Outsourcing To India or Europe - The Debate Goes On

There has long been a battle over the best international locations for IT and Business Process Outsourcing (BPO) locations. Analysts in this area long ago stopped arguing about the merits of specific countries and started looking at cities and regions instead, with one of the constant comparisons being India compared to Central and Eastern Europe (CEE) for clients based in Western Europe.

At times the debate has been rather tired. It’s obvious that Europe and India both have their advantages and disadvantages for outsourcing service delivery, however a recent editorial feature in IT Pro really backs the case for working with companies in the CEE. In fact, IT Pro goes so far as to suggest that for IT and BPO services, the CEE region “is a nearshoring Mecca.”

According to research by Deloitte, working with partners in the CEE region, rather than China or India, helps to avoid problems such as:

– poor supplier performance; it’s hard to effectively control your supplier when they are so far away. Each problem may require a very expensive and long journey to visit in person – or you need to expatriate teams to oversee the supplier.
– inability to realise cost advantage; cost advantages in low-cost locations are often overstated because they don’t account for errors, mistakes, and the cost of increased oversight.
– time zone considerations; it can be difficult to manage a team when you only get a small window of time together each day. Emails may take a day or more to be answered and calls are very difficult.
– social beliefs; especially true if your remote team is customer-facing. It’s far easier to work with Europeans if you are a European company buying services – even if they come from a different country the team will broadly have the same European cultural values.
– government incentives; China and India are mature markets and the real incentives were on offer around 15 years ago – now there are more interesting government incentives in other markets.

Not much of this is new information. European companies have long weighed up the value of paying more to work with European partners they can be close to, both physically and culturally, but there is a strong emphasis on the gap getting wider. The BPO and IT companies are innovating at present and developing new delivery and payment platforms and this is where many Indian companies are getting left behind – relying on the same methods of IT sourcing that were in vogue a decade ago.

How do you think the India v Eastern Europe argument has developed recently? Will this change in 2018 and does the IT Pro analysis reflect what you see in the market at present? Please leave a comment here with your thoughts.