The Onshore Outburst: Why Everyone is Talking About Setting Up Delivery on US Soil

By Kirk Laughlin

Literally from Austin, TX  (where I led a roundtable of outsourcing buyers at the Shared Services Exchange on Monday) to Sao Paulo and Rio (as part of a Brasscom-led tour of Brazil) later this week, there is a theme that is getting more airplay that the latest Katy Perry single: The place to augment delivery capabilities over the next few years is in the heart of the old USA. Whether using rural sourcing, leveraging internationally-exposed military professionals in third-tier metro areas or snapping up a focused managed services player, the United States is open for business. 

Nearshore Americas counts at least four deals in the works that will be going public over the next few months.  Some acquisitions will be led by Latin American providers (with focus on BPO and IT services) that are determined to be closer to potential customers and put their project managers and business development leaders theoretically in the client’s backyard. A harder-to-measure factor, but one that plays a major part in the migration, is the newly emerging class of Nearshore players recognize their value and attractiveness is increased when US buyers see the commitment they are making to the US market – and thus mitigating some of the sting  of sending jobs “offshore.” The customer spend in some way “stays in the US.”

One of Costa Rica’s leading software and IT services firms – Avantica (CEO Mario Chaves is a member of the 2010 Nearshore Power 50 Ranking) acquired a small San Francisco based software firm called Open Mountain in May, strengthening Avantica’s diversified product development offering.

In an briefing with Infosys earlier this week, company executives spoke enthusiastically about the value derived from its purchase of Atlanta-based McCamish Systems, an Atlanta based BPO and software products builder that was generating about $40 million in revenue before the take-over. The acquisition enabled Infosys to command more market share in the insurance and financial services industry where McCamish Systems was mostly focused.

Other tidal shifts going on that portend to it being the right time to land onshore:

– The supply of IT-trained people in the US appears (we’ll try to see if we can dig up some data to support this) to be rising in a down economy where many software programming jobs have vanished over the last few years.

– Tough sounding legislation from the likes of Sen. Shumer of New York (that will probably go nowhere) aimed at penalizing companies that “send jobs” overseas means providers who are seen as non-US will have to think of more creative ways to appear invested in the United States.

– States and cities are turning up the volume on marketing themselves as good places for BPO activities – this week we met with a business development director from North Dakota, which actually was a sponsor at the Shared Services Exchange.