The client-vendor relationship is the foundation of the Nearshore industry. It’s the motor that drives borderless business in The Americas, and the route to companies receiving quality outsourcing services from a larger talent pool at attractive prices.
But when that relationship goes awry, bad things start to happen. Tensions breed distrust and financially things can get very messy. Nearshore Americas spoke to two outsourcing pros to find out about the most common errors and misunderstandings that new clients have when entering the Nearshore. They offer suggestions on how to avoid these common pitfalls and achieve success in the outsourcing venture.
Accept Real Estate Differences
Jeff Pappas, managing director at MOHR Partners, a global corporate real estate services firm, points out that companies must understand that in parts of Latin America, and particularly in the Caribbean, 40-story, LEED certified glass towers are unlikely to be available.
“In the Philippines or India, you can find Class A or Class B buildings easily enough. But a lot of the time in the Nearshore, especially in the Caribbean, there simply isn’t the same glut of Class A buildings sitting vacant,” he explained.
“For example, in Jamaica, most contact centers have occupied older one or two-story buildings that are nondescript. They wouldn’t be considered Class A. Few companies are competing for employees based on the buildings their in but for the wages and types of business they’re supporting,” he added.
Pappas suggests that companies must accept that what they want their building’s image to be may not be available in parts of the Nearshore market.
Understand That Timeframes Differ
Cultural differences can impact many aspects of the Nearshore relationship. And one of the most fundamental differences in culture between the US and other parts of the world is the relation to time. While in the US market there are well-greased wheels that speed the organization and implementation of new business ventures, this isn’t the same in all other Nearshore regions. Taking this into account is a must, said Pappas.
“If a client says it has 60 or 90 days to start supporting a client in a market, that client must understand that processes can take much longer to set up than that” — Jeff Pappas
“If a client says it has 60 or 90 days to start supporting a client in a market, that client must understand that processes can take much longer to set up than that,” he said. “When they’re doing due diligence, they can forget that there are time barriers to opening new facilities. This involves the usual real estate buildout and development, as well as incorporation of the business and being able to support financial issues in markets where money laundering might be present and therefore companies have to initially wait 90 to 120 days to pay salaries.”
While local attorneys and firms help to smooth issues, there can be some bumps along the road. Timeframes must be reconsidered, Pappas concluded.
Be Certain of Local Language Abilities
Prospective Nearshore entrants need to carry out due diligence on local English language abilities in Latin America, said Pappas. He points out that the Caribbean – where 18 territories count English as the native language – and some of Latin America’s major cities, host strong English talent. But in other areas, scalability is more questionable due to the differences between “cultural” and “learned” English. Pappas defines “cultural” English as native or near-native ability.
“If we think of a customer contacting AT&T, Verizon or Apple to complain about a problem with their cell phone, that customer may not be able to explain in any clear way the problem they’re having. It’s likely to be a very vague explanation,” he said. “If the client has gone into a market where the English is more scripted, there may be problems with the entry-level customer service that can create cost issues.”
Management Cultures Must be Aligned
In many regions of the Nearshore, there is a strong, shared economic history between client and provider, and this has created a deep understanding of how each side works, and of what they expect. Northern Mexico, for example, has a long shared history with the Southern US and companies in both regions tend to have an understanding of how the other works. This isn’t the case for all Nearshore markets, especially if clients are from other parts of the world.
“Assuming a client has a five-day training program in the US, they are likely making a mistake to think that it will take five days for the vendor.” — Ali Viqhar
“Personnel need to be managed by a style they relate to. In some parts of the Nearshore there is no cultural barrier impeding that, while in others there are. Maybe teams in Costa Rica, or El Salvador or Guatemala, don’t relate to a US management style as well and local management provides better results,” he said.
“For companies entering Latin America from other parts of the world, there may be other barriers to working cohesively. So this needs intentional team building and closing those communication gaps,” he added.
Training Takes a Little Longer, And Remember the Learning Curve
Ali Viqhar, senior vice president of strategic projects at Accedo Technologies and based out of Bogotá, said that newer entrants into the Nearshore market can wrongly assume that the training they provide employees in-house can simply be transferred to the vendor in Latin America. It isn’t as simple as that, Viqhar explained.
“The big issue is that clients try to fit their in-house training into the outsourced site. But there needs to be some cultural adjustments made to the training material, so the original training process may not be the best fit for new vendors in Latin America,” he said.
One of the consequences of this is that training times are longer when outsourcing. Though not by much, this must be factored in by new companies, he said.
“Assuming a client has a five-day training program in the US, they are likely making a mistake to think that it will take five days for the vendor. The teaching is beginning from scratch with new information, and agents are learning new cultural affinities.”
This links to further performance expectations down the line. Though companies traditionally outsourced simply for cost benefits, more and more outsourcing is being seen for the quality of service it provides. But to reach that quality service provision, agents need to be given a period to adapt. Clients should not expect immediate performance, Viqhar said.
“Whenever a new vendor is onboarded and performance metrics are agreed on – perhaps a goal of 90 percent on C-SAT, it must be remembered that this isn’t going to happen overnight. Clients must provide some learning curve, whereby expected performance targets can be staggered. Performance will come but clients must have realistic deliverables,” he explained.
Washing Your Hands of Responsibility Doesn’t Work
“A common belief is that when a company outsources it can simply hand over everything to the vendor and it can then wash its hands of responsibility for performance,” Viqhar said. “Whenever clients do that and expect numbers, a healthy Nearshore relationship is never built.”
“A vendor manager who is able to help in terms of training, quality, workforce and coordination is vital. They should be the single point of contact.” — Ali Viqhar
Close partnerships between the client and the vendor always lead to better results, he explained. “In Latin America, you see companies like Microsoft, AT&T or Target helping with close support to their vendors. This is why these companies have been so successful here. Companies that tend not to support the relationship often shutdown one vendor after poor results and move on to another. But the same thing happens again.”
It’s essential that companies understand that the Nearshore relationship is just that; a relationship. There is constant back and forth so that the vendor can provide the optimal client service and both parties can move towards success.
Assign a Dedicated Vendor Manager
To avoid these hiccups, Viqhar suggested that companies assign a dedicated vendor manager to each new vendor to provide necessary support.
“A vendor manager who is able to help in terms of training, quality, workforce and coordination is vital. They should be the single point of contact,” he explained.
“It makes a huge difference, and strong vendor management relationships are the reason why companies like Microsoft and AT&T do so well.”