There's No Lack of Emerging Offshore Alternatives, Says A.T. Kearney

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"Flavor of the month" is a well-known concept when used to describe serial daters -- typically aging guys looking to foster a youthful image.


But it also seems to sum up the activities of many companies chasing after the cheapest and/or best offshoring experience -- and of the countries promoting themselves as alternatives to offshore giants such as India and China.


Estonia, for instance, landed on A.T. Kearney's list of top 50 global offshoring locales, beating out better-known locations such as Russia and Canada, reports CRM Buyer. Among the companies with a presence there is eBay subsidiary Skype. Ten new countries have joined the list since 2005, the last time that A.T. Kearney compiled one.


Financial attractiveness, based on a country's wages, infrastructure and taxes, accounts for 40 percent of the rating A.T. Kearney assigns to countries, which likely explains the entry of such locations as Uruguay and Pakistan.


But will those countries demonstrate staying power as desirable destinations for offshoring? Experts caution that cost should not be the primary factor in offshoring decisions.


Many of the countries make sense when viewed from a non-U.S. perspective. While U.S. firms shun Pakistan because of concerns over terrorism, it's a popular offshore site for Middle Eastern countries. Senegal and Morocco are populated with French speakers to staff call centers.


Other countries attract offshore work from certain industries because of their talent pools with specialized skills. Uruguay, for instance, is known as the "Switzerland of Latin America" because of its strong finance and banking industry.


Governments often go to great lengths to improve the offshoring appeal of their countries. For instance, the CRM Buyer piece details Kenya's efforts to install a submarine cable that would connect to Fujairah, one of the seven United Arab Emirates, and provide cost-effective bandwidth.


It's not surprising that governments are willing to go to this kind of trouble. Frost & Sullivan expects the global market for shared services and outsourcing to grow to $1.43 trillion by the end of 2009, from $930 billion in 2006.


And companies are increasingly willing to spread their offshore business around, says Gartner, which predicts that some 30 percent of Fortune 500 enterprises will outsource to three or more countries by 2010, up from less than 10 percent that do so now.