Aligning Location with Need: The New Calculus of BPO Site Selection

Outsourcing buyers once took a fairly narrow view of offshore locations, tending to match up countries with certain kinds of work. For example, it was rare for companies …

Outsourcing buyers once took a fairly narrow view of offshore locations, tending to match up countries with certain kinds of work. For example, it was rare for companies to consider countries other than India — and later the Philippines – for U.S. English call center work. But now both buyers and sellers are taking a broader view of what countries can offer in terms of services. So while the Philippines is still known as still the leading option for English-language voice work, it is also growing market share in health care BPO.

As PhilStar.com reports, citing research from the Everest Group, revenues from health care BPO more than quadrupled in two years, growing from some $102 million in 2010 to $430 million in 2012. This growth is due to the large numbers of U.S.-licensed nurses in the Philippines, who are familiar with American health management practices, according to the story.

Similarly, while Latin America countries have been popular destinations for English/Spanish bilingual call center work, outsourcing buyers are now willing to consider them for more sophisticated tasks as well.

H. Karthik, vice president and leader of the Everest Group’s Global Sourcing practice, said companies are looking for talent pools that can offer specialized skills in markets where those skills remain largely untapped.

Get into the Niche

“While companies have tended to associate locations with certain ‘sweet spots,’ they are now looking to tap into niche labor pools,” he said. “They are realizing there is a lot more they can do in certain locations where they will enjoy more head room for growth.”

In a growth pattern similar to India, Costa Rica first earned a strong reputation  as a site for bilingual call centers but is now seeing growth in IT outsourcing, engineering and R&D, Karthik said.

San Jose, Costa Rica was a hot location on Tholons’ list of Top 100 Outsourcing Destinations, moving up five spots, from No. 18 to No. 15. Manuel Ravago, Tholons’ president of Research, said, “The development of Costa Rica’s ITeS space has been very progressive, and has followed a similar trajectory to those of market leaders India and the Philippines. In similar fashion, Costa Rica has leveraged on its ITeS sector to boost FDI (foreign direct investment), catalyze domestic growth, and augment employment in the country.”

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Like Costa Rica, Chile was known best for bilingual voice work. But now, Karthik said, buyers are considering it as an option for analytics, financial research and other types of knowledge-based work. Forensic accounting firm RGL Forensics this month announced it plans to open an office in Santiago to further expand its business in Latin America.

“Economic growth throughout Latin America has brought many of our existing clients into the market. Establishing a permanent office ensures we can continue to offer expanded and effective services throughout the region. With an office in South America, RGL is now even better positioned to assist our clients,” said RGL Forensics CEO Angie MacPhee in a company press release.

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