Does Safety Trump Outsourcing Cost Savings?
A recent survey, which yielded a list of the most dangerous places in the world for outsourcing, will have many U.S. executives examining the overall value proposition of outsourcing, and reevaluating their corporate strategies. The central issue is whether concerns like personnel safety and business continuity are more important than short-term cost savings.
The list was a result of a survey of 448 corporate development and outsourcing destination specialists, and was conducted by Black Book Research and Brown-Wilson Group. The survey ranked 50 of the largest established and emerging offshore locations-from the safest to most dangerous-based on threat of terrorism, crime, climate hazards, and other factors (locations in the U.S. and the U.K. were excluded).
The Most Dangerous 10
1. Jerusalem (Israel)
2. Mumbai (India)
3. Rio de Janeiro/Sao Paulo (Brazil)
4. Manila/Cebu/Makati (Philippines)
5. Delhi/ Noida/Gurgaon (India)
6. Kingston (Jamaica)
7. Kuala Lumpur (Malaysia)
8. Johannesburg (South Africa)
9. Bangkok (Thailand)
10. Bogota (Colombia)
The Safest 10
1. Singapore
2. Dublin (Ireland)
3. Santiago (Chile)
4. Krakow/Warsaw (Poland)
5. Toronto (Canada)
6. Prague/Brno (Czech Republic)
7. Budapest (Hungary)
8. Monterrey (Mexico)
9. Beijing (China)
10. Cairo (Egypt)
The recent terrorist attacks in Mumbai, along with the potential that the Obama Administration might propose policies which would penalize outsourcers with tax disincentives, have many U.S. executives rethinking their corporate offshore outsourcing strategies.
These developments could create challenges for several popular outsourcing locations, particularly in India. U.S. companies alone are expected to spend over $25 billion this year just on IT outsourcing contracts with vendors in India.
Ultimately, no amount of cost savings can be justified if personnel or business continuity are put in jeopardy. One likely outcome: the high risks involved with many of these offshore locations will influence companies to outsource to domestic vendors or in locations that are closer to home. Companies will also gravitate further towards utilizing the flexible workforce, which affords them on-demand expertise which can be deployed on a project or ongoing basis.
