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Opportunities and risks in 5 global outsourcing locations

Stephanie Overby | April 11, 2016
A look at some of the key trends impacting IT and business process outsourcing locations around the globe—from U.S. veterans entering the IT outsourcing talent pool to currency fluctuations in China and Latin America to the geopolitical situation in Ukraine.

Everest Group’s 2015 outsourcing year in review report included a quick peek at some important trends taking place in five global outsourcing geographies around the globe including India, China, the United States, Latin America, and Ukraine. talked to Aditya Verma, practice director in Everest Group’s global sourcing practice in detail about the opportunities and risks that are arising in these areas.

1. United States: Inflows of military-trained talent

Hiring veterans has become a key focus for a number of U.S. companies in the IT and business processing space, says Verma. JPMorganChase, Bank of America, HP, USAA, Wells Fargo, Amazon, Intel, Shell, Accenture, CSC, CGI and IBM all having dedicated programs for hiring former military personnel. “While companies have been hiring veterans for a long time, there has been an increased push lately as companies are looking at them as an alternate talent pool to mitigate the higher competition for traditional sources such as college graduates,” says Verma. And that increased competition is of rising demand for onshore deliver of IT and business process services, particularly in tier-three and tier-four cities.

Federal and state governments provide incentives (usually in form of tax credits ranging from $2,000 to $10,000 per year) to companies for hiring and training veterans with additional benefits often negotiated for, say, building a delivery center near a military base with a specific veteran recruitment plan. The military provides relocation costs for veterans, saving employers that overhead. “Regular hiring of veterans provides a stable and consistent talent pipeline,” says Verma. “Veterans also typically have a higher retention rate than traditional talent.”

Veterans of the Navy, Air Force, and intelligence branches also typically have prior training on technology and related platforms and may have security clearances that make them very attractive to companies working in the public or government sector.

2. Brazil and Colombia: The upside of depreciation Currency fluctuations impacted almost all leading offshore destinations in 2015, says Verma. But the impact is more prominent for certain Latin American countries, especially Brazil and Colombia. Brazil saw its labor arbitrage benefits double in comparison to Dallas (from 20 percent savings in 2014 to 40 percent in 2015). Similarly, Colombia Peso depreciation is creating a positive outlook for the country. “This fluctuation has impacted both countries in a positive manner, improving their relative attractiveness for global services, and is likely to impact both existing players and companies considering these countries,” says Verma.

However, there are other mitigating factors. “Even with a significant change in its currency, players have remained cautious in making fresh investments in Brazil due to the uncertainty in macroeconomic scenario and recent changes in tax regulations that impact the IT and business process services sector.”  


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