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Outsourcing Roadmap Index

Service buyers: Selecting the offshore location

After reviewing country resources and pre-selecting a number of prospective outsourcing destinations it is time to evaluate those countries more in detail. Before constructing the country evaluation grid create a good inventory of resources. In the resource inventory include:

General country information, references and research

Third party sector research

Web resources

 
 

Trade and industry association. Often they are very good entry points to the country's IT and BPO sector. They can put you in contact with decision-, and policy makers as well as government departments and officials.

 
 

Government resources (in your own country and in the target country). Request information from the relevant embassies! They can provide business, travel and other important information. Sometimes they also offer business support programs to tap on (financing, marketing, trade missions, business development etc.) The embassies later can also put you in contact with companies and government agencies.

 
 

The country evaluation checklist

 
 

Geographical and geopolitical considerations

 

Social structure

IT services export growth rate

 

IT sector organisations and technology parks

Global offshore visibility and related trends in the past 12 months

 

Cultural fit and adaptability (corporate, social, etc.)

IT penetration

 

Employment law

Infrastructure (communication, internet, etc.)

 

Availability of necessary skills

Legal structure and legislation (corporate, financial, taxation, import and export, foreign ownership, profit relocation, etc.)

 

Education output and structures

Government support and incentives. Possible impact of government and regulatory changes to the outsourcing venture.

 

Language skills

Intellectual property protection

 

Compensation costs

Political stability

 

Attrition rates

Corruption

 

Business domain experience

Business climate and environment

 

Data, systems and general security

Financial structure

 

Quality certifications

 
 

Country evaluation must include a detailed risk assessment of the issues related to the list above.

 
 

Download the Country Evaluation checklist here.

 
 

How to use the country evaluation checklist

 
 

The country evaluation checklist worksheet is NOT ‘beautiful’ so it can be easily modified and ‘beautified’ later, according to the user’s needs and corporate style.

 
 

Here are the simple steps to make the evaluation checklist work for you;

 
 

1. Modify the left column. Add/edit/delete issues and country features you might consider important for your country selection

2. Adjust the formulas in cells E3, G3 and I3 if necessary

3. Review the Relative Importance and Issue Rating scale. Go to the List worksheet and adjust the rating scales if necessary.

4. Write on the top of the table the country names you are evaluating

5. Do not write in the colored cells. They either contain formula or have no meaning to the calculations at all. TIP: when you are ready with modifying the table protect the these cells.

 
 

6. Set the Relative importance of each issues/country features individually. You can use only numbers set in the list of Importance (on the List worksheet).

 
 

7. Evaluate each country feature or issue individually and give a rating according to your rating scale.

 
 

8. When you are finished, you can see the country ratings at the top of the table.

 
 

What’s next?

 
 

The country rating grid can be a useful tool for negotiating, at management level, the possible outsourcing destinations. However, the evaluation must be put in the context of the company’s whole outsourcing strategy.

 
 

Based on your evaluation visit the most prospective countries. This will help you to verify and refine your selection and it will also get you in contact with companies, IT associations, government bodies, IT decision-, and policy makers. The information you pull together during a country visit will be essential to finalize your country selection and start to find suitable partners.

 
 

Why is it important for service providers to know about country selection?

 
 

There are a number of reasons a service provider in a low cost country should know, how prospective customers select a country for their offshore operations. Some countries are well known outsourcing destinations, such as India, China, Israel, etc. Some countries are generally better known than others, people have more information (bear in mind that here we do not talk about the quality of the information, only the availability and quantity) such as Russia and China. Unfortunately on most of the low cost countries there is not enough information available and when information reaches the general news media it is, more often than not, about a disaster, political upturn, war, disease or any other ‘newsworthy’ event, which regularly means ‘bad news’. I think all of us can cite many examples. Consequently, many low cost countries;

 
 

do not have a too positive image in general

 
 

have to deal with the perceptions of people

 
 

have very little or no visibility as an IT outsourcing destination

 
 

However, a number of countries are working gradually to change this, often not too encouraging, picture. It is crucial to present the right information to prospective customers. Ideally the country has a one-stop-shop (web site, office, regional representative) where all information and information source is present and available for customers. Consequently, it is crucial to know the buyers’ country selection process and criteria set. Often country level promotion is seen as a the task of government or IT sector associations. However these bodies sometimes do not or can not fulfill this task. In a situation like this companies play a vital role to provide at least entry level, but well selected and well presented information on the country to prospective customers.

 
  Further, one of the most difficult task of any service provider is to formulate a unique value proposition. This is all about to differentiate from other competing suppliers. It is important to emphasize the key competences and advantages the country offers in the value proposition.  Sometimes this is the only really ‘unique’ feature to offer.  
 

 
   

 

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