The Nearshore Blog

JOBS Act May Produce Nearshore Bonanza

In a rare act of cooperation by an increasingly divided US government, last month President Obama signed the bipartisan JOBS (Jumpstart Our Business Startups) Act into law. As described by CNET, the biggest benefit the JOBS Act, which relaxes SEC regulations on how startup companies raise capital and promote themselves, provides businesses is simple. “They can raise money from anyone.” JOBS  is designed to stimulate the creation of growth of startup companies in the US, which could mean a potential flow of new business to nearshore BPO and ITO providers.

Giving Startups the Most Bang for the Buck

If JOBS works as planned (and as it has been law for less than one full month, obviously we will have to wait for a while to see how well the legislation actually performs), the US economy should produce a slew of new startups, including many in the IT sector. In addition, many struggling IT startups will have access to new streams of money without having to go public or seek out traditionally deep-pocketed, SEC-approved private investors.

Is "Unsourcing" the End of Customer Support Outsourcing?

If outsourcing were a person, we should excuse this person for feeling beleaguered. Some days it can seem like outsourcing just can't get a break. There's always talk of some new force like cloud computing or other awesome sauce that's going to make outsourcing better or turn it into something completely different. And it must be discouraging to hear people calling for the end of you.

The latest force du jour is described in a new column by The Economist sci-tech writer who hides behind the name Babbage. Babbage calls this developing trend "unsourcing," which may not be the best name, and in fact the earlier force known as crowdsourcing might be more like it. But never mind. Here's the setup scene as Babbage sees it:

The Many Languages of Nearshore

When evaluating the advantages offered by nearshore BPO, buyers often consider that in addition to the widespread Spanish fluency found in the nearshore region, a relatively high rate of English proficiency is also common. But the nearshore region features high and even native degrees of fluency in many languages beyond Spanish and English. Let’s take a quick review of some of the languages commonly spoken in the nearshore area, starting with Costa Rica as an example.

Costa Rica Features Proficiency in 6 Languages

Costa Rica is an increasingly popular nearshore BPO destination, featuring advantages such as political stability and high levels of spending on education and healthcare. Buyers of Costa Rica-based BPO services also count on native Spanish proficiency (Spanish is the country’s official language) and widespread fluency in English.

"Extended Global Enterprise": Like Outsourcing with The Avengers

One of the things you hear a lot these days is that companies want outsourcing to change their business. Customers don't want to just cut costs. They want specialized skills, they want innovation, they want help cracking new international markets.

They want external services providers to be a seamless part of their overall business services strategy. This approach goes beyond the usual shared services or outsourcing models and focuses on the priorities of the whole business, the entire enterprise.

Cliff Justice, a principal with KPMG, calls this new delivery concept "the extended global enterprise." He says it's not a set-in-stone delivery method but rather a way of thinking about delivering business services "that is based on the concept of end-to-end processes, internal and outsourced service providers, high value services, and strong central governance."

Services, Resources, Efficiency Drive ITO Market

If the activities of 12 leading ITO vendors used as benchmarks by consulting/analyst firm Technology Business Research are any indication of the industry as a whole, then the global ITO market is looking very healthy in 2012. According to a recent webinar hosted by TBR, “Following the Sun in 2012,” a benchmark group of 12 heavyweight ITO vendors including Accenture, Capgemini, and IBM are rapidly expanding headcount as they attempt to provide higher-value services, balance their resource composition, and invest for efficiency.

Don't Let Success Obscure the Difficult People Problems

The annual Nearshore Nexus conference is a good time to take the virtual pulse of the region's IT outsourcing and BPO community. The event brings together a diverse crowd that enthusiastically espouses or embraces nearshoring but also recognizes the restraints and the challenges ahead.

If there were a triumphant headline from the conference, it would be "Nearshore No Longer Operates in Shadow of Outsourcing Giants," to paraphrase Nexus founder Kirk Laughlin. India and the Philippines and China continue to be where the biggest outsourcing action is, but "outsourcing to Latin America" gets the head-scratching "Say wha?" response less often now than it has gotten until recently. Even the Wall Street Journal is now paying attention.

Education is Critical to Nearshore Future

Anyone with children knows how critical a good education is. Education makes the difference between pursuing a lucrative, fulfilling career and simply working at a dead-end job to pay the bills. For nearshore outsourcing, which is still in the early stages of maturity as a widespread business practice, education will be just as critical in determining whether it goes on to become an alternative means of executing call center services and other low-level functions, or reaches its full potential as a first choice for performing high-level business processes and IT development and management activities.

During a Q&A session at last week’s Nearshore Nexus conference in New York City, Alavaro Aribe, former president of the Republic of Colombia, stressed the importance of education to the continued growth of outsourcing success both in Colombia and in the greater Latin American region. “Twenty-five years ago, economists recommended Latin American countries needed to change from commodity-based economies to knowledge-based economies,” said Uribe. “They need the same thing today.”

Obama's Missed Opportunity with a Nearshore Neighbor

President Obama had an opportunity at the Summit of the Americas in Cartagena last week to bestow some of that trademark "hope and change." Instead of shunning Cuba, he could've welcomed the island nation to the meeting of Latin American states. He could've effectively said "Welcome to the Nearshore." But no. He opted to continue with the Cold War approach, causing a bit of a dustup preceding the summit.

Cuba has not shown sufficient interest in becoming a democratic republic, Obama said, "no interest whatsoever" in improving relations with the U.S., and "no disposition to respecting the democratic and human rights of the Cuban people."

Nearshore Providers Shouldn’t Overlook SMEs

BPO is often assumed to be the province of large enterprises. After all, small-to-mid-sized enterprises (SMEs) generally have a much more difficult time researching and vetting overseas providers, establishing international communications links, affording the inevitable time and monetary costs of outsourcing transition, obtaining economies of scale, and simply having the resources to manage work performed afar on a day-to-day basis than their larger competitors.

Everyone Loves India

If the world of global IT outsourcing were a television comedy, the main character would be India. Latin America would be a minor character, who shows up once an episode and, since this is a TV sitcom, gets a few laughs by being stereotypically exotic compared to India's stereotypically buttoned-up. Other characters facetiously refer to him as "El Nearshore."

Due to a devoted fanbase, Latin America gets a spinoff, but it can't compete with India, which is on every night. India kills in the ratings. Everyone loves India.