Outsourcing Trends - The Asian Connection
July 14th, 2008 | by admin |The Global Services Location Index for 2007 compiled by A.T. Kearney clearly identifies India, China, Malaysia, Brazil, Philippines and Thailand as the preferred locations for outsourcing services across all industries. As statistics indicate, its not just tech support and low-end secretarial jobs that are being outsourced. Since these countries are widely known for their pool of talented workforce that is also relatively young and upwardly mobile, domain expertise is now more easily available. The wage-cost factor still continues to draw outsourcers to these markets where offshore services are still cost-competitive compared to inflated wage costs in the developed countries.
Where a favorable business environment is the deciding factor for outsourcing, Singapore and Malaysia are preferred over India and China, although here too, there is improvement. What has worked to create this advantage is that outsourcing firms in these countries have begun to invest time and effort in trying to match the needs of their clients from overseas. With the onslaught of offshore service firms offering opportunities to twenty something just beginning their adult lives, physical and cultural boundaries tend to blur. Throw in a training program that offers them a chance to upgrade their skills, and you have a workforce that consistently strives to move up the “value chain.” Jumping on this bandwagon are not only new graduates, but also seasoned professionals with a multitude of skills and qualifications. In the face of high unemployment rates, entrepreneurship now has many offshoots in the form of consulting, and consequently, freelancing has emerged as the preferred course of work for many certified professionals.
The result - a mass exodus from the suburbs to where the action lies. The average young teen no longer relies on traditional professions but looks beyond the shores. Open a daily newspaper and you’ll find educational institutions and companies making a beeline for Asian students and professionals. Even young mothers and home-makers as well as working executives juggle their schedules to fit in work as virtual assistants, and their working worlds are conveniently shrunk to fit a laptop. With favorable statistics, this trend is here to stay-the International Labor Organization predicts that by 2020, India will have 110 million working age people while China will have 94 million.
A peek into the Asian psyche reveals a state of mind that is readying itself to become a part of the global work environment. Fed a diet of Hollywood movies and Bill Gates, an average city-bred young person belongs to the era where almost every Asian family has a relative abroad. Even the local entertainment bears remnants of western idols, which turns them into anglophiles at an early age. Once they’re ready to join the workforce, overseas seems only a click away. With a very vibrant and open media that openly endorses multi-lateral trade and international relations across the globe, every educated individual in Asia, is fast catching on to leveraging basic qualifications with the help of communication skills and cultural adaptability.
Since the vibrant virtual world reflects outsourcing as a global business trend, all kinds of businesses, especially in the west should no longer ignore outsourcing as a viable component of their strategic vision. Clearly, as services move up the value chain to offer high-tech services, cost advantages of other low-end service locations like Vietnam and Poland are not as viable because businesses realize that in the long run, only quality service pays, even if it comes at a cost.
Current outsourcing trends reflect a shift towards more demand for specialized services that can build synergies with their collaborators. As a consequence, countries that are able to offer skills as well as a favorable business environment will over the years emerge as leading outsourcing locations.
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