Chris Snyder, CIO, Hulcher

Ever wonder what really distinguishes nearshore from offshore?

By Chris Snyder

I like to imagine an IT vendor selling the first screwdriver. “It can also replace the hammer, if you use the head of the screwdriver to hit the head of a nail. You also won’t need a knife for butter anymore because it will replace that as well. Crow bar… gone. Car keys… a thing of the past. A screwdriver will replace them all and you can finally standardize on one platform (the screwdriver) and reduce costs across the toolbox.”

The “right tool” approach to the organizational structure of an agile software development project mitigates cost by using arbitrage to achieve lower costs, while minimizing risks from misuse of resources – like using the screwdriver when you really need a hammer.

There are three tiers – offshore, nearshore and local, and then there is a cross-functional, cross-project sub team – the Ninjas – but we will get to that later. The balance of resources between the tiers depends upon the project, the teams, aversion to risk, the company culture and the experience within the teams.

Offshore

Offshoring software development was certainly once touted as the uni-tool. “Send us your development, your call centers, your business processes. Move it all offshore!” And after really trying to make it work, things started moving back home. Offshoring is neither the end-all solution, nor is it dead. But where is it best used in software development?

First, let’s distinguish offshore from nearshore. Nearshore involves similar time zones, allowing for agile development. Offshore is dissimilar enough in time zones that live coordination of the customer and the development team cannot be done without rearranging schedules from standard work hours. And I’ve tried the night shift in offshore models and my experience was similar to everyone else’s that I have talked to – don’t do it. No one should have to deal with high turnover on a “B” team.

There is an unspoken rule to distinguish nearshore from offshore. If you really really do not want to go visit the team at their location, they are offshore. Mumbai – offshore. Anything in Costa Rica or Brazil – nearshore. This doesn’t mean that New Jersey is offshore – they still have to be in a different country.

So, what is the offshore team well utilized for? The answer is non-critical path waterfall development: waterfall because the time difference precludes agile development; non-critical path because delays in communication add unpredictability which can upset the timeline. These delays will occur, and with the time difference, the few exchanges necessary to resolve the situation can take days. Components within this area should still fall into the guidelines for waterfall development – that is that they are highly definable and based off of established business processes not likely to change.

This analysis has been used for entire projects to determine the methodology applied for the process; I am proposing to apply it at the component level. If parts of the project can be developed at a lower cost utilizing waterfall methodology without impact on the whole project’s timeline and with minimal risk, then those components should be sent offshore.

“English-speaking” is a relative term. I can order a beer in German and ask where the bathroom is, but that is about it. By no means do I consider myself “German-speaking,” but there are nearshore vendors who would.

Nearshore

Nearshore development costs fall between the costs of local development and offshore development. It should be obvious that if nearshore development is cheaper than offshore and the quality is in line, then there is no need for offshore. Conversely, if it is more expensive than local development, there is usually no need for nearshore. Also, if waterfall method is used exclusively, a lot of the appeal of nearshore disappears.

The decision factors for balancing nearshore development with local development is not as clear when to send components offshore. Corporate culture, infrastructure, if the company has (or is trying to gain) a presence in the county, exchange rates and numerous other factors play into the decision. There is some residual resistance to nearshoring from bad experiences with offshoring, despite the differences between the two. Generally speaking, if nearshoring is accepted as an option, is fiscally sound and there is infrastructure to support remote workers, then the balance becomes one of comfort level with the development done remotely. In other words, what isn’t sent offshore and what isn’t done locally should be done utilizing nearshore.

When dealing with nearshore vendors, know a few things. First: “English-speaking” is a relative term. I can order a beer in German and ask where the bathroom is, but that is about it. By no means do I consider myself “German-speaking,” but there are nearshore vendors who would. Nearshore development is not identical to remote development, even with every fancy piece of collaboration software and hardware. There are cultural and educational differences, holidays, difficulties in procurement and staffing, economic fluctuations, irrational government regulations and so on. Where these issues exist in local development, they are amplified in nearshore development.

Local

There is a psychology to software development. Local development allows developers to understand local and corporate culture, establish bonds with product owners and other employees, participate in ad hoc conferences and lunches and so on. The degree to which the influence of proximity holds varies between organizations and between projects. Some view programmers as only interfacing with project managers – these people will be more comfortable with more offshore and nearshore development than one who organizes more in a cross-functional pod-like manner.

My personal preference is to keep project management and analysis local, and then to create cross-functional teams comprised of local and remote members. Having local management and some local development presence keeps the team aware of the corporate environment while mitigating costs. The question that comes is “What is the proportion between the two types – nearshore and local?” 80/20. Just kidding, the reality is – this is one of the toughest decisions managers are paid to make. Do not expect to employ empirical data to arrive at a solution, but instead rely on xperience and knowledge of the company and the project.

The Ninjas

Finding and keeping highly valuable “Ninjas” will form the bedrock to your success. It is not enough to be a senior/experienced/excellent programmer to become a Ninja. People skills are required, because the Ninjas deal directly with customers, program managers, end users and so on. Ninjas can be coupled with or act as a temporary stand-in for business analysts and project managers. Need more testers? Throw a Ninja in there. Project off track? Ninja will fix it. Everyone should have Ninjas.

Ninjas are rare, and by no means does everyone have the ability and desire to be one. They are strategic, tactical, multi-talented, affable and analytical leaders. Their presence provides mentoring to developers, stability to managers, insight to analysts and project managers and a sense of security to the customers. They should be well paid and taken care of, lest they become someone else’s Ninja. They need to be kept from entering management, lest they become “Freecell” Ninjas.

Conclusion

The best tool for the task at hand. And Ninjas.

Chris Synder, CIO at Hulcher, will be appearing at the Nearshore Nexus Conference, April 2012, in New York City. Follow NSAM (@NSAmericas) for regular updates.

By Karina E. Cuevas

Bogota employs over 30,000 people in the contact center industry

Plenty of heads shook with dismay across Latin America, and particularly in Colombia, when Bogota was labeled as the riskiest outsourcing destination in the world for 2009, according to publishers of the Black Book on Outsourcing.

Lots of rankings come out annually about outsourcing providers, specialty areas, regions and cities – but this particular announcement seemed to be so at odds with reality that it triggered a slew of condemnations across the Internet and raised serious questions about the methods used by authors Scott Wilson and Doug Brown. (For further opinion, see Nearshore Americas’ reaction here.)

Modern City on the Rise

A city that generates over $250 million annually in the call center/outsourcing industry can hardly be called a dangerous investment option.  “It [Bogota] has a big and modern economy with over 500,000 college students, a major international airport and the advantage of moving more cargo in Latin America [than any other country],” says Vladimir Ramirez, Managing Director of International Development Group, a management consulting firm with operations in Colombia, New York and Chicago.  “It was number one in foreign investments last year (in LATAM) making it the first port of entry in Latin America and having both Colombian and international Spanish call centers located in Bogota.”

With facts like these, it’s hard to believe the negative comments on Bogota, but Black Book of Outsourcing doesn’t stop there. It places Bogota under the radar as a dirty and polluted city with an immature legal system.  When contact about the report, authors Scott Wilson and Doug Brown did not respond to questions.

“Many people know very little about Latin America and nothing about Colombia, so I don’t know if those people have ever been here or where they get their data,” says Ramirez. “Colombia, within its political context, has never had a coup d’état, it has only entered in a recession once at the end of the last century and from a public order point of view it is no more corrupt than India, Indonesia and other countries in Latin America.”

Teleaccion: Training Plays a Key Role

Colombia counts on the expertise of a consulting and training company, unique to Latin America, called Teleaccion.

• It’s a 21-employee institution specialized in improving technology and BPO management within the country and nine other nations around Latin America.
  
• It has focused on three primary countries of growth for the call center market, including Colombia, Peru and Venezuela.
• “We have trained around 23,000 people within 157 contact centers in Latin America,” says Patricia Alzate, General Manager of Teleaccion. “We work for Latin American reality, not for American or European cultures. Our method is a practical and simple one that has showed great results.”

According to Ramirez, Colombia is a market waiting to be discovered by the international community.  Currently there are around 120,000 employees within the call center industry.  The largest call centers are located in Bogota which employs around 30,000 people. The country, with seven distinct regions, offers over 12 cities in which to base a company.  In five years, the call center/outsourcing industry is expected to generate $2.5 billion in revenue for the country.

Colombia has over 20 contact centers around the country all with different levels of success. Teledatos, located in Bogota, ranked number two in 2008 accounting for 13 percent of the market revenue.  With 15 years of history, Teledatos has become a leader in domestic services and has an open door policy for international business. They focus on the health care sector, air and land transportation with their services delivered mainly in Spanish, but also in Portuguese, English and Papiamento (the official language spoken in the Caribbean islands of Aruba, Bonaire and Curacao).  It has a consistent portfolio of loyal clients, one that has maintained a 14 year long business relationship and others that see their quality in customer service and have stayed for over four years and counting.

Over 55 Clients Served

“Teledatos is born in Medellin and then in Bogota, being it the capital it went on to be part of the growth strategy,” says Mauricio Velasquez, Commercial and New Business Vice President. “We employ around 6,200 people and service 55 companies from Europe, the United States and Latin America.”

Profile: Mauricio Velásquez M.

Commercial and New Business Vice President of Teledatos

Systems Engineer of EAFIT, Specialized studies in Management in Universidad Pontificia Bolivariana and in Direct Development in INALDE.

He is a professional and numbered member of the International Association of Outsourcing Professionals – IAOP, USA.

He was Manager of Business Development with an emphasis on Outsourcing for HP in their region MCA (Multicounty Area), Director of Sales for business lines of Telecommunications for Unisys in Puerto Rico, Project Leader of IBM, among other related positions within outsourcing in technology.

Since 2009, he is the Commercial and New Business Vice President of Teledatos S.A. company that thanks to the strategic vision of its management team, it has leader the transformation of the Contact Centers in Colombia, transforming them in to one of the most strategic sectors of development in the country.

In the national market they place as number one when it comes to number of employees and annual capital.“Latin American culture is very easy and it’s not the same as in Pacific Asia because they have a barrier which is the English language,” says Vasquez. In Latin America we speak English and we weren’t born with it as a main language, so for companies like Samsung or LG that cater to the Hispanic population it would be easy for us to take care of their needs in our language, but for Indians to learn Spanish would be a very difficult process.”

The Colombian government is taking English language training seriously and is developing incentives to bring more qualified workers into call centers and outsourcing.

Government Steps Up its Role

“For this sector and with the help of the Department of Economic Development and the local government of Bogota we created a program called Talk to the World that is currently training 575 future employees in English and we expect to train 10,000 more in the next four years,” says Monica Ramirez Hartmann, Investment Officer of Invest in Bogota, a nonprofit investment promotion agency created by the Alcaldia Mayor de Bogota and the Bogota Chamber of Commerce.

According to Hartmann, Invest in Bogota together with other government institutions such as Servicio Nacional de Aprendizaje (SENA) is training and helping employ as many people as they can within the contact center industry regardless of their career choice. They want to attract as many foreign investors as possible by offering them the best customer service at a low price and therefore making Bogota grow from its 60 percent annual revenue within the industry.

“Colombia is a country that for 20 years has had a bad image, but today’s situation is not the same, it’s a problem on how you perceive things and reality,” says Ramirez Hartmann. “This is the least expensive country in Latin America when it comes to payroll, infrastructure and telecommunications and it’s all very effective, they don’t offer any problems to companies. We are also in a great geographic position compared to India and the Philippines, since it’s a city where all the major airlines arrive making it therefore a convenient destination.”

Karina E. Cuevas is a contributing writer to Caribbean CRM Central. She is based in the Dominican Republic and can be reached at: kecuevas@gmail.com