/ OUTSOURCING & OFFSHORING

Country Attractiveness for Outsourcing

What makes a country an attractive proposition for outsourcing offshoring? At the end of the last class we were tasked with selecting a country to investigate the impact IT outsourcing has had there. I chose Malaysia.

Why did I chose Malaysia?

Well, actually for not any very compelling reason, I simply done some very quick research and found that it is a country that has consistently ranked highly in attractiveness indexes for outsourcing to over the last few years. For this reason alone I assumed it would be a country worth investigating. However in both in his paper and during class our lecturer questioned the validity of these attractiveness indexes (Higgins & Saadatmandi, 2016). Firstly many of them change their methodology, of which they mostly don’t share, from year to year. Looking over the rankings each year many countries disappear and reappear without any valid reasoning. They don’t reveal their data sources and they mostly come from consulting companies who will have vested interests in skewing the rankings to enhance their own businesses.

Interestingly the same paper suggests that of 18 countries where the correlation between the impact of outsourcing and the ranking of a country on an attractiveness index was calculated that only Malaysia had a somewhat negative correlation (Higgins & Saadatmandi, 2016). This suggests that either the impact in Malaysia is slightly opposite the norm or that the data from the attractiveness indexes may not be all that accurate.

These two points about my chosen country initially had me worried that Malaysia might not be a good choice of a country to assess the impact of IT outsourcing on. But then I thought, since the data our lecturer’s paper shows somewhat of an anomaly for Malaysia that it would make it more interesting to dig deeper into the data available for the country. Is there only a limited set of data on outsourcing there? Why is it consistently ranked so high in the attractiveness indexes? What impact is this having on the people of Malaysia as a whole? These are the questions I hope to tackle in my paper and I’m interested in seeing what the results will be. Going into the paper with no preconceptions about the country I think will favour me and I look forward to seeing what the data reveals.

Speaking of data, within class we then needed to come up with some concrete factors that could be realistically measured for our countries to see how attractive they might be for outsourcing, we came up with an extensive enough list, but some of them can be hard to measure, here’s the list:

  • Language / Timezone / Distance away
  • Culture
  • Tax incentives
  • Politics - Stable / Volatile
  • Resources / Education - Talent competitive index
  • Number of multi nationals located there
  • Cost of living
  • Population age (And other demographics)
  • Unemployment rates
  • Emigration / Immigration rates
  • Crime rates / corruption
  • Infrastructure
  • Regulatory environment - ease of setting up businesses
  • Financial property, commercial property available

As you can see there’s a lot to look for and it’s not immediately clear how many of these can be measured. The challenge will be to get 10+ years of data for these types of factors to get a true picture.

To finish off the lecture we done a simple exercise in showing how to calculate Pearsons correlation coefficient. I have previously used R for some very basic statistical stuff so it was really interesting to get it installed on my machine and get using it again. Digging deep into the data and analysing it with R is going to be an interesting aspect of the paper for me. Not something I would be confident in but something I am looking forward in adding to my skill set.

Now to mine some data!

References

  1. Higgins, A., & Saadatmandi, B. (2016). Country Selection and Impact IT Sourcing Relationships Between Business Factors and Social Inequality.
donalrafferty

Donal Rafferty

Forever learning, Software Engineer, CoderDojo mentor, Smurfit Business School student, Photographer

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