The Brown-Wilson Group recently released its 2008 Black Book ‘State of the Outsourcing Industry Report’ (if your browser has problems with the URL format, try here).  If you’re even thinking about worldsourcing, this report deserves your consideration.

Twelve (12) U.S. outsourcing firms made the report’s “Top 20″ list.  Five (5) Indian organizations were on the list.  This report is interesting because it is based on input from actual users of outsourcing services.  According to the Brown-Wilson blurb:

“Brown-Wilson Group annually evaluates leading global outsourcing service providers across 26 management criteria and 18 operational excellence key performance indicators completely from the perspective of the client experience.”

It’s disappointing to note that no Chinese companies made the report’s list of the “Top 50″ companies.  Here’s an excerpt from their report that attempts to explain the absence.

“China has an unparalleled wealth of highly skilled labor and solid infrastructure to place it atop most short lists for offshoring engagements. Based on recent client satisfaction outcomes, however, the majority of those outsourcing decision-makers will not rank China as their first choice for upcoming initiatives anytime soon. How big this trend of caution will be, however, remains unclear. Revenues are increasing for China’s technology providers but hardly touch a fraction of the huge global offshoring market share. Clients currently agree that too many barriers exist for China to take India’s place as offshoring destination of choice.

2006’s Black Book Top 50 rankings included Freeborders, an information technology solutions supplier as the first China outsourcing firm to enter the ranks, but has not reappeared. Some software & IT outsourcing vendors have come close: Dextrys (formerly DarwinSuzoft), Achievo, Bleum, Neusoft, IT United, Objectiva, and Symbio Group all have done well again as reported by customers, but the level of client satisfaction has not been maintained over long periods as have other offshore suppliers and to grand heights of approval.

Customer-provided grades in work quality and staff dedication are extremely high but clients complain of several crucial issues keeping China outsourcing vendors from receiving top satisfaction scores. On top of a fragmented market, China still lacks outsourcing management talent, along with problems with intellectual property protection, differences in culture, poor English language skills, and sparsely found project management expertise especially in outsourcing. Having to tread carefully with these concerns is causing clients to reconsider these suppliers until more intrepid competitors substantiate successes in China.”

They even twist the knife a bit more with this comment:

“We expect to see the US and Central/Eastern Europe to [sic] replace China in this period of evolution for European destination preferences.”

One point they made in the report’s executive summary also resonates with what I’m hearing from an increasing number of prospective clients:

“Receiving the most fervent customer disapproval this year are outsourcing firms who have placed the majority of their company’s workforce offshore without maintaining adequately supported US based ventures.”

We still have some work to do…

Technorati Tags:  China, China Outsourcing