Firms Seek Alternatives to India for Outsourcing Higher-Level Jobs

In 2011, Latin America and Eastern Europe surpassed India in the growth of outsourcing facilities.  According to Everest Group, India opened 49 new outsourcing facilities in 2011 while Latin America and eastern Europe opened 54 new facilities.  The trend of shifting functions away from India and toward nearshore destinations is continues to grow as American companies outsource skilled white-collar jobs in research, accounting, procurement, and financial analysis.  As many companies have capitalized fully on their savings potential in India, it is natural progression to seek savings in other functions and geographic locations.   With higher-level functions that don't require mass processing or large numbers of workers, countries like Argentina and Poland are viable options.  While you won't find critical mass in any one Argentinian outsourcing firm, the laborers are skilled and offer a valuable service at a lower hourly rate than companies can find in the U.S.

Source: Bloomberg Businessweek

Outsourcing firms in India are catching on the the trend as well; Tata Consultancy has 8,500 employees operating in Peru and Paraguay.  Genpact, India's largest BPO firm, opened and F&A (Finance and Accounting) outsourcing firm in  Brazil.  Outsourcing is becoming increasingly popular in Eastern Europe.  Particularly in Wroclaw, Poland, 30 universities graduate a steady stream of skilled laborers each year.  Firms including IBM, Ernst and Young, and Microsoft have opened up outsourcing centers in Wroclaw.  Poland and other Eastern European countries offer a better environment for high-level outsourcing.  About 50% of Poland's 20-24 year olds are college-educated, compared with a mere 10% of 20-24 year-olds in India.  It's important to keep in mind that India's massive population means an incomparably larger number of college graduates; India has 109.4 million people between 20-24, compared with Poland's 2.9 million people in that age range.  Though the sheer numbers may always be in favor of India, nearshoring offers valuable benefits that India can't match, such as cultural alignment, language capabilities, and the ability to interact with clients.

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