Podcast: The ‘Golden Age’ of Nearshore is Underway. What’s Next?

At this very moment, the Nearshore is living in a ‘golden age’, says Nearshore Americas’ founder and chief analyst, Kirk Laughlin, in a recent podcast interview with Michele Marius, publisher and editor of ICT Pulse, a Caribbean-based online blog and podcasting platform.

“Say what you will about the personal disruptions caused by Covid, from a Nearshore business perspective the last three years have been a transformative moment for this industry. I think the ramifications of what happened in 2020 continue to be realized”, Laughlin said during a recent interview with Marius. “It’s exciting, especially because the Nearshore offers so many options.” 

NEW RELEASE!!
ICTP 247: 2023 Caribbean outsourcing update and trends, with Kirk Laughlin, of @NSAmericas https://t.co/mvN1m6FAmT#podcast #OUTSOURCING #trends #ICT #Caribbean

— ICT Pulse (@ICTPulse) April 12, 2023

Even though there’s reasons to be optimistic about the future of Nearshore BPO and ITO, Laughlin underscored several points that players in the region including, BPOs, software engineering firms, SaaS vendors, investment promoters, industry clusters and government agencies in general, need to keep in mind: Stay competitive and stay relevant as the Nearshore model and delivery needs to be as flexible as the market it services. 

The Wave of New Investors

What did Covid trigger? One of the most important trends to pay attention to is the significantly larger pool of investors now examining Nearshore. The overall size of the Nearshore market (defined by exporting of services globally from the region) has grown over 50% in the last four years, largely because of the unprecedented level of new engagement.

“The new wave of investors are taking a much more serious look at Latin America and the Caribbean than they would have previously. This  has created many new investment projects, lots of new conversations and a drive for many BPOs and providers to diversify globally. The Nearshore has been a net benefactor.”

Don’t Fear Ai

While a lot has been said in the media about AI’s capabilities to throw labor markets and even whole industries into chaos, BPO and ITO providers should leverage the power of the technology instead of fearing it. 

“It should never be as simple as you develop this tech and you lose this job,” Laughlin commented. “If you look at it simplistically, you’re going to miss the boat, and unfortunately some countries have done that. But those countries who commit to technology skills will continue to do very well.”

Data, Data, Data

While technology itself has proven useful in the gathering and organization of data, human intelligence will still be needed to mine through it and find the most revealing insights. Nearshore vendors should build teams that are well trained to locate those golden nuggets.

“By and large, even when using those [technological] tools, there’s still a need for technical expertise to implement, to maintain, to measure and gather data and analytics,” said Laughlin. “This wave of digitization, it is a huge, huge trend, and it is demanding of talent.”

The Role of Politics

 Latin America in particular has been making headlines due to the recent rise of left-leaning presidents. While investors should keep an eye on the politics of their country of interest, the issue has proven barely relevant in the case of Nearshore outsourcing. 

“There’s always a very lively debate about how much do politics matter at the end of the day for BPO. Maybe it’s more of a question of rule of law and what new laws are about to come into play that directly impact the industry,” Laughlin pointed out.

Present And Well-Informed IPAs

IPAs have to be ready to provide pertinent, accurate and recent information to foreign investors, but they should also be willing to accompany these investors in their journey of business in the country. 

“I’ve come to recognize the crucial role of the partnership with your IPA,” Laughlin said. “Is the IPA presenting itself as a partner that’s going to be there in your journey or do they see themselves as ‘Here is our information, here is our contact number; call me when you need me.'”

The Rise of Second-Tier Cities

As some of the more popular locations in the Nearshore become even more solicited, second-tier cities will grow attractive in the eyes of investors due to the availability of labor, real estate and more appealing costs. 

“It should make people look more seriously at these so-called second-tier cities,” Laughlin pointed out. “There’s this area of Clarendon, in Jamaica (population 246,000). That’s a population that’s significant, but there’s no BPOs present there yet. That’s the kind of thinking that we all need to start applying here.”

A Caribbean Awakening

The Caribbean is gearing for an upgrade. Regional governments have been implementing upskilling and investment promotions programs. Something’s brewing among the islands, and North American and European businesses have caught its scent.

“For the UK, to make sure they’re aware that there’s this other interesting option looking West, instead of looking at South Africa or Nearshore Europe. There’s this whole other unique opportunity,” Laughlin said.

Find Out For Yourself

Although Nearshore outsourcing is a booming industry and there are sources of information that could prove useful, the best advice for interested investors is to look for deeper insight into the region, either by themselves or using sources that are closer to the ground.

“Continue to find out for yourself what’s really going on in these markets. Use channels like ICT Pulse and Nearshore Americas to get a realistic understanding of what’s going on,” Laughlin remarked.