Date: 15.05.2004 :: Page: 3 of 5

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Maturity of countries

We could also say: visibility of countries on the global supplier chart of offshore IT services outsourcing.

Often we see charts usually showing four tiers of countries using similar terms such as:

leaders

challengers

up and comers

beginners

But how can we put countries in any of the above categories. Where do we draw the threshold? What are the factors influencing a country’s global acceptance as a viable offshore IT outsourcing destination?

In 2003 Erran Carmel had discussed the above issue (Erran Carmel: Taxonomy of New Software Exporting Nations). He had introduced three threshold criteria between each of the tiers:

maturity: the number of years the companies have been exporting IT services or products

critical mass: number of businesses exporting IT services or products

export revenue: from exporting IT services and products

From our practice we know that in many countries one can obtain quite reliable information on the number of businesses exporting IT services or products. It is a bit more difficult to establish the timeline of export activities and almost impossible to get reliable financial information.

For practical reasons we also use, what we call, the country’s “Offshore visibility index”. This index shows how much a country is known or accepted as a IT offshore outsourcing destination within a country or territory.

The second index we use is the country’s “Offshore attractiveness index” which is a blending of factors such as communication infrastructure, IT education output, government support, etc.

We also have realized that the maturity and acceptance (or the visibility) of countries differ depending on the nature of offshore outsourcing services they offer and the geographical area we assess.

Example: at large the Philippines is considered as one of the most attractive offshore outsourcing destinations (Challengers). However, if we look at European businesses, often they know quite little about the Philippines and the offshore outsourcing opportunities it offers. The geographical distance is usually considered too large and from time-to-time disturbing political events keep the global news agencies busy. Consequently the visibility of the Philippines in Europe is quite moderate. Indeed, the Philippines offers great offshore opportunities in BPO, while software related services are lagging somewhat behind.

In practice, we advise potential Buyers to create a “Country Risk Assessment” to compare the feasibility of various offshore IT outsourcing locations.

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