Leandro Pereira

Proximity Offshoring Generating Considerable Savings with No Significant Increase of Risks or Losses in Quality—Nearshoring Playing a Key Role on a Business Transformation Program

Information Technology leaders are demonstrating an increased concern on the distance dimension while considering sourcing initiatives. This suggests that, in Information Technology outsourcing activities, “distance is not dead”—actually, distance is seen as a source of challenges that can hurt the project overall health. In order to reduce these risks keeping an effective cost, proximity offshoring (nearshoring) is getting more used over the past two decades, but the academic literature on the subject is still on its beginnings. Using an Information Technology project, part of a large business transformation program that took place in Geneva (Switzerland), done by a vendor that delivered more than 2500 days in consulting as the main case study, this paper analyzes and discusses the benefits and challenges of incorporating nearshoring practices in these types of initiatives. The analysis starts by suggesting that nearshoring can add value to Information Technology projects if managed the right way—when compared to traditional services delivery (onsite consultants), nearshoring practices can have an outstanding result, with a very positive financial impact, showing considerable savings and avoiding a significant increase of risks or losses in quality, leading to an increased return on investment (ROI). Finally, some recommendations are suggested as the starting point for a framework for nearshore usage, pointing directions for further research. A similar analysis was already published by the same authors for a training project, aiming to understand if the same trends are applicable in several types of services delivered using nearshoring practices.

Maximizing return on investment without increasing project risks — Near-shoring as a key practice on a business transformation programme: Case study on a training project for a global consumer goods company

Proximity off-shoring (near-shoring) on the Information Technology sector has been a common practice over the past 2 decades, mainly for software development functions. But the benefits harvested from the delivery of professional services on a near-shore model can be replicated to other functions from a business transformation programme, such as competence and training management projects, improving cultural affinity at an overall effective cost, reducing complexity and risks associated with remoteness. Using a large business transformation programme from a global consumer goods company as a single case study, the present paper analyses the benefits and main challenges of incorporating such delivery model in these types of projects, focusing its attention mainly on the financial and quality aspects. The analysis suggests that, when compared to traditional services delivery (on-site consultants), near-shoring practices can have a very positive financial impact for the vendor and the customer, translating into an increase on the Return on Investment (ROI) without a significant increase of risks or losses in quality - The services cost can have a significant reduction on the vendor side, with a consequent reduction to the end client. Regardless these benefits, it is suggested that traditional consulting still plays an un-replaceable role in these types of projects, especially by providing expert insights on the industry/solution and specifics of the local market and culture. Furthermore, it is suggested that it is equally important the commitment from top management for such initiatives, with the implementation of a clear and focused governance model to reduce eventual risks from remoteness or cultural clashes. Finally, the article also points out some directions for further research on the topic.