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During the last few years the outsourcing industry suffered at an international level – the global political, economical, social and security changes are to blame. Nearshoring also referred as Nearshore Outsourcing is on the rise.
The biggest challenge in outsourcing governance has shifted towards downstream risk mitigation by choosing the best location for processes. The outsourcing world became fully aware of potential safety risks that offshoring brought upon themselves.
The cost savings gap between India and other popular locations such as Central Europe and Latin America decreased to less than ten percent. Central and Easter Europe are also viewed as a safer location site to host your BPO and ITO services. The close proximity to the main facilities had made it possible for a shift in delivery preferences towards nearshore and sameshore options alike.
Having call centers nearshore and sameshore will become a major trend in the upcoming years.
The Growing Trend
The shift in delivery opens up new possibilities for all the counties gathered around the so called nearshore umbrella. The number of nearshore sites themselves have grown significantly.Managers need to be aware, everyone is gunning for that nearshore multibillion dollar pie – you’re bound to encounter some really “exotic” places thanks to advertisement and marketing. Proven nearshoring locations include Canada, Latin America, Central and Eastern Europe and .
The nearshore Zone
But what defines a nearshore location? There are two rules mostly used in the outsourcing industry. The first one is that you don’t need to cross the ocean to get your nearshore site. The second one is quite similar, up to 5 hours of flight.
We believe that nearshoring locations should be aligned along a spectrum of potential outsourcing sites. On one end of that spectrum are locations such as China and India, on the other Poland and other Central European countries that specialize in BPO and ITO services.
Geo-location should never be the determining factor when looking for a potential nearshore location. Linguistic and cultural ties are also a key factor, even education similarities and directness of communication can be a deal-breaker.
Take the above factors into consideration before you choose a nearshore location or a partner since they tend to play a far more important role than they are gived credit for.
Ditching the term “outsourcing” is the hot topic during all the industry summits lately.
Most of the industry thinks it’s quite easy “Let’s just call it something else” and all you have to do is figuring out a new and amazing mix of super savvy words that will keep the customers in awe.
Frankly the buyers would rather stay with the current naming terminology, be it BPO, Outsourcing, ITO. Customers just don’t want to change something that works for them.
Providers on the other hand just want to swap out “outsourcing” for “services” since it doesn’t have the negative “sound” of the former (sometimes our feeble human mind interprets lower cost with lower quality). The term Global Business Services is gaining quite the following from mainly management consultants but the term would be used for all forms of sourcing services.
To be fair the outsourcing industry has a lot of work to do before it can re-brand, after the hype with ditching the “O” word dies down most higher ups will notice that “we’re starting to believe in our own shenanigans”.
The most vocal point is that people are connecting “outsourcing” with “off-shoring” but vast majority of ITO/BPO are dependent on offshore work force. The whole industry needs to stop and say “Hey, maybe lets stop pretending and use the term offshore outsourcing” (rally the angry mob and ready those pitchforks!), use the resources to expand the industry instead of wasting them on “make believe” to sleep better at night.
Everyone wants non-linear growth, value creation and innovation. But in order to get there we need to tackle all the current problems the industry as a whole is facing.
At this time, re-branding is a futile – changing how the industry is perceived instead of adding real business value. The customers know the business value the whole outsourcing industry provides, there simply is no need to change just for the sake if image. Since truth tends to be brutal; it’s like putting make up on a dead horse.
The fDi Markets’ shared service ranking clearly portray Poland’s as the industry’s rising star. Tough India experienced a small dip it still remains the leader for SSC projects.
Poland is emerging as a serious contender and judging how the things have turned out recently poses quite a threat to India. The average annual growth for Poland is an amazing 68% in number of SSC investments and this ranks Poland as the third for the overall number of SSC projects since 2003 when the data collection began. Krakow one of largest Polish cities is the 6th most often picked sites for SSCs.
From January 2003 and February 2012 India topped the charts and attracted the largest number of projects -175. This number represents 24% of all SSCs projects conducted globally at that time. Keep in mind that project numbers for India are declining at a rapid pace, dropping from 43 in 2003 to four in 2011.
While viewing the Top10 destinations you’ll quickly notice that the whole SSC market is clustered in couple key locations globally.
Between 2003 and 2012 fDi Markets recorded 723 SSC projects globally with the average size of 421 jobs per project. The sector that accounted for the highest number of projects was The Business services sector – total number 224 which came down to 34% of all investment projects. Software and IT services recorded the highest average growth of 13% per year.
The fDi Markets’ recorded a total of 398 companies investing overseas, Genpact from Bermuda is the top company with 20 investment projects announced between 2003 and 2012.
The highest number of outsourced oversea projects belongs to the US, with a whopping 377 projects – 52% of investment projects. Germany scored the highest growth of 46%.