Immigration Bill Gives Competitive Advantage to American Firms

June 14, 2013

In a previous post, I outlined how America’s proposed new immigration regulations (Senate Immigration Reform Bill S. 744) restrict visa availability and increase costs for large employers.  In this post, I outline how “Outplacement” restrictions in the bill will strengthen U.S.-centric third party providers at the expense of India-centric third party providers, and will benefit captive providers as compared to either type of third party outsourcer. Read the rest of this entry »


Myth #2: Increased wages in India translate directly to increased costs for U.S. buyers of IT services

March 12, 2013

A common critique of offshore outsourcing is that wage inflation in India is quickly shrinking the value of labor arbitrage.   However, this analysis is based on three myths:

This post exposes the flaws in Myth #2 and explains how outsourcing professionals can leverage the truth to improve decision making and negotiations.  We explained Myth #1 here, and will explore Myth #3 in a future post.

Read the rest of this entry »


Myth #1: All Indian IT Wage Levels are Going Up at a Dramatic Pace

March 4, 2013

A common critique of offshore outsourcing is that wage inflation in India is quickly shrinking the value of labor arbitrage.   However, this analysis is based on three myths:

This post exposes the flaws in the first myth and explains how outsourcing professionals can leverage the truth to improve decision making and negotiations.  Future posts, will explore Myths #2 and #3.

Read the rest of this entry »


True Global Outsourcing: It’s about Skills, Not Visas

April 25, 2012

Writing in Forbes, veteran Forrester analyst Stephanie Moore, recently wrote that “every offshore development team requires an onsite component, [and] that [the] onsite component could be provided by American citizens — who naturally have more contextual business understanding, thus satisfying one of clients’ most pressing needs today.” (True Global Outsourcing Should End The Visa Debate). Moore is right that American employees can and should staff more of the onsite roles in global IT outsourcing projects, but the reason they don’t is driven more by the difficulty of finding American employees who have the appropriate skills and interests than it is by costs. Read the rest of this entry »


Understanding Concentration Risk in Offshore Operations

February 10, 2012

Offshoring analyses routinely incorporate comprehensive risk evaluations of economic, political and other well-known risks, but often fail to consider how these intensify as offshore operations scale. This probability of magnifying other risks as operations become geographically clustered is called “Concentration Risk.”  The remainder of this post illustrates the concept of Concentration Risk by applying a simplified offshoring risk management architecture to the operations of a hypothetical U.S. company as it evolves through an offshoring lifecycle. Read the rest of this entry »


Beyond India – Optimizing the Locations of Offshore Operations

November 23, 2011

As the volume and maturity of offshore outsourcing continues to grow, companies are developing sophisticated location strategies to balance the cost and efficiency of leading offshore locations against their economic, political, and operational risks.  During a recent analysis of global delivery center locations, my firm, Red Bridge Strategy, compared locations based on economic factors (i.e., GDP, prices, wages, and growth rates) and differences in the availability of business, technology, language, and management skills.  We then evaluated each location’s strategic suitability within our client’s optimal portfolio of offshore locations. Read the rest of this entry »


Pangea3 Using a Hub & Spoke Approach to Global Locations?

August 19, 2011

Pangea3’s recent opening of a delivery center in Carrollton, TX, near Dallas, highlights the speed with which the legal process outsourcing (LPO) industry is incorporating the general evolution of the BPO industry.  Initially, offshoring was exclusively to low cost countries to take advantage of labor arbitrage, and thereby, lower the overall costs of business processes. Since then, offshorers, both outsourcers and companies with captive centers, have begun implementing portfolios of offshoring locations using the so-called “hub and spoke” system.  “Hubs” of offshore work are generally located in scalable countries, like India and the Philippines, where there large numbers of low cost, skilled workers.  “Spokes” tend to be smaller centers that are used to meet particular skill, geographic, or regulatory needs.  Examples of spokes include the use of medium cost locations like Poland for European language skills or the location of a data center that can meet particular E.U. regulations; and Israel to get medium cost yet highly sophisticated legal skills.  (Sales offices, even when they house a few delivery people are not considered “centers,” and therefore not included in this analysis.) Read the rest of this entry »