In this article, “Nearshore” refers to outsourcing software development to providers that are located in foreign countries in the same or adjacent time zones or that are geographically close to a client’s home country. For U.S. companies, this term describes outsourcing to providers located in Canada, Mexico and Central and South America. For companies in Western Europe, nearshore providers are logically located in Eastern Europe, the Middle East or North Africa. At Scio, we work primarily with customers in the U.S. using a combination of U.S.-based and nearshore resources from our Delivery Center in Morelia, Mexico.
Customer Experience as a Key Differentiator
The other day I was reading an article about the “Experience Economy.” In the language of economists, the Experience Economy is the next step in the sequence from an agrarian economy, to the industrial economy and the more recent service economy. A basic premise of the Experience Economy is that competitive differentiation between service providers will emerge from positive and memorable customer experiences. In this view, customers will begin to take for granted that top-notch quality of service and work products are widely available. They will begin to make purchase decisions and maintain loyalty based on the quality of their experience of working with a service provider.
After considering the subject, I realized that one of the main advantages of working with readily accessible teams is precisely that it helps provide a better customer experience.
At Scio, we have found that in the context of software product development, given a choice, people invariably prefer to work with local team members (either internal employees or consultants). After all, the ability to interact face-to-face greatly enhances the richness of communications, which in turn helps productivity and improves quality. It is usually the promise of lower costs that persuade companies to go through the additional effort of working with a remote team.
Although working with a nearshore team is by no means the same as working with an on-site team, it does provide the possibility of much richer communications between all team members than is possible when the remote team is in opposing time zones. For most practical purposes, it resembles very much working with a team in a neighboring city or state.
Nearshore Customer Experience: A Typical Day with a Nearshore Team
A typical day for one of our outsourced product development clients starts with the Daily Scrum Meeting (we are an Agile development shop based on Scrum). Our nearshore team joins the client team in a web meeting and conference call where progress is communicated, plans are updated and action items are identified and assigned. The rest of the day goes by with direct communications (through email, instant messaging or phone calls) between individual members of the Scio team and their counterparts on the client team. When issues arise, the combined team is typically able to address them in real time and resolve them quickly. During planning and review sessions, the client and Scio teams can brainstorm and provide feedback to each other to improve the next Sprint (the name given to iterations in Scrum). So, while these interactions are not as rich as working at the same office, they do provide a level of team integration, rapport and ownership that is far superior to what is possible when the remote team gets all their communications through a designated offshore team representative.
The fact that the entire nearshore team is present during the daily Scrum calls means that there is no loss of fidelity in conveying client ideas and requests to the team; they were all there. Both team and individual team member concerns can be addressed directly. Likewise, the ability to communicate and interact in real time (instead of waiting overnight for a response) helps to foster relationships between the client team and the nearshore team, and thus reduces the time required to reach agreements, and overall helps both teams to get the desired results more quickly and satisfactorily.
With a closer geographical location, a closer cultural affinity also typically follows. For example, in Morelia, Mexico, within ten miles of our Delivery Center, there are local franchises of McDonald’s, Burger King, Kentucky Fried Chicken, Domino’s Pizza, Subway, Sam’s Club, Applebees, Chili’s, OfficeDepot, OfficeMax, Costco, Walmart, Nextel, and others. So, while we could discuss whether globalization takes away from the personality of a city, it is also true that in this particular case it helps create a shared context that enhances communications and mutual understanding.
Television is another example of a medium that creates a shared cultural experience. Cable and satellite TV in Mexico play basically the same shows as in their counterparts in the U.S.; even public broadcast TV channels in Mexico play shows like Mad Men and Breaking Bad. (Yes, they were one season behind, but the point is that it is another factor that creates a shared context.)
This is not to say that the national cultures involved are exactly the same. There are significant cultural differences between the US and Mexico that come into play and need to be accounted for (see Geert Hofstede’s Cultural Dimensions for a good comparison of different country cultures), but the cultural gap is much smaller than with more distant countries.
Another element that enables a nearshore team to provide a better customer experience is that by working during similar business hours, the quality of life of the client team members is not affected. There is no need for late-night or early-morning conference calls to be able to synch up with the remote team. Likewise, it is not necessary to wait anxiously all day for a remote developer to finally arrive to the office to be able to talk to her about a particular issue.
Granted, since our engagement model may include nearshore resources, my opinion is biased. And I fully recognize that a nearshore location alone is no guarantee for good quality or better results. However, I think that given two providers that are equally capable, where both have proven methodologies, committed team member, and a results oriented attitude, but where one is on a similar time zone and the other is in an opposite time zone, the perceived experience of working with the nearshore provider will overall be better than with the offshore provider.
What is your experience? Do you agree?
Considering Media Reports About Mexico
Over the past several years, there has been frequent coverage in the media about the violence in the vicinity of the U.S./Mexico border, arising from the war on drugs. This, naturally, can be of concern to those considering nearshore outsourcing in Mexico.
The situation is indeed very serious in that region and without a doubt ,it is affecting the ability to conduct bi-national business in the area. However, even though it may seem that the whole country is in a state of emergency, in reality ,the problem is mostly concentrated in a few locations, like Tijuana and Juarez.
Morelia, where our Delivery Center is located, is about 800 miles away from the closest border point with the U.S., Morelia is the capital of the state of Michoacán, and it is pretty much a college and government town of about one million people. Although some incidents have occurred here, life in the city goes on ordinarily, with its characteristic lively, dynamic atmosphere.
A fact of modern life is that there are no completely safe and risk-free places anymore. From terrorist attacks in Mumbai, India, to the attacks in New York, Madrid, and London, it is becoming difficult to think of places where safety can be entirely and permanently guaranteed. Nevertheless, the risk of being the victim of violent acts is still very small compared to the risk posed by car accidents or unhealthy life habits. So, while it is only common sense to stay out of places where violence is rampant, we must all go on with our lives, striving to make the world a better place.
Going back to the issue of working with resources in Mexico, as Datamonitor put it in a recent article, “it would be futile for both outsourcers and their clients to forsake this country in light of recent worrying media reports, considering its clear advantages and history as a delivery hub.”
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