issues, as well as on secure networks, infrastructure, technology and telephone. However, Poland still needs to focus on corruption and the imaturity of its legal system.

03: Santiago (Chile): scored highest in geopolitical issues, local strife and the maturity of its legal system. However, they it has to improve on crime rate, police to citizen ratio and the uncontrolled environmental waste and pollution.

02: Dublin (Ireland): scored highest points on the maturity of its legal system, the lack of corruption and geopolitical issues. However, terrorist threats, crime rate and police to citizen ratio make it only number 2 on the list.

01: Singapore (Singapore): was ranked the safest outsourcing location, with an overall high score in all segments.

It has to be noted however, that - while we included areas of improvement - those issues were not as grave as with yesterday's list. Additional to that, the Top25 of the safest outsourcing locations also included other European locations: Bucharest Romania (11), Reykjavik Iceland (12), Sofia Bulgaria (16), Bratislava Slovakia (17), St. Petersburg/Moscow Russia (18), Belfast Northern Ireland (21) and Kiev Ukraine (23).

The customer satisfaction survey in the managed services sector, the Black Book 2009 State of the Outsourcing Industry report also reveals six significant paradigm shifts impacting global suppliers and buyers for the latter half of this year and into 2010.

• Indian outsourcers have regained strong buyer confidence by demonstrating tangible transparency, accountability and ethical management practices to eighty-one percent of US companies buying services offshore;
• Technology budgets will be fully restored or expanded over next twelve months, corroborated by sixty-eight percent of outsourcing buyers;
• Buyers predict fastest spending growth in progressive outsourcing organizations that consistently demonstrated client empathy through the downturn. As the economy improves, sixty percent of clients anticipate shifting from less agile outsourcers that were unmovable through recession-related renegotiation issues;
• BPO projects that deliver speedy return-on-investments are highest in demand. 180-day ROI's, typical in Procurement Outsourcing, Accounts Receivable, Accounting and Financial transaction processing, will be creating the greatest growth in new contracting through 2010;
• Cloud Computing & Software-as-a-Service explodes IT outsourcing growth guidance. Remote Infrastructure Management and bundled applications development/maintenance initiatives which have been on hold by ninety-one percent of CIOs will receive the most immediate funding; and
• The multishore trend expands as more outsourcers diversify in lower cost locations. Although clients have yet to score any Chinese outsourcing firms in the highest Black Book ranks of overperformers, China's Neusoft, entered the 2009 group. Two South American providers, CPM Braxis and Neoris, maintained top survey rankings, and one Russia-based firm, EPAM, was highly nominated.

"Outsourcing's cost argument still outweighs political issues in this survival economy," said Scott Wilson, author of "The Black Book of Outsourcing", and principal of Brown-Wilson Group, a Datamonitor company. "Despite the pending policy changes in U.S. corporate tax code, high US and UK unemployment rates, and the recent offshore scandal at Satyam, the core drivers of outsourcing have remained intact," added Mr Wilson commenting this year's results.

Source: TheBlack BookofOutsourcing


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