Cast your minds back a few years and think about which geographical locations were considered service providing power houses. India, UK and the US were the big three, collectively making up a huge chunk of the global services market. Fast forward to present times and the service landscape could not be more different.
Countries previously only realistically able to trade within the agricultural, apparel or manufacturing markets are now finding themselves on a level playing field with the big service boys. So which destinations are causing the change in landscape? In true Columbus-esque fashion sourcingfocus.com sets sail to navigate the ‘New World’ of BPO.
The BPO market has slowed down, as Alistair Maughan, partner at legal firm Morrison and Foerster points out, “ The BPO market has been much quieter than the ITO market recently. IT outsourcing gives immediate payback where as BPO has a longer ROI time and requires more investment.”
Despite a slow market, there are still a variety of upcoming locations hungry for a piece of that BPO pie.
First stop, Asia. This continent has been the epicenter for outsourcing. India, is of course the region that instantly springs to mind when people think of call centers, IT support or back office processes. In fact, for a while it seemed that so much of the outsourcing market was heading to India, it was hard to see anyone else really making headway in that space. However, times have changed.
Clive Longbottom, Service Director for Business Processes Facilitation at Quocirca, has highlighted a lot of to and fro in the Asian BPO market, “The Philippines has become really massive again for BPO. It was essentially dead as American companies pulled out of Manila because prices rose and quality went down. Organisations moved their operations to India, however as that market matured the same happened; prices went high and quality came down, so the Philippines became an attractive destination again.”
It’s not just the Philippines that has been making headway in the offshore market. Some of India’s closest neighborus have been quietly readying themselves for a push into specific service sectors. Mr Longbottom highlights Sri Lanka as being one of the key destinations to keep an eye on for finance and accounting services. Boasting the largest amount of CIMA qualified graduates outside the UK, as well as stringent data protection laws, the Asian ‘tear drop’ is set to be a key player in a niche market.
Looking closer to home, Eastern Europe is fast becoming a key destination for companies looking to keep closer tabs on their outsourced processes. Mr Maughan, highlights Romania and the Czech Republic as key areas, “Romania and the Czech Republic have done particularly well within the outsourcing world. Romania in particular offers a very attractive pan European solution, with good language capabilities.”
However, as Mr Longbottom points out, some of the previously socialist countries, which have recently converted to capitalist ways, are finding themselves in hot water. The recession has meant that capitalist converts have found themselves without the necessary cash to invest in infrastructure vital to BPO success.
The recession has also forced some destinations to adjust their place on the value ladder. Ireland was a location that quickly hoisted itself out from offering lower level services and positioned itself as a nearshore destination for high level BPO and IT. Knowledge process outsourcing and product development were the markets which Emerald Isle service providers felt were right for them.
These areas of outsourcing traditionally come with a high price tag and high price tags are traditionally something which companies refuse to work with during difficult financial times. So we may see Irish providers slip down the value chain, lower their prices and return to their roots.
Although there is a positive burst of activity from previously inactive destinations (Kenya, Malta and ,less prominently, Turkey) we are finding the same big vendors leading the field in the majority of these new locations. In fact, in a bid to stay competitive, vendors such as TCS, IBM and Infosys are setting up shop in these emerging destinations and taking the cream of the crop from the labour pool. As Mr Maughan highlights, a Romanian IT graduate would be crazy not to start his career with IBM in favor of working for a startup.
So, despite an exciting new landscape to explore, end users are essentially dealing with the same bunch of people. The difference is that now a potential outsourcer can make a demand for processes to stay within a certain geographical region around the globe, regardless of whether they are dealing with a big Indian or American vendor.
There are those who have managed to carve a name for themselves within this competitive market. KenCall, a Kenyan based service provider was particularly praised by Mr Longbottom as being a ‘shining beacon’ in the Kenyan BPO market. There is potential for start ups to gain a foot hold in the industry, they just need to establish a niche, employ best practice and ensure high quality for a reasonable price – no easy task.
All in all, we have got an exciting, competitive landscape within BPO. End users should always look to follow good practice when choosing a location and supplier. The old rules apply: don’t base your judgment solely on cost, get references and make sure you know what process you are outsourcing and which location/supplier is the best at delivering that process.