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IT firms choose multi-shore delivery to meet client needs
- This model has a lower risk of operational disruption, especially with the ongoing pandemic
- Infosys has promised to double its Canadian workforce to 4,000 by 2023
Indian IT services companies are opting for a multi-shore delivery model, a mix of onshore, nearshore, and offshore, to meet client needs in a digital world.
In the past few years, Tata Consultancy Services Ltd (TCS), Infosys Ltd, Wipro Ltd, and Tech Mahindra Ltd have ramped up their nearshore presence in countries such as Canada, Mexico, and Brazil. However, these locations do not always meet the requirements of US clients seeking to leverage the service provider’s local resources.
While onshoring refers to outsourcing to service providers in the same country, offshoring refers to outsourcing to far-away countries. Nearshoring is a tactic that allows companies to move their operations to the closest country with a qualified workforce and reduced cost of living without the time difference. A multi-shore delivery model has various advantages such as access to a diverse talent pool, faster time-to-market, and reduced risk of operational disruption, especially with the pandemic, when lockdowns may be abruptly imposed in certain geographies.
Local hiring helps these companies include a diverse talent pool and de-risk their operations from regulatory changes related to immigration policies. Infosys, for instance, has been stepping up its local hiring in the US to increase its onshore presence. In September 2020, Infosys committed to hiring an additional 12,000 American workers, bringing its total hiring commitment in the US to 25,000 workers by 2022. As part of this, Infosys opened six delivery centres in the US in the past few years.
As part of expanding its nearshore capabilities, Infosys recently opened two development centres in Canada, in Mississauga and Calgary, and committed to doubling its Canadian workforce to 4,000 employees by 2023. The digital development centres will play a key role in building digital capabilities and training for the next generation of IT talent to support Canadian businesses, Infosys said.
Wipro has delivery centres in nearshore locations such as Romania, Australia, and Brazil that helps in serving the fast-changing needs of the clients. Last year, TCS also acquired select assets of Pramerica Systems Ireland Ltd from insurance giant Prudential Financial Inc (PFI), which saw more than 1,500 employees of Pramerica move to TCS’s new global delivery centre in Ireland. The centre is expected to enhance TCS’s nearshore capability to provide a range of services to customers in Ireland, the UK, Europe and the US.
“Localization has been a key theme of delivering services to customers in the last few years. Though offshoring remains popular for customers who want to drive down the cost, many customers expect more proximity to local resources. Providers can bring decision-making and competency closer to customers by nearshoring in addition to cultural alignment. Besides, it provides better access to talent by distributing the capability globally and mitigates some of the operational risks of offshoring,” said D.D. Mishra, senior director analyst, Gartner.
Tech Mahindra has built global delivery centres in the Philippines and development centres in the US, Europe, Canada, and Latin America.
“The spread of these delivery centres across strategic business locations helps us improve the agility of solutions and ensures a wider scope to source the best available local talent,” said Harshvendra Soin, global chief people officer and head, marketing, Tech Mahindra.
The company aims to step up hiring in tier-2 cities and nearshore locations across Europe and Latin America. “This is in continuation of our efforts to remain closer to our customers and deliver innovative and customized solutions to them,” Soin said.
“Today, skills and client demand define the mix of onsite, nearshore, and offshore. Also, in many of the digital projects, the scope of work is exploratory with a lot of digital unknowns. So, the client prefers to sit next to the talent to increase the pace of decision making,” concluded Sanchit Vir Gogia, founder and chief analyst, Greyhound Research.
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First Published:6 Sep 2021, 10:38 PM IST
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