Outsourcing off the beaten track

Where next for outsourcing? While China might be the most likely destination, pioneering technology leaders should head for Ukraine.

Having spent the past few years handing over control of troublesome processes to Indian service providers, IT directors are looking for a broader range of sourcing options.

The National Outsourcing Association (NOA), for example, has found that more than three-quarters of IT specialists believe China is the country most likely to challenge India’s dominance in outsourcing in the next five years.

Such results are not surprising. Indian call centres are under pressure to produce high performance in a competitive industry. And China provides another destination to help IT directors deal with tricky technology issues.

But the search for suitable sourcing sites does not stop in Asia: suppliers and IT directors are busy searching the globe for other locations.

Some locations, such as the Isle of Man and Northern Ireland, provide attractive sourcing possibilities, offering all the benefits of cheaper provision within the British Isles.

Eastern Europe, particularly Russia, is a popular base. And offshoring expert Mark Kobayashi-Hillary told me recently that Ukraine is also now on the outsourcing map.

After laughing out loud – and laughing out loud some more – Kobayashi-Hillary told me to expect big things from the former Soviet republic.

A quick Google search on ‘outsourcing Ukraine’ suggests he might be right. The country is quickly becoming a home for offshore development, with outsourcing turnover apparently growing at 200 to 300 per cent annually.

Such growth rates are nothing short of phenomenal, especially in an industry that has just experienced one of its trickiest years ever.

Outsourcing analyst TPI says 2006 has seen a decline in service contracts across the globe, with the last quarter being the worst in four years in terms of the total value of major contracts awarded.

TPI’s data also points to an actual reduction in outsourcing expenditure during 2006; with the analyst predicting a one per cent fall in provider revenues.

Locations that buck the downward trend will provide competitive sourcing solutions for IT directors.

Ukraine – birthplace of the Easter Egg and Chicken Kiev – might well be one such centre.

And remember, you heard it here first (or second, if you have already spoken to Mark Kobayashi-Hillary).

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