Where to Outsource: A Guide to the Best Outsourcing Destinations

By: Amy Smith


Offshore outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the product or service will be sold or consumed.

Outsourcing has increased at a rapid pace due to the advancement in modern satellite and Internet technologies, better connectivity and a constant search for less expensive labor to cut costs and achieve competitive advantage. By outsourcing their back office business processes to less expensive nations like China, India, Philippines, Malaysia, companies can cut labor costs, concentrate on their core businesses and strengths, and ensure better customer satisfaction. According to a recent report, US firms have saved nearly US$8 billion through outsourcing to developing nations like the Philippines. There are many developing nations that act as offshore outsourcing destinations to developed nations. Some of the countries that can be considered as offshore outsourcing destinations are as follows:


The Philippines' key competitive advantage is its people. Philippines has a well-educated English speaking work force and stands out as the world's third largest English speaking nation. The attitude, commitment, community, and education constitute the key competitive advantage especially in the front office operations such as customer service and sales.

The Philippines boasts of a huge pool of productive, trainable and multi-skilled labor force. Filipino Outsourcing companies such as AOV Outsourcing service only hire workers that are highly qualified for various outsourcing tasks.

Government support and the IT infrastructure is a given. Major companies that already operate in the Philippines include AIG, AOL, Barnes & Noble, Chevron, Citigroup, Dell, HP, HSBC, IBM, Intel, JPMorgan Chase, Motorola, Procter & Gamble, Siemens AG and Trend Micro.


In recent years, China is rapidly emerging as one of the world's leading suppliers of offshore software outsourcing services due to its incredible development rate. Although India is at the moments the world leader in software outsourcing industry, China aims to outpace India and become the next dominant competitor in software outsourcing. It is predicted that China will emerge as one of the top three countries for overseas software outsourcing between 2007 and 2010. Companies are already beginning to plan their offshore outsourcing strategies to take advantage of China's emerging strength as an outsourcing center. This includes looking for ways to take advantage of the country's current software strengths. Some estimates state that China outsourcing could rival India as the leading offshore IT services market as early as 2007.

The recent flurry of activity that helped put China on the outsourcing map came about partly as a result of government support and promotion, partly because of Japan's push to move much of its software development work to China, and partly because a number of large foreign companies -- GE, Microsoft, Dell, SAP and HP, for example -- started up R&D centers in China.


One of the major players in the offshore outsourcing industry, India has a well educated, talented, low cost and English speaking workforce, excellent IT and networking infrastructure, a fairly stable political scenario, friendly laws and well laid taxes and quality certified software firms. The offshore outsourcing market in India is ever growing and has produced many success stories making India a popular offshore outsourcing destination for IT related and other BPO services.

Offshore assignments have moved up the value chain - from data entry to large and complex turnkey projects of 200 to 300 person years. Almost any service can be outsourced to India, be it healthcare, engineering or KPO.


Malaysia's well-developed infrastructure, attractive business environment and strong government support makes it a rising alternative to India and China. The government's positioning of Malaysia as a hub for services and technology innovation has resulted in a number of multinationals locating some of its global or regional operations in Malaysia. Malaysia has a relatively more stable political climate backed by consistent economic growth which makes it attractive for sensitive, high end applications in banking and finance.

2007 Amy Smith. All Rights Reserved.