Cost Advantages Of Tier 2 Locations A Double Edged Sword

Nov. 28, 2012 - PRLog -- The proliferation of tier 2 delivery locations in offshoring destinations such as India and the Philippines result in immediate cost advantages but hidden challenges lurk.

“India and the Philippines emerged in the late 90’s as preferred destinations for global companies looking to outsource their work to a low cost destination,” observed Mr Patrick David, Head of International Marketing & Sales at Coracall, a global Call Centre Company which has operations in the UK, South Africa, India and the Philippines. “As the industry matured availability of talent emerged as key challenge and outsourcing companies had to look further afield to source qualified and skilled people. As cost pressures mount a number of outsourcing companies set up operations outside of traditional metropolitan locations where infrastructure and labor costs were lower.”

A smart move? Not necessarily demurs Mr David. “Whilst India and Philippines have made huge strides in the provision of services to global customers, the fact remains, that outside of the metropolitan areas challenges remain on infrastructure quality, IT uptime and the quality of talent. There are a number of government initiatives currently in place by the respective governments of India and the Philippines which address these gaps however it may take a few years for a Tier 2 location to be on par with its metropolitan city cousin. Through experience rather than design outsourcing companies are now using Tier 2 locations for local and regional language support for domestic business where delivery norms and expectations are not so stringent.”

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