11 Aug 2020
6 top outsourcing destinations in 2020
Choosing the right outsourcing company is a complex process that has a significant impact on the effectiveness of the following cooperation. To achieve your business goals you need to cover several aspects – choose the right outsourcing type, select the deal that would ensure the best cooperation model, and prepare to start the work. But before that there comes the time for crucial decision that would affect all the following work – selecting the right outsourcing destination. And that’s exactly what we covered in this article.
Below you will find 6 top outsourcing destinations with short characteristics. Technological possibilities are changing year by year and to keep up with them software developers need to constantly learn and improve their skills.
Let’s go back on track – rather than choosing “the one” that in our opinion is the best, we’ll focus on countries with different specializations, so once you will decide that the time to outsource came – you’ll be ready to make a right, evidence-based decision. For the sake of this text, we will look at the top outsourcing destinations from the perspective of the USA and Western Europe based companies since these are the countries that tend to outsource the most. That’s why we chose 2 American, 2 Asian, and 2 European destinations, making sure that whatever needs you have, at least one of these would have a great fit.
When you think of outsourcing this is probably the first country that comes to your mind. That’s not a coincidence since most statistics confirm that India is the top outsourcing destination. Being almost extremely cheap in comparison to more developed parts of the world, full of potential employees (India is the second biggest country in the world) it’s a great place to find relatively inexpensive labor. This makes it a great choice if you’re looking for outsourcing simple tasks and the price of the service plays the most important role. That why it’s a common and well-proved practice to choose India if you want your external partner to cover a big project regarding support for your customers or simple but long-lasting maintenance projects.
However, if the job you’re about to delegate is complex and requires high skills and close cooperation with seamless communication, looking beyond India might be a better choice since this Asian destination is often connected with cultural misunderstandings and communication issues.
Although the Philippines are much smaller than India, these two are often compared. Outsourcing your operations into this country would fit in a similar price range making it a frequent choice if you’re looking for a money-saving destination for outsourcing simple projects. What’s definitely an advantage of this outsourcing destination, in comparison with other Asian countries, is that the Philippines were the US colony for about 40 years. During that time Filipinos embraced the western culture and English language which makes the collaboration with outsourcing companies from the Philippines easier nowadays.
However, as in the case of India low labor costs come with the price. Apart from a challenging time-zone difference (15 hours between the Philippines and Silicon Valley and 7 when the Asian country is compared to London) the Philippines regularly have problems due to environmental conditions. Having an average of 20 storms in a year Filipinos need to deal with power interruptions and inundations within flood-prone areas. That’s why if you choose this offshoring destination it should be always considered how the company handles such a situation and if it is ready to operate remotely, so your operations continuity would be secured.
Another popular outsourcing destination for the United States-based companies in Mexico. When compared with the rest from our list, Mexico is located the closest to the USA and fits into the nearshoring model for this country. In the case of European-based companies, the time-zone differences grow according to the distance, but if you want to start offshoring Mexico might be a good alternative to India or the Philippines. Mexican companies have a long history of cooperation with the US-based enterprises and are well prepared to operate in that manner. Although English is not the main language used within this country, the proficiency level may not be excellent but it is more than enough for effective communication, and service prices can make up for the inconvenience. Additionally, there are reportedly 120000 new tech-related graduates yearly providing wide talent pool to choose from.
However, if you decide to launch the cooperation with Mexican company you should be aware of cultural differences that might affect your project. The Mexican culture is really “laid back” so you should always keep the track of the progress and make sure that your project is meeting the deadlines. What’s more, Mexicans are similar to India employees in the term of deference – that is why if you cooperate with the company based in these countries you should always make sure to keep your instructions and expectations completely clear and if you want some input from the vendor teams – you have to ask for it rather than wait for them to come up with something. Having these rules in the back of your mind would allow the cooperation to move forward smoothly and create the value that you were after.
Time-zone difference between Silicon Valley/London and listed outsourcing destinations:
Staying within close proximity to the USA we can’t omit Argentina in the list of top outsourcing destinations in 2020. The overlap hours for North American and European companies ensure the possibility of synchronous communication making it a good choice if offshoring is on your horizon, but you want to maintain the possibility of real-time contact and cooperation.
Argentina is one of the most educated countries with the highest English language level in Latin America (the only country with a higher score from our list is Poland) making this outsourcing destination well suited for cooperation with abroad companies. At the same time, in Coursera Global Skill Index Argentina achieved the first position in the “cutting edge” group in terms of technology which allows us to assume that finding a company with skilled people would be completely manageable. For start-ups, an important factor might be also the 4hour flight from Silicon Valley, which makes Argentina’s top outsourcing destination for regular onsite meetings and project evaluation.
During recent years Eastern European countries are moving to the top outsourcing destinations ladder. Combining a big talent pool of well trained and experienced developers with prices that compared to wages in the USA or UK are relatively low, countries like Ukraine provide a good price for quality ratio. The European locations also have the benefit of having similar time-zone (especially when compared to western Europe, but even in case of cooperation with USA based companies some overlap hours are possible) so Ukraine is a great choice if you want to be in real-time contact with your external specialists wherever is your country of origin.
Wonder where’s the catch in the case of Ukraine? This country is not a part of the European Union and does not have to fit the high safety requirements as the EU members and the trade barriers are not as low as within the Union.
As Ukraine is still going to the top outsourcing destinations ladder, Poland has reached the absolute top and maintains its position. Top-notch software developers (3rd place worldwide in HackerRank and SkillValue reports), innovative market (Poland is one of the first countries in Europe to implement fintech innovations), almost 80k IT related graduates every year and highest English proficiency are only few examples of what Poland brings to the table . Although the labour cost which isn’t the lowest within countries included in the list (outsourcing in Poland fits in the similar price range to Argentine) but is relatively low when compared to DE, UK or USA making this destination a perfect choice in terms of complex and challenging development projects. You also can’t forget about the safety regulations imposed all over the EU that would keep your project and data safe as a houses if you decide to outsource to Poland.
What is also essential is the western mindset and culture almost identical to countries that tend to outsource which makes cooperation with a Polish specialist simply flawless. At the beginning of the year, we wrote a whole article about the reasons that make Poland top outsourcing destination nowadays, so that’s where you should be heading if you want to learn more.
Invest time in making data-driven decision
No direction fits all needs and before you will start considering particular destinations, establish your needs, and decide which factor plays the most essential role in the project you want to outsource. Knowing this, you will be able to select the outsourcing destination that has the best fit and would provide exactly the service you need. Making the wrong choice will result in having unnecessary complications related to a country-specific characteristic as mentioned before approach to cooperation or time-zone.
Will these countries maintain their position for the years to come? No one knows, but surely at least one of these outsourcing destinations would be able to provide what you’re lacking at the moment. If what you’re looking for is the highest quality, proactive approach, partnership, and great value for money – we are positive that we will be able to provide you with what you need. If your focus is on other factors – then we suggest looking within countries that would suit them better.