Popular nearshoring destinations are gaining some ground according to AT Kearney’s Global Services Location Index. After an 18% wage decrease in Mexico, the country made its way to the top of the Latin American countries and ranked 6th overall. Chile, dropping from number 8 in the 2009 index, ranked 10th this year. Why did Chile drop? According to AT Kearney’s website, the rankings are assigned based on many factors including skilled labor, inflation, language capabilities, and infrastructure modernization. In the case of Chile, their resilience in the wake of a global economic downturn allowed the price of wages to remain stable. Relative to other outsourcing hubs, this made Chile’s cost of labor less competitive, but in the midst of global political instability, should the Global Services Index penalize a country for keeping their wages stable?
The internet shut-down in Egypt had disastrous effects for BPO/ ITO centers reliant on a robust internet to succeed, and this turmoil occurred immediately after AT Kearney’s rankings placed Egypt 4th in the Location Index. Granted this type of problem is truly unpredictable, but how can companies account for political risk when choosing an outsourcing destination? In addition to consulting sources such as AT Kearney, invest in a political risk analysis of countries where critical business and IT processes are being supported. Compare the risks of occurrences, such as the Egypt situation, with the cost-savings and business benefits of using these locations. Saving 30% from your bottom line won’t provide the same utility if you risk not running your business properly for long periods of time.
No comments:
Post a Comment