When most executives think of outsourcing, they immediately consider offshore locations.  There are many near shore outsource service providers that offer the same benefits of offshore vendors.  Many IT departments, including those from Fortune 500 companies, have numerous reasons for sending work to near shore IT providers.  Outsourcing to a near shore IT supplier is thought to lower risk, increase productivity and reduce hidden costs associated with outsourcing.

What are the top near shore locations for IT outsourcing?  Mexico, Canada, Brazil and the Caribbean region offer great outsourcing opportunities for U.S. based companies and some of these areas were even listed on Gartner’s list, Top 30 Countries for Offshore Services.

Canada
Since Canada borders the United States, travel to this country is similar to Mexico in its convenience.  The country covers four U.S. time zones, which allows for real time communication.  There is strong support of IT services within Canada and the government has been known to offer tax breaks and incentives.  This country also has stringent intellectual property protection and privacy laws.  The Canadian workforce is considered to be highly educated and skilled in IT-related fields.  Plus, the cost of labor is lower than the United States. The language and culture are very similar between Canada and the United States, which helps eliminate cultural and communication barriers.

Caribbean Region
The Caribbean region is a convenient location for help desk support, call centers, bookkeeping and tax data processing support.  English is commonly spoken in some Caribbean countries and many of the employees located in this area have attended colleges and universities within the United States and Canada.  Cost of labor is cheap in comparison to the salaries paid to U.S. employees. The close proximity to the United States and the similar time zone make it an attractive outsourcing option for U.S. buyers.  Just like some of the other near shore locations, there are many cultural similarities between some of the Caribbean countries and the United States.

Brazil
Brazil has one of the largest economies in the world, as it is ranked 11th based on 2007 GDP figures in the CIA World Factbook.  The population in Brazil is significantly large and continues to grow at an impressive rate each year.  Brazil has a well developed IT sector and is only one time zone away from the Eastern Standard time zone, aiding in the communication and coordination of projects.  The country also boasts cultural and demographic similarities to western countries.  The native language in Brazil is Portuguese, but there are a lot of IT professionals who are proficient in English.

Mexico
Mexico’s proximity to the United States makes it easy for quick and inexpensive trips to the IT supplier.  Most of Mexico is on the Central Standard Time zone, making it simple to coordinate meetings and project deadlines.  The Mexican government has taken steps to increase the size of the IT industry within Mexico.  There is a large labor pool of IT professionals and it is estimated that the country has hundreds of thousands of students studying IT related subjects in universities and technical schools.  Many of the workers speak fluent English and the Mexican culture is very compatible with that of the United States.  The cost of labor is lower than the United States.

There are many near shore locations to choose from when it comes to outsourcing.  A&E Consulting will help you determine if near shore outsourcing is right for you.  We will assist you in choosing an outsource service provider and establishing the business relationship.  In addition, we will manage the first outsourced project.

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India is not the only destination for global sourcing.  Countries such as Argentina, Ireland, and Singapore have gained popularity when it comes to global sourcing.  Choosing the right location is vital when sending work overseas. This decision can make the difference of whether the global sourcing arrangement succeeds or fails.

Gartner recently released a list of the top 30 countries for global sourcing.  The countries were evaluated based on 10 key criteria, which included language, local government support, infrastructure, labor pool, education system, political and economic environment, cost, data security and privacy, cultural compatibility and global and legal maturity.  Gartner then organized the top 30 list by separating it into regions.  The highest scoring countries based on Gartner’s research were as follows:

Americas: Argentina, Brazil, Canada, Chile, Costa Rica, Mexico and Uruguay

Canada received the highest score in 7 of the 10 categories, among the countries in the Americas.  However, Latin American countries have become more attractive to U.S. companies because of the demand for Spanish speaking skills.  There is a major concern about intellectual property and data security and privacy within this region.

Asia/Pacific: Australia, China, India, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka and Vietnam

China, India and Singapore all showed strong government support of IT services for global sourcing.  Australia, New Zealand and Singapore are considered higher-cost locations, but these countries did receive high ratings in the categories of political and economic environment, cultural compatibility, global and legal maturity and data and intellectual property security and privacy.   Pakistan, the Philippines, Sri Lanka and Vietnam did poorly in the political and economic environment category as many outsourcing companies are concerned about this issue.

Europe, the Middle East and Africa: The Czech Republic, Hungary, Ireland, Israel, Northern Ireland, Poland, Romania, Russia, Slovakia, South Africa, Spain, Turkey and Ukraine

Ireland, Israel, Northern Ireland and South Africa did well in the language category as there are a large number of quality English-language speakers in these countries.  Some of the other countries in the region such as the Czech Republic, Slovakia, Hungary, Poland and Romania received additional recognition for alternative language skills, which is of benefit to European buyers. The biggest concern in this region is government support.  Also, according to Gartner, few countries within this region, except for Russia, offer an adequate selection of local service providers looking to sell their capabilities outside their own country.

As your company embarks on the journey of outsourcing part of your IT services to a global sourcing provider, there are many factors that need to be considered before choosing which location is most appropriate for your organization.  A&E Consulting can help you choose the right global sourcing partner and will assist you in establishing the business relationship.  In addition, we will manage the first outsourced project to make the transition as smooth as possible.

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Outsourcing is a term that has been used frequently over the last several years.  More and more IT services are being outsourced by U.S. companies.  The major dilemma that most executives face when making the decision to outsource is whether to use an onshore or offshore resource.

Onshore outsourcing refers to sending a business process to a U.S. based supplier to complete.  Global sourcing is defined as exporting work to a supplier located in another country.  Both types of outsourcing have significant advantages as well as drawbacks.  The decision on which outsourcing model to choose is strongly dependent on the overall objectives of the outsourcing company.  However, the goals for outsourcing will be the same, such as reducing operating costs, increasing productivity and re-allocating financial resources to other areas.

One of the major draws to outsourcing to onshore suppliers is the geographic proximity.  The local presence gives a level of comfort to the outsourcing company and makes communication and travel easy.  Offshore suppliers on the other hand are generally located in vastly different time zones, making communication difficult.   Plus, the cultural differences can make it hard for the offshore resource to effectively work with the U.S. employees.

When considering outsourcing as part of IT services, executives cannot ignore the appeal of the cost savings associated with offshore resources.  Companies feel the immense pressure to increase profitability and ROI.  Global sourcing offers cost efficiency through a variety of means, including scalability of operations.  The savings in labor also significantly reduces expenses for the outsourcing company and enables the focus to be placed on core competencies and increasing productivity.

Onshore suppliers have difficulty competing with some of the cost savings that offshore firms offer, but there are hidden costs associated with global sourcing that have to be factored in.  For example, global sourcing will have ongoing costs for long distance communication, training and travel.  There are also initial expenses associated with the knowledge transfer of technical and business processes.  Nevertheless, even with the hidden costs, the savings are generally greater with global sourcing.

In the IT industry, the enforcement of intellectual property rights is vital and data theft can be of extreme detriment to the outsourcing company.  The protection of intellectual property is often a major consideration when choosing to outsource onshore versus offshore.  The United States has strict laws protecting intellectual property rights.  There are major concerns about security and intellectual property in various countries, including China and many Latin American countries.  Imposing intellectual property laws in these countries can be difficult.

Regardless of onshore versus offshore, the trend within the IT industry has been to outsource various processes.  A&E Consulting will help you evaluate global sourcing so that you can make an informed decision.  If you choose to move forward with global sourcing, we will assist you in choosing the right global sourcing partner and establishing the business relationship.  In addition, we will manage the first outsourced project to make the transition as smooth as possible.

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