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Global Expansions: New and Old Destinations

|Includes: SYKE, Wipro Limited (WIT)

By Audrey B.

When people say outsourcing, a select few countries would immediately come to mind.  But while the economy continues its recovery and business continues to thrive, more and more places are being tagged as ‘the best’ or ‘the hottest’ outsourcing destination.  Not all outsourcing destinations however were created equal, which is why many outsourcing providers have branched out in one place or another, some obviously preferring that destination, some to sample the local flavor to see if they’ll prosper there.

June Signals Expansions Into Different Regions

For June, three big companies announced expansions, all in different parts of the world.  First of which is French company Teleperformance (EPA:RCF).  The company announced on the 7th of June that they are expanding their presence in the Asian market by establishing an Asian regional headquarters in Makati City, Philippines.  Known for the reliable source of quality manpower in terms of customer relationship management, the Philippines has long been one of the preferred outsourcing destinations, primarily because of the talent, and quality of manpower that can be found in the country.  Commenting on the development, David Rizzo, President of Teleperformance Asia Pacific said, “The new center and Asia/Pacific regional headquarters are in an ideal setting for us. It offers access to the highest caliber of talent to help meet and exceed the quality of service goals of our Clients and partners.”  Notably, Teleperformance had only just this January announced another center opening in the Philippines, which speaks volumes of just how much the company views the Philippines as an outsourcing destination.

Indian company Wipro Technologies (NYSE:WIT) on the other hand, has expanded with a new center in Seoul, Korea on the 17th of June.  Banking on the potential of Korea to be a viable IT outsourcing destination, the company has established a center in order to enhance its position as a business transformation analyst.  Although relatively lesser known, Korea’s information technology talent pool is hailed to be above reproach, making it attractive for companies, hence, Wipro’s decision to expand into the Korea – South Korea, to be exact.  As Rajat Mathur, Senior Vice President and Chief Sales and Operations Officer APAC, Wipro Technologies, said, “South Korea is an important market for us and in addition to our existing clients, we will be pursuing both new business and partnership opportunities.”

Lastly, multinational corporation Sykes Enterprises (NASDAQ:SYKE) has expanded into the EMEA region with the opening of a new center in Cluj, Romania.  Another IT outsourcing hub, Romania had been slowly gaining steam, albeit at a slower rate than other destinations, but the country’s performance last year has shown a marked decrease in its growth.  Sykes, however, is still banking on Romania as an ideal location.  “Given the long-term growth opportunity in the customer contact management industry, the expansion into Cluj, Romania, builds on our initial beach-head in Eastern Europe going back more than a decade and further strengthens our low-cost near-shore delivery capability for the European continent,” said Chuck Sykes, President and Chief Executive Officer.

TCS Meanwhile Banks on Latin America

On the 24th of July, India’s top software exporter, Tata Consultancy Services Ltd or TCS, after the release on the 15th of July of their stellar results for the past quarter, announced that they will be banking on business in the Latin American region to double their sales within the next five years.  According to Alejandro Valenzuela, the company’s manager for Peru that the sales target is over $1 billion.  Based on the company’s last quarter results, the company’s growth in the Latin America was at 4.3%, with the region’s economic growth expected to reach 5% this year according to the International Monetary Fund (NYSE:IMF).  Just recently on the 25th of July, the company announced that they are already going forward with the plan, and has announced their entry into the Peruvian market, in Lima.

Countries are now aligning themselves with the outsourcing industry to attract more companies. And while companies expand even further, not all outsourcing destinations will prove to be the best option.   Some companies may opt to go the tried and tested route while some may take the road not taken.  In any business however, location is still key.

Disclosure: No Positions