Outsourcing Comes to the Americas

Sometimes the grass is greener ... in your own backyard. That's the message delivered in the report "Time Zones Do Matter: Rediscovering the Americas and Nearshore Delivery" by Dana Stiffler, research director for AMR Research.

Read the Report For more on what this means for U.S.-based IT organizations, see a PDF version of the AMR Research report here.

By 2015, India will be just one hub in a vast network from which IT organizations will deliver technology and business skills, according to the report. "Most processes are better candidates for nearshore and remote domestic delivery than they are for 100 percent onsite or 100 percent offshore," says Stiffler.

In response to what Stiffler describes as "India and China fatigue," businesses are seeking relief from the staff attrition and rising salaries that have become the norm in Asia and looking to Latin America and less expensive regions of the U.S. as an increasingly attractive option for IT services delivery.

As the rupee has strengthened against an already weak dollar, Latin American currencies have gained little vis-`-vis the greenback, making that market even more attractive. Large service providers targeting the U.S. market have already expanded into Latin America, with the most popular destinations being Brazil, and more recently, Mexico. U.S. and Indian firms are also opening up new service centers in the Cono Sur countries (the Southern Cone of South America, which consists of Argentina, Chile and Uruguay).

Service providers-and their customers-are also "rediscovering" the good old U.S. of A. Traditional IT services companies like Accenture, BearingPoint and CapGemini are setting up shop in smaller, less expensive areas like Kansas City; Hattiesburg, Miss.; and Tulsa, Okla. Meanwhile, Indian outsourcers are aggressively building and buying throughout North America.

"Delivery of business and IT services from Latin America and the United States will not supplant what's now being done in India or China," Stiffler says. "It simply enlarges the potential pool of processes and technologies that can be addressed."

(For more on outsourcing see CIO.com's Outsourcing section)