As the drive towards greater agility and velocity continues, global IT consultancies are looking to the nearshore to help them compete. Beyondsoft recently announced its partnership with Mexico-based nearshore provider iTexico, which is both emblematic of the trend and likely a precursor of more to come.
The success of such partnerships seems in large part to hinge on the overall alignment between the two parties. What is the frequency and quality of communications between the main principles in the relationship? Does the IT consultancy have sufficient awareness and sensitivity to the unique conditions present in markets like Mexico? These and other questions are some of the most salient matters that often influence long-term durability.
Anurag Kumar, Founder and CEO of iTexico, says: “It’s a growing trend. Lately, a lot of services companies are starting to partner with nearshore companies like ours, to compete more effectively, to get access to talent. Many are opening their own delivery capabilities in Mexico and other nearshore destinations, starting with Accenture, Infosys, TTS, Cognizant, Deloitte. Cognizant even has a significant presence nearshore.”
Client demand has also encouraged these sorts of partnerships. But while larger services companies have built a footprint in the nearshore, Kumar says mid-market IT consultancies are still trying to get there. “Some of them are adding their own teams like Luxoft and EPAM, some of them are partnering with companies like iTexico, to service US clients with more agility, with more effectiveness and get some capacity, capability and cost into the equation.” he says.
For the US, Mexico is the most convenient destination for such partnerships, Kumar believes, because of its proximity and cultural alignment. It is a popular destination with IT consultancies. Luxoft launched its Guadalajara offices in 2014 and EPAM expanded its operations to Mexico in 2017.
While these expansions create a presence in the geography, partnerships like the iTexico-Beyondsoft one provide other opportunities. The potential for collaborative working in teams across geographies is appealing and combines the benefits of traditional outsourcing with local delivery.
The value for nearshore providers lies in the expanded capability – iTexico does not have a huge team in the US and most technical talent is in the two innovation centers in Mexico; Beyondsoft has extensive capabilities in the US. iTexico’s partnership with Beyondsoft is also helping it to expand into more markets in the US and into new verticals, because of Beyondsoft’s established focused on sectors such as automotive, which iTexico has not traditionally targeted.
Such partnerships are not without risks, and while collaboration is key to all such ventures, Kumar warns that there is the potential to compete for the same clients. He believes such overlap is less likely when the partners focus on different strengths. “BeyondSoft focuses on larger clients, many of them in the automotive sector – we don’t play there, so less of an issue,” he says.
Another potential pitfall is in cultural issues where teams comprised of talent from different companies may come into conflict with each other. “It takes time to ensure that the teams work together smoothly,” he says, adding that the two companies are still in the beginning phase of the partnership and so have not encountered these difficulties yet.
From an operational perspective, the nature of the partnership needs to be fully fleshed out. iTexico and Beyondsoft will work closely together in terms of sales, but will still function as separate entities and as such marketing will be run separately. “When an opportunity comes, we will do joint webinars and events and depending on the specific project, one of us will take the lead. But operationally I don’t think it will make any major differences.”
“We see possibilities to work together on other things, leveraging our expertise in design, mobile, process automation, AI and Cloud to work on projects in Latin America or perhaps even in Europe,” Kumar says.