The Importance of Quality Standards in the Nearshore - Part 1


Webinar: Evaluating effectiveness of vendors' quality models One of the features that characterize truly mature service providers wherever you go is the implementation of quality standards. These internationally recognized certifications let buyers know that the vendor they’re considering has a proven track record of quality, which helps to dispel a lot of the perceived risks of outsourcing. But the fact is that many Latin American providers (even some doing business outside their home countries) have not invested in these standards. A few months ago I spoke with Jane Siegel, Senior Scientist at Carnegie Mellon University, who had some very strong views on this topic. 

The baseline

The one standard that every provider operating internationally should have in place is ISO 9001. This is the basic requirement for doing international business. Usually buyers want to see some sort of additional certification that gives an idea of how good the provider’s processes are, or the specifics of its quality management system – which ISO does not do. 

According to Siegel this is one area in which the Indian outsourcing industry excels more than providers from any other geography. “Those firms have been involved in international standards development through ISO for a very long time, and have a history of understanding the need for quality standards and incorporating them into their service delivery” she says. “They see the business value in clients being assured of having defined and certifiable processes in place when they take on a project.” 

It’s a good point for all providers to keep in mind. Outsourcing is inherently risky – especially complex tech functions. When clients send their work offshore especially, they’re much more comfortable with a provider if they see quality certifications in place. 

Standards for homegrown providers 

Until now, Latin America was considered an emerging destination. Companies were content to chase low wages and other incentives, and slowly build up their footprint in the region. But now as markets like Brazil, Mexico and Chile begin to mature, clients will begin to expect more from vendors in those countries. “The tendency for many smaller LatAm providers is to assume that if they do good work, they’ll be able to grow,” says Siegel. “In some cases that strategy has worked, but in many cases companies reach a size of 1000 to 2000 employees and then they can’t expand into international markets because they haven’t planned for or figured out how to get those certifications in place.” 

By contrast, Siegel says, global companies like Accenture, IBM or HP that have regional delivery centers in Latin America, always make sure those centers are certified with anywhere between six and ten different quality standards. So if you want Nearshore delivery, you can get it and be assured of the same quality standards as you would get at home in the US. 

 

In my next post, we’ll talk about whether the lack of quality standards could lose Latin America outsourcing market share. Stay tuned!