The COVID-19 pandemic of 2020 has resulted in widespread economic turmoil with unprecedented side effects. When governments across the globe issued stay-at-home orders, companies scrambled to keep captive operations up and running. Overnight, poor internet connections, barking dogs, and curious children turned “business as usual” upside down.
One of the unanticipated outcomes is a flurry of activity to sell off captive centers to minimize the impact of lost revenues. The Economic Times[1] stated that “India’s cash-rich IT services companies are eyeing captive technology centers of global corporations, as they gear up to provide IT and back-office services at lower costs and offset a demand slowdown from the US and European markets in the wake of the COVID-19 pandemic.” While many captive centers are call centers, the consensus is that as many as half of captives could end up on the auction block.
But the ramifications don’t stop there. Faced with unsustainable post-pandemic fallout, even companies with large offshore and nearshore captive centers—such as Amazon[2] and Uber[3]—are looking for ways to slash fixed costs and transition core services to partners with flexible cost models. And with an uncertain future ahead, boardrooms around the world are looking for ways to ensure both business and agility continuity with new collaborative IT sourcing strategies.
But what’s the difference between “collaborative IT sourcing” and “captive centers”? Aren’t they just two terms describing the same thing?
Captive Centers: High-Risk, Long-Term Investments
According to Gartner[4], “Captive centers are client-owned-and-operated service delivery centers, typically in a nondomestic, low-cost location, that provide service resources directly to their organization. The personnel in a captive facility are legal employees of the organization, not the vendor.”
The pandemic highlighted the built-in weaknesses of captive centers:
- Inadequate business continuity plans: Most captive centers were unprepared for remote working scenarios, competing with large enterprises and service providers for essential equipment and implementation support.
- Inflexible cost models: Whether fully operational or sitting idle, captive centers cost money, eating into eroding revenue streams during challenging times.
- Dependence on human labor: Despite maturing robotic process automation, artificial intelligence (AI), and machine learning technologies, cheap offshore labor has done little to motivate corporations to make the transition.
As a result, COVID-19 has led to increased interest in accelerating the adoption of emerging technologies to replace repetitive manual tasks. At the same time, the focus has switched to sourcing high-value services for developing modern, next-gen data-driven solutions leveraging the power of open standards, cloud, and machine learning.
Collaborative IT Sourcing: Flexible, Low-Risk, Variable-Term Partnerships
With 20 years’ experience working with US companies, Near Contact offers a differentiated, hybrid model to meet your needs. While client-owned-and-operated captive centers require extensive upfront investment, long-term commitment, and expensive exit strategies, Near Contact employs the best IT talent from across Mexico. We make them available for projects of variable durations with complete flexibility to accommodate any market fluctuations—including those stemming from pandemics, political unrest, or natural disasters.
With highly-skilled, English-speaking resources with demonstrated proficiencies spanning numerous technologies and industry sectors, you can scale your resources as needed to ensure your project’s success. And with contingencies built into the contract, you don’t have to worry about unforeseen eventualities. Focus on executing your strategy, and we’ll look after the rest—hiring, training, management, and exit—in compliance with Mexican and international law.
Build agility into continuity with nearshore specialized IT services
As corporations learn the hard lessons of 2020, the focus will be on developing high-value partnerships with full flexibility and zero lock-in. With the ultimate goal of providing IT operational elasticity and accelerated time-to-value, our strength lies in our ability to deliver the right skillsets, technologies, and industry experience at the optimal price under any market conditions. Here’s how you can take advantage of it:
- Engage: Choose a strategic partner to help unlock the value of your business processes and those of your customers by digitizing and integrating them into the end-t-end value-chain.
- Execute: Outsource select functions like application development or customer experience finance, leveraging your chosen partner’s industry-focused, business-platform-as-a-service (BPaaS) solutions to streamline the transition.
- Divest: If you own a captive center, talk to your partner about the possibility of their acquiring or transitioning assets and resources to accelerate savings through acquisition and shared deal structures.
- Monetize: Leverage your captive center’s high-value intellectual property (IP) and assets to cement a long-term relationship with your collaborative IT sourcing partner built on mutual interests and commitment.
Talk to Near Contact to ensure “Agility Continuity”
Choosing Near Contact as your nearshore outsourcing partner guarantees a dedicated team of highly-skilled, English-speaking workers with a shared culture and values for ensuring optimal collaboration and accelerated time-to-value. With close proximity and easy, face-to-face interaction in real-time, you can quickly expand your in-house team—either temporarily to fill a short-term gap or for a long-term project—based on your need for increased capacity and skills.
Partnering with Near Contact allows you to cost-effectively scale your pool of skilled resources up or down according to market demand while simultaneously delivering high-quality software and services. It also enables you to minimize the risk of missing critical deadlines or being penalized for non-performance due to circumstances beyond your control.
For more information on how Near Contact can help you access the pool of IT skills you need, email us at info@nearcontact.com
About Near Contact
Specializing in digital transformation, software development, and mobile apps, Near Contact attracts and retains the top talent from across Mexico to support US enterprises and service providers. With over 20 years’ experience matching the right talent for each client and project, Near Contact’s flexible, hybrid outsourcing model offers fast access to a highly-skilled, scalable resource pool—delivering your project, your way. www.nearcontact.com
