Nearshore Americas

Accenture Mexico Q&A: Reaching the Fourth Stage of Outsourcing

According to Ruben Gallego, Outsourcing Manager at Accenture Mexico, Mexico is rapidly approaching the fourth stage of outsourcing.  And it is hoped that this will result in real benefits for all; better value for the businesses, greater availability of highly qualified staff and, thanks to changes made to the Labor Law, more rights for employees.

Gallego, who arrived in Mexico four years ago, with the goal of setting up the company’s Outsourcing Division, chatted to Nearshore Americas on these and other subjects, defining the maturity of the Mexican and Latin American market.

Nearshore Americas:  You have been managing the Outsourcing Division at Accenture Mexico for four years now, what has been your view of the market during this period?

Ruben Gallego:  In the four years that I have been in Mexico, I have seen great improvements in the way in which outsourcing services are being provided. Businesses now understand that they are contracting a service.  Other markets have taken between 15 and 20 years to achieve what Mexico has achieved in just four years.

There are four outsourcing stages:  the first is the cessation of the work force as it is currently perceived, the second involves managing and training human resources along with caring for the professional careers of the employees; the third consists in working with performance indicators, as well as industrialization and automation of the services provided. This is the stage Mexico is currently at. The fourth stage involves specific activities performed by different segments of the industry, and tried and tested technological and innovative assets supplied by the provider. It is during this stage that the real economic benefits are felt.

NSAM:  What is needed in order to get to stage four?

RG:  Changes to the Labor Law are regulating work in the outsourcing field.  People have, for a long time, criticized the lack of workers’ rights. These new regulations are a step in the right direction.  The services are being brought up to professional standards. This generates better jobs, which, in turn, adds value.

As far as the businesses themselves are concerned, they have to find out what technology is available to them. This takes time, as trust needs to be gained. I believe that moving onto stage four is advantageous as outsourcing results in more competitive businesses and an improved economy.

NSAM:  Some businesses are complaining that the standards promised by the outsourcers are not being met, and are thinking about terminating their services.  How can they do this without encountering problems?

RG:  If the providers are offering a service that is not up to standard, first of all, you need to understand exactly where they are going wrong. Often, it is not that the outsourcer is not adequately qualified, but rather that their focus is misdirected.

You have to try to identify the real problem, and put pressure on the provider so that he makes changes. If he is not willing to do so, you will have to look for another provider. This approach has often proved successful.  When changing a provider you need to take into account, how personnel will be managed, what processes will be implemented and what opportunities are offered to ensure that this will be a successful enterprise and not another failure.

NSAM:  How soon should you be expecting to see savings and a return on your investment?

RG:  All outsourcing projects aim to provide a good return on your investment. And savings are always anticipated. The provider has to clearly explain how they expect to achieve this.

They also have to provide a clear business plan and explain exactly how long it will take to see the benefits. In my opinion, it should realistically take at least three years, as an there is always an investment incurred when changes are made to culture, personnel, services and knowledge.  However, it shouldn’t take more than five years as changes can be made reasonably quickly.

The most important thing is that the agreement between the provider and the corporation allow for flexibility, as it will need to adapt as the economy evolves and technology improves.

NSAM:  How is the outsourcing industry affected by the lack of IT specialists?

RG:  The lack of talent is a real problem. Mexico is seen by the United States as a viable option when looking to recruit nearshore services. This is resulting in real benefits for the economy but also in a lack of available human resources.

At Accenture, we have started up the Stewardship Program. This program aims to take care of future generations, ensuring the continued growth of the business. It offers scholarships for technology courses tailored to the needs of the market. Analytics, for example. This is something that needs to be implemented in universities. Courses should be modified to include these subjects, as these are the skills that are required in the work place.

We have agreements in place to contract professionals from several universities, such as Mexico’s National Autonomous University, the National Polytechnic Institution and Monterrey’s Technological Institution for Higher Education.  With these scholarship programs in place we hope to be able to fill demand. This, to a great extent, is up to the IT service providers themselves. The clients should look to adapting their internal infrastructure in order to effectively manage, evaluate and consolidate the providers.

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NSAM:  What is needed in order to ensure maturity of the Mexican and Latin American outsourcing market?

RG:  Some businesses have greatly improved while others have lagged behind. There are varying levels of maturity within the market; we have to try and balance this out. This will only be achieved by good communication, diffusion and improved marketing. Businesses need to invest in showing off what they have to offer, encouraging visits to their delivery centers and showcasing their success stories.

Clients and providers need to work together to define goals and encourage competitiveness. This is the next wave of outsourcing, the fourth stage, where real value is added to the business. It is important that the provider has the maturity needed to adapt to new trends and evolve.  Mexico is making great bounds and rapidly gaining experience, thanks, in part to the services of good outsourcing providers.

Norberto Gaona

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