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Opportunities and risks in 5 global outsourcing locations

Stephanie Overby | April 11, 2016
A look at some of the key trends impacting IT and business process outsourcing locations around the globe—from U.S. veterans entering the IT outsourcing talent pool to currency fluctuations in China and Latin America to the geopolitical situation in Ukraine.

3. Ukraine: Uncertainty benefits neighboring countires

“Ukraine has been an important location for global services, especially for IT services,” says Verma. Some of the the war-torn nation’s talent and IT service operations are migrating to nearby central and eastern European countries.

“There was a spurt in outward migration of IT talent from Ukraine resulting in improvement in talent availability in other countries such as Poland, Bulgaria, Romania, Slovakia and the Baltic States,” says Verma. “While migration among CEE countries has always existed, the geopolitical situation in Ukraine has seen heightened activity, including specialist IT workers (such as game development).” The biggest beneficiaries have been countries, like Lithuania, with relatively small talent pools some of whom have simplified visa procedures for IT and software professionals.

Some companies serving global clients have shifted their employees to neighboring countries to ensure uninterrupted delivery. Luxoft, for example, shifted 500 Ukraine-based workers further west to Poland, Bulgaria and Romania.

“The geopolitical situation in Ukraine has also led players (both foreign and Ukraine-based) to adopt a wait and watch approach to Ukraine and consider alternate locations in for expansion or new operations,” says Verma. “This has also impacted areas in which Ukraine has typically led its peers, such as web design and gaming. Consequently, countries such as Poland and Lithuania have reported higher growth in non-traditional IT industries. Lithuania, for example, has attracted a number of computer game development companies from Ukraine and Russia, including Insight, Melior Games, Charlie Oscar, Flazm and Alternativa Platform.  

4. India: Pune gets big and digital India takes off

Pune is officially a tier-one location for global services delivery. The city saw a surgey in activity in 2014 and 2015 with companies like Deutsche Bank, MasterCard, Allstate, Volkswagen, Tech Mahindra, and TCS setting up shop. However, says Verma, Pune offers several advantage to its peers like Mumbai and Bangalore, including lower attrition, wage inflation, and operating costs and better quality of life.

The Indian government launched Digital India in 2015 to transform the nation into a digitally empowered society and knowledge economy. The initiative aims to integrate government departments and the people of India by making government services available electronically.

The initiative also includes connecting rural areas with high-speed Internet networks. This initiative has three core components, i.e., creating digital infrastructure, delivering services digitally, and increasing digital literacy. Each of these components can potentially create several opportunities for the global services industry, across India-based and multinationals firms. Digital India offers four key opportunity areas for companies:

1. Direct business opportunities: Digital India initiative has the potential to generate business opportunities worth $3-4 billion annually for the Indian IT-BPO industry. On the technology side, it is likely to provide opportunities ranging from infrastructure (e.g., network), to hardware support, to application development and maintenance. One of the key objectives of the initiative is to reduce paper work by increasing digitization. This is likely to create opportunities on the BPO front, especially in digitizing existing documents (e.g., data processing and document processing for BPO companies).

 

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