Three More Questions to Ask Before Nearshoring

We kicked off last week with two questions to ask before you sign on the dotted line and set up in a new Latin American location, based on an article by Esteban Herrera. Here are three more: 

3) Do I have the right scope?

Herrera approaches this question in a different way. He asks whether you’re getting the right services out of Latin America, and whether they make your operation more cost effective or not. He gives the example of a past company he worked for that outsourced its English call centers to Mexico, while keeping its Spanish call centers in the US. 

Well there may not be much hope for your business if you’re ok with that kind of decision. But the scope question relates to much more. One of the main things you should ask is whether there is scope to expand your operation once you’re settled in. In other words, is it scalable? If you’re a call center company looking to fill a few thousand bilingual seats, be very careful which location you choose. Many firms have ended up with top notch facilities, but not enough local talent to fill them. 

4) Have I discerned adequately between sales polish and delivery capability? 

Latin America in the last five years has experienced real growth not just economically, but also in measurable skills of its population. However when it comes to providers, many of them “lack the maturity or resources required to mount the expensive pursuits requires to win deals from Global 2000 companies”, according to Herrera. That doesn’t mean they lack delivery capability – in fact many of them have tech and software design operations that are on par with what you get in the US. So make sure you judge them by what they can actually do, rather than by their marketing campaign. 

There are only a few large Nearshore vendors that have the reach to market internationally and market well, which is why most sourcing operations in Latin America end up being captive centers. But don’t rule out the third party option right off the bat – the region is starting to bring some very high quality offerings in that department. 

5) Do I have the right advisor? 

More importantly, do you have the right advice? Your advisor will not be able to give you the right advice if he does not intimately know the locations you’re considering for your offshore operation. As Herrera says, “Your advisor should have relationships with the government investment agencies, a network of well-vetted local attorneys, a thorough understanding of the talent market dynamics at your destination, and cultural adeptness on both sides of the border”. 

I disagree with Herrera when he says that Latin America is already a relatively low-risk proposition. I think it depends entirely on which country you go to, and what kind of function you’re outsourcing. However, answer these questions adequately, and you will have reduced much of the inherent risks from the get-go. Happy sourcing!