Updated: Apr 12, 2021
Outsourcing has been helping CIOs to be more strategic within their organizations, it can bring many advantages, from overall cost reduction, operations efficiency, risk reduction, etc. For years this strategic view has made outsourcing a must within the IT strategic goals, from support teams to IT infrastructure, outsourcing has become a big part of a company. In recent years there has been a steady increment in Nearshore outsourcing for SAP services becoming a strong option for CIOs.
Offshore outsourcing has been in the market for decades now. The practice is widespread across business sectors and adds value to companies, this practice has been well balanced over the years serving as an enabler for business competitiveness and growth.
Over the last decade, we have also seen that Nearshore outsourcing is gaining market ground due to its several benefits when it comes to outsourcing like proximity and time zone, cultural affinity and ease of doing business, cost savings, and the possibility of having expert resources available almost immediately. Now nearshore options are not just for big companies, small and medium companies can benefit from this outsourcing model.
In 2021, we faced the most disruptive time in the last century caused by the COVID-19 pandemic, organizations large and small have to become more creative to resolve all challenges that this time of uncertainty brought. One component that will be key in an IT department and that needs to be on the discussion table is using outsourcing in a balanced multi-sourcing strategy.
There are three aspects of why bringing a Nearshore team to the strategy is a must:
When considering an outsourcing option, cost reduction was always on the top strategic goals, nevertheless, according to the Deloitte Global Outsourcing Survey 2020 report (add a link) the key objectives of outsourcing were moving away from reducing operating costs to enabling speed to market, scaling faster, enhancing user experience, and achieving competitive advantage. Due to the pandemic cost reduction is back to the top strategic goals, a light at the end of the tunnel is seen but this tendency will stay.
One of the main benefits of having a Nearshore outsourcing partner is exactly that, reduce the costs of operations either on a new implementation or with a support team or simply by adding additional resources to your current team. For this reason, technology and business leaders need to reevaluate their technology partnerships and look for options that can help their organizations achieve their goals, especially in budget-constrained times.
Although nearshore rates tend to be a bit higher than offshore rates, the overall cost of Nearshore engagements is equivalent to or less than offshore, because of the efficiency gains and customer satisfaction.
Essentially the purpose of outsourcing is to delegate those non – core, but essential sectors of its administration to firms specializing in these very particular functions. Organizations expect their outsourcing partners to deliver on what they promise and the expectations are high, if you are engaging with an outsourcing company you expect to receive nothing but experts on their domain and/or technologies that can not only run and solve everyday tasks and issues but also to help innovate, deliver a business transformation, organizations should be looking for partners that help them to find or increase that competitive advantage.
Because you are engaging with experts, you should also receive expert advice on the latest technologies, best practices, etc., companies must embrace new technologies for their business growth. The focus of a partner should always be the client, client success is the provider’s success.
Now, if you engage with a Nearshore partner that can bring this level of expertise, you will be getting the best of both worlds, having experts in their field and staying on budget creates a unique opportunity for your organization.
Time Zone, Proximity and Cultural affinity = Customer Experience
Time Zone, Proximity, and Cultural affinity, all these aspects can be summarized into a Better Customer Experience, some studies suggest that companies prefer to pay more for a better customer experience, with companies looking for reducing costs due to the pandemic, without sacrificing the service quality, this is the moment where Nearshore companies can deliver true value for all kind of companies, small, medium or large, because of the versatility and new communication technologies that have emerged due to the pandemic.
First of all, the time zone is a great advantage, basically is like working with a co-worker sitting on the next building, you can benefit from all the benefits of communicating with your team immediately, without the need of a conference room availability, this results in higher productivity & more efficient daily interaction, even agile teams have figured out on how to work without the need to be co-located in the same office.
Cultural affinity by definition is having a sense of attraction or a feeling of connectedness towards a certain culture, this definition perfectly fits what you seek in a customer satisfaction experience, it is something that you should consider if you want to have that level of customer experience, whether your outsourcing takes you across town or countries, visibility on workflow and progress toward intermediate and long-term goals is crucial. CIOs should ensure that their teams are responsible and accountable not only for what needs to be and by whom, but also that their partners share their vision and strategy to achieve the organization's goals.
In conclusion, in 2021 SAP is bringing tons of innovations with their S4/Hana technology along with SaaS solutions like SuccessFactors and Ariba, for companies to adapt will require partners that know to deliver the right expertise, search for a Nearshore partner that can make your organization ready to approach SAP new challenges is a must. Again, your outsourcing providers must be able to share their knowledge with client companies and boost their entire capacity in performance engineering.
A flexible sourcing model considering a Nearshore model is now the mainstay for most client sourcing strategies. This trend has been consistent over the past two decades with clients mostly in the software development industry, but in recent years the need for SAP consultants in a Nearshore model has been growing as its benefits have also been understood and realized by clients.