Singapore is pushing hard to grab more offshoring business, especially from U.S. companies, but it will face challenges from other emerging countries such as Brazil and China that also have their sights set on the providing such services.
The country used this week’s Garter Symposium ITxpo 2005 in Orlando to bring its message to the masses saying it had recently been ranked as the second fastest growing outsourcing destination by the U.S. Department of Commerce.
According to Khoon Hock Yun, assistant chief executive of the Infocomm Development Authority (IDA) of Singapore, the country is counting on a number of strong suites to attract U.S. customers. IDA is Singapore’s trade association tasked with developing Singapore as an outsourcing hub. “We have strong intellectual property protection and one of the world’s strongest economies,” Yun said. But perhaps most importantly we take security very seriously, he added.
Indeed, the country recently implemented a $38-million Infocomm Security Masterplan, which was developed by Singapore’s multi-agency National Infocomm Security Committee. The plan involved extensive consultations with government agencies and the private sector. The plan is designed to strengthen Singapore’s IT defenses in three key areas: information protection and risk mitigation; situational awareness and contingency planning; and the development of professional skills and promoting research and development of security technologies.
The country is trying to stem security breaches that have put a dent in outsourcing leader India’s armor. In fact, a committee set up by India’s Ministry of Communications and Information Technology recently recommended India amend its Information Technology Act 2000 to include tighter provisions and stiffer penalties for data theft. Business process outsourcing and call center companies in India that handle large volumes of sensitive data from the U.S. and Europe have for the last two years been putting increasing pressure on the Indian government to pass a more stringent data protection law.
Analysts say Singapore is an attractive location for U.S. businesses to explore but with one caveat: cost.
“They definitely understand the industry, are easy to deal with and have the manpower to be a player,” said Ian Marriott, research vice president at Gartner. “But if you’re looking for low cost structure, they aren’t first on the list.”
Marriott says India is the obvious low-cost leader but emerging countries such as Brazil are also cost-effective for U.S. companies.
Yun acknowledges a pricing premium of 5% to 20% in some cases but says Singapore offers a much more secure, strong infrastructure that offsets those costs. “Sure some places like India may be less expensive but companies outsourcing there sometimes have to build their own infrastructure like power plants. We can typically get things up and running faster than places like India.”
