Outsourcing Hubs Find Ways to Tap into the European Market

Includes: EXLS, G, INFY, WIT
by: Outsourcing Insider

Reading the Indian mainstream news about India Inc.’s strategy to expand operations in Eastern Europe and hire multilinguals to serve the European finance and accounting sector does not surprise me anymore. In my April article, I talked about how Europe is becoming more comfortable with outsourcing, not just to its neighboring countries but also to Asia, particularly the Philippines. The following month, I wrote an article on Philippine Outsourcing re-focusing its efforts to the European market instead in anticipation of US political and trade condition changes.

It is not a question anymore if there is outsourcing need in Europe - the more important question to ask is how to monetize this growing demand. There are several ways of doing it. Outsourcing companies can hire multilingual locals or they can set up operations in Eastern Europe where there are more European-languages speakers who charge at reasonable rates or they can do both.

IBM Business Services for instance has German and French multilingual Filipinos doing finance and accounting work for their European clientele here in the Philippines. This is a good strategy for small to medium size outsourcing firms to expand their service offering without having to open offices in Eastern Europe which entail higher investment costs.

Although the pool of European language-speaking people in Asia is quite small and is even smaller when industry specialization is factored in, especially when it comes to finance, accounting and research, it is no surprise then that India sees it a better option to set up offices in Eastern Europe where the German and French speaking labor supply is much bigger. This strategy allows them to almost immediately monetize this demand at a bigger scale.

Currently, Infosys (NASDAQ:INFY), Wipro (NYSE:WIT), Tata Consultancy Services (TCS), and Genpact (NYSE:G) have presences in Eastern Europe. Wipro has a 250-seat office in Bucharest and Infosys has 450-seat centre in Czech Republic. To add to that, EXL Services (NASDAQ:EXLS) is at the moment evaluating putting up a centre in Romania and Czech Republic to tap into their multilingual workforce.

As European businesses require more outsourcing especially higher level services such as finance, accounting and research work, the demand for high skilled multilingual workforce will simultaneously grow with it, increasing global workforce competitiveness and even more blurring inter-country boundaries.

Disclosure: No positions.