CIO Insight Magazine Releases The Global Outsourcing Report
Yahoo! Finance, March 21, 2005 Press release
(http://biz.yahoo.com/prnews/050321/dam019_3.html)
NEW YORK, March 21 /PRNewswire/ — Three-quarters of U.S. companies outsourced some or all of their information technology activities in 2004, and that percentage is likely to increase this year, according to a special survey on outsourcing and offshoring in the March issue of Ziff Davis Media’s CIO Insight magazine. While a smaller percentage of companies are outsourcing those activities offshore (32%), half of them have cut full-time jobs as a result.
India is the most competitive and popular technology outsourcing destination in the world in 2005, according to the Global Outsourcing Report and, China will be the No. 1 technology outsourcing country in 10 years. The Global Outsourcing Report 2005 is the first-of-its-kind report to rank countries based on the opportunities, costs and risks they present for IT outsourcing, both now and in the future.
“All companies need to consider the best global sourcing strategy for their business needs,” says Ellen Pearlman, Editor in Chief of CIO Insight. “The Global Outsourcing Index provides a standardized way of evaluating countries on costs, risks and market opportunities.”
Outsourcing has become a supercharged issue, thanks to fears of job loss, but as New York Times foreign affairs columnist Thomas Friedman points out in an exclusive interview in CIO Insight’s special March issue on Globalization, people need to be aware of the consequences of a flat world (his new book, titled “The World is Flat,” will be published in April 2005). “There is no such thing as an American job. There’s no job that’s got your name on it. And you’re going to have to get over that,” he says.
And despite the sensitive political issues around offshoring, the strategy can provide huge corporate benefits in terms of productivity, prices, profits and wages. But companies need to be able to assess the risks and benefits of each country they’re considering as an outsourcing destination.
The Report was compiled by Mark Minevich, an international strategic advisor and principal at Going Global Ventures, a U.S.-based international consulting and venture advisory firm, and Frank-Jurgen Richter, President of Horasis: The Global Visions Community, a Geneva-based strategic advisory firm that develops scenarios related to issues of globalization. A copy of the Global Outsourcing Report 2005 can be accessed at www.cioinsight.com/whiteboard.
Twenty countries have emerged as the leading technology outsourcing destinations in 2004. China, Costa Rica, the Czech Republic and Hungary round out the top five countries. Looking forward ten years from now, 30 countries are featured in the future index, several of which are not listed in the current index for 2005. The Report predicts that in 2015 the top five outsourcing destination will be China, India, the U.S., Brazil and Russia.
Using two different indexes — the Global Outsourcing Index (GOI) and the Future Outsourcing Rank (FOR) – the Global Outsourcing Report 2005 contains an analytical country profile for each of the 20 economies in the study, providing a comprehensive summary of the overall IT outsourcing position. The ranking is as following:
| GOI | FOR | |
| 1 | India | China |
| 2 | China | India |
| 3 | Costa Rica | USA |
| 4 | Czech Republic | Brazil |
| 5 | Hungary | Russia |
| 6 | Canada | Ukraine |
| 7 | Russia | Romania |
| 8 | Latvia | Belarus |
| 9 | Chile | Philippines |
| 10 | Romania | Canada |
| 11 | Ireland | Ireland |
| 12 | Singapore | Malaysia |
| 13 | Philippines | Armenia |
| 14 | Poland | Chile |
| 15 | Brazil | South Africa |
| 16 | Armenia | Thailand |
| 17 | Bulgaria | Vietnam |
| 18 | Ukraine | Moldavia |
| 19 | Israel | Mexico |
| 20 | Mexico | Poland |
The GOI is a weighted index made up of three separate ratings: the cost of doing business in each country; seven risk factors (including geopolitical, human capital, IT competency, economics, legal, cultural and IT infrastructure); and market opportunities. The Future Outsourcing Rank, which assesses the long-term (10 years) competitiveness of the top 30 future outsourcing countries, is determined from GDP growth, population growth, the quality of the labor pool and analysis from leading entrepreneurs, economists and other experts.