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The Farthest Shore

When it comes to outsourcing locations, no place is too exotic. Not even Cleveland.

Last year, when management at call-center services specialist LiveBridge Inc. was searching for a place to house the company’s Spanish-language operation, it looked south of the border — way south of the border. After considering the more traditional outsourcing venues in Latin America, the Portland, Oreg.-based company decided to build its state-of-the-art call center in Argentina.

And just what was the lure of the land of gauchos and Maradona? “We didn’t want reps who could just speak Spanish,” explains CFO Chuck McLaughlin. “We wanted people who are bilingual, well educated, and who could interact with customers in a friendly, natural way.”

LiveBridge isn’t the only company taking the path less traveled when setting up an offshore outsourcing operation. As wages increase in one region, companies move farther afield. This search for new lands spells trouble for India. Admittedly, the subcontinent remains the most popular information-technology offshoring location for U.S. companies. But observers say India’s period of competitive advantage may be waning. In fact, with local wages rising at a 20 percent annual clip, executives at companies from Bangalore to Brahmapur are reportedly beginning to shop out some of their own operations. “This outsourcing to India is definitely a very short-term phenomenon,” insists Phil Fersht, an analyst who covers offshoring for The Yankee Group, a Boston-based technology-research firm. “Other countries are maturing and getting involved with the global economy,” he adds.

Indeed, executives who are considering outsourcing their corporate IT functions are hearing from some unexpected quarters. At the top of the list: Africa. Experts report that several African nations, including Uganda, Senegal, and South Africa, are getting into the outsourcing game. To date, though, Ghana seems to be the destination of choice for U.S. technology companies setting up offshore operations in Africa. Case in point: Affiliated Computer Services, a $4 billion (in revenues) outsourcing company headquartered in Dallas, is building a new data-input center in Accra that will employ 2,000 workers. Three years ago, the company employed only 65 workers in Accra.

Somewhere, Beyond the Sea

This increase in outsourcing choices may be bad news for officials in Mumbai, but it’s really bad news for U.S. technology workers. The irony here: advances in technology are what’s costing IT workers — and their managers — their jobs. The truth is, the Internet has made it easy for businesses to outsource vital technology functions to some very remote outposts. In the North Sea, for instance, a former World War II anti-aircraft military fortress now serves as a server co-location center for dozens of companies.

As everyone knows by now, tech workers in those kinds of remote locales get paid a whole lot less than their counterparts in the United States. According to a study conducted by Mercer Human Resource Consulting, a senior IT manager in the States pulls in an annual average salary of about $140,000. In Argentina, a senior IT manager makes $61,000. In Vietnam, one of the new outsourcing hot spots in Asia, top technology executives make less than $30,000 a year.

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