Five Tips to Help You Find an Ideal Outsourcing Location
Every organization is prone to rapid changes due to the ever-changing conditions of business landscapes, regardless of industry. Scaling a firm becomes a perpetual struggle as technologies transform processes, people change their behaviors, and markets stay unpredictable.
Aiming for development, growth, or expansion in a firm entail undergoing proper procedures to improve operations, processes, and services. Are these goals attainable? Yes, if you have the resources, talents, and competencies, as well as the financial resources. If you don’t have the yeses, then no.
Companies today, on the other hand, are lucky to have a practical choice for managing their operations: outsourcing.
Since the 1980s, when firms decided to focus on their core strategies while contracting non-essential services to a partner company, outsourcing has become an integral aspect of management. Outsourcing continues to aid many firms in search of solutions to achieve their vital missions. It enables firms to focus more on their core skills and strategy while keeping the stability of non-critical processes.
As a result, an increasing number of businesses are hopping on board, allowing the industry to continue to flourish for years. According to Statista, business process outsourcing will increase at a 6.26% yearly pace through 2025, culminating in a market volume of USD381 million. This upbeat forecast only illustrates that, after years of helping a variety of organizations, the outsourcing industry has earned a reputation as a driver of corporate growth, innovation, and efficiency, which it continues to do today.
The Perils of Political Instability and Uncertainty
Instability in the macro environment is something that company leaders and entrepreneurs despise. Businesses make decisions based on future estimates and scenarios that include both shocks and certainty. However, as much as businesses factor in uncertainty, there is one thing they want to avoid at all costs: macroeconomic instability caused by political deadlock, extremism, and dysfunction.
Many emerging markets in Asia and Africa either attract or repel international investment because of this. For example, until recently, African countries were shunned due to their civil war-like circumstances, but several Asian countries were similarly shunned due to political unpredictability caused by frequent regime changes and even coups. Businesses gravitate to regions and governments where there is political stability, which is not the case for Ukraine, China, and Taiwan right now. Furthermore, businesses prefer to operate in a climate free of frequent strikes, social unrest, and anarchy, as these variables would negatively impact their operations.
Outsourcing in Countries with Stable Macro Environment
Businesses want political stability since they invest a lot of money in setting up facilities once they have permissions and licenses to run in different regions and states. Furthermore, even throughout the process of obtaining land and other assets, they require government assistance to make the process easier.
Apart from that, political instability damages them because their employees are often forced to miss work due to strikes and other disturbances, which has a detrimental influence on their revenues.
Furthermore, businesses choose a location that is kind and hospitable to them rather than one that is antagonistic and unfriendly. The argument is that political instability has a negative impact on everything from profits to operations to employee working conditions, therefore firms avoid it.
Another facet of political instability is that important laws and regulations are often stalled in legislatures and parliaments, and important approvals are hampered by bureaucratic delays. All these variables combine to create an unfavorable business environment.
Finally, capital is country and area agnostic, migrating and flowing wherever it is welcomed, and the macroeconomic environment is favorable. This is the lesson that all politicians must learn if they want to grow their constituency.
With that in mind, here are five suggestions for sifting through a list of potential outsourcing locations.
1. Look for the skillsets that your company needs.
Consider what you intend to outsource. Is it going to be engineering, software development, or customer support? Different outsourcing sites specialize in different sectors, so it’s better to pick one where you can get the talents your company needs. While India has the best software developers, China is known for its manufacturing prowess. The Philippines and Indonesia are well-known for their call center capabilities.
2. Examine the data security procedures used.
This is, without a doubt, the most critical element to consider. Look for a location that has strong data security and privacy policies in place, so you don’t have to worry about your trade secrets or intellectual property being misused. Before you outsource, make sure you know everything there is to know about the country’s data security practices. You’ll also want to look into the IT infrastructure’s trustworthiness and network security.
3. Assess government support for businesses.
This is an important issue that is often overlooked, yet it may make or break the success of any outsourced project. You can count on the smooth functioning of your business if the government is on your side. Examine whether the outsourcing site provides government assistance in areas such as tax reduction, public infrastructure, and labor rules.
4. Consider other crucial indirect factors.
Remember to look for challenges with language, cultural hurdles, time zone differences, the social environment, safety, and the political environment as well. Such circumstances may have an indirect impact on your project’s completion.
5. Determine the currency rates that exist in that particular region or location.
Because of the differences in currency rates across countries, offshore countries can offer low-cost services. Check the currency value of the location. It’s also a clever idea to check the volatility of different marketplaces and examine probable fluctuation over time.
What criteria do you employ to select the ideal outsourcing location? If you need help in finding the right outsourcing partner, book a FREE APPOINTMENT with Outsource Asia experts today.