OK. More on the 2005 Global Outsourcing Report, which you can download from CIO Insight for a quick, free registration:
http://www.cioinsight.com/article2/0,1397,1776816,00.asp
The report was compiled and written by Mark Minevich with Going Global Ventures, a US-based consulting firm, and Dr. Frank-Jürgen Richter with HORASIS, a strategic advisory firm that focuses on globalization.
This report should actually be called the Global Offshoring Report, for the simple reason that it doesn’t include the US in its analysis — other than to say that the US offers potential for future consideration “thanks to competitively priced high-value offerings.”
The Index ranks 20 countries by multiple factors:
Cost: The cost factor includes compensation and wages, infrastructure cost and tax and regulatory cost. It makes up 30% of the final score for each country.
Risk: This makes up 54% of the score and takes into account a variety of risks that companies should consider when choosing an offshore service provider. These include:
- Geopolitical (10%): The stability of government, corruption, geopolitics, security.
- Human capital (10%): Quality of educational system, labor pool, number of new IT graduates.
- IT competency (10%): Project management skills, high-end skills and competence.
- Economic (6%): Currency volatility, GDP growth.
- Legal (6%): Overall legislation, tax, intellectual property.
- Cultural (6%): Language compatibility, cultural affinities, innovation, adaptability.
- IT infrastructure (6%): IT expenditure, quality of key access infrastructure.
Market Opportunity: This makes up 16% of the ranking score. It includes third-party analysis, its global competitiveness and IT marketshare. It’s supposed to serve as a “check” on any imbalances elsewhere in the report.
The top five countries for current “global opportunity,” in ranked order are:
- India
- China
- Costa Rica
- Czech Republic
- Hungary
Obviously, each country has its own areas of IT specialization, so it can’t really serve as a shopping list (“Well, let’s start by shopping for a provider in India; if that doesn’t work, let’s go to China, then Costa Rica…”)
What I find interesting, besides the actual descriptions of each country, is the ranking for “future opportunity.” For instance, Costa Rica drops from position number 3 in the current ranking to position number 30 in the future ranking. Why is that? According to the report, it “will struggle to remain competitive because they’ll be unable to maintain the population growth and skilled workforces necessary to remain attractive.”
Tomorrow, I’ll talk about the China analysis, because that’s where all the “smart money” is going. So how smart is it?
