Nearshore Outsourcing

Nearshore is a form of outsourcing that refers to services delivered from an adjacent or nearby location.

The concept of nearshore was first coined by Softtek in 1997 as we began to do work with our first U.S. clients. The concept began to gain ground during 2002-2003 as Softtek and the Mexican government began marketing the concept more aggressively. The broad market now identifies Nearshore with primarily Canada and Mexico for the U.S. market. The term has also now evolved to describe any outsourcing location “near” to its primary market (i.e. Eastern European countries to Western European Countries) Some analysts describe it as services delivered from an adjacent or nearby country.

Nearshore Goes Global

The original concept of Nearshore, as we defined in our white paper, Nearshore Goes Global, essentially promoted the following customer benefits:

  • Proximity and Time Zone
  • Cultural Affinity and Ease of Doing Business
  • Cost Savings

These benefits represent the most elemental form of value proposition for a nearshore offering, since they are seemingly available for every company that establishes in a nearshore location, and for a seasoned global sourcing professional can be easily justifiable. Thus, it is understandable to see many players jumping into the nearshore bandwagon and claim the nearshore value proposition.

At Softtek we are certain that these elements serve as a great foundation to build a powerful value proposition for users of global services, but are just the starting point, since without a highly mature approach and world class practices these benefits can not be fully leveraged.

By the year 2002 Softtek introduced the Total Cost of Engagement or TCE concept, as an approach that evaluates the total expenditures of offshore engagements, bringing to light the cost competitiveness of a mature nearshore model, even when compared to highly cost efficient offshore models.

Although nearshore rates tend to be higher, the overall cost of nearshore engagements is equivalent or less than offshore, because of the efficiency gains that working in close proximity to the US and in the same time zones can bring. Through the use of a mature and disciplined process, the nearshore model is much more efficient in achieving higher percentages of work performed at a lower cost location than offshore. We must reiterate on the caveat that a mature and disciplined process is needed to achieve such levels of nearshore usage. As of December 2007 we have an average of over 90% of work performed at the lower cost location, representing huge savings for our clients.

Labor arbitrage can only bring so much cost savings to a client. Our experience shows that the companies that engage in long-term engagements, measured by Service Level Agreements, are the ones that can better leverage the capabilities of the nearshore model. By 2004 we had moved the vast majority of our engagements from Time and Materials to SLA’s. This represents an enormous advantage to hiring managers and their employers, since value is measured by results rather than time sheets, and man hour rate comparisons.

That same year, Softtek had significantly expanded its nearshore capabilities with the acquisition of GE Ddemesis and GE’s Global Delivery Center in Aguascalientes México. Softtek also opened centers in Sao Paulo Brazil and A Coruña in Spain, marking the beginning of what we call now the Global Nearshore Model.

In 2007 Softtek outlined its vision of the evolution of the nearshore model into a truly global delivery model, with the release of the whitepaper called Nearshore 2.0: Nearshore Goes Global, in which we stated: “(Nearshore companies will) open global locations outside the “Nearshore comfort zone”. This means expanding not only into their primary markets, but opening up delivery centers in parts of the world that offer them access to more skill sets and scale.” In August of that year, Softtek acquired I.T. UNITED a leading China-based provider of software development and outsourcing services, with operations in Beijing, Shanghai, Xiamen and Xi'an. This step enabled Softtek to expand its global services footprint, and complement its European and Americas coverage with the Asian component. A revised version of Nearshore Goes Global was published in April 2011.

As of August 2021, Softtek has 19 Global Delivery Centers in Mexico (6), Brazil (2), Colombia (2), Argentina (2), Spain (2), Chile, Paraguay, China and India. These enable the company to provide Global Nearshore solutions as well as complete “follow-the-sun” solutions for application-related services, IT infrastructure and BPO services.

In more than a decade of nearshore history, we have evolved our value proposition from being strongly supported in delivering services from a nearby location, to one that helps our clients to globalize their IT operations, reduce the complexity of service management, optimize cost and support the evolution of the business.

Right-Value Model

Softtek’s characteristic approach has six key components that we believe essential to any successful client relationship, project or engagement. The six key aspects are as follows:

Right-Culture

We believe in establishing an environment that is value, results and efficiency-driven as well as a culture that rewards action-oriented behaviors.

Right-Size

One must have the right number of people with the right mix of skills. At Softtek, we do not believe in simply re-badging or relocating people as a first approach. First, we identify the client’s business objectives, and then we build an optimal-sized team with the right skill mix built either through re-badging or re-locating.

Right-Governance

Good governance requires identifying key business performance indicators through Design for Six Sigma (DFSS) principles, a clear change management strategy and a baseline processes to create predictable performance in accordance with Six Sigma, CMMi or ITIL guidelines. Softtek automates processes and measures via digital dashboards, which yield relevant business performance metrics and continuous improvement.

Right-Quality

We believe quality must be evaluated based on business performance. Our quality assurance metrics ensure that performance is measured by service level agreements, lean Six-Sigma processes and your bottom line.

Right-Place

Labor arbitrage is a strong tool for cost reduction, yet often a recipe for failure.  We believe that team allocation should be determined by performance, regulation, geopolitical and risk mitigation factors rather than solely the location of labor. Our onsite, onshore, Nearshore and offshore capabilities allows us to make optimal work-allocation recommendations.

Right-Execution

Outsourcing contracts typically provide initial costs savings, which erode in time as scope expands and costs rise. Softtek’s approach optimizes outcomes and ensures operational health throughout the engagement lifecycle.

Nearshore Delivery Centers

Softtek has more than 30 offices around the world – 19 of which
qualify as Global Delivery Centers, as they comply with the following:

Robust communications infrastructure
Business continuity & Disaster Recovery plans
Mature recruiting & training capabilities
Strong security & regulatory compliance
Capability to host several clients in isolated physical
and logical segments
Design for growth
Strong process rigor (Six Sigma, CMMi, ISO)

Our network of Global Nearshore Delivery Centers is comprised
of the following:

North
America

Mexico:

Aguascalientes
Ensenada
Guadalajara
Mexico City (2)
Monterrey

South
America

Argentina:

La Plata

Brazil:

Fortaleza
São Paulo

Asia
 

China:

Wuxi

India:

Bangalore

Europe
 

Spain:

A Coruña
Monterrey
Mexico City
Aguascalientes
Ensenada
São Paulo
La Plata
A Coruña

Rated as the #1 city in which to do business in Latin America by Fortune Magazine, Monterrey possesses many attractions.  Among the city’s features are:

  • modern telecommunications infrastructure;
  • a highly educated labor pool;
  • direct flights to Dallas Houston Miami, Los Angeles, Atlanta and Chicago;
  • a stable social, political and working environment.

Monterrey, the capital city of the state of Nuevo Leon, was founded in 1596 in a valley near the Sierra Madre Oriental, surrounded by the famous “Cerro de la Silla” (‘Saddle Hill,’ for its similar-looking shape).

This city is considered the industrial pole of Mexico, due in part to the presence of approximately 10,000 industries of different specialties that operate in the state: food production, beer, tobacco, glass, cement, plate, steel, chemical products, equipment, and machinery are just some of the most important production areas.

Nuevo Leon also stands out for its large commercial development, reflected in more than 25,000 businesses with diverse specialties established throughout the city.

Regarding high level education, Monterrey is the alma mater of the Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM), internationally renowned for the quality of its education techniques and the level of excellence of its graduates. The Universidad Autonoma de Nuevo Leon, the Universidad de Monterrey, and the Universidad Regiomontana, among other education institutions, place Monterrey as one of the most important education centers in Mexico.

Mexico City is the nation's capital and one of the largest cities in the world. The city owns a modern telecommunications infrastructure composed of thousands of miles of fiber optic cable, copper wire, and wireless. AT&T, MCI, Sprint, and Telmex provide voice and data services with modern infrastructure.

Mexico City is an important hub for airlines from Europe, North and South America. The number of flights to/from the U.S. ranges in the hundreds per day, making the city a very important and accessible business destination.

With a population of more than 20 million people, Mexico City and its metropolitan area host a growing number of universities, including campuses from Monterrey Tec, Universidad Nacional, Universidad Iberoamericana, ITAM, Universidad Anahuac, and Instituto Politecnico Nacional, which rank at the top of universities in Latin America.

Our Global Delivery Center in Mexico City is built in a technology park, sharing facilities with the Tec Milenio University campus Mexico City—a subsidiary of Monterrey Tec. Softtek works in collaboration with Tec Milenio to define the curricula of its students, to expose them to real life situations by working in internship programs, and to offer a rapid inclusion to post-grad life.

Located halfway between Mexico City and Monterrey, Aguascalientes represents an alternative to people that want to enjoy the infrastructure of a modern city, without the crowds. Being an industrial, mid-size city, Aguascalientes offers excellent power, telecommunication and transportation infrastructure, as well as an important talent pool. One of the main competitive advantages that Aguascalientes has is its privileged geographical location, right in the center of the Republic, which facilitates quick communication toward the metropolitan areas of Monterrey, Mexico, and Guadalajara. In addition to its proximity to those—the three largest cities in Mexico—Aguascalientes is strategically located in a business/industry corridor close to other mid-size cities (Leon, Guanajuato, Zacatecas).

Aguascalientes is a municipality that conserves the vestiges from its 400-year-old history. The area has a perfect balance of old and new worlds. The level of the population's well-being is within the five top entities nation-wide, with the highest levels in housing, health care, education, and electricity.

The city has an international airport that hosts direct flights from Houston and Dallas.

Ensenada boasts a protected harbor and modern port facilities, making it Baja California's leading seaport. Located within a 90-minute drive from San Diego, its easy accessibility by land, air or sea travel, have made Ensenada a favorite tourist spot any time of the year.

Fishing, canning, and winemaking are among its main industries. The warm Mediterranean climate, vineyards, museums, golf courses, whale watching, and beautiful beaches are just some of the factors that have made Ensenada to be considered as one of the most important ports on the Pacific Rim.

Softtek’s Global Delivery Center in Baja resides within the UABC campus (Universidad Autonoma de Baja California), which is the largest university in the region. Softtek and UABC have created a partnership to align the curricula of academic programs and to expose their students to world-class projects by participating in internship programs and getting them up to speed in their professional careers.

The main financial, corporate and merchant center of Latin America, São Paulo is one of the most influential Brazilian cities at the international level and considered one of the most globalized of the world.

São Paulo was chosen for the second time as the best destination in Latin America for its business, according to the annual study conducted by “América Economia Intelligence,” investigations unit of the communications company ‘América Economia.’  The analysis resulted in a ranking of the top 42 municipalities of the region for business, taking into account innovator potential, capacity to generate new businesses, telecommunication, security, quality and cost of living.

The capital has an excellent metro service that is considered one of the most modern and comfortable of the world, as well as 33 million taxis. There are over 200 heliports, with 500 helicopters, making it the second largest in the world.  In addition, it has the second contingent of private jets around the globe.

For air traffic, the city of São Paulo is accommodated by two airports: the International Airport of São Paulo, in Guarulhos; and the Congonhas Airport.  For small planes and helicopters, the airport used is Campo Marte.  More than 40 cities from another 23 countries connect regularly by commercial flights.  In the Congonhas airport there are connections with 70 local towns in nearly all of the Brazilian states.

The capital of the state of São Paulo has a temperate climate and is located in southeastern Brazil.  With an area of 1,530 km2 it is the fourth largest city in the world and in the Southern Hemisphere. In accordance with the IBGE, the population of the municipality of São Paulo is 10,886,518.

Capital of the province of Buenos Aires, La Plata is an administrative, commercial, recreational and cultural center that possesses a magnificent architecture expressed in its foundational buildings, plazas, avenues and paths that are home to 600,000 inhabitants.

La Plata is a paradigm of advanced, urban planning dating of the nineteenth century.  It is also an example of the hygienic (ecological) movement that started gaining importance in that period.

In general terms its population is highly qualified, with a greater proportion of university students compared to other cities.  Since its foundation, it has been a place for excellence in education, serving as the facility for three universities:  Universidad Tecnológica Nacional (UTN), Universidad Nacional de La Plata (UNLP) and Universidad Católica de La Plata (UCALP).  It also has important third, second and first establishments.

The zone in which it is located is extremely important to the growth of the Software industry, due to its:

  • Highly qualified manpower.  The city has a high register of IT in the universities previously mentioned.
  • Stable social political and working environment
  • Proximity to the capital, Buenos Aires
  • Good access to terrestrial communication; main national airports within 50 minutes

The Global Delivery Center in La Plata is located in the middle of the urban center, facilitating access and mobility of our associates and visits of our clients.  This center was inaugurated by the city mayor and Vice President of the nation Daniel Scioli (present governor of the province of Buenos Aires) and was presented as the facility of the first technological pole of the city.

A Coruña is located in the northwest corner of Spain.  The ‘Torre de Hércules’ (Hercules Tower) – the oldest, working Roman lighthouse – overlooks the city.  It is also known as the “City of Crystal” for its peculiar architecture in buildings close to the coast dock.

This delightful city has pleasant weather for the majority of the year, and it is a regular tourist destination spot for its gastronomy and local beaches.  Furthermore, A Coruña is known for its high quality of life among its inhabitants – a population of 250,000 people that make it the second most populous city in Galicia.

A Coruña is in communication to the north of the peninsula with Madrid with diverse Spanish cities along the highway.  Additionally, with only a two-hour flight to get to London, A Coruña has three airports in the area:

  • A Coruña Airport: direct flights to Madrid, Barcelona, Seville, London, Lisbon and Bilbao.
  • Santiago Airport: direct fights to the majority of the Spanish cities, as well as the main European capitals, such as London, Paris Frankfurt and Rome
  • Vigo Airport: direct flights to Madrid, Barcelona, Paris

There are three large universities in Galicia that generate more than 1,300 graduates each year.  The seven campuses of the Galician cities offer more than seven technical careers.

Nearshore Benefits



 

Throughout the years we have evolved our nearshore value proposition in four waves.

Each wave adds to the previous to conform a solid value proposition in globally delivered services.

Leverage proximity

This was our first wave, the idea behind the concept was to fill the gap left by India-centric global service delivery. This concept remains as a solid differentiator of Softtek, although it is just the beginning of our venture in global services.

This component of the value proposition encompasses the following:

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Proximity and Time Zone

Geographic proximity and similar time-zones allowed companies to have increased face-to-face interaction, allowing more complex types of projects to be done nearshore. This filled a gap left by distant, offshore locations such as India.

Cultural Affinity and
Ease of Doing Business

Because of proximity, most nearshore locations have closer cultural affinity to their primary markets than offshore locations. Mexicans for example are very familiar with U.S. lifestyles, customs and styles of communication. In addition, because of NAFTA, Mexico has not only been an important manufacturer and provider of services to the U.S., but is an important market for U.S. businesses. This business exchange has further increased familiarity between the two cultures, helping to minimize communication issues due to cultural differences. In addition, because of NAFTA, visa issues are virtually non-existent as Mexicans can obtain TN visas (renewable 1 year term) easily.


Cost Savings

Depending on the location, cost savings can be equal to that of offshore locations. For example, Mexico was able to give substantial cost savings to U.S customers that were comparable to cost savings in India because indirect costs such as contracting costs, due diligence, communication and travel were lower.

Total Cost of Engagement

Total Cost of Engagement, or TCE, is an approach that evaluates the total expenditures of offshore engagements, bringing to light the cost competitiveness of a mature nearshore model, even when compared to highly cost efficient offshore models.

Although nearshore rates tend to be higher, the overall cost of nearshore engagements is equivalent or less than offshore, because of the efficiency gains that working in close proximity to the US and in the same time zones can bring. Through the use of a mature and disciplined process, the Near Shore® model is much more efficient in achieving higher percentages of work performed at a lower cost location than offshore.

By using a strong quality model, we build the necessary infrastructure to support work remotely, which even with the benefits of a nearshore location, still represents challenges. The quality model supports our capability to have a very high nearshore leverage (work performed at the low cost facility).

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Productivity Gains

By combining the mature quality model, digitized processes and domain expertise, we are able to offer our clients services that are based on Service Level Agreements (SLAs). This represents an enormous advantage to hiring managers and their employers, since value is measured by results rather than time sheets, and man hour rate comparisons.

By using a Six Sigma approach, we can offer our clients evolving SLAs which translates into a commitment on our end to always do more with less. To increase productivity, reduce costs, minimize defects, support more, deliver results faster, or any other combination that benefits our clients in a long-term and highly efficient relationship.

Global Nearshore

Today we pledge to reduce the complexity of IT services management; optimize costs and support the globalization of IT and BPO operations while contributing to the evolution of our client’s business.

 

The afore mentioned is possible due to the capability to provide world-class cost efficient services, the focus of the company in addressing the market needs that are overlooked by traditional providers and the dedication to provide an outstanding experience to our customers.

 

World-class cost efficient services

Measurable and ever-evolving performance; at lowest Total Cost of Engagement possible.

Fill the gap left by India centric global sourcing.

We believe that a solution provider must find ways to make its client’s life easier, while still providing the best services available in the market. Our clients need specific customized solutions and the quality services of a high performance provider.

That is why we created the Global Nearshore™ Model, as a way to fill the gap left by India-centric global delivery models. By leveraging Softtek’s capabilities, corporations can reap the benefits of global sourcing, while fulfilling their needs for high interactivity, on-demand communication, rapid response to change, risk diversification, reduced attrition and multi-language support; critical elements that are not adequately addressed by an India-exclusive model.

Outstanding customer experience

Business value is measured by price, quality and timeliness of the deliverables. Experiential value, on the other hand, is focused on addressing the needs, wants, and concerns of the people – individuals - interacting with the provider. Both elements play a key role in the success of global sourcing.

Value

 

Reduce the complexity of IT services management

Consolidate the portfolio of new and legacy applications into a single team.

Ensure that vital applications behavior is predictable and its operation remains uninterrupted.

Reduce the multiplicity of vendors and leverage the strengths of a robust yet flexible partner with global reach.

Monitor Service Level Agreements, not timesheets.

Support the evolution of the business

Support globalization initiatives.

Expedite the implementation, customization and deployment of enterprise applications at the best possible ROI.

Build a platform for the future. Implement solid applications and the processes to support them.

Maximize business knowledge. Assign resources to business valuable tasks. Extract business logic embedded in legacy applications.

Optimize costs

Reduce the Total Cost of Engagement. Lower indirect costs. Leverage the lowest cost location to its fullest.

Optimize processes. Consolidate functions. Reduce defects. Ever evolve the Service Level Agreements.

Allow people to reach their highest potential. The right task at the right location.

Optimize the use of the technology. Accelerate new technology deployment while ensuring its effectiveness.

Globalize IT and BPO operations

Increase the ability to compete globally with a global partner.

Operate under world-class standards, regardless of the local, regional or global nature of your needs.

Locate the service wherever in the world it makes the most sense for your business, not your vendor’s.

Leverage Softtek’s deep knowledge of the peculiarities of the North American and Latin American markets. Support European and Asian operations nearshore.

Take advantage of “global nearness”. Manage day-time operations always during the day, regardless of where in the world they are.

Improve response time to customer’s needs by having your support team always near.

Software Quality Governance Model



Softtek's Quality is based on three key elements that allow full visibility to track Softtek's metrics to measure the quality of the services delivered to its clients.

  1. Adherence to the Capability Maturity Model (CMMi).
    As a CMMi Level 5 organization, Softtek uses the SEI CMMi guidelines for planning, engineering, and managing software development and maintenance. Thus, the organization is constantly improving its ability to meet goals for cost, schedule, functionality, and product quality.

  2. Six Sigma to achieve excellence in business processes.
    Our Six Sigma program began five years ago and we have successfully completed Six Sigma projects both internally and with our clients. Six Sigma has become our preferred system for problem resolution and process improvement. Six Sigma is a customer-focused and data-driven management method for achieving excellence in business processes.

  3. Wing-to-wing process digitization.
    Our whole project tracking and control strategy is based on the digitization of our processes in their entirety. Digitized processes enable real time tracking of metrics, SLA compliance, and efficiency gains attained by Six Sigma projects. This provides full-cycle visibility, delivering total control and real time information of our processes, and the services we deliver to our clients.
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