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Outsourcing Explores New Grounds

|Includes: Infosys Limited, Inc. (INFY), WIT

Business process outsourcing solutions providers are usually looking for the best place to host their services from, and it is in fact the reason why there are actually countries that push to become the top outsourcing destination. In fact, countries are exhausting all possible measures, including seeking assistance from each of their own governments, to become the destination that comes to companies' minds when thinking of outsourcing parts, if not all, of their operations or administrative tasks. But one can notice that for every channel in the outsourcing industry, there is a particular country that is being scouted; for example, Philippines springs to mind when companies are looking to outsource their customer service, mainly because the Philippines is now regarded as the top destination for call center needs.

But despite the popularity of offshoring with companies, there seems to be a new up and coming trend in India, where instead of going overseas to put up their locations, they are now considering building locations in rural areas within their country. A business process outsourcing company founded in 2008 called Rural Shores Business Services was the one that stood out as it "is one of the largest providers of BPO Services out of rural areas, offering jobs to 1,000 educated youth." This is a great opportunity for those individuals who do not have access to the metropolitan area of the country to get the same opportunity given to those working in outsourcing companies in the city. The aforementioned outsourcing solutions provider have inspired other outsourcing companies, BPO arms of information technology outsourcing service providers in particular, to do the same thing which is to open a branch in the rural areas. Wipro BPO, a subsidiary of Wipro Technologies (NYSE:WIT), have announced last August of this year that it has launched its first rural operational facility. Two months later, the public was faced with the announcement by Infosys BPO, the business process outsourcing arm of India-headquartered Infosys (NASDAQ:INFY), that it followed suit, signing an agreement for BPO centers across 22 districts.

The increasing attention given to the opportunity of opening a facility in rural areas, which is regarded as 'rural shoring', led Nasscom to say that the IT-BPO companies are anticipating an increase in the employee count in their rural offices, and they say that it could reach 10 times more within the next three years.

However, despite the popularity of rural shoring in India, some companies still seek the assistance of offshore outsourcing providers. One of the countries that has been delivering adequately, and has been actually predicted to rise this 2011, was China. China is a country that markets lower costs for labor, which is why information technology companies are turning to outsource some of their manpower to China. The review from CIO points out that China is only sought by domestic and regional IT and BPO companies, but it can be seen that soon enough, it will become a major contender against the Philippines and India as top outsourcing destinations.

Outsourcing companies are becoming innovative now and exploring grounds that have been overlooked before such as rural shoring and seeking assistance from countries that are midway through the outsourcing ladder. Let us see if these expansions and predictions mentioned above will continue to pan out within the succeeding years.

Author: Jamee C.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.