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Offshoring? Try China and India plus a third site

Market saturation, rising prices in India spur companies to look at China, Brazil, Vietnam for outsourcing

By Owen Fletcher
June 22, 2009 08:24 AM ET

IDG News Service - China may be rising as an offshoring destination, but many companies are outsourcing to multiple countries rather than choosing between China and India.

Market saturation and rising prices in India have helped spur multinationals to offshore to other countries, including China, Brazil and Vietnam, said Jim Longwood, research vice president at Gartner Inc.

Many companies also aim to tap the varied expertise available in different regions by outsourcing to multiple countries, said Michael Rehkopf, North Asia director for Technology Partners International (TPI), an outsourcing consultancy.

Such is the case for U.S.-based Hanover Insurance, which uses India as one of three outsourcing sites abroad. The company has outsourced to India for more than five years, but it also uses Canada and has turned to China in the last year because it needs the ability to adjust the size of its workforce rapidly for some tasks, said Michael Clifton, chief technology officer at Hanover.

Each site offers unique skills, Clifton said. Hanover has partners in India maintain its mainframes because the required expertise is common there, Clifton said. Parts of Hanover applications that must be developed on mainframes are also programmed in India. Mainframes still support much of the operations at the 150-year-old company.

Indian outsourcers gained "massive" experience with mainframes by working on Y2K issues for customers a decade ago, Rehkopf said.

Meanwhile, Hanover's Canadian partners do research and development consulting, such as analyzing how younger generations think of insurance, Clifton said.

Hanover uses its China site for quick scaling and for work on application interface design.

One application Hanover has developed at its China site is a tool for sales agents. It can be used to modify Hanover insurance plans and produce price quotes according to the needs of potential buyers. The application, built with a service-orientated architecture and based on Adobe Flex, runs through a browser window but looks like a resident program, said Clifton.

Service-orientated architecture development and user interface design for multiple devices are two of China's engineering strengths, he said.

China also offers expertise in embedded application design, perhaps because products like mobile phones and cameras that run such software are so often made in China, Rehkopf said. India offers contrasting expertise in business office systems, he said.

Development of Web applications is also a strength for China, though the country does not have a definite advantage over India in that area, Rehkopf said.

Hanover has found scaling easy in China, Clifton said. The number of people at Hanover's China site has usually run between 50 and 75, but that number can fluctuate by the month and reach 100 if needed, he said.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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