Emerging outsource countries should focus on SMEs


    The outsourcing press loves stories about up countries entering the outsource arena. These countries want to emulate the successes of India and China, and rightly so. There are obstacles in their paths of course, language, education levels, size of work force, infrastructure, geographic location, political stability, etc, which means these new markets must have a focuses strategy in order to succeed.


    Many people believe that India was in the right place at the right time. Their success was the culmination of over a decade of planning by government to get the conditions right, that and a health dose of luck meant that they were able to capture some large MNE clients and make a name for themselves as the worlds outsource hub. If other countries want to follow suit, they should remember the maxim "specialise or die".


    By this I mean that it is unlikely that the next Wipro or TCS is going to come out of Colombia. Therefore, a through review of the client market place should be undertaken before the marketing machine kicks in. There are a number of large companies that would prefer to be a big fish in a small pond. Harvey Nash is an excellent example. They have set up an offshore development centre in Vietnam, sponsored a local university and therefore have captured the majority of a relatively small workforce. They are the prime employer in IT services and attract the cream of the talent. For emerging markets, setting the stage for this sort of deal can be difficult and time consuming. Perhaps another tactic is required.


    The mega deal outsourcing agreements are drying up with clients moving towards a multisourcing strategy, among other reasons, to reduce risk and foster internal competition among vendors. MNE clients are not adverse to sending aspects of the multisourcing strategy to various locations round the globe, again to be a relatively large fish in a small pond. To capitalise on this the vendors and indeed client companies, instead of trying to cover over the smaller resource pool, could actually make it a selling point to the right clients. Of course, investment must be ongoing into the other factors that make a successful outsource market, namely infrastructure and education.


    Alternatively, the emerging markets, instead of going for the MNE sector could work towards an SME strategy. By this I mean demonstrating their willingness to be flexible to SME contracts, have multiple vendor companies that are SMEs themselves and are keen to partner with other SMEs round the world. This is not as easy as it seems. SMEs are just as demanding when it comes to vendor selection as MNEs. Both sizes of organisations have just as much to lose if something goes wrong. A real effort and desire to work with fellow SMEs is required with assistance from governing bodies. If a country makes a name for itself as a prime market for SMEs, they way India has for MNEs then the rewards are there to be had. The SME sector has over 4.3 million companies in the UK alone. Many of them are starting to consider outsourcing as a requirement to be successful in today’s business landscape.


    As a consultant working with the SME market, one of the hardest things to do is find the right vendor for clients. Governments don’t keep a central list and there is no single place to go to find vendors. Making this sort of information readily available, not only assists people in finding your companies but sets you above many other countries.


    To date I haven’t seen a single country in the emerging list that set out their claims and provide a cohesive strategy. The majority are all trying to emulate India and quite frankly will fail at the first hurdle.