March 23, 2021
International outsourcing is a relevant and oftentimes crucial economic endeavor, generating more and more attention from all organizations, from businesses to governments and national and international decision-makers. The matter is of importance and current, given the changes brought by the pandemic.
The decision to contract a specific team for hire in a different area is usually an opportunity for business enterprises wishing to improve competitive factors, seeking the optimal combination of costs and productive inputs to maximize the overall utility of their activity. However, contrary to the popular belief that low wages in developing countries such as India are a critical advantage for the selection of international outsourcing location, the optimal solution may often be different and closer to home than you might think.
Wages, education, language, and legal risk should all be among the most important factors in choosing the optimal outsourcing partner for your business. While telecommunications and the specific IT infrastructure are also very significant, what 2020 has taught us all is that geographic proximity and social stability are even more relevant to the success of any business.
In addition, a company can never neglect the potential political risk. The political risk reflects the risk of deploying and/or exposing the company’s IT and telecommunications infrastructure in politically risky environments, where unexpected fiscal policy and regulatory changes, economic changes and development policies can lead to a number of surprising and often insurmountable disruptions. Moreover, the assessment of risk and strategic trading costs should always take into consideration the higher wages involved in assignments to high-risk areas.
Let’s look at some of the costs involved in hiring a potential team from SE Asia:
In comparison, flying to Toronto will usually be no more than $300 – and that is if you live in California. IT workers will cost you over $60/hour, but they are highly skilled, know the North American way of life and way to do business very well, and they speak the same the language, leaving little room for misunderstandings.
You will also never need to spend any amount of time there, because why would you? The infrastructure is already set up for near-shoring, with big names such as Microsoft, Hewlett-Packard, Oracle already well established in the Canadian landscape, and videoconferencing is faster and easier. Canada already has a legal framework for outsourcing so contracts and agreements are largely standardized.
Under NAFTA, both countries are part of a free trade market. The federal corporate income tax rate is only 15% in Canada. All of this is transparent and easily accessible and researchable. No unpleasant surprises here.
Also relevant, Canada has implemented ample programs (such as the Global Skills Strategy) to bring in people from all over the world, including SE Asia. Which guarantees that the best-skilled workers from countries like India, Malaysia, or Vietnam might already be closer than you think.
Of course, Canada is not the only country with highly-skilled software engineering teams for hire. However, it is the closest one, both geographically and culturally. It is not as inexpensive as – say – Vietnam, but it is easier to access, manage, and safer to work with. It's just the right balance between cost and everything costs something, the best investment for you might be the right balance between cost, time, effort and output quality.