Outsourcing report:

Exporting Blue Lagoons future

I believe the future belongs to those who dont know what they cant do. This report is an important and timely brain trust of global knowledge, representing IT visionaries and thought leaders from all over the world. We are creating answers for bringing the future to life, today,said Mark Minevich, a talented technology leader and the chairman of Global Technology Leadership Council .

This report deals with outsourcing, but especially with the choice of the country where it is worth outsourcing. Following the presentation about it to the management team, it was decided that going offshore was a really interesting choice for the company to save money. This report is going to emphasize on which country is judicious to relocate Information and technology, manufacture and the call center. In conclusion, it will guide Blue Lagoon to choose the right country, decreasing the choice on only four states thanks to the study. This report is divided in four parts; each part develops the advantages of one country. First, it will start with India, then it will continue with China, after that it will keep on the Philippines, finally it will end with Mexico. The aim of this report, and such a plan, is to present and explore all the outsourcing opportunities; it contains a comprehensive summary for each country. The report is organized according to a detailed ranking: from the most competitive country to the less one, as well as a guide.

First, it would be interesting to think about outsourcing part of the activities of Blue Lagoon in India because, thanks to the calculations and the figures, it appeared that Indias inhabitants would be able to respond to the actual economic expectations. India is actually able to do many services and produce some goods of the company for less money and time: an hour of work costs about 2 dollars in India instead of more than 100 dollars per day here in the USA; it would be a real saving. Moreover, in India, the company will be sure that the work will be rightly done: 250 000 Indians get graduated every year and it is still rising. So, Indian workers are high-skilled workers, they can work on innovation department too, maybe in your always answer call center because of their good level in English language. So, Indian people will be available for the company to do part of the work with a very high-quality services in short time and work in specialized industries to innovate our products, our networks, our machines etc. For that, it would be a really good investment for Blue Lagoon; it is really a chance to take. Then, like it was said in the presentation about outsourcing or not, as it was decided to outsource, a study was made about the political climate of India, because obviously it has to be a safe place to settle the departments. India is the largest democracy but the major political risk is the ongoing territorial dispute with Pakistan over Kashmir. Our president Barack Obama, in 2008 tried to ease the tensions between Pakistan and India in order to resolve the crisis. However he didnt manage it: According to The Financial Times, India has warned him that he risks "barking up the wrong tree" if he keeps on looking for an agreement between Pakistan and India over Kashmir.

Undoubtedly India is known to be the destination for outsourcing back office work, but the time when China will take over the World of outsourcing is not very far. According to our research, the Chinese IT services market has grown nearly 42% a year since 1997 , and it is the second country in the global opportunity rank for outsourcing, according to the Global Outsourcing Report. Moreover, a study of PriceWaterHouse Coopers explains that using China-based outsourcers could save companies approximately 37% as compared to those from India . Furthermore, it is highly proved that when it comes to manufacturing, few regions can compete with China's labor costs. This report is focusing on China as the best outsourcer for Information and Technology, and manufacturing because it is a country with many advantages. First, there is the growth in technology, the highly skilled workforce. According to a study, in 2007, there were more than 400 000 professionals working in China and the country was producing 100 000 more every year. Then, there is the fact that there is a very cheap labor compared to the United States but also compared to Chinas neighbors; China is fast becoming a low cost alternative to other economically developed countries like India, japan, Taiwan or Singapore. Then, it is important to know that English has attained the level of China's second language, which permits the trade easier. It is true that theres the omnipresent Chinese government; but in a way it is a real advantage as the government is doing everything to improve Chinas image so it has liberalized the economy, laws and policies Last but not the least, the Chinese Government set up laws that protect private ownership and intellectual property in the country. That is why China is a judicious choice as an outsourcing destination because it will improve our competitiveness.

The Philippines are a country where a vast population speaks English and the Filipinos have a very good American accent; moreover, there is a cultural proximity between the Filipinos and the Americans, in other words, the Philippines are exposed to Western culture and global business. Furthermore, the Philippines are one of the most westernized countries in Asia: That is why it is a very good destination for the AACC. There is the possibility to set up a round-the-clock call center, so that the clients could call any time they want and would be completely satisfied. The big advantage of the Philippines is that there is a very high literacy rate: Actually, the literacy rate rises by 97% whereas it is always lower than 90% in Southeast Asia. Plus, the industry of the call centers is aimed at the US, Australian and British markets which means that it needs an English skilled workforce. The Philippines offers quality with spacious offices and cheaper salaries, better telecommunication infrastructures and moreover a favorable government. The Philippine government faces threats from both Muslim separatist groups and Communist insurgents, but it is a stable and strong government. It promotes itself as a perfect destination for outsourcing, and highlights its good infrastructure and its Good educational system. The Philippines are considered as one of the most competitive destinations for the call centers in the world. Furthermore, it is in the Top Ten of the Future Opportunity rank, considering outsourcing.

Finally, the report chooses Mexico due to its proximity to the U.S. and to specific factors. It only considers Mexico in order to outsource a part of the Always Answer Call Center of Blue Lagoon. Mexico could be a good choice for the company as 19.5% of our clientele is Spanish speaker. Indeed the company is very present in the states like California, Arizona, Texas, and Florida which are states where there is between 25 and 40% of Spanish speakers. In fact, Mexico is the preferred destination for Spanish-speaking population service, and in the United States 12% of the population are Spanish speakers. So, it could be relevant to outsource the AACC in this country, besides outsourcing in an English speaking country. Mexico has a considering advantage: a lower geopolitical risk than some other outsourcing countries . There is a stable government, the laws are goods (as it protects copyright piracy, and laws against trademark counterfeiting exist), and with the creation of NAFTA (The North American Free Trade Agreement), the trade between the U.S and Mexico is very attractive.

In conclusion, the report suggests Blue Lagoon to choose: China to outsource the IT department and a part of the production, Mexico to have an extra language for the Call center and the Philippines for the major part of the Call Center (English speakers). As companies improve their effectiveness very quickly, it is recommended to act fast. In order to realize the importance of outsourcing, it has been added graphs to show our expectations for the future.

Blue Lagoon's Market place comparated with the rivals in 2011.

Blue Lagoon Samsung Dell HTC LG Toshiba

Blue Lagoon's Market place in 20 years after outsourcing.

Blue Lagoon Samsung Dell HTC LG Toshiba

The secrets out, said Leo Portman, management team of Blue Lagoon.

February 15th, 2012.