Outsourcing Toolkit

UK wary of offshoring to emerging economies

Published: 22 Jun 2007 10:02 BST

UK companies are wary about offshoring business to "Brics" countries because of a perceived lack of security and technology, research reveals.

Three-quarters of UK directors believe organisations in the developed world are better equipped technologically to take on international work than those in Brazil, Russia, India, China and South Africa — the so-called 'Brics' countries — according to analyst house Datamonitor.

A survey found company directors in France, Germany, the UK and the US believe data security to be the main barrier for effective collaboration with Brics companies, followed by different legislation and regulations, and political interference within those countries.

Mark Kobayashi-Hillary, offshoring director of the National Outsourcing Association, said that large UK companies are already embracing Brics countries for outsourcing deals, though smaller organisations may struggle with outsourcing to these countries due to the difficulties of managing the necessary contracts and service-level agreements.

One-third of UK directors said India is the best Brics economy to do business in, with South Africa coming second (29 percent) and China third (28 percent), according to Datamonitor's Building Business with Brics report.

This echoes the findings of a recent poll by ZDNet.co.uk's sister site, silicon.com, which ranked India as the most attractive offshoring location over the next 10 years.

When questioned about the Brics economies, the UK directors surveyed by Datamonitor revealed a distinct lack of knowledge: 14 percent said vodka is the main product of Russia and roughly nine-tenths could not name the currencies of Brazil or China.

But Kobayashi-Hillary does not think this is representative of the overall business population. He said: "I don't really believe British company directors are as ignorant of the world outside our shores as this survey suggests."