Whether you’re a budding startup or an established business, contracting work to a third party in some of the top countries for outsourcing, like India and the Philippines, offers a ton of benefits.
It can help you save costs, hire from a skilled talent pool, complete projects quickly, access flexible staffing, and more.
In this article, we’ll explore the eight top countries for outsourcing your business activities. We’ll also discuss five key parameters that can help you pick the right outsourcing destination.
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8 top countries for outsourcing business
Here’s a detailed look at some of the best outsourcing countries in the world today:
1. India
India remains a top outsourcing destination for businesses across the world.
Despite the pandemic-induced challenges, the country placed second on Tholons Top 50 Digital Nations list for 2021.
Key reasons to outsource
A. Cost savings
The outsourcing industry in India offers several cost-saving opportunities for businesses. This is primarily because the country has a low average salary, a relatively low cost of living, and an abundance of skilled labor.
For instance, hiring a software developer in India would cost you an average of 664.53 USD per month. In comparison, hiring a software developer in New York would cost you an average of 8742.25 USD per month.
B. Large and skilled talent pool
The country has the second-largest English-speaking population in the world. This makes it ideal for business process outsourcing (BPO) for European and North American companies.
The Indian higher education system also focuses heavily on science and technology, producing over 2.6 million STEM graduates in a single year. That’s why India is preferred for outsourcing software development services.
Most outsourced services
The most outsourced services to India are software development, software engineering, and BPO services.
Average salary
The average salary in India is around 424.64 USD per month, as per the exchange rate in December 2021.
Read our complete guide on outsourcing to India to learn more.
2. The Philippines
Like India, the Philippines is one of the best countries for outsourcing services in Asia.
The country has held the title of ‘The BPO Capital of the World’ for over a decade. Several international companies, including Microsoft, IBM, and Wells Fargo, outsource to the Philippines.
Key reasons to outsource
A. Advanced English proficiency
Filipinos are known to have high English fluency.
In the European Fellowship’s (EF) English Proficiency Index for 2021, the Philippines ranked 18 amongst 100 countries worldwide. Additionally, the country has an impressive literacy rate of 98.18% as of 2021.
The English language fluency helps Filipinos carry out customer service jobs with ease, especially for businesses with an English-speaking target audience.
B. Government support
The Philippines has favorable tax laws that help its outsourcing industry attract businesses worldwide. The Philippines government introduced the Philippine Economic Zone Authority (PEZA) to help businesses, including outsourcing companies, receive tax exemptions.
Outsourcing activities eligible in PEZA registration include software development, BPO services, IT outsourcing (Information Technology), and more.
Most outsourced services
The most outsourced services to the Philippines are customer services, data entry, and other BPO services.
Average salary
The average salary in the Philippines is approximately 885.41 USD per month, as per the exchange rates in December 2021.
For more details, read our article on the top five reasons to outsource to the Philippines.
3. Ukraine
Like Bulgaria and Romania in Eastern Europe, Ukraine is fast gaining outsourcing popularity. The country was recognized by the Global Sourcing Association (GSA) as the ‘Delivery Destination of the Year 2021’.
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Key reasons to outsource
A. Technically-skilled talent pool
The Ukrainian government is building Ukraine to become a future IT leader in software outsourcing.
Outsourcing statistics show that the country already has over 200,000 IT specialists. The Ukrainian developer community is also supported by over 30,000 tech graduates every year.
B. Similar time zones to European countries
Time zones would be a conflict for such companies while outsourcing to Asian countries like India, China, or Vietnam.
But an Eastern European country like Ukraine benefits from a similar time zone to companies based in any other European country.
Most outsourced services
Outsourcing software development services and IT-related services are popular in Ukraine.
Average salary
The average salary in Ukraine is around 845.27 USD per month as per the exchange rate in December 2021.
4. Poland
Poland is another Eastern European country with one of the biggest IT markets for any software outsourcing service in Eastern Europe.
This European country also has specialized talent in finance and accounting that is more cost-effective to hire than from Western European countries.
Key reasons to outsource
A. Advanced data security
Polish outsourcing providers comply with strict EU standards like GDPR for IP protection and data security.
These safety regulations can help keep your software development project, customer data, and other business data safe. It’s also why the EU remains a top investment destination for IT companies globally.
B. Stable economy
The Polish economy is well-diversified and resilient. The country’s GDP saw a minimal contraction of 2.7% in the face of the pandemic. This was the first such dip since the year 1991.
Additionally, Poland recorded a 2.3% growth in GDP in the third quarter of 2021.
Most outsourced services
Poland is known for skilled Polish developers, IT services, web development, and PHP (Hypertext Preprocessor) programming outsourcing.
Average salary
The average salary in Poland is nearly 1,945 USD per month as per the exchange rate in December 2021.
5. Brazil
Brazil is a top outsourcing country in Latin America. The country has a highly-skilled talent pool and well-developed tech infrastructure.
Key reasons to outsource
A. Advanced digital infrastructure
Brazil has significantly expanded its digital infrastructure in recent years. The country now has over 90 technology parks and over 35 business accelerators.
The tech parks and centers feature cutting-edge digital infrastructure and house several international companies and large offshore development teams.
B. Favorable outsourcing law
Brazil‘s 2017 outsourcing regulations allow companies to hire outsourced employees to perform the company’s core activities in addition to its non-core activities.
This means you can hire outsourced talent from Brazil to work on your company’s main functions.
Most outsourced services
The most outsourced services to Brazil are business process and software development services.
Average salary
The average salary in Brazil is approximately 1,635 USD per month as per the exchange rate in December 2021.
Read our guide on outsourcing to Brazil for more details.
6. Mexico
Mexico is a popular outsourcing destination in Latin America.
The country secured the eighth rank on the Tholons Top 20 Digital Nations 2021 list, a significant jump from its 13th rank in 2020.
Key reasons to outsource
A. Similar time zones to the US
Mexico is a popular nearshoring destination for companies based in the US.
Compared to the other outsourcing countries on our list, Mexico is the closest to the US. Similar time zones aid smoother outsourcing collaborations.
Additionally, the geographical proximity can be a huge advantage for US-based companies looking to outsource manufacturing services to Mexico.
B. High employee retention
Popular outsourcing markets worldwide are witnessing employee retention issues due to the fierce competition to hire talent.
However, Mexico is yet to be completely exposed to the international outsourcing market. The country witnesses a higher employee retention rate as a result.
According to a report, countries like the USA and UK will lose $435.7 billion and $90.0 billion, respectively, due to high employee turnover in 2030. Mexico, on the other hand, will only lose $9 billion.
Most outsourced services
The most outsourced services to Mexico are human resource services, customer services, and IT services.
Average salary
The average salary in Mexico is around 1,529.76 USD per month as per the exchange rate in December 2021.
Read our article on the benefits and challenges of outsourcing to Mexico for more details.
7. Malaysia
Malaysia is a rising outsourcing market with a thriving IT sector. It placed third in the 2021 Kearney Global Services Location Index, owing to its increased digital capacities.
Key reasons to outsource
A. Good English proficiency
Malaysians ranked third on the English Proficiency Index for Asian countries in 2021. It also has a high overall ranking of 28 amongst 112 countries worldwide.
The high proficiency enables Malaysian talent to perform any English-speaking outsourcing services efficiently. This includes customer services, content development, and more for businesses with an English-speaking target audience.
B. Low cost of living
Malaysia has a relatively low cost of living than most USA and European cities. As a result, the Malaysian average salary is much lower than in other developed countries.
For instance, hiring software engineers from a software development company would cost you an average of 945.40 USD per month in Malaysia. Hiring the same professional can cost you an average of 9103 USD in New York.
Most outsourced services
The most outsourced services to Malaysia are IT and software development services.
Average salary
The average salary in Malaysia is around 1,554.80 USD per month as per the exchange rate in December 2021.
Find out if Malaysia is a viable outsourcing option for you.
8. Argentina
Argentina is a preferred software outsourcing destination in Latin American countries. It produces and sustains a large pool of highly skilled tech talent.
Additionally, with overlapping time zones, the country can support a hassle-free outsourcing experience to businesses in North America and Western Europe.
Key reasons to outsource
A. Reasonable hiring costs
Due to its high-quality higher education system, Argentina produces qualified tech graduates and software programmers. You can hire this talent at a relatively lower cost than other countries in the USA and UK.
For instance, hiring offshore developers for Python would cost you an average of 1,183.04 USD per developer per month in Argentina. Outsourcing developers with the same expertise would cost you an average of 6,543.39 USD in the UK.
The cost savings are similar for hiring developers for other programming languages like Java and C++.
B. Growing tech hub
Argentina has been the driving force behind Latin America’s IT industry.
Tech companies such as MercadoLibre and Globant have helped create a well-established tech hub in the country. This growing tech ecosystem now houses several global companies.
As a result, outsourcing companies in Argentina have grown expertise in IT-related fields, including software and mobile development, engineering, and cloud computing.
Most outsourced services
Argentina is a preferred destination for software outsourcing and customer service solutions.
Average salary
The average salary in Argentina is approximately 447.79 USD per month as per the exchange rate in December 2021.
For more details, read our article on outsourcing to Latin American countries like Argentina.
Let’s now look at how you can decide on an outsourcing destination.
How to pick the right outsourcing destination
Here are the five factors that you should consider to find the most suitable outsourcing country for your business:
1. Business profitability
It’s important to consider the cost-effectiveness of offshore outsourcing to any destination.
You can analyze the tax regime of a particular country and the other economic factors that add up to the services costs.
The right outsourcing choice can help you save big on hiring skilled talent with its financial attractiveness.
2. Availability of skilled talent
Each outsourcing destination and outsourcing company has a talent pool with specific areas of specialization. You should ideally pick an outsourcing country that best caters to the skill set your business needs.
For instance, countries like India, Poland, and Mexico are great picks if you want to offshore software development services.
Similarly, if you’re looking for BPO services, instead of software development outsourcing, you can choose the Philippines as its talent pool has expertise in English.
3. Government laws and regulations
Choosing an outsourcing country with outsourcing-friendly laws and a positive business environment is integral. Government support in the form of tax relief, labor laws, and public infrastructure can aid the success of your outsourced business projects.
4. Linguistic and cultural differences
You must choose an outsourcing destination that doesn’t pose major cultural and linguistic challenges for your business and its target audience. While outsourcing to a distant country, it’s best to ensure that your outsourcing partner has multilingual capabilities.
In terms of culture, you can learn about the work cultures of your outsourcing partner and ensure they align with the work culture of your own business. This includes the work flexibility, lifestyles, and work practices of your outsourced team.
5. Outsourced team management
Another key parameter to consider would be your ability to manage your outsourced talent. Outsourced offshore teams operate in different time zones and under different management. This complicates accountability within the team.
That’s why regardless of the outsourcing destination, you’ll have to take measures to track your team’s productivity and billable hours.
But how?
One way of tracking your outsourced team’s performance is by introducing advanced employee productivity management software like Time Doctor.
With Time Doctor, you can:
- Track the time your outsourced team spends on your project.
- Calculate billable hours to pay your team accurately.
- Manage projects and budgets to maximize your outsourced team’s efficiency.
- Use productivity reports to determine if your outsourced team is actually productive at work.
- Track employee productivity across apps using Time Doctor’s powerful Chrome browser extension.
Check out the complete list of Time Doctor’s features for more details.
Wrap up
Outsourcing can help you scale your operations, save on costs, and focus on your core competence.
That’s why it’s crucial to select your outsourcing destination carefully.
You need to ensure that the destination and the outsourcing company you choose are profitable, offer talent with the right skill set, and enable a smooth outsourcing experience.
Go through our list of the top countries for outsourcing to narrow down the right choice for you. Additionally, you can use tools like Time Doctor to manage and boost the productivity of your outsourced team
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.