Nearshore Blog

Of Presidents and IT Outsourcing

One is the newly elected president of Mexico, and one wants to be re-elected president of Mexico's neighbor to the north. The guy who wants to be re-elected has been making noise about the badness of outsourcing, but the other guy could have more impact on the future of outsourcing – at least in the nearshore region.

Obama has scored headlines and maybe some political points with his calling out Mitt Romney's outsourcing of U.S. jobs to China and India while an executive at Bain Capital. Obama has hit the outsourcing theme hard a few times in the past year, and in January even held a summit to proclaim the awesomeness of "Insourcing American Jobs."

Unhappy Client Complaints: Cost Overruns, Fictitious Work

"The world is full of complainers," as the sociopathic private eye says in the opening monologue of the great Coen Brothers movie Blood Simple. And apparently the attendees of the recent InfoSec Europe conference in London can be included among them.  Their complaints are about their outsourcing providers.

Their biggest single complaint? Cost overruns. In a survey conducted at the gathering of IT security professionals by Lieberman Software (provider of identity management solutions), 42% said their outsourcing deals had cost more than originally specified. Of that surprised group, 16% said costs were "significantly more" than expected. On the happy side of the ledger, 9% said things cost less than they'd planned. About half said things ended up as bargained for.

Closer Ties with India: Bad News for Mexico's IT Providers?

"Aap ka swagat hai." That's Hindi for "You are welcome," and that's what it said on the big billboard greeting India's prime minister, Manmohan Singh, when he arrived in San Cabo, Mexico, for the G20 Summit last week. The friendly message was posted by Mexico's government, which seemed to be reaching out to Mr Singh in particular during the meeting of international heads of state.

Mexico's president Felipe Calderon met with Singh before the summit began, which observers say means Mexico wants to build closer ties with India. The president and the prime minister discussed "the promotion of reciprocal investments and the need to deepen scientific and technical cooperation," according to a statement from the Mexican federal government.

India is already Mexico's 16th largest trading partner, and last year bilateral trade between the two countries reached $4.1 billion. The most important thing about that figure is it represents an increase in trade of 40 percent. That's one reason Mr Singh, who represents a country with an IT invasion force that has swarmed the proverbial beaches of Mexico and elsewhere, was welcome.

Lessons for Outsourcers from Luis Aparicio

The connection between professional baseball and the Nearshore region is a long and valuable one. Major League organizations have been outsourcing much of their player development to the Caribbean and Central and South America for decades, and today many teams sponsor baseball academies in lucrative talent spots like the Dominican Republic.

I started thinking about baseball and Nearshore IT sourcing the other day after talking to a fellow fan about shortstops. We were discussing the height/weight/size factor. Is it better for a shortstop to be a smaller guy, about the size of your average college professor, or a taller guy with some heft?

You can pick from two of the greatest shortstops in baseball history (and two of the best overall players as well) to make either case. Representing the little-guy team is Luis Aparicio. Making the case for a big shortstop, Cal Ripken Jr. "Little Louis" is listed in the books as 5 feet 9 inches. Ripken: Six feet four, and about 50 pounds heavier.

Ok, so, the connection with nearshore IT sourcing?

Predictive Analytics: Good for Tennis, But How About Outsourcing?

One of the off-court but on-screen highlights of the upcoming Wimbledon will be IBM's use of data to provide deeper insight into each player's performance. This is Big Data stuff, done in real time, and made available through something IBM calls SlamTracker, which "maps a match in real-time and highlights the key turning points."

There's also some predictive analytics going on here. IBM says all this data could help players figure out what they need to do to improve their chances of winning (that is, besides playing better than their opponents). 

Big data and the tools to analyze it are being credited with all kinds of discoveries, including analysts at Target knowing a young woman was pregnant before her father did. (Fathers of daughters are likely to be impressed but not comforted by this kind of capability.)

But what about people involved in outsourcing relationships?

New Report Puts Mexico IT Services in Perspective

Oh, down in Mexico
I've never really been so I don't really know...


For those unfortunate people involved in outsourcing decisions who have never made the trip to Mexico, like the guy in the James Taylor song quoted above, there's a new report you should check out. It's called Going Global: The 2012 Investor's Guide to Mexico's Business and Technology Services, and it rounds up the kinds of key information anyone reckoning with sourcing locations would find helpful. It's also relatively free of the MBA-speak that makes so many reports like this so god-awful to read.

(Full disclosure: The folks who produced this report have been colleagues of mine, but they don't even know I've read this report.)

I'm going to mention just a few highlights that jumped out at me, but I encourage you to download the report. Mexico, after all, has emerged as the world's fourth largest producer of IT services, after India, China, and the Philippines, according to Gartner, and deserves deeper investigation by more businesses.

HP Cuts: Last Gasp of IT Services Group, or Smart Move to More Valuable Services?

The latest round of layoffs announced the other day by HP was not surprising. Sadly, huge job cuts are almost an annual ritual at the company, where a glorious past has been dimmed by decisions that some have called questionable.

What was surprising is that the greatest share of the 27,000 (!) terminations will reportedly come from the services division. Sources told Bloomberg that HP could cut the group by 10,000 people, leaving 15,000 saved. It could be HP's opportunity to be the new type of provider we sometimes hear about.

The Public's Misperception of Outsourcing Is Not the Public's Fault

A new survey of public attitudes toward outsourcing indicates that the public does not love outsourcing. The study also suggests that the public doesn't really understand outsourcing.

The Public Perception of Outsourcing research found that more than half of the respondents associate outsourcing with job losses, and 65% think it has to do only with cost cutting. The study was done in the U.K., by the National Outsourcing Association, but it's not a stretch to assume results would be similar if done in the U.S. or Canada or Western Europe. It's not like they were asking about the Champions League matches.

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:

"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."