One of the initial concerns a company faces whenever it decides to outsource projects abroad is the choice of the place from which the skill should be sourced. A systematic method can be used to make this decision. This involves collecting data on various options, carefully considering each one, and numerically assessing and comparing them.
Whenever this method is employed, the World Economic Forum publishing, the Global Competitive Report, shows up. This report contains a combination of macroeconomic data, including but not limited to education and innovation, which shows a countries’ competitiveness. From this report, a company can determine the advantages each country bears in the global outsourcing industry.
The World Competitive Report classifies the Eastern European countries. These countries are nearshore and have been classified based on their development stages into stage 1, 2 and 3 as explained below:
Stage 1: Countries with low productivity and wages which thrive on natural resources and unskilled labor. The Republic of Moldovia is in this stage.
Stage 1-2 transition: Georgia, Armenia and Ukraine.
Stage 2: Countries whose efficiency is improving, increasing productivity and wages. The countries in this stage include Romania, Serbia, Bosnia, Bulgaria, Russia, Albania, Montenegro, Herzegovina, and Macedonia.
Stage 2-3 transition: Hungary, Croatia, Poland, Lithuania, Slovak Republic, Estonia and Latvia.
Stage 3: Countries are driven with innovation, producing new and unique products which result in high wages and cost of living. The countries in this stage include the Czech Republic and Slovenia.
From the classification, we identify countries in stage 1 and 2 as suitable for outsourcing due to the cost advantages that they’re bound to offer. However, countries in stage 3, are less attractive. from a financial perspective
The above analysis gives a sound basis from which to determine the cost implications of outsourcing from the countries. However, a more detailed analysis is needed to determine the education level and business intricacies of each country.
This can be found in their Global Competitiveness Index (GCI) Ranking that was done for the year 2018. The GCI characteristic is as indicated below in descending order:
The Czech Republic at No. 29
- High GDP per capita
- Superior education system
- Great collaboration between universities and industries
- High innovation and patenting rates
- Efficient labor market
- Good infrastructure
Estonia at No.32
- Transparent government policies
- High GDP per capita
- High auditing and reporting standards
- Strong and independent judicial system
- High-quality scientific research
- High-quality education
- Shortage of labor supply
- Macro- economic stability
Slovenia at No. 35
- High GDP per capita
- Excellent education standards
- Good Innovation capability
Poland at No. 37
- Average GDP per capita
- High FDI
- High level of technology transfer
- High educational standards
- Restrictive labor regulations
Lithuania at No. 40
- Excellenteducation system
- Greatlevel of industry-university collaboration
- Highauditing and reporting standards
- Rigidemployment
- Inefficientlabor market
Slovak Republic at No.41
- High GDP per capita
- High education standards
- Efficient labor market
- Macro- economic stability
Latvia at No. 42
- High education system
- Efficient labor markets
Russia at No. 43
- LowGDP per capita
- Highinnovation
- Weakeducation institutions
- Corruption
Hungary at No. 48
- Average GDP per capita
- Good education quality
Bulgaria at No. 51
- Low GDP per capita
- Sound macroeconomic environment
- Efficient labor market
Romania at No. 52
- High education quality
- Low GDP per capita
- Macro- economic stability
Serbia at No. 65
- Bureaucraticgovernment
- LowGDP per capita
- Higheducation system
Croatia at No. 68
- HighGDP per capita
- Higheducation quality
- Smalllabor pool
Armenia at No.70
- Bureaucratic government
- Low GDP per capita
- Efficient labor market
Montenegro at No.71
- Bureaucraticgovernment
- Higheducation system
- Highinnovation
- LowGDP per capita
Albania at No. 76
- Bureaucraticgovernment
- Aboveaverage education system
Ukraine at No. 83
- Efficient labor markets
- Macroeconomic instability
- Low GDP per capita
Macedonia at No. 84
- LowGDP per capita
- Averageeducation level
The Republic of Moldova at No. 88
- Bureaucratic government
- Low GDP per capita
Bosnia and Herzegovina at No. 91
- Bureaucratic government
- Low GDP per capita
With GCIclassification, the suitability of outsourcing from each of these EasternEuropean countries can be adequately deduced, helping companies in makingsuitable decisions.