Mexico's Softtek: Success through Nearshoring

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With the times changing, the global economic conditions had become challenging with fluctuating business and market conditions. Such market challenges had forced companies to streamline their operations and cut costs. As a result, companies took initiatives to outsource non-core functions and adapt to the technology economy. Firms realized that apart from cost savings, outsourcing also provided agility and competitiveness and added significant long term value to their businesses. Since 1990s, the trend of outsourcing had been on the rise, with organizations in developed economies shifting their non-core functions to low-cost destinations like India, China, and the Philippines...

Despite the success achieved and the benefits offered by nearshoring, the debate about the suitability and viability of the model compared with offshoring continued. Keeping costs as the main criterion, many companies moved their operations to low cost countries. But wage inflation in the destination countries eroded the advantage and the companies were shifting or reshoring their operations to nearshore locations. However, experts felt that these new locations would have risks of their own, such as fluctuating cost structures, which might turn a profitable sourcing strategy into an unprofitable one and hence an optimized network was needed. With reshoring to nearby locations, the costs would be higher and there would be a risk of losing an important offshore destination which might have proved profitable in the long run...

According to the Ministry of Economics, Mexico, the service sector had been growing at annual rate of 16%, while the International Data Corporation (IDC) forecast that the sector would maintain an annual compound growth rate of above 10% by 2012. This placed Mexico among the fastest growing markets, behind only the BRIC (Brazil, Russia, India, and China) nations. These figures and estimates indicated a promising future for Softtek. Yet, with instability in the global economy and financial crises becoming more common, the future seemed unpredictable...

Exhibit I: The NAFTA Agreement
Exhibit II: Softtek's Services
Exhibit III: Softtek Timeline
Exhibit IV: Softtek's Awards and Distinctions
Exhibit V: Softtek's Offices and Global Delivery Centers
Exhibit VI: Softtek's Value Proposition
Exhibit VII: Softtek's Nearshoring Benefits
Exhibit VIII: Top 10 Nearshoring Trends for 2012
Exhibit IX: Outsourcing Demand by Geography
Exhibit X: Offshore Outsourcing Vs Nearshore Outsourcing

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