Nearshore Call Center Outsourcing
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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: firstname.lastname@example.org 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.