“Offshore Nation” and the myths about services globalization

This book Offshore Nation: Strategies for Success in Global Outsourcing and Offshoring (McGraw-Hill, 2006) written by Atul and Avinash Vashistha is a must read for all those who want to maximize the benefits of business process outsourcing. As an avid observer of this emerging industry in the Philippines, its value lies on how it dispels the myths surrounding this exciting industry.

Myth 1: that services globalization adds risk to business organizations. Not true, says the authors. “Offshoring can actually reduce the risk … by reducing your cost structure and diversifying your supply base to economies that are removed from the fluctuations of your home country economy and your core markets, and by providing access to a much larger labor pool.”

Myth 2: Offshore suppliers use slave labor. Reality: “The workforce is generally from the middle or even upper-middle classes of their respective countries… The delivery facilities in countries such as India and the Philippines rival or even exceed those of the US and UK,” says the book.

Myth 3: The infrastructure is poor at offshore centers. Reality: “The IT parks in India, the Philippines, China, Hungary, Mexico, Ireland and other big offshoring locales rival those of Silicon Valley in terms of telecommunications, power generation and other infrastructure—and in many cases exceed them,” says the book.

This book’s quotation on Ernest Cu of SPI Technologies engaged in various outsourcing activities (eg. content editorial, production and electronic delivery; medical transcription; legal transcription; content aggregation; among others) here in Manila really amazes me.

“One potential client came to us with some graphic needs and asked if our capacity can handle it? We have 35 g-series Macs, high-end four-color scanners, and handle at least 20,000 graphics a month. Can we handle it? I told him we can handle 10 times that.”