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Is Spain plus Brazil more effective than India?

Spain’s star is on the rise in the outsourcing world. Too long in the shadow of India and Eastern Europe as near and offshore solution, Spain is becoming the thinking company’s destination of choice.

This is supported by Forrester’s recent research (Spotlight on Spain) which suggests that companies should take another look at Spanish providers. It’s not just about nearshoring capabilities, but also the strong cultural and linguistic ties with Latin America which enable offshoring via Spain.

For European companies new to outsourcing, Spain’s proximity is ideal – offering better collaboration opportunities and closer working relationships – smoothing out the soft issues, which can often prove a barrier to successful outsourcing. With São Paulo as close as 3 hours from Europe (GMT-3) it’s relatively easy to maintain a close working relationship, whilst offshoring to Brazil or other parts of Latin America.

For established, global outsourcers, Spanish providers offer a nearshore complement to existing offshore programmes. The country has a highly-educated labour pool and strong sector expertise, which means it can deal with both complex IT projects, as well as offering staff augmentation solutions.

Compare this with India where the outsourcing sector is suffering from attrition, wage inflation and skills shortages, meaning that its cost advantages are beginning to change when compared with European rates.

Forrester does not see the outsourcing issue going away; claiming “there is no doubt that interest in remote IT delivery is in the rise”. So, rather than playing second fiddle to Eastern Europe, Spain’s combination of proximity, skills and flexibility could perhaps see it overtake other outsourcing destinations?

Graham Underwood

Forrester Research Inc. Complementing India With Nearshore Strategies: Spotlight On Spain. 27 February  2009

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Comments: (2)

John Cant
John Cant - MPI Europe Ltd - London 18 March, 2009, 09:53Be the first to give this comment the thumbs up 0 likes

At MPI Europe, we are also seeing clients taking the view that traditional destinations for IT outsourcing are becoming saturated, and that more sophisticated on-shore/off-shore models are being deployed which require elements of cultural fit, creativity, time zone match and intellectual property as well as pure productivity. So as part of this, firms are re-examining the potential geographic spread of their providers. In your piece, I am interested that you see Brazil as the natural partner for Spain, rather than the closer linguistic and cultural fit of Argentina where companies such as Globant are thriving, and putting a greater emphasis on European and US clients given their mid Atlantic timezone and other advantages. Indeed a recent report from my old firm KPMG (it seems to be the season for outsourcing reports) indicated that Buenos Aires was a new and growing hotspot as an outsourcing destination. So there are a range of options for firms looking for new and different outsourcing models and these options look likely to expand in the current challenging environment.  

A Finextra member
A Finextra member 23 June, 2009, 13:00Be the first to give this comment the thumbs up 0 likes

The time zone and cultural compatibility of the whole South America is certainly something that I see benefiting European and North American clients. As the financial centre for South America, Sầo Paulo is the appropriate place to be for GFT. In addition English speaking is mandatory for almost all European and North American financial sector work (the project language being English) and this is a minimum requirement for hiring.

Still, it’s certainly an interesting time in that part of the world at the moment.

Graham

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