Choosing a supplier is allot like a beauty contest, you know that the contestants are all in the same league but you need to choosing the virtues most befitting to your liking.

“You Get What You Pay For”

ImageOn a regular basis we and probably every other adviser is asked, “who is the best to do this sort of work”.  Usually this request is further qualified by a particular skill or geographic region that the provider is a part of.  While I am not particularly enamored by this particular approach it is what it is.  Possible created as the result of years of practice followed, although unpolished, it remains a step that has been repeated and the path now worn has become the way.

I have seen over two decades an ever shifting interest in certain regions, providers and often driven by the talent pools.  One cannot assume that things will always remain the same,  We have seen some regions rise rapidly to the top and almost overnight they disappear from the radar only to reappear a few years later.  It seems that most of the time its not because of ability, cost or talent but rather the marketing investments and their never ending up-and-down spending cycles.  One might consider it a feast or famine proposition.  Sometimes created by false expectations that visibility means opportunity but lacking the realization that opportunities does not mean sales.  Yes, this is probably why there is a clear delineation between promotion and pursuits.

As I said, I have been bullish on certain geographic regions and certain types of outsource service providers.  We started our advisory business based on developing formidable enterprises in to credible world class businesses.  Many have gone on to much bigger and more durable enterprises but there has also been those companies that for a variety of reasons have failed to sustain a credible velocity of success.  Possible we are a bit forgiving, we look more at potential then hanging our confidence in known “social” performers (those are the ones with war chests of investable cash, that by their very name are almost assured a place at every contract bidding endeavor).  Let me share with you our personal opinions on a variety of regions, countries and tier players.

We will start out with tier players.  Some might have read this to mean that we are going to give you a run down on ‘named’ companies.  Unfortunately, we will not be doing this but simply we are still convinced that the best-of-the-best in terms of long term commitment, access to all levels of the provider organization, flexibility and price for performance are tier 2 players.  These are those organizations with under 10,000 employees and may span 3 to 5 geographic delivery/service regions.  We remain interested in this group because of potential and not based on name.  Most buyers simply can’t promote a commitment based on name, it has to be based on credible fact.  One might consider that tier 1 players would have the edge but in fact they suffer from those all to common issues involving size, separation between what is promoted and what is delivered, and a lingering contractual paralysis that retards flexibility and change.  The small players (tier III) are ideal if investing in potential, considering for acquisition as a captive, or performing labor intensive – low intellectual investment type work.  But there is a risk, even if there is a great social value being achieved, as might be the case with impact sourcing enterprises.

Let’s explore regions.  It is quite clear that the Asia market has created intense global interest with a sustained dominant commitment for nearly three decades.  There are also cautions that involve regional stability, quality of staff, level of service and the ever present increase in price (due largely to the low-to-high phenomenon).  What we have seen in both Eastern Europe and in South America is a consistent level of near shore interest but also the appear/disappear/reappear condition.  The vacillation creates concern, buying bewilderment, and a continued commitment to evaluation of credible sources.  We have personally known of some really great and credible companies who struggle because of this situation, none of which is within their ability to control.  If one was to lay blame it would have to rest with ICT organizations who have failed to deliver on their initial commitment to market visibility as an industry sector.   As a surprise to many, the Middle East while not a dominant market serves a credible and stable gateway into the region.  World class financial support allows these operators to do it right, staff it right and will do whatever it takes to engage experts to lend advise.  The cavet…. to be considered an expert you must be willing to be trusted and supportive, this does not mean they are buying your endorsement but you have to serve with heart and conviction.  Last but certainly not least is Africa and what is it strong points?  Desire, conviction, limited outside investment, resources in number and interest in becoming a part.  Countries like Mauritius, Kenya, Uganda, Ghana and South Africa remain beacons in the sub-Saharan with Egypt remaining the anchor in North Africa.  But the problem resides in how to basically develop the market from ground level zero, deal with the risk of regional instability (which in Africa can appear overnight) and how can this all be done without continuing the benevolence agenda that is so commonly associated with Africa (and has in part become a part of the social fabric of business and commerce).  There in lies the challenge for Africa and what could be is not, but there will be success stories driven by intelligent and committed Africans, not foreigners.

Now to a few countries.  For the last five years we have been quite bullish on Malaysia due largely to its societal values, stability and quality of workforce. We opt for them over Singapore due in large part to price and resource availability.  There is however allot more than can and should be done in Malaysia and this will require an investment commitment by  leading foreign enterprises.  This is need to further advance research and development, support incubator enterprises and to push the education system beyond the level of achievement at present.  

We are also bullish on the Philippines, not because of cost or resource capacity but because there are spots of up and coming enterprises that are not call center agents but legitimate information technology and knowledge enterprise organizations.  Current foreign investment policy and an over interest in furthering the development of BPO (business process outsourcing) are areas where change will be essential to provide a path for continued service development however.

Mauritius made the bold statement in 2012 that they would lead Africa into outsourcing.  I have the utmost confidence in their vision, determination and committed abilities.  What will enable this is for other African companies to be willing to be a part and not feel that they need to be the lead group.  It remains to be proven but we are hopeful that they will be a catalyst for this to occur (baring that they remain focused on the goal and not distracted by false analytics that so often plague our industry).

In South America we remain convinced that both Brazil and Argentina are two great sources .  We also see Chili as up and coming along with Panama and possibly Mexico.  Costa Rica was at one time a wonderful destination but suffers from resource capacity (some of which was consumed by HP).

Russia, the Ukraine and Poland are great bets.  Highly educated in the sciences and mathematics they remain at the top of the list for services that demand a level of precision second to none.

Other countries like Vietnam, Indonesia, Sri Lanka are very interesting locations with some quite capable companies (as well as capable individuals).  But as an industry, even in the most informal sense, the forming of such has not taken place.  This doesn’t mean not to investigate these regions its simply that its more a look at a company level and not as a pervasive outsourcing sector.

ImageLet’s talk about the two big player, India and China.  Allot of the status is based on resource capacity and pricing.  But today, although these may be important the service buyer wants more and is particularly nervous about risk.  Whether it being political policy, social behavior or track record both countries are at a turning point.   Their decisions will determine whether they will continue to hold market share or will become of less interest in favor of other alternatives.  While the historical efforts of NASSCOM has played a significant role in India it is now coming into question whether their policies and long term commitment is in favor of the industry as a whole or just a few of the star players.

So being competitive may be just that, being competitive.  Its nothing special, you are just one of the pack and you are apt to get chances not because of dominance but because you are just like the rest.  Those that want to excel, whether as a company or as a nation, must be nimble and ready to go beyond.  Set a pace that others have not and be willing to be a companion and not a servant.  This is what makes some nations (and companies) stay on the radar while others are simply static on the screen.

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