By Alex Robbio(*), President & Co-Founder Belatrix
Last week I enjoyed the privilege of participating on a panel at the Nearshore Nexus event in New York. The event brought together industry experts to discuss the future of the services industry in Latin America (for those unfamiliar with the term, “nearshore” refers to service delivery from a close location to the client, such as Latin America, as opposed to “offshore”).
In this blog post, I want to share some reflections from the event:
- “Nearshore” no longer works. Traditionally the nearshore services industry positioned itself within the context of its geographic location (hence the name “nearshore”). In the past we highlighted how clients could take advantage of an overlapping timezone, cultural similarities, and ease of travel. What became clear at the event however, was that while this continues to provide major advantages, it is no longer enough. To drive the industry forward, “nearshore” needs to reposition itself. Sophisticated Latin American service providers need to offer a more solution-oriented approach – guiding clients throughout the software development process, from conception and prototyping, all the way through to development, quality assurance, and ongoing support. This focus on offering greater value, applied innovation, and high-end, creative product development services is what will drive the industry forward. The industry will simply not grow and develop without the required investments to offer clients this broader array of more sophisticated services. Clearly being in a close location helps offer these services, but by themselves, are no longer enough.
- Quality of Latin American talent reflected by interest in setting up development centers. While many attendees at the event were interested in working with third party service providers, others expressed interest in setting up their own centers in Latin America. In particular organizations want to tap into the specific skills they can find in some locations. For example, for global companies which already have a presence in the region, the option to tap into dedicated creative talent in Argentina, represents an attractive option. The decision whether to work with a service provider, or set up your own captive in the region will clearly depend on specific circumstances. But when choosing to go it alone, make sure to be aware of the best practices for nearshore software development, which many service providers have extensive experience with. The usual practices you may have used with a captive in India for example,will differ in Latin America.
- Lack of scale should not be a reason not to look to Latin America. Firstly, most service engagements are significantly smaller in size than they were even a few years ago. However, when you do need to scale-up service delivery in Latin America, as Patrick Millar, Co-Founder and CMO of Formatic stated during the discussion, you can do this by diversifying across vendors and geographies. Clearly this also helps lower potential risk.
- Multinational companies exploit the strengths of Latin American. Attendees at the event also included major organizations such as Merrill Lynch, UPS, and Bank of America. While such organizations continue to have a major presence in traditional outsourcing locations such as India, they view Latin America as a strong complement. As another attendee at the event, Iris Trout of TD Bank stated, choose nearshore for mission critical tasks, but offshore for repetitive tasks and regression analysis. This blending of delivery locations helps ensure organizations can take advantage of the specific strengths of different locations. As service providers in Latin America continue to mature, they will become the go-to location for high-end, innovative services.
See more about Nearshore & Belatrix here
