What Country Should You Outsource To?

October 19, 2012

By Steve Mezak

Accelerance provides a beneficial outsourcing consulting service for clients needing a full analysis of doing business in a variety of countries. Some clients have concerns about countries where they could set up their own software development operation or work with a partner company to outsource. Accelerance can conduct an analysis of a list of countries, to recommend the best fit for a given client’s situation. In our comparison of the pros and cons of various destinations, it all comes down to seven different areas of analysis that will allow you to draw a conclusion.

The first area is cost. Salary is the main consideration, but there are also some hidden costs with respect to taxes. It is also important to know the attrition rate, because a lack of workers delays productivity, which then increases the amount of time it takes to develop the software. Trends in salary can have quite an impact, and benefit and bonuses that have to be provided within that country can add to cost as well.

The second area is the time zone. The ability to collaborate and work at reasonable hours, even if that means extending the work day, is essential to the success of an outsourced team. This allows for more 24-hour support of the development process.

Third is economical and political stability. This varies over time, as some countries are very stable politically due to dictatorships, while others have a solid democratic foundation that elicits political stability as well. It is unlikely that you will outsource to countries that have rioting in the streets. This then leads into whether or not they are business-friendly, meaning the amount of support the government gives to outsourcing business from that country. Taxes, the communication system, the information structure and unrestricted employment are all factors to be taken into consideration.

The fourth area is intellectual property (IP) laws. Most companies have made the transition towards complying with international standards for IP protection, making it less of an issue today, but it can still be a factor. There are still some countries, particularly in Asia, that consider intellectual property unimportant.

Fifth is infrastructure, which assesses what it is like to work in a specific country. Roads, public transportation, electric power and weather issues could all lead to potential problems. Many countries have established technology parks, ensuring reliable services and transportation.

Sixth is the labor pool, assessing the talent that is available and identifying where the talent is from. The environmental aspect should be considered with respect to company location and size. Labor laws, the ease in which visas are obtained, and the hiring and firing capabilities are important to be aware of.

The seventh area is cultural compatibility. A different language and the manner in which others communicate can be a challenge. By understanding the cultural compatibility issues, it is possible to compensate and still manage a thriving outsourcing relationship.

Before you decide to outsource or set up your own operation in another country, it is crucial that you know what you are committing to. By reviewing these seven areas of analysis, you can easily determine what country will provide you with the most successful experience. A full analysis by Accelerance presents you with everything that you need to know.

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