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Cost efficiency remains top factor in shifting IT work offshore

by: Ronald Escanlar

Wednesday, March 2, 2011 | Outsourcing News |

Cost Efficiency a Huge Factor for CIOs

Cost efficiency remains the strongest factor in the decisions of most CIOs looking to shift IT work offshore, says leading outsourcing research firm Gartner in their list of top 30 countries for IT offshore outsourcing.

The 2011 list contains eight new entrants – developing countries that offer low-cost IT services and whose governments are improving their support for the industry – Mauritius off Africa; Bangladesh, Sri Lanka, and Turkey in Asia; Bulgaria in Europe; and Colombia, Panama, and Peru in South America.

"It's a reflection that most organizations are looking for countries that offer some cost advantage," explains Ian Marriott, Gartner vice president for research.

Among the developed countries not in the list include Australia, Canada, Ireland, Israel, New Zealand, Singapore, and Spain. "They will have benefits that they can leverage, but they won't be saying, we're cheaper than India, China, Brazil and so on," he comments.

Although these new entrants are definitely cheaper, these locations scored poorly against Gartner’s criteria  for data and intellectual property security. "It does take time to put protections into legislation and to get that legislation through the courts, so privacy and security protections remain a challenge," Marriott says.

Multinational companies that have chosen to establish operations in these locations "tend to wrap their own corporate standards around the location," he explains. “They manage security the same in the Ukraine as they do in the U.S."

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