Mexico's Softtek: Success through Nearshoring

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"Offshoring looks at a balance of low cost and low risk. When enterprises try to drive down costs, the risks tend to go up. This is the reason why more percentage of work is going nearshore than offshore."

- Ian Marriott, Research Vice President, Gartner Research ¹, in 2011.

"It's not just about convenience for clients; it's about using that proximity to work much more productively for them... It's true that we are continuously approached by different companies (for acquisition). We're a very attractive target firstly for our nearshore ability, and secondly for our dominance in the Latin American market."

- Blanca Treviño, President and CEO of Softtek, in 2010.

Mexican IT nearshore services provider Softtek had been growing at a compound rate of around 30% for many years , but its growth slowed down in 2009 due to the global economic crisis. However, it was back on track and posted a double-digit revenue growth in 2010. The company's Spanish South America commercial director, Javier Porretti, said, "Due to the conservative year that large corporations had in 2009, this year (2010) turned out to be one of the best in recent memory."

Softtek was a global provider of process-driven IT solutions. It also banked on support and maintenance contracts of its clients' in-house software, as well as solutions provided by manufacturers such as SAP AG² and US corporate solutions provider Informatica Corporation ³. Softtek was the one that coined the term 'Nearshoring', when it began working with its first US client in 1997. Later, the company 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.

The company was fairly successful in terms of gaining global clients, achieving a two digit growth rate and making the concept of 'nearshoring' accepted and implemented across the globe. However, it faced challenges from its local government and in gaining a talent pool. It was felt that this could pose a threat to its future growth and could even cause the failure of the company. Moreover, the company had become a prime target for acquisition by large companies for its nearshore capabilities and Latin American market dominance.

About Softtek - Next Page>>

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1] Gartner, Inc. is an information technology research and advisory firm headquartered in Stamford, Connecticut, US.
2] SAP AG is a German multinational software corporation, headquartered in Walldorf, Baden-Württemberg that makes enterprise resource planning (ERP) software to manage business operations and customer relations.
3] Based in Redwood city, California, US, Informatica was founded in 1993, and is a provider of enterprise data integration and data quality software and services.

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