In plain terms, outsourcing means transferring specific functions of a business to a third party for execution. The third party may be an individual or another firm. They are responsible for the administration and performance of the business functions or tasks required of them, and effectiveness is measured using performance metrics.
Outsourcing has become the logical option for most US-based firms, ranging from startups to multinational corporations, because it allows them to focus resources on other vital competency processes such as advertising, billing, and customer relations. North America is home to many of the world's top outsourcing countries, and US companies derive excellent value from it.
The USA benefits from lower-cost imports by outsourcing American businesses to both nearby and offshore countries with practical skills and wages. Investing in these nations creates employment for the unemployed and underemployed, improving their quality of life and local economy. As their economies strengthen, countries can better participate in the global market and purchase more American products. In the end, it’s a winning situation for the businesses, the customers, the outsourced agents, and even so far as the global economy.
When firms decide to outsource within their country, it is called onshore outsourcing. Similarly, nearshore outsourcing is when companies outsource with a third party that is outside of the country, but nearby or in a similar time zone. Offshore outsourcing is when outsourced business processes are handled by third-party firms in a distant country.
Each region and country has its own performance strengths. We've carefully curated the top outsourcing destinations in Asia, Eastern Europe, Latin America, and the Caribbean. This list is not exhaustive but instead based on top-performing countries in each region.
Asia has remained a popular outsourcing destination for western businesses over the last several decades. In addition to increasingly affordable wages, Asian cultures typically offer a working proficiency in the English language, making partnerships easier to manage.
A bonus of outsourcing to Asian countries is the difference in time zone, which provides the unique advantage of your outsourced work being completed after Western work hours. Although the COVID-19 pandemic brought business to a halt, causing an Asian unemployment surge to 6.7% in 2020, the region overall is on a steady path to recovery and maintains committed efforts to making businesses thrive.
India has a vast labor pool of over 671 million individuals available to service various outsourcing tasks. Companies that move operations to India are met with an array of talent options at a minimal cost.
With almost five decades of US colonization, it is no surprise that western culture is deeply entrenched in the Philippines. Filipino citizens are fluent in English, and they have one of the broadest populations with an acquired American accent. For this reason, western firms are usually very comfortable doing business here.
When Intel launched its manufacturing and assembly operations in Malaysia in 1972, it was not for lack of options but rather to take advantage of skilled labor and favorable government policies. For over 50 years, the country has churned out professionals in the finance and IT sectors with robust IP laws and copyright protections, ensuring all innovative products are secured.
According to an A.T. Kearney Outsourcing Survey Published in 2019, Vietnam is the fifth most preferred outsourcing destination. Vietnam has strategically situated itself as an alternative to China in terms of low-cost labor and a skilled pool of professionals. The government has also proven to be immune to the instability and internal conflicts plaguing other countries around the globe.
Eastern European countries have production advantages over their western counterparts. Although skilled labor here might cost more than in Asia, there is still a 50% discount in wages compared with North America and Western Europe.
Current research suggests that the south of Eastern Europe has a staggering youth unemployment rate of 48%. Additionally, several of these countries are widely known for various strengths and in-demand skills. Cultural similarities, English proficiency, and an emerging labor market are other key reasons why Eastern Europe is a sought after outsourcing destination.
Poland is renowned for being a major software and IT outsourcing market. The country provides western firms excellent content production and fulfills service needs by combining high-level technical expertise with reduced budgets, without sacrificing quality.
Good work ethics and a vast talent pool were critical for HP to employ Bulgarian developers in it's computer systems design team. Bulgarians are actively involved in information technology development teams, completing outsourced tasks.
With a high level of technical proficiency, Romania can be seen as the Silicon Valley of Eastern Europe. Outsourcing software development and web development tasks to IT specialists in Romania is relatively smooth. The country is especially attractive due to it's proficiency in English, Romanian, Hungarian, and French.
The Latin American labor force consists of 57.2% of the working-age population. A.T. Kearney Global Services Location Index states that the Latin American business environment is well suited for western businesses, and consistently ranks Latin American countries among the top outsourcing destinations.
Since the devaluation of the Argentine Peso, the country's economy has taken an upward movement with steady growth in its GDP. This is in part due to relevant government policies that create a conducive work and business environment.
As the most populous nation in South America, Brazil provides an excellent location for delivery facilities to service customers across the continent successfully.
When it comes to cost-effective labor, Mexico has a significant edge. This country also presents reduced travel expenses.
The first Outsource to the Caribbean Conference, OCC, had participants from over 20 countries involved in over 160 industries, including more than 300 BPO leaders from the US and Canada. The Caribbean nations have positioned themselves as a force to be reckoned with amongst outsourcing companies, attracting business process outsourcing firms.
The region currently has the presence of Western businesses such as IBM, Microsoft. A creative mix of 30 countries offers native multilingual speakers of French, English, Dutch, and Spanish. According to Outsourcing Journal, the region has a high unemployment rate of 15% in the mainstream islands coupled with a young and vibrant youthful population, making it an excellent destination for outsourcing needs.
Tax advantages are a major benefit when it comes to doing business in the Bahamas. As western businesses outsource tasks to the Bahamas, they do not have to pay taxes. The only fees required from the government are property and stamp taxes, licensing costs, and import tariffs. Their native English-speaking workforce is culturally in tune with the USA due to American influence in their business and tourism.
As a western firm, outsourcing jobs to Jamaica means no communications or cultural differences as Jamaicans are fluent in English since the language being an official language in the country. Jamaica is the Caribbean's largest English-speaking territory, giving companies looking to outsource in the area a competitive advantage.
The Dominican Republic is a member of the CAFTA group. The country is located between the eastern and western Caribbean regions providing a central trade link.
As the world gradually continues to recover from the effects of the pandemic, the economies and GDP of countries are also beginning to improve, some faster than others. Outsourcing is key to this recovery as it is vital to global trade, provides affordable quality labor, and increases the purchasing power of outsourcing destinations. The regions discussed are the central hubs of outsourced jobs and have proven beneficial to the American economy and consumers.
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