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Is There a 'Next India' in List of Offshore Alternatives?

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When I saw a CIO Update piece titled "Top 10 Outsourced IT Destinations You Haven't Thought Of," I thought, "Oh no, not a sentence ending with a preposition" and mentally re-titled it "10 Outsourced IT Destinations You Haven't Considered." (I went to a parochial school where the nuns made us diagram sentences on the board for hours at a time, and old habits die hard.)

 

I then moved on to my next thought: Having covered outsourcing for several years, I don't exactly agree with the premise. Countries around the globe have been working on developing the necessary technical infrastructures and labor pools to position themselves as "the next India." Some of them have landed on similar lists, like one from A.T. Kearney in which Uruguay, Estonia, Pakistan and Senegal placed among the consulting company's top 50 offshoring locales. So many companies have probably already considered at least a few of the alternatives on CIO Update's list.

 

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Having sad that, the list certainly deserves a peek. Kenya and Nicaragua are suggested as good bets for call centers. I wrote about Kenya's burgeoning call center business back in 2007, noting that while the country had an inexpensive labor force with impressive English language skills, it lacked a reliable telecommunications infrastructure. That problem pretty much vanished with the recent installation of three fiber-optic cables. The operator of a Kenyan call center told CIO Update his 55 employees serve customers including DirecTV. His attrition rate is less than 10 percent a year and costs are 20 percent less than in the Philippines, a better-known call center location.

 

In addition to Nicaragua, other Latin American entries on the list are Argentina, Guatemala and Uruguay. When I interviewed Peter Ryan, head of Datamonitor's contact center outsourcing practice in late 2008, he told me Latin America's outsourcing star was rising, thanks to the efforts of political leaders, including former Mexican President Vicente Fox and Colombian President Alvaro Uribe, to create a business-friendly climate in the region.

 

One of the key benefits of outsourcing in Latin America is workers' ability to easily cross borders, said Chris Disher, a retired management consultant and co-founder of the International Association of Outsourcing Professionals. Prompted by its membership, the IAOP launched a Central American chapter in September 2008. Recruiting workers from multiple countries "gives you added flexibility," Disher told me.

 

Egypt is mentioned, not a surprise based on my late 2008 interview with Hazem Y. Abdelazim, CEO of Egypt's Information Technology Industry Development Agency (ITIDA). He told me IBM, Cisco and Intel are among the countries that have established a presence in Egypt, and IT is one of the country's fastest-growing sectors.

 

Low-cost U.S. locations are perhaps the most welcome entry on the list, at least from a political standpoint. Sixty million Americans live in non-metro areas, where wages are lower than in larger cities, and $7.2 billion in federal stimulus funds have been earmarked for the expansion of broadband in rural areas, said Monty Hamilton, CEO of Atlanta-based Rural Sourcing Inc., during a presentation at the recent 2010 Outsourcing World Summit. These factors are among those contributing to what he calls a "rural renaissance" and the possibility of fewer jobs going offshore. A slideshow contains highlights of Hamilton's presentation.

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