India has been dominating offshore outsourcing market since its opening. Despite the cultural differences the majority of American companies considered India the best place to outsource jobs to, mainly because of the cost benefits. However, the decline of the U.S. dollar against other currencies including the Euro, Yen and the Indian Rupee makes most countries such as India, China, Russia and number of European countries less competitive in offshore development. The currency exchange trends give Belarus a competitive advantage in terms of its outsourcing potential. In addition to other benefits that Belarus has to offer, exchange rate factor gains momentum: BRB/USD exchange rates are fixed and the value of the Belorussian ruble follows that of the dollar.
Since the rupee has appreciated by 8.9 percent against the US dollar in 2007-2008, Indian outsourcing companies now have to compete with the countries that have more favorable dollar exchange rates. The following graph shows the recent dynamics of INR/USD exchange rates.
(source www.exchange-rates.org)
The rising appreciation of rupee against dollar and West Asian currencies is not the only challenge for Indian outsourcing providers. Indian economy is overheating with excessive demand pushing prices even higher. Considering the current account deficit the U.S. has got with China future looks very promising for Belorussian outsourcing companies. But the favorable situation on the currency exchange markets is not the only advantage Belarus has got.
(source www.exchange-rates.org)
Considering the future we see the Belarus keeps BRB on the same exchange rate to the USD thus maintaining this advantage to other outsourcing destinations.
Tags: offshore web development, outsourcing
Posted in outsourcing | 3 Comments »
I think I should disagree with you on one point. Whereas Belarus is “European”, it is a country that does not share democratic and free enterprise values with the West.
On the other hand, India does – an Eastern country with an appreciation for many Western values.
I run into this issue all the time when Canadian and US companies put so much effort into investing in China and its magical growth, and so many of those companies have gotten burned because there is no culture of rule-of-law and free enterprise in China. Those companies would do much better focusing on India, which has the free market and democratic institutions.
Yes, there are big cultural differences between India and the West, but that is good. The areas that count for business relationships are not among those differences.
David –
I wonder if you ever actually been to Belarus or worked with Belarussian people? Yeah some international press reports about absence of democratic – however this is not true to a full degree. This is more political thing anyway. Speaking about values – I guess those are true European already. Comparing it to China is not the best way to go. One of our US customers once came to Belarus and decided to stay here, got married and settled here! Reasons? Your guess. Belarus has many successful outsourcing companies which can provide solid service. Besides educational system is among the strongest which brings an additional advantage.
I guess you use Indian outsourcing vendors and are fully satisfied with the service? Could be – there are different companies and people in every country. But there are the tendencies also – 10% of our new clients come to us being unsatisfied with the Indian service (high attrition rates, bad time shift, lack of responsibility). Tell us about your experience!
That’s a very interesting topic. Actually, according to recent studies from major Big 4 auditor, 69% of all outsourcing deals fail, completely or partially. The main reason for this is lack of cultural compatibility between the vendor and the client and poor relationship management. Find more on this issue by reading this article here http://www.outsourcing-factory.com/en/stay-informed/white-papers/cultural-differences-outsourcing.html