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Outsourcing
Roadmap Index |
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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 |
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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. |
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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. |
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The country evaluation
checklist |
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Geographical
and geopolitical considerations |
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Social structure |
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IT services export growth rate |
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IT sector organisations and technology parks |
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Global offshore visibility and related
trends in the past 12 months |
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Cultural fit and adaptability (corporate,
social, etc.) |
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IT penetration |
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Employment law |
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Infrastructure (communication, internet,
etc.) |
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Availability of necessary skills |
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Legal structure and legislation (corporate,
financial, taxation, import and export,
foreign ownership, profit relocation, etc.) |
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Education output and structures |
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Government support and incentives. Possible
impact of government and regulatory changes
to the outsourcing venture. |
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Language skills |
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Intellectual property protection |
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Compensation costs |
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Political stability |
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Attrition rates |
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Corruption |
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Business domain experience |
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Business climate and environment |
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Data, systems and general security |
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Financial structure |
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Quality certifications |
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Country
evaluation must include a detailed risk assessment of
the issues related to the list above. |
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Download
the Country Evaluation checklist
here. |
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How to use the country
evaluation checklist |
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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. |
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Here are
the simple steps to make the evaluation checklist work
for you; |
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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. |
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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). |
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7. Evaluate each country feature
or issue individually and give a rating according to your
rating scale. |
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8. When you are finished, you can
see the country ratings at the top of the table. |
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What’s next? |
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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. |
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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. |
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Why is it important for
service providers to know about country selection? |
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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; |
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do
not have a too positive image in general |
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have
to deal with the perceptions of people |
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have
very little or no visibility as an IT outsourcing
destination |
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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. |
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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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