Abstract

Outsourcing is a business model that reduces operating costs and boosts profit margins while maintaining a high quality of customer service. The model allows companies to adjust their resource allocation. Many companies opt for out-of-country outsourcing, which is divided into two categories – nearshoring and offshoring. Nearshoring is transfer of work within the region whereas offshoring is relocation of work to more distant locations. Softtek was a global provider of process-driven IT solutions. The Mexican company founded in 1982, coined the term “Nearshore” in 1997. It first offered IT and ITES services to US companies. The company later began deriving benefits from its outsourcing services by working in close proximity to its clients’ location, thereby easing the process and making it cost effective both for itself and its clients. Though the company succeeded in implementing its concept and gained a global presence across 20 countries, it faced many challenges – including challenges from its local government and in gaining a talent pool. There was apprehension that these factors could hinder its future growth. This case is meant for MBA students as a part of the Operations Management/ Logistics and Supply Chain Management course.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The concept of nearshoring
• The advantages and disadvantages of nearshoring compared to offshoring.
• Trends and the changing competitive landscape in the global outsourcing industry
• How Softtek started the nearshore concept and achieved success in the global outsourcing market.
• The challenges faced by Softtek.

Keywords

Outsourcing, Nearshoring, Offshoring, Operations Management, Logistics, Supply Chain Management, Business model, Softtek's Value Model, Softtek's Quality Governance Model, Value proposition, Six Sigma, Global Nearshoring Industry, Latin American market