Three Common Roles & Configurations for Onshore Domestic Delivery Centers | Market Insights™
Three common roles & configurations for onshore domestic delivery centers
Three common roles & configurations for onshore domestic delivery centers
The South far outweighs other regions in US domestic market outsource service delivery market share
Contact center, IT, and judgment-oriented business process services are the most common functions delivered by North American domestic service centers
The South leads the way in US domestic market new service delivery center set-ups; the rate of new center set-ups in the U.S. varies by region, with the numbers in the South growing significantly
Drivers of North American domestic outsourcing
50% increase in North American domestic delivery center set-ups by service providers in recent years, and that growth is expected to continue
“Salil Dani, vice president of Everest Group, commented: “A highlight of Q1 is that the overall GIC market continued to increase and is shifting toward getting better, thanks to persistent demand from adopters. In particular, we are seeing GIC setups for IT and R&D/engineering work gaining traction, driven by the increased adoption of Social, Mobile, Analytics and Cloud—or SMAC—technologies.” Read More.
There’s a lot of rethinking going on in North American businesses in light of new technologies. In Everest Group’s conversations with clients and in round table discussions we’ve been holding in the industry, we find that these mature companies believe automation gives them the ability to bring their work back on shore.
After more than a decade of achieving value through the offshore labor arbitrage model, one would think that mature organizations that have built GICs or captives, or organizations with extensive use of third-party outsourcing providers, would be at peace with the model. We expected them to move to a model of arbitrage plus automation. But the level of peace and comfort with offshore arbitrage is much less than we expected, and companies are expressing their desire to use robotics automation to repatriate their work.
This is particularly the case in regulated industries with significant compliance requirements. This is where the desire to move work back on shore shows up first. The increasingly regulated financial services industry is especially burdened with complex regulations. These businesses receive a higher degree of scrutiny if operations are in offshore low-cost locations than if they are automated. It’s easier to demonstrate compliance in an automated environment than in an arbitrage labor environment.
Moreover, these companies believe life is easier in an onshore environment than in an offshore environment.
This is not to say the desire to move work back on shore is a sea change. But we are seeing the early stages of this movement.
I think this is a very interesting development. Our hitherto assumption that the market had overcome its xenophobic fears is not correct. It’s quite possible that the steady blast of negative press in the media and the nationalistic pressure from consumers may be starting to play a role in this re-examination.
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Annual operating cost for IT-ADM services varies significantly among locations in nearshore Europe
Locations in nearshore Europe offer a unique value proposition for the delivery of IT services, including cost arbitrage, favorable location & connectivity, lingual and cultural affinity, quality talent availability, and a favorable business climate and access.
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