|OUTSOURCING: A PASSAGE OUT OF INDIA|
Aruba, March 23, 2012 - For years there was pretty much one choice for U.S. companies seeking to move jobs offshore: India. Outsourcing grew to a $69 billion business there and transformed backwaters such as Chennai and Hyderabad into teeming cities. That wave has crested. In 2011 companies in Latin America and eastern Europe opened 54 new outsourcing facilities, vs. 49 for India, according to industry tracker Everest Group.
The two regions are challenging the subcontinent’s dominance in outsourcing as American corporations increasingly ship higher-level jobs offshore. India had substantial advantages in offshoring’s first phase: plenty of English speakers to staff call centers and enough tech talent to run remote data-processing and computer support centers—all at about a 60 percent discount to stateside workers. But having wrung substantial costs out of back-office functions, U.S. companies are exporting skilled white-collar jobs in research, accounting, procurement, and financial analysis.
Because these jobs aren’t mass-processing functions, India’s forte, there are greater opportunities for countries such as Argentina and Poland. Using an outsourcing firm to hire an entry-level accountant in Argentina, for example, costs 13 percent less than a similar U.S. worker, while an Indian worker would cost 51 percent less. But many employers moving higher-end jobs offshore care about more than just getting the lowest wage. The higher-value outsourcing jobs require a greater understanding of business context and a higher amount of interaction with clients.
It also helps that the region’s time zones are more in sync with those of North America. That’s why Copal Partners, which has its investment-research outsourcing business in India, added an office in Buenos Aires. It’s only a two-hour time difference for clients in New York. “If you’re working with a hedge fund manager who you have to interact with 10 to 15 times a day, having someone in about the same time zone is important,” says Rishi Khosla, Copal’s CEO.
Poland’s Gen Y population is highly educated and prolifically multilingual. The 26 languages spoken at Hewlett-Packard’s Wroclaw center make it ideal for serving its European, African, and Middle Eastern operations. The Wroclaw center employs more than twice as many workers as HP expected when it opened in 2005 and they perform higher functions.
Hansjörg Siber, head of Capgemini’s global business-process outsourcing operations, says the Guatemala center employs college graduates who can analyze the bottler’s vendor agreements and optimize its procurement costs. Such jobs also require interacting with clients, an area in which he says nearshoring beats offshoring. “The Guatemalans speak English with an American accent, which is very well accepted.” Fersht cites another benefit: Capgemini’s clients get the services of Polish and Guatemalan college graduates for the price of U.S. high school grads.
The bottom line: As U.S. corporations try to outsource more-skilled white-collar jobs, they’re looking beyond India. Savings can reach 50 percent.