Nearshore Call Center Outsourcing

							Nearshore Call Center Outsourcing


            Anupam Govil
       CEO, Global Equations LLC
        New York, Oct 18th 2006
The Nearshoring
paradigm
                               Global Shoring Ecosystem
             Nearshore:
             Canada                            Offshore:            Offshore:
                                               Ireland              Russia




                                                                                                   Offshore:
                              Onsite/                                                              China
                              Offsite
                                                                                                      Offshore:
Nearshore:                    Nearshore:                                                              Philippines
Mexico                        Caribbean
                                                                          Offshore:
                                                                          India



    Nearshore:                                                             Offshore:
    • Easier travel                                                        • Lower costs
    • Cultural similarities                                                • Time to market
    • Time zone                                                            • Resources
    • Security                                                             • Quality
                                                                           • Scale


                       Longer-Term Prospects         Current Priorities           Mature options
                               Choosing Delivery Options

Indirect
                                                                Blended model or
                                                                “Right-shoring”

                                               Off-shore
   Client Interface




                                         Near-shore

                                    Off-site

                               On-site
Direct



                      Client
                      Near                                                         Remote
                                 Physical Proximity to Client
              Benefits of Nearshoring
Cost Reduction
• Higher cost than offshoring, but cheaper than U.S. labor
• Favourable exchange rates
• Multi-lingual capabilities

Enhanced Productivity, Efficiencies and QOS
• Time zone/geographic proximity
• More efficient communication
• Greater control and flexibility
• Closer cultural affinity
• Qualifications, degrees and certifications of identical standards
• Domain expertise – like Financial services, Insurance etc
                 Benefits of Nearshoring

Risk Mitigation
• Lower geo-political risk
• Compatible legal structure, patent and IP laws
• Access to insurance – not available when moving work offshore
• Security, Data sensitivity, Regulatory issues

Strategic Value
• World class services built around similar processes and methodologies
• Opportunity to build asset value over long term
• Reduce time to market and accelerate product/service rollout
• Handle premium customer service at lower cost without fears of
   “offshore backlash”
• Diversification of global sourcing portfolio

                                Golf !!!
Nearshore Call Center
Outsourcing Dynamics
Global – Annual Wages & Benefits
                                   India - $ 7,779
                                   China - $ 7,634
                                   Philippines - $ 9,844
                                   Romania - $ 12,691
                                   Mexico - $ 17,899
                                   Costa Rica – $17,420
                                   Brazil - $ 13,163




                                     Source: NEO IT
Balancing Nearshore vs Offshore
            Key Risks in Nearshore Model

•   Comparatively lower advantages of cost reduction
•   Inability to scale – saturation of labor pool
•   Cost inflation due to relative high impact
•   Maturity of service providers
•   Trade-off between cost and sophistication
    of the services.
•   Depth of domain specific skills
•   Identifying and demarcating nearshore locations
•   High investments may hike labor and property rates
The Caribbean Landscape
    The Caribbean: the Best Near Shore Solution

•    Near-shore is defined by proximity to geographical market being served, and an optimum
     time zone.
      •   A synchronization, or limited stagger to the customer market is critical. The Caribbean
          is AST, GMT -5/-4 and EST/EST+1 depending on the Season. This time zone is ideal
          for an offset of prime-time UK and US contact, which optimizes utilization of the
          physical plant.
•    Language/Accent
      –   Increased response rates and “first call resolution” in the US and UK with the “door
          opener” of the very pleasant, Caribbean, English accent.
•    Work Force
      –   Fully Loaded Labor Cost is about 1/3 the US & UK rates
      –   Management level workforce available at 1/2 or less than competitive US & UK rates
      –   Cultural linkage to UK and US
      –   Educated labor force looking for alternative career opportunities
•    Pro-business environment with key government agency support
•    Ease of travel with direct flights:
      –   Favored by clients who want to visit multiple sites in one day and provide local
          management support
            The Caribbean: Continuing Call
                    Center Growth
•   The Caribbean is home to a population of 11 million (not including Cuba)
•   There are currently approximately 85 call centers, compared with 45 in 2002.
     –   Agents have grown from 11,000 in 2002 to 25,000 in 2004 and expected to grown to
         50,000 in 2006 (Zagada)
     –   Over 80 percent of this growth comes from contact centers fulfilling projects for Fortune
         1000 and large U.S corporations
•   Locations include: Barbados, Antigua, Jamaica, Dominican Republic, Trinidad, Panama. St.
    Lucia and Puerto Rico.
     –   “…U.S corporate buyers are increasingly finding sustained value by including
         Caribbean nearshore contact center operators as part of their global sourcing selection
         mix inclusive of Asia, Europe, Canada, and Latin America” (Zagada)
Central America:
Guatemala
     “Thank You”




         Anupam Govil
       T: 512.310.8544
E: agovil@globalequations.com
   www.globalequations.com
Extra slides
           What the Analysts are saying

• Flights to Caribbean cities require 2 to 4 hours, versus 18 to 20 hours
  for a trans-continental flight to an offshore destination. These
  nearshore destinations provide clients the comfort of proximity.
   - Source: Brendan B. Read , Call Center Magazine

• U.S corporate buyers are increasingly finding sustained value by
  including Caribbean nearshore contact center operators as part of
  their global sourcing selection mix inclusive of Asia, Europe, Canada,
  and Latin America.
   - Source: Zagada Institute’s “Caribbean Call Center Report 2005”

• Recent studies suggest that as organizations become more experienced
  outsourcing key IT and business process functions, the importance
  placed on direct cost savings diminishes while other factors such as
  security, quality, service and the “existence of solid trusted networks”
  rises. In fact, experts observe that U.S. companies are more likely to
  opt for nearshoring when the cost benefit is at or above 65% of the
  cost of a U.S. project.