Tag Archives: outsoucing

Outlook for Nearshore Contact Center Outsourcing: Strong and Getting Stronger

After several years of stagnant growth, contact center outsourcing in the US and Americas is now poised for a significant upswing. Given the prediction by business & technology analysis firm Ovum, contact center outsourcing by US and Canadian companies should increase at a compound annual growth rate (CAGR) of about 3 percent between 2011 and 2016.

“This is significantly in excess of the 1.5 to 2 percent CAGR we were seeing for the past several years,” said Peter Ryan, Ovum Practice Leader for Outsourced Services, during a recent interview with Nearshore Americas. Last year, Ovum forecast said North American contact center outsourcing might increase at a CAGR of 2 percent from 2010 through 2016.

Ryan said contact center outsourcing by North American companies began dipping during the global economic turmoil of 2009, but recent improvements in the global economy are helping spur new growth. “There is more interest in North America,” he said. “More economic activity is driving calls to contact centers, which increases the stress on the pipeline.”

Though Ryan believes that current political and public pressure on US-based companies to keep jobs onshore is creating a greater interest in domestic contact center development. He expects that may change once the election is over.

Good News for Mexico

“This is a good news story for nearshore providers,” said Ryan. He gave the example of the Mexican contact center outsourcing industry, which Ovum predicted will report a CAGR of 6.4% between 2011 and 2017, up substantially from the 5.5% CAGR previously forecast for 2010 through 2016. This is an improvement from a “comedown” the market for Mexican contact center services has experienced in recent years.

“Ninety percent of the comedown in the Mexican market was due to the negative impact of bad news about Mexico’s drug wars and unsafe borders,” Ryan said. “This was pushing work away from Mexico and toward providers in other nearshore countries like El Salvador, Nicaragua, and Colombia. However, this year we noted a pickup in interest in Mexico.”

Ryan attributed this improvement in the prospects for Mexican-based nearshore contact center outsourcing to several factors. “Capacity in Central America is limited,” he explained. “There is contact center saturation in El Salvador, Nicaragua and Guatemala, and Honduras will not have a mainstream contact center industry anytime soon. Colombia has taken some business away but is struggling with bilingual services.”

In contrast, Ryan said Mexico is “well-known” among North American companies for having strong bilingual capability. In addition, he noted that Mexico is a “huge country” and that most contact center activity takes place far away from areas plagued by drug violence. Ryan said Brazil also has similar nearshore contact center outsourcing market with a potential to grow significantly in the years ahead.

Argentina – Lone Trouble Spot

Ryan singled out Argentina, saying it is the only “bad news story” among nearshore contact center destinations. “The government is anti-commerce and anti-outsourcing, and has not taken the concerns of the BPO industry seriously,” he said. “Inflation is huge problem that goes beyond official government statistics.”

According to Ryan, the economic and political situation in Argentina has largely stopped most US companies from outsourcing contact center services there, and even domestic contact center services clients are starting to shift their business to nearby Latin American destinations such as Peru. “It was inconceivable as recently as four or five years ago for a non-Argentinean contact agent to be serving an Argentinean caller,” Ryan said.

Although the prospects for the nearshore contact center outsourcing industry look bright, Ryan cautioned they are based on current positive economic trends and may be subject to change. For example, another European debt crisis or an economic slowdown in major developing markets could scale back Ovum’s latest predictions.

source: http://nearshoreamericas.com/nearshore-contact-center-outsourcing-promising-analysts/

Did you like this? Share it:

Cloud Computing Is Leading The Outsourcing Market

Cloud computing is revolutionizing the companies’ infrastructures. More and more companies are spending their outsourcing budget on purchasing cloud services. This helps them avoid hiring more people and save a fair amount of funds from their budgets. Research firms (including Gartner Inc.) have published figures that demonstrate the trend of cloud computing services in the IT outsourcing market.

On August 7th, 2012, Gartner Inc. said that out of $251.7 billion of total market of IT outsourcing, cloud computing services are the fastest-growing segment, having increased from $3.4 (2011) to $5 (2012). Currently, this is still insignificant when compared with the $251.7 billion market, but we can hope to see them as the leading area of IT outsourcing because of their high growth rate. Let’s take a look at some of the factors that have made cloud computing services so popular in the IT outsourcing sector.

Why Companies Prefer Cloud Services

No Need to Hire Extra Staff

This is a major advantage of using cloud computing services. The applications are handled by the cloud services providers; they are responsible for maintaining and repairing the applications. The company that uses them has no need to hire extra staff to take care of these software applications.

Instant Deployment

Cloud computing services are readily available and they can be instantly integrated into a company’s infrastructure. The company only needs to subscribe to the services and then it can access them from any PC with an Internet connection. On-premises applications need time to be installed on the company’s systems, they need to be configured according to the company’s requirements, so it takes time to bring them in the running condition.

Scalability

Cloud computing services are highly scalable. The company that uses them can easily require to the provider to increase the capabilities and functionalities of these services, if this is necessary. As these services usually run on distributed computers, adding more space and processing power is no difficult task. Also, everything is done dynamically, with zero downtime.

These are only some of the advantages of cloud computing services that justify the current trend of companies towards them. In the near future, it would be no surprise to see cloud computing services becoming the leading segment of the IT outsourcing market.

source: http://www.cloudtweaks.com/2012/08/cloud-computing-is-leading-the-outsourcing-market/

Did you like this? Share it:

10 problems with outsourcing IT

Takeaway: Outsourcing your IT functions may appear to make good sense, but beware of certain side effects that could negate the benefits.

The economy has hit everyone hard. Many companies have had to pare back departments, employees, budgets… on nearly every level. And many companies have done something no one thought they would ever do — jettison their IT departments in favor of outsourcing. On paper, it seems to make perfect sense. You have a company willing to handle your IT needs on an on-call basis. You’re not paying staff to sit around and wait for problems, nor are you having to pay benefits or deal with the issues that come with having computer engineers on hand. (I say that mostly in jest.)

But along with that approach comes a handful of issues you may not be prepared for. Let’s examine 10 of them.

1: Real cost
There are costs involved with outsourcing IT that many do not consider. For example, when you schedule an appointment with your outsourced IT company, you’re going to be charged for the drive time there and back. And what about when that outsourced engineer has no idea how to fix your issue and has to learn on the job? Are you willing to pay for that? It’s one thing if your own employees learn as they go. But it’s a different story when a contracted employee does it. There are other real costs as well, such as when you get recommendations from the outsourced company that aren’t actually needed. Upsales are common and sometimes unnecessary.

2: Time factor
When you have an emergency, it will have to wait until your outsourced IT department can get someone there. Drive time strikes again. You’re also subject to the calendar of your outsourced company, and many factors can cause your emergency to be pushed back. At this point, you are at the mercy of your outsourced IT department. Had IT still been in-house, the emergency would be dealt with right away.

3: Familiarity with network and systems
When your IT is in-house, your IT workers (more than likely) know your system and your network really well. They should: They probably built it. So it’s likely that in-house IT workers can keep your systems running more smoothly and solve emergencies much faster. Yes, it is true that even an outsourced IT department can learn your systems and networks. But there will be ramp-up time, as well as the possibility that a lack of documentation can cause serious issues.

4: Employee relationships
Although some may not see this as an issue, I have come across it many times. When employees are in-house, they know one another and know how to interact well with one another. If you are outsourcing your IT, you may or may not get the same engineer showing up every time. That means your employees must get used to different contractors and how they work. With an in-house IT staff, relationships can form and solidify. Of course, that’s not to say relationships with outside staff can’t be built. But bringing in IT from the outside causes a fluctuation. It may not always be a problem, but I have seen it create issues to the point that an engineer was banned from being deployed to a client.

5: Liability
There are certain instances where information or situations can become a liability when a third-party is brought in. Security measures may need to be implemented to protect company data, employees, systems… everything can become a liability. You never know when data is accidentally going to walk off on an external hard-drive or be left in a car and stolen. You add another piece to the puzzle, and more things can go wrong. Add to that the fact that no one is going to treat your company data with the care and importance that someone in-house will.

6: Loss of work
When an employee’s machine goes down, that employee will lose the ability to work until the outsourced IT department can make it in to resolve the issue. That loss of productivity can be costly. The response time and calendar issues you will face with outsourced IT will continually cause a loss of work. With in-house IT, response time is only a matter of walking down the hall. And one other major factor plays into this: priority.

7: Priority
This is a big one. Your company will most likely be on a long list of companies your outsourced IT company works with. Who gets priority? Honestly? The company that spends the most will get top priority. If that’s not you, that means you’ll get bumped down when that big spender tells the outsourced IT company how high to jump. If you want to remain on top of the priority list, you will either have to spend a lot of cash or keep your IT in-house.

8: Morale
The second you can members of your IT department, everyone else is going to be on the watch for their own pink slips. That kind of deflating of morale takes a long time to recover from. And when employees know they don’t have in-house IT, they know when problems arise, they may be slow to resolve.

9: Continuity
This takes into consideration many of the previous points. When your IT is outsourced, you’ll constantly need to redirect engineers, retrain people with regard to conduct and security, and deal with a fluctuating IT schedule you have no control over. And when a variety of engineers step in, issues will be resolved differently and setups can be completed without regard to in-house standards.

10: Control
You can’t control an external company. So now you have one more cog in a machine that is already incredibly complex. Why add more layers and pieces, which will only mean you lose more and more control over how your company behaves, performs, and grows? If you are one of those owners, shareholders, or managers who prefers to keep control over the daily workings of your company, it doesn’t make sense to outsource such a critical aspect of a smooth-running system.

The decision

The outsourcing issue will be argued back and forth until IT is no longer relevant. I have seen its effects from nearly every side and rarely does it work as well as those initiating the process would hope. Of course, it’s not a completely flawed system. But a lot of issues get overlooked when the idea of saving some salary comes to mind. Choose wisely where your IT dollars are spent. The returns could make or break your company.

source: http://www.techrepublic.com/blog/10things/10-problems-with-outsourcing-it/3016

Did you like this? Share it:

The problem with cloud computing: Clouds

Thanks to the cloud, websites and apps around the world can tap into vast, remote stores of data and computing power.

And thanks to the cloud, one good blow to one of those vast, remote storage centers can take down websites and apps around the world.

That’s what happened this past weekend. A ferocious lightning storm in Northern Virginia took down Netflix, Instagram, Pinterest, Heroku and more — not because any of those companies are based in Northern Virginia, but because they all apparently rely heavily on Amazon’s Elastic Compute Cloud facility there. Amazon said the storm, for reasons not immediately explained, took out both its main power supply and its backup generator.

The outage brought to mind a similar incident a year ago, in which an outage at the same Amazon facility felled Reddit, Quora and several other sites.

Does the ability of one local weather pattern to affect web users around the globe point to a fundamental flaw in the cloud? Have we entered a world in which Internet users in Palo Alto, Johannesburg and Taipei must watching the weather report for Northern Virginia?

Not necessarily, but it does highlight the reality that the cloud is as much a physical system as it is a virtual one. And as with most physical systems, redundancy is essential to reliability.

Amazon already has U.S. facilities in Oregon and Northern California in addition to Northern Virginia, and it encourages major customers to take advantage of its Elastic Load Balancing service, which is supposed to shift traffic from one cloud center to another to keep things running smoothly. In the past, some of the companies affected by outages have admitted that they didn’t sign up for this option, which costs extra. Everyone whose business depends on reliability by now should know that it’s worth the price.

But in this case, it seems that some of the companies affected were in fact using Elastic Load Balancing — and it failed too.

If that’s true, this latest outage could spur a different kind of diversification in the cloud. Namely, companies might take a harder look at using providers other than Amazon, the industry leader. Rackspace and Microsoft Windows Azure have been the two closest competitors. But in a timely development, Google announced last week, the day before the outages began, that it is poised to enter the field as well.

The increase in competition will put pressure on Amazon to beef up its reliability. If it doesn’t respond, its customers will.

Source:

http://www.dailyherald.com/article/20120707/business/707079956/

Did you like this? Share it:

Outsourcing Price – Don’t Lose the Cost Linkage

Getting to the right price. If not the primary objective, it’s certainly one of the more important goals of any customer who has ever outsourced a piece of their operation. While striving for the lowest price possible, in order for the transaction – and long term relationship – to be successful, it must be beneficial to both parties. If a customer negotiates a supplier below the point at which they can make money on the service, there will be problems with that relationship. It might take a little while for them to surface, but surface they will.

One of the longstanding precepts of pricing in the sourcing world is to maintain, as closely as possible, a linkage between the underlying cost of providing the service and the price being charged for that service. No customer should begrudge their supplier making a reasonable profit, for without a fair return on their work, it is unlikely the supplier will be there in the future to support the customer. Hence, if the costs of providing the service plus a fair margin are equal, in as many cases as possible, to the price being paid by the customer, then the chances for a long, happy and productive relationship between the customer and supplier are good.

This does not mean that one should strive for a "cost plus" arrangement. On the contrary, that pricing paradigm comes with its own set of challenges. What this does mean is the price should be closely linked to the underlying cost of providing the service. An O/S image support charge is directly attributable to the labor and maybe some productivity tools that are used in the delivery of that server’s support. Conversely, the charge for a gigabyte of data streamed to a tape has no linkage to the underlying cost of providing data backup services.

Just a few weeks ago in Outsourcing Pricing Models: Recent Trends and Ever-Important Considerations we discussed an article from CIO Magazine that highlighted a trend in the industry to explore different pricing models. Customers are always looking for new ways to manage the cost of technology and commodity business functions and better align them with their lines of business. This is not a new concept and has been evolving for some time. In another example, about 18 months ago the Outsourcing Center assembled a panel of industry experts to discuss different approaches to pricing (see Outsourcing Experts Discuss New Flexible Pricing Models).

A desire for output based pricing is a common objective for customers seeking alternative pricing structures. An insurance company wants to pay by the number of claims processed; a payables department wants to pay by the number of checks written or invoices processed; etc. When trying to achieve these type of billing metrics, the buyer must not forget the still relevant principle discussed above (cost + margin = price). The challenge often encountered with these output-based pricing metrics is getting to an objective, measurable and agreed-upon cost basis for each of the output events. Sometimes there is a direct correlation between output and cost and in those cases, output based pricing is probably the right way to go. But sometimes the parties try to take the concept too far and bundle in costs that have nothing to do with changes in the volume of output. In those cases, there is often a hidden trap that catches either the client (through higher than necessary fees) or the supplier (through margin shrinkage or even loss).

The buyer of sourcing services should use caution when pursuing these types of pricing strategies in the absence of good historical metrics on the underlying cost structure. Suppliers try to give the customer what they want in as many cases as possible. If asked for an evolutionary pricing metric, most suppliers will try to accommodate the request. However, they will also ensure they are protected. When faced with a request to price for an unknown risk (e.g., if the underlying costs of a particular metric are not inherently clear), the supplier will mitigate that risk with either contingency funds, increased margin, or both. The customer may get the new billing metric they were after, but they may also end up overpaying for the service.

In summary, regardless of whether you are pursuing input-based, output-based or even a more revolutionary pricing metric, the underlying principle of cost + margin = price should be respected as a fundamental reality to supplier pricing. This should ensure you don’t overpay for the service and that your supplier earns a fair margin on their work. Both are necessary for a successful outsourcing relationship.

Source:http://www.jdsupra.com/post/documentViewer.aspx?fid=a54dee1b-67ee-46d4-adbc-dc55778c1b24

Did you like this? Share it:

Entrepreneurs With Outsourcing Roots See Passage Through Silicon Valley as Essential

IT outsouring in Latin America has proven to be fertile training ground for a pair of startup-minded tech stars – who both have purposely tapped into the largest economy in the region (the United States) to launch their organizations. Their decision to go north, instead of launch their companies in Latin America, says a lot about the appetite of entrepreneurs to transverse international borders to pursue their fortunes and comparatively deeper pools of funding.

Crowdsourcing and Open Data, two relatively new forces that are rather abstract in terms of how they can be integrated into traditional business models and leveraged to create value, are technologies underpinning the startups created by Luis Enrique Corrales and Diego May.

Luis is working on a “hyper-localized” mobile application called Ourcast that crunches weather data from 20,000 sources across the country and its user base. “It is equivalent to having hundreds of weather stations within one city. When you login you are immediately presented with a two hour forecast, you have a set of icons to either report the weather anonymously or you can check-in to Facebook and post your location along with the weather,” remarked Luis. The series A round of venture capital was raised by Starfish Ventures out of Australia, the firm likes the idea of creatively disrupting the weather industry.

Riding the Open Data Movement

Diego May is CEO and co-founder of Junar, a company that has created a cloud based platform “for opening data to drive innovation, collaboration, and to meet legislative goals,” as stated by Junar. The open data movement is gaining steam with governments. The US government’s Data.gov is celebrating its three year anniversary; hundreds of citizens have built clever apps based on data sets released by the US government.

Junar is banking on the fact that foreign governments, universities, NGOs, companies, etc. want to open up data, but do not want to undergo the process of building proprietary systems to do so. Instead they can subscribe to Junar and have a proven end-to-end solution immediately.

“This is the third renaissance of the Internet. So much data is being created by universities, federal and local governments, companies, etc. and those organizations are not publishing portions of it in a way that brings them value,” exclaimed Diego.

At this point profiting from opening up data is somewhat ambiguous, but so seemed online retail at one point. Diego explained that there are innumerable ways data can be opened to bring a company value, something as simple as releasing facility location data a developer can take and integrate into an app can benefit a customer.

Underdeveloped Support

Entrepreneurs like Diego and Luis would find it much harder to realize their ventures if they were back home in their domestic markets. Access to capital and the lack of support for entrepreneurs are widespread barriers to growth for startups across the region.

“Latin America as a region is significantly behind in terms of technical entrepreneurship, the numbers are very small. It is a generational thing and it is progressing, just slowly. It takes more than teaching people about entrepreneurship, it takes capital,” stated Mario Chavez, CEO of Avantica, a nearshore software engineering services firm.

Source:http://nearshoreamericas.com/latam-tech-stars-head-north-silicon-valley/

Did you like this? Share it:

BPO Competitive Advantage Relies on More than Cost

The competitive advantage offered by outsourcing, relative risks of global sourcing, and differences between process improvement and innovation were among the topics debated by panelists in the G6 Under Practitioner Review at the North American Shared Services & Outsourcing Week conference held last week in Orlando, FL. Discussion on all three issues demonstrated the variance of industry opinions about how these issues are affecting the delivery of outsourcing services, as well as differing thoughts on the relative merits and shortcomings of the captive team and outsourcing models.

The G6 panel consisted of Capgemini CEO Hubert Giraud, CSC President of Global Sales and Marketing Peter Allen, Alsbridge CEO Ben Trowbridge, Deloitte Principal Susan Hogan, Genpact President/CEO Tiger Tyagarajan, and KPMG Principal of Advisory Services Bob Cecil.

Cost as the Basis of Competitive Advantage
When presented with the statement “Outsourcing providers sell one competitive advantage: cost,” panelists agreed that cost forms the basis of the competitive advantage offered by outsourcing, but is not enough in and of itself to support the BPO industry.

“When I was a (captive services provider) for the first seven years of my career, that was our statement,” said Tyagarajan. “We said we aligned culture and business objectives. But cost is a starting point with other advantages layered on top. In today’s world, it must be there.”

Trowbridge said that shared services providers must offer their client benefits other than cost. “You must provide points of value based on the needs of shared services organizations,” he said. “(Shared services organizations) need to ramp quickly and quickly transition their assets and resources to a global shared services footprint. You can’t do that on your own. Cost is not the answer to all situations.”

Global Risks Require Management
Panelists also generally agreed that global BPO, shared services and captive team sourcing carries significant risks which must be properly managed. In response to the statement “A shrinking pipeline, new low-cost locations, data security, and economic/political uncertainty make global outsourcing risky,” Trowbridge said there is a “tremendous” risk associated with global sourcing.

“The reason a location is low-cost has a variety of drivers: dramatic differences in GDP, crime and communications,” said Trowbridge. “It’s easy to make a ‘me too’ decision based on where the nearest expat school is to the shared services delivery location, but you can wind up with a risky location. The labor pool can shrink, a new competitor can move in.”

However, Trowbridge said a properly set up captive shared services center can have its location based on a “pure” assessment of local risk. “With a captive center, you can tour the world with a blank slate,” he said.

Giraud spoke in favor of a widespread outsourcing footprint.“The world is changing at a pace nobody can predict,” said Giraud. “All barometers are continually moving. The capability of a big organization with a global strategy is a competitive advantage. Outsourcing spread across the world is less risky than a captive center.”

Source:http://bpooutcomes.com/sson-bpo-competitive-advantage/

Did you like this? Share it:

Dell plots Ubuntu laptop for developers with eye on OpenStack cloud

Dell this week revealed Project Sputnik, a six-month-long pilot program to develop an Ubuntu laptop designed specifically for developers and devops, with the long-term vision of providing a client on which developers can build, test, and seamlessly launch services to an OpenStack-powered cloud environment.

The company is soliciting feedback from the developer community to come up with specs for the machine, which will start with an XPS13 laptop running Ubuntu 12.04. The goal is to deliver a stripped-down machine that comes loaded with all the necessary drivers and functionality developers want, but without the performance-draining bloatware, according to Barton George, Cloud Computing Group evangelist at Dell.

Notably, this isn’t Dell’s first foray into the world of Ubuntu. The company is among the minority of hardware vendors offering any kind of end-user machines loaded with the operating system. Further, the company announced new servers last year loaded with Canonical’s Ubuntu Enterprise Cloud (UEC).

One of Dell’s visions for Project Sputnik is to enable developers to download premade, ready-to-use developer environments — effectively profiles with all the necessary tools for coding in various languages. "If you wanted the Ruby profile for developing in Ruby, or Android, or JavaScript, you could go and take those packages down and use them on your system," George said in the Dell Vlog.

The idea is for a developer to be able to easily load a new profile to a machine on the fly from GitHub in case he or she wants to start coding in a new language. "People will get excited about building out more profiles for themselves," said George.

The long-term vision for Sputnik is to equip developers with a lightweight system that would serve as a launchpad for pushing applications to a cloud back end powered by OpenStack. "The idea is that you would develop in a microcloud on the laptop itself. You would then push it out to a test environment, which you then push out to a cloud," said George. "You have a seamless connection of tools that are all linked together in a very devops kind of a fashion."

If Project Sputnik proves sufficiently successful, Dell also could roll out a heavyweight counterpart to the envisioned lightweight machine, "a big honking machine that people could do more heavyweight-type developing on," said George.

Developers have started contributing dozens of suggestions for Project Sputnik on Dell’s Idea Storm site. Among the suggestions:

At least a Core i7 processor
8GB of RAM
A fast solid-state drive
A midrange Nvidia GPU
At least seven hours of battery life
A matte display with a resolution of at least 1,440 by 900
A high-quality keyboard
A high-quality touchpad
The option for a multilingual keyboard and installation
A preinstalled virtual version of Windows 7

source:

http://www.infoworld.com/t/linux/dell-plots-ubuntu-laptop-developers-eye-openstack-cloud-192732

Did you like this? Share it:

The New Latin America Outsourcing Dynamic: Domestic, Global or a Bit of Both?

Distinguishing between domestic and export driven business is becoming increasingly important to vendors operating in LatAm. How are Brazilian banks outsourcing their back office? Why is Mexico’s manufacturing industry rebounding and what technology solutions are producers looking for? Is Colombia’s telecoms market the next big opportunity? Likewise, multinational enterprises will be looking for those service providers best suited to support their specific industry, as they invest in these oft complex markets.

The Latin America outsourcing model poses a new dynamic relative to India where exports still comprise 80 percent of total sales. Across LatAm exports are more to the tune of 30 percent. In a recent interview with our sister affiliate Global Delivery Report, TCS revealed that 70 percent of their Latin American presence (nine thousand heads) focuses purely on domestic consumption. As Brazil, Mexico, Colombia, and Peru blaze forward economically, we surmise that in-region deals will eat up an even bigger portion of that pie. Furthermore, while Mexican exports continue to grow rapidly, so too is its domestic outsourcing market.

Data Source: Mexico’s Ministry of the Economy

The Discussion Will Shift Toward In-Country Sourcing

As Latin American economies pick up steam and push labor markets to their limits, the Nearshore model will be put to the test. We already see this happening in Brazil and in Chile where increasing labor costs are making it less practical to export services. Multinational vendors are shifting certain BPO projects from location to location, transferring operations from high cost to low cost countries, from Chile to Guatemala, from Brazil to Argentina, from Mexico to Colombia.

As this game of ‘hot potato’ plays out, the global sourcing conversation will likely shift in different directions as it relates to domestic markets: How can we service Portuguese clients out of Colombia? Should Mexico’s public sector be a priority for us? How will the Colombia-US Free Trade Agreement impact local demand? Are we ‘vertical’ enough to break into Mexico’s manufacturing sector?

David Shpilberg of CPM Braxis touched on the ‘domestic’ issue, during an interview at Nearshore Nexus last week, when reflecting on the relevance of the US market to Brazil-based vendors – in light of the huge in-country workload. He responded by saying that “it has become difficult to distinguish between what is local and what is global.” Outsourcing mega deals involve numerous end-user and service provider locations across countries and continents. “To be a global player, you must show clients that you can manage nearshore contracts.” Keith Jones from advisory firm Pace Harmon also confirmed that “when entering into uncharted markets, multinationals [enterprises] want service providers that have experience working on projects in the United States.”

So as enterprises move in, Nearshore contracts can play as the ‘hook’ that catches more work on Brazil’s domestic front.

Mexican Manufacturing Will Drive more IT/BPO Deals

Vertical expertise could also be a game-changer for LatAm domestic markets. Jimit Arora of Everest Group sees the “verticalization” of IT application development and maintenance (ADM) as a major paradigm shift in today’s global services marketplace. “Clients are reassured when vendors can speak their language whether it’s financial services, hospitality, manufacturing, or health care.”

Mexico is the largest trading partner with the United States second only to China. 2010 was a record year for goods exports totaling $230 billion US dollars

Accenture is credited as the pioneer of the ‘vertical’ approach, but most outsourcers now market their offerings based on specific vertical expertise. Nearshore Americas surveyed the top IT services vendors operating in Mexico and identified the following verticals to keep a close eye on:

Data Source: Nearshore Americas supplier survey

Manufacturing in Mexico is a good example of how vertical know-how could help IT/BPO outsourcers grow their domestic business. According to the Offshore Group, rising costs in China are a boon to Mexican manufacturing. The sector suffered in the late 1980s as producers packed up and began moving production overseas, but the last five years have seen a rebirth of even more advanced manufacturing, particularly in aerospace. In 2004 aerospace companies operating in Mexico exported a total of $146 million US dollars worth of products; that number rose to $3.5 billion US dollars by 2010. Of particular interest to the big outsourcers might be the multinational packaged goods and automotive clients (see chart).

Data Source: Instituto Nacional de Estatistica y Geografia

Mexico is the largest trading partner with the United States second only to China. 2010 was a record year for goods exports totaling $230 billion US dollars (US Census Data). Indian product exports to the US barely scratched $30 billion US dollars in 2011. Nissan’s recent decision to locate a $2 billion US dollar facility in Aguascalientes gave the industry an additional boost as well as a recent survey by the IMF, showing that Mexico’s rapid economic recovery (as the US rebounds) shows strong fundamentals particularly in manufacturing.

Verticals and Co-Location – The Way Forward?

As multinationals bring manufacturing back to Mexico, vertical expertise will be a ‘hook’ for both IT and BPO contracts. Homegrown technology services providers like Neoris – Latin America’s only SAP Global Partner – will likely see a bright future in that vertical. These homegrown players are expanding their sales force in the United States undoubtedly pitching global goods manufacturers – among others. BPO providers with proven expertise in manufacturing could also see a bright future. “Co-location is always beneficial because it removes another layer of complexity,” explained Keith Jones of Pace Harmon. “If you’re manufacturing in Mexico, does it make sense to send your back office to India?”

source:

http://nearshoreamericas.com/domestic-latin-america-outsourcing/

Did you like this? Share it:

Can your IT outsourcing contract coexist with the cloud?

If your enterprise is committed to a long-term managed services or information technology outsourcing (ITO) contract, you might be looking longingly at the agility and efficiencies of cloud-based delivery models. If you’re like many enterprises that rely on managed services, you might be less than thrilled with the quality, responsiveness and flexibility you’re getting. Cloud seems like a better path, but you’re contractually obligated, potentially for several more years.

Source: http://gigaom.com/cloud/bils-it-outsourcing-contract-cloud/

Recommend Articles:

1. IT Outsourcing Companies in the USA

2. iOS Platform App Features

3. Android System Architecture

Did you like this? Share it: