Nearshore’s Big Flaw: Quality Standards

By Jane Siegel, Ph.D., Director, ITSqc, LLC and Senior Scientist, Carnegie Mellon University Silicon Valley

Executives, strategists, and technical professionals who have goals to increase market share and bring increased sourcing work to Nearshore locations often overlook an essential aspect of customer consideration.  Answering this short list of questions helps to point to a key differentiator of service providers.

• Why is India continuing to be a preferred destination for ITO, BPO, and KPO service provision?
• Which sourcing destinations are synonymous with QUALITY?
• Where are certifications/standards widely adopted for quality systems, security and privacy, service management, software and systems development, and sourcing?
• What standards provide risk mitigation for customers?
• Which providers are innovative and can support business transformation?

Customers’ decisions about service providers for both ITO and BPO are aimed at achieving reliable, secure, cost-effective, competent, service delivery and increasingly they are looking to form strategic partnerships for transformative or innovative service design/delivery.  These requirements, especially for privacy, security, and risk management are increasingly important as customers consider Cloud Computing opportunities.  So where are customers taking their business?

Providers winning 3 or more contracts worth more than $25MUSD in 1Q2010 (From TPI) are:

Accenture              HP                         Tata Consulting Services

CapGemini            IBM                       WNS

CSC                      Infosys                  Wipro

Genpact                Siemens

HCL                       T-Systems

Six of these thirteen companies are Indian firms and five others are global providers.  The remaining two providers have their origins in Germany.  So, although there are many providers in Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Mexico and other Nearshore nations who could be on this list, the work and revenues are not coming to Nearshore nations.

A critical differentiator for the providers who are winning the business is their long-term investment in quality standards and quality assessment results.  Customers know that when they send their sourcing business to India, the global companies, and Europe, at a minimum their work will be done in an environment where quality standards are in place and there is a culture committed to quality.

The prevalent and relevant standards/frameworks are:

• ISO 9001-2000/2008 (Quality Management Systems),
• ISO 27001 (Security),
• ISO 20000 (IT Service Management/ITIL),
• CMMi-DEV (Software and Systems Development), and
• eSCM-SP (eSourcing Capabiity – best practices).

Thus, customers don’t even need to think for a moment or ask about the pervasive and deep commitment to quality in the winning organizations – they know the risks and benefits of their sourcing concerns are already addressed when they are selecting providers for their major deals and as their strategic partners for the future.

For example, IBM’s Strategic Outsourcing operations in Argentina and Brazil and Infosys BPO are eSCM-SP certified and also carry certifications and assessment results for most of the other standards and frameworks mentioned here. While the World Bank has ranked several Latin American countries as Top Reformers and as improving their status as “Business Friendly” nations between 2007 and 2009, just five of these nations are actively working to adopt key quality standards and frameworks today (see the table below) and few have attained certified status for more than one or two standards/frameworks.

Call to action: Nearshore providers should examine the potential business impact of embracing quality standards as a strategic initiative to improve their operations and increase their market share.   Decisions to invest in adopting key quality standards/frameworks should be made now so that Nearshore providers can realize their potential and  improve your competitive opportunities.

Jane Siegel is a founding director of the spin-off company, ITSqc, LLC and a Senior Scientist at Carnegie Mellon Silicon Valley where she teaches graduate Service Management courses. For the past decade she was on the faculty at Carnegie Mellon’s School of Computer Science as director of the Information Technology Services Qualification Center (ITSqc) where the eSourcing Capability Models for Service Providers and Client Organizations were developed to provide a framework for industry best practices in sourcing and service management.  Her Ph.D. is from Carnegie Mellon University, and she also holds an M.Ed. from the University of Virginia and a B.A. from the University of Colorado, Boulder.