Nearshore Outsourcing

Nearshore is a form of outsourcing that refers to services delivered from an adjacent or nearby location.

The concept of nearshore outsourcing was first coined by Softtek in 1997 when we began working with our first U.S. clients. It gained significant traction in 2002-2003 as Softtek and the Mexican government began marketing it more aggressively. Today, nearshoring typically refers to services provided from Mexico and other Latin American countries to the U.S. market. The term has also evolved to describe outsourcing from any location "near" its primary market, such as Eastern European countries serving Western Europe. Some analysts describe it as services delivered from an adjacent or nearby country.

SUMMARY

NEARSHORE GOES GLOBAL

RIGHT-VALUE MODEL

NEARSHORE DELIVERY CENTERS

NEARSHORE BENEFITS

SOFTWARE QUALITY GOVERNANCE MODEL

OVERVIEW

SUMMARY

NEARSHORE GOES GLOBAL

RIGHT-VALUE MODEL

NEARSHORE DELIVERY CENTERS

NEARSHORE BENEFITS

SOFTWARE QUALITY GOVERNANCE MODEL

Nearshore Goes Global

The original concept of nearshore outsourcing, as defined in our white paper, Nearshore Goes Global, highlights three key customer benefits:

Proximity and time zone alignment
Cultural affinity and ease of doing business
Cost savings

These benefits form the basic value proposition for nearshore offerings, widely recognized and justifiable for companies establishing in nearshore locations. As a result, many players have adopted and promoted the nearshore value proposition.

At Softtek, we believe these foundational elements are crucial but only the beginning. To fully leverage these benefits, a highly mature approach and world-class practices are essential.

In 2002, Softtek introduced the Total Cost of Engagement (TCE) concept, which evaluates the total expenditures of offshore engagements, highlighting the cost competitiveness of a mature nearshore model.

Although nearshore rates tend to be higher, the overall cost of nearshore engagements can be equivalent to or less than offshore, thanks to efficiency gains from proximity and time zone alignment. With a mature and disciplined process, the nearshore model can achieve high percentages of work performed at lower-cost locations. By December 2007, we averaged over 90% of work at lower-cost locations, generating huge savings for our clients.

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Fulfilling the India 'plus one' Strategy

Labor arbitrage alone offers limited cost savings. Our experience shows long-term engagements, measured by Service Level Agreements (SLAs), better leverage nearshore capabilities. By 2004, we had transitioned the majority of our engagements from Time and Materials to SLAs, providing a significant advantage to hiring managers and their employers by focusing on results rather than time sheets and hourly rates.

In the same year, Softtek expanded its nearshore capabilities by acquiring GE Ddemesis and GE’s Global Delivery Center in Aguascalientes México. We also opened centers in Sao Paulo, Brazil, and A Coruña, Spain, marking the beginning of what we call now our Global Nearshore Model.

In 2007, Softtek outlined its vision for evolving the nearshore model into a truly global delivery model with the release of the whitepaper called Nearshore 2.0: Nearshore Goes Global. We predicted that nearshore companies would expand beyond their primary markets (outside the "nearshore comfort zone"), opening delivery centers worldwide to access diverse skill sets and scale. In August of that year, Softtek acquired I.T. UNITED, a leading China-based provider of software development and outsourcing services, expanding our global footprint and complementing our European and Americas coverage with an Asian component. A revised version of Nearshore Goes Global was published in April 2011.

As of August 2021, Softtek operates 19 Global Delivery Centers in Mexico (6), Brazil (2), Colombia (2), Argentina (2), Spain (2), Chile, Paraguay, China, and India. These centers enable us to provide Global Nearshore solutions and complete “follow-the-sun” solutions for software development outsourcing and application-related services, IT infrastructure, and BPO services.

Over more than a decade of nearshore history, we have evolved our value proposition from merely delivering services from a nearby location to helping our clients globalize their IT operations, reduce service management complexity, optimize costs, and support business evolution.

Right-Value Model

Softtek's distinctive approach is built on six key components, which we consider essential to the success of any client relationship, project, or engagement. These six core aspects are:

Right-Culture

We believe in fostering an environment driven by value, results, and efficiency, alongside a culture that rewards action-oriented behaviors.

Right-Size

Having the right number of people with the right mix of skills is crucial. At Softtek, we don’t believe in simply re-badging or relocating people as a first approach. Instead, we start by identifying the client’s business objectives, then we build an optimally sized team with the appropriate skill mix, whether through re-badging or relocation.

Right-Governance

Effective governance involves identifying key business performance indicators through Design for Six Sigma (DFSS) principles, implementing a clear change management strategy, and establishing baseline processes to create predictable performance in line with Six Sigma, CMMI, or ITIL guidelines. Softtek automates processes and measures performance via digital dashboards, providing relevant business metrics and continuous improvement.

Right-Quality

We believe that quality should be evaluated based on business performance. Our quality assurance metrics ensure that performance is measured against service level agreements, lean Six Sigma processes, and your bottom line.

Right-Place

Labor arbitrage can be a powerful tool for cost reduction, but it often leads to failure if not managed properly. We believe that team allocation should be determined by performance, regulatory, geopolitical, and risk mitigation factors, rather than solely by labor location. Our onsite, onshore, nearshore, and offshore capabilities allow us to make optimal work-allocation recommendations.

Right-Execution

Outsourcing contracts often deliver initial cost savings, which can diminish over time as scope expands and costs rise. Softtek’s approach optimizes outcomes and ensures operational health throughout the engagement lifecycle.

Nearshore Delivery Centers

Softtek has more than 30 offices around the world – 19 of which qualify as Global Delivery Centers, as they comply with the following:

Robust communications infrastructure

Business continuity & disaster recovery plans

Mature recruiting & training capabilities

Strong security & regulatory compliance

Ability to host several clients in isolated physical
and logical segments

Designed for growth

Strong process rigor (Six Sigma, CMMi, ISO)

Our network of Global Nearshore Delivery Centers is comprised of the following:

North
America

Mexico:

• Aguascalientes

• Ensenada

• Guadalajara

• Mexico City (2)

• Monterrey

South
America

Argentina:

• La Plata

Brazil:

• Fortaleza

• São Paulo

Asia

China:

• Wuxi

India:

• Bangalore

Europe

Spain:

• A Coruña

Monterrey

Mexico City

Aguascalientes

Ensenada

São Paulo

La Plata

A Coruña

Rated as the #1 city in Latin America for doing business by Fortune magazine, Monterrey boasts numerous attractions. The city features:

A modern telecommunications infrastructure
A highly educated labor pool
Direct flights to Dallas, Houston, Miami, Los Angeles, Atlanta, and Chicago
A stable social, political, and working environment

Monterrey, the capital city of the state of Nuevo Leon, was founded in 1596 in a valley near the Sierra Madre Oriental, surrounded by the famous “Cerro de la Silla” (Saddle Hill, named for its saddle-like shape).

The city is considered Mexico's industrial hub, partly due to the presence of approximately 10,000 industries across various sectors operating in the state. Key industries include food production, brewing, tobacco, glass, cement, steel, chemical products, equipment, and machinery.

Nuevo León is also notable for its significant commercial development, with more than 25,000 businesses of diverse specialties established throughout the city.

In terms of higher education, Monterrey is home to the Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), internationally renowned for its educational quality and the excellence of its graduates. Other notable institutions, such as the Universidad Autónoma de Nuevo León, the Universidad de Monterrey, and the Universidad Regiomontana, further establish Monterrey as one of Mexico's most important educational centers.

Mexico City is the nation's capital and one of the largest cities in the world. The city boasts a modern telecommunications infrastructure, comprising thousands of miles of fiber optic cable, copper wire, and wireless networks. Voice and data services are provided by AT&T, MCI, Sprint, and Telmex, all operating on advanced infrastructure.

Mexico City serves as a crucial hub for airlines from Europe, North America, and South America. With hundreds of flights to and from the U.S. each day, the city stands as a vital and highly accessible business destination.

With a population exceeding 20 million, Mexico City and its metropolitan area are home to a growing number of universities, including campuses from Monterrey Tec, Universidad Nacional, Universidad Iberoamericana, ITAM, Universidad Anáhuac, and Instituto Politécnico Nacional—each ranked among the top universities in Latin America.

Our Global Delivery Center in Mexico City is located within a technology park, sharing facilities with the Tec Milenio University campus, a subsidiary of Monterrey Tec. Softtek collaborates with Tec Milenio to help shape student curricula, provide exposure to real-life situations through internship programs, and offer a smooth transition into post-graduate life.

Located halfway between Mexico City and Monterrey, Aguascalientes offers an appealing alternative for those seeking the infrastructure of a modern city without the crowds. As an industrial, mid-size city, Aguascalientes boasts excellent power, telecommunications, and transportation infrastructure, along with a significant talent pool. One of its key competitive advantages is its privileged geographical location at the heart of the Republic, enabling swift communication with the metropolitan areas of Monterrey, Mexico City, and Guadalajara. In addition to its proximity to these three largest cities in Mexico, Aguascalientes is strategically situated within a business and industry corridor, close to other mid-size cities like León, Guanajuato, and Zacatecas.

Aguascalientes is a municipality rich in history, preserving the vestiges of its 400-year-old heritage. The area strikes a perfect balance between the old and new worlds. The well-being of its population ranks among the top five entities nationwide, with high standards in housing, healthcare, education, and electricity.

The city is also equipped with an international airport offering direct flights to Houston and Dallas.

Ensenada boasts a protected harbor and modern port facilities, making it Baja California's leading seaport. Located just a 90-minute drive from San Diego, its easy accessibility by land, air, or sea has made Ensenada a popular tourist destination year-round.

Fishing, canning, and winemaking are among the city's main industries. The warm Mediterranean climate, vineyards, museums, golf courses, whale watching, and beautiful beaches are just some of the factors that have established Ensenada as one of the most important ports on the Pacific Rim.

Softtek’s Global Delivery Center in Baja is located on the UABC campus (Universidad Autónoma de Baja California), the largest university in the region. Softtek and UABC have formed a partnership to align academic curricula with industry needs, providing students with exposure to world-class projects through internships and helping them transition smoothly into their professional careers.

As the main financial, corporate, and commercial center of Latin America, São Paulo is one of Brazil's most influential cities on the international stage and is considered one of the most globalized cities in the world.

São Paulo was named the best business destination in Latin America for the second time, according to an annual study conducted by América Economía Intelligence, the research unit of the communications company América Economía. The analysis ranked the top 42 municipalities in the region for business, considering factors such as innovation potential, capacity to generate new businesses, telecommunications, security, and quality and cost of living.

The city boasts an excellent metro system, recognized as one of the most modern and comfortable in the world, and is served by an extensive fleet of 33 million taxis. São Paulo is also home to over 200 heliports and 500 helicopters, making it the second-largest hub for helicopters globally. Additionally, it has the second-largest contingent of private jets in the world.

São Paulo is served by two major airports: São Paulo International Airport in Guarulhos and Congonhas Airport. For smaller aircraft and helicopters, Campo de Marte Airport is the preferred choice. The city is connected by commercial flights to more than 40 cities across 23 countries, while Congonhas Airport provides connections to 70 local towns across nearly all Brazilian states.

The capital of the state of São Paulo enjoys a temperate climate and is located in southeastern Brazil. With an area of 1,530 km², it is the fourth-largest city in the world and in the Southern Hemisphere. According to the IBGE, the population of the municipality of São Paulo is 10,886,518.

As the capital of the province of Buenos Aires, La Plata serves as an administrative, commercial, recreational, and cultural center, boasting magnificent architecture showcased in its foundational buildings, plazas, avenues, and pathways. The city is home to 600,000 inhabitants.

La Plata is a paradigm of advanced urban planning dating back to the nineteenth century and stands as a prime example of the hygienic (ecological) movement that gained significance during that period.

The city’s population is highly educated, with a greater proportion of university students compared to other cities. Since its founding, La Plata has been a hub for educational excellence, hosting three universities: Universidad Tecnológica Nacional (UTN), Universidad Nacional de La Plata (UNLP), and Universidad Católica de La Plata (UCALP). It also has important primary, secondary, and tertiary institutions.

La Plata is a key area for the growth of the software industry due to its:

Highly qualified workforce, with a significant number of IT professionals trained at the aforementioned universities
Stable social, political, and working environment
Proximity to the capital, Buenos Aires
Excellent access to terrestrial communication, with major national airports within a 50-minute reach

Our Global Delivery Center in La Plata is strategically located in the heart of the urban center, facilitating access and mobility for our associates and client visits. This center was inaugurated by the city mayor and Vice President of the nation, Daniel Scioli (currently the governor of the province of Buenos Aires), and was introduced as the city's first technological hub.

A Coruña is located in the northwest corner of Spain. The Torre de Hércules (Hercules Tower), the oldest operational Roman lighthouse, overlooks the city. It is also known as the "City of Crystal" due to its distinctive architecture, particularly in the buildings near the coastal dock.

This charming city enjoys pleasant weather for most of the year, making it a popular tourist destination known for its gastronomy and local beaches. Additionally, A Coruña is recognized for its high quality of life, with a population of 250,000, making it the second most populous city in Galicia.

A Coruña is well-connected with Madrid and other Spanish cities via highways to the north of the peninsula. With only a two-hour flight to London, the city is also served by three nearby airports:

A Coruña Airport: Direct flights to Madrid, Barcelona, Seville, London, Lisbon, and Bilbao.
Santiago Airport: Direct flights to most major Spanish cities and key European capitals, such as London, Paris, Frankfurt, and Rome
Vigo Airport: Direct flights to Madrid, Barcelona, and Paris

Galicia is home to three large universities that produce more than 1,300 graduates each year. Across the seven campuses in Galician cities, more than seven technical disciplines are offered.

Nearshore Benefits

Over the years, we have evolved our nearshore value proposition in waves.

Each wave builds upon the previous one, creating a robust value proposition for globally delivered services.

Leverage Proximity

This was our first wave, driven by the idea of addressing the gaps left by India-centric global service delivery. While this concept remains a strong differentiator for Softtek, it was just the starting point of our journey in global services.

This component of our value proposition encompasses the following:

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Proximity and Time Zone

Geographic proximity and similar time zones have enabled companies to increase face-to-face interactions, allowing for the execution of more complex projects nearshore. This approach effectively filled the gap left by distant offshore locations, such as India.

Cultural Affinity and Ease of Doing Business

Due to proximity, most nearshore locations share a closer cultural affinity with their primary markets than offshore locations. For example, Mexicans are very familiar with U.S. lifestyles, customs, and communication styles. Additionally, under NAFTA, Mexico has not only been a significant manufacturer and service provider to the U.S. but also an important market for U.S. businesses. This ongoing business exchange has further strengthened cultural familiarity, minimizing communication issues that might arise from cultural differences. Furthermore, thanks to USMCA, visa issues are virtually non-existent, as Mexicans can easily obtain TN visas.

Cost Savings

Depending on the location, cost savings can be comparable to those of offshore destinations. For instance, Mexico has provided substantial cost savings to U.S. customers, similar to those found in India, due to lower indirect costs such as contracting, due diligence, communication, and travel.

Total Cost of Engagement

Total Cost of Engagement (TCE) is an approach that evaluates the complete expenditures of offshore engagements, highlighting the cost competitiveness of a mature nearshore model, even when compared to highly cost-efficient offshore models.

While nearshore rates may be higher, the overall cost of nearshore engagements is often equivalent to or even less than that of offshore engagements. This is due to the efficiency gains achieved by working in close proximity to the U.S. and within the same time zones. Through a mature and disciplined process, the Near Shore® model proves to be much more efficient in achieving higher percentages of work performed at a lower-cost location than traditional offshore models.

By employing a robust quality model, we build the necessary infrastructure to support remote work. Despite the advantages of a nearshore location, challenges still exist, and this quality model enables us to maintain a very high nearshore leverage, ensuring a significant portion of work is performed at a low-cost facility.

Productivity Gains

By integrating a mature quality model, digitized processes, and domain expertise, we offer our clients services based on Service Level Agreements (SLAs). This approach provides significant advantages to hiring managers and their organizations, as value is measured by results rather than time sheets or hourly rate comparisons.

Utilizing a Six Sigma approach, we deliver evolving SLAs that reflect our commitment to continuously improving efficiency. This means always doing more with less—enhancing productivity, reducing costs, minimizing defects, providing greater support, delivering results faster, or any combination that benefits our clients in a long-term, highly efficient partnership.

Global Nearshore

Today, we commit to reducing the complexity of IT services management, optimizing costs, and supporting the globalization of IT and BPO operations while contributing to the evolution of our clients' businesses.

This commitment is made possible through our ability to provide world-class, cost-efficient services, our focus on addressing market needs overlooked by traditional providers, and our dedication to delivering an outstanding customer experience.

World-class cost efficient services

We ensure performance that continuously evolves, all while maintaining the lowest Total Cost of Engagement possible.

Fill the gap left by India centric global sourcing

We believe that solution providers must simplify their clients' lives while delivering the best services available. Our clients require specific, customized solutions combined with the high-quality services of a top-tier provider.

This is why we created the Global Nearshore™ model—to address the shortcomings of India-centric global delivery models. By leveraging Softtek’s capabilities, corporations can benefit from global sourcing while meeting critical needs for high interactivity, on-demand communication, rapid response to change, risk diversification, reduced attrition, and multi-language support—elements not adequately covered by an India-exclusive model.

Outstanding customer experience

Business value is traditionally measured by price, quality, and timeliness of deliverables. Experiential value, however, focuses on meeting the needs, wants, and concerns of the individuals interacting with the provider. Both elements are crucial for the success of global sourcing.

Value

Reduce the complexity of IT services management

Consolidate new and legacy application portfolios into a single team.
Ensure vital applications behave predictably and operate without interruption.
Reduce vendor multiplicity and leverage the strengths of a robust, flexible partner with global reach.
Monitor Service Level Agreements (SLAs), not timesheets.

Support the evolution of the business

Support globalization initiatives.
Expedite the implementation, customization, and deployment of enterprise applications with the best possible ROI.
Build a platform for the future by implementing solid applications and the processes to support them.
Maximize business knowledge by assigning resources to valuable tasks and extracting business logic embedded in legacy applications.

Optimize costs

Reduce the Total Cost of Engagement and lower indirect costs by fully leveraging the lowest-cost location.
Optimize processes by consolidating functions, reducing defects, and continuously evolving Service Level Agreements.
Enable people to reach their highest potential by aligning the right tasks with the right locations.
Optimize technology use by accelerating new technology deployment while ensuring its effectiveness.

Globalize IT and BPO operations

Increase global competitiveness with a global partner.
Operate under world-class standards, regardless of the local, regional, or global nature of your needs.
Locate services wherever they make the most sense for your business, not your vendor’s.
Leverage Softtek’s deep knowledge of the North American and Latin American markets, while supporting European and Asian operations nearshore.
Take advantage of “global nearness” by managing day-time operations during the day, regardless of location.
Improve response times to customer needs by keeping your support team always nearby.

Software Quality Governance Model

Softtek's commitment to quality is anchored in three key elements that provide full visibility and track metrics to measure the quality of services delivered to our clients.

Adherence to the Capability Maturity Model (CMMi).
As a CMMI Level 5 organization, Softtek follows SEI CMMI guidelines for planning, engineering, and managing software development and maintenance. This adherence enables us to continually improve our ability to meet goals for cost, schedule, functionality, and product quality.
Six Sigma for business process excellence.
Our Six Sigma program, initiated five years ago, has successfully completed numerous projects both internally and with clients. Six Sigma has become our preferred method for problem resolution and process improvement. It is a customer-focused, data-driven management approach aimed at achieving excellence in business processes.
Wing-to-wing process digitization.
Our project tracking and control strategy is fully based on the digitization of our processes. Digitized processes enable real-time tracking of metrics, SLA compliance, and efficiency gains achieved through Six Sigma projects. This approach provides full-cycle visibility, ensuring total control and real-time information on our processes and the services we deliver to our clients.