Part 6: Location, location, location
When setting up an overseas office a crucial consideration is time zones. It’s going to be difficult to have team calls and maintain working practices if teams need to wait 6-12 hours for in-house, permanent teams to return to the office and vice versa. This might seem insignificant but it really can have a huge impact on efficiency and productivity.
India is often seen as a safe haven for offshore services generally and for IT services in particular, with Bangalore being coined the Silicon Valley of India. Its great attraction as an outsourcing destination is its unbeatable value proposition combined with up-to-date technical skills. But over the past few years, a growing number of other jurisdictions have presented viable alternatives for technology offshoring. However, whether you’re a trendsetter or a follower of fashion, many of these other markets still can’t compete with India’s technology infrastructure and talent pool.
Although we’re huge fans of India, in fact we have our own offshore development and managed services teams in India, there are other great outsourcing destinations which are used to develop fit-for-purpose offshore teams. Eastern Europe is becoming a great location for outsourcing (nearshoring) and benefits from a more aligned time zone to the UK. Israel, Vietnam, and Latin America are also rising up the charts but their capacity and combined technical excellence is dwarfed by what’s available in India.
Red tape and protocol is also something to be factored. Setting up in countries such as The British Virgin Islands can only take a matter of days – three to five, to be precise. It’s also a very attractive destination for financial investors as it’s a tax haven, with 0% corporation tax and a stable political system, which are important considerations.
The privacy an offshore destination provides companies might also be important. For example, The Cayman Islands offers considerable privacy to its companies. Company accounts and the like are kept private and confidential and don’t have to be registered with the government. All documentation and legislation are in English too so there are no language barriers for those companies using English first for business.
The Caribbean islands of Saint Kitts and Nevis could be the right place for you if you need considerable asset protection. The country has a highly sophisticated and secure banking system. Interestingly, it’s increasingly difficult for people to file lawsuits against you there.
Having said all of this, India is always our top pick. India has the second-largest English-speaking population in the world (seriously), there is believed to be five million software developers, with a funnel of 200,000 IT grads each year entering the market. It’s also extremely cost-effective with the average cost of hiring developers $20-$40 an hour compared to $50-$75 in Hong Kong.
India is the world’s largest democracy, it is politically stable and has friendly policies toward the IT sector.
Location is a key consideration when looking at offshoring so please do your research and visits diligently. Spend time in the cities/locations you’re considering. It will pay dividends to understand the markets’ strengths, as well as any weaknesses, in respect to factors relating to any decision to offshore.
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