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Diversifying Your Sourcing Strategies Through Nearshore Alternatives

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Information about Diversifying Your Sourcing Strategies Through Nearshore Alternatives

Published on March 6, 2009

Author: gscouncil

Source: slideshare.net

Description

Presentation by Eric Hochstein of Ontario Ministry of International Trade and Investment
Presented at Global Sourcing Council's Conference at Steven's Institute of Technology
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Diversifying Your Sourcing Strategies Through Nearshore Alternatives Eric Hochstein Ontario Ministry of International Trade and Investment Global Sourcing Council February 9, 2009

Ontario: The Nearshore Component of Your Global Delivery Strategy Captive and Outsourced Contact Centers Customer Service Technical Support Business Process Outsourcing (BPO) and Shared Services Human Resources Outsourcing (HRO) Finance and Accounting Outsourcing (FAO) IT Outsourcing (ITO) Help Desk Network Administration Applications Outsourcing Software Development

Captive and Outsourced Contact Centers

Customer Service

Technical Support

Business Process Outsourcing (BPO) and Shared Services

Human Resources Outsourcing (HRO)

Finance and Accounting Outsourcing (FAO)

IT Outsourcing (ITO)

Help Desk

Network Administration

Applications Outsourcing

Software Development

Ontario: An Important Nearshore Sourcing Destination The Next Generation: Knowledge Process Outsourcing (KPO) Product Development and Innovation Research and Development Other Knowledge-based Processes

The Next Generation:

Knowledge Process Outsourcing (KPO)

Product Development and Innovation

Research and Development

Other Knowledge-based Processes

Proximity to US Easy Access Time Zones Compatibility Business Practices Language Culture Quality of life Government Programs Powerful R&D Incentives Hiring/Training Incentives Business Immigration Ontario’s Nearshore Advantage Top Tier Talent Educated Dedicated and Available Business Savvy Competitive Costs Exchange Rate Arbitrage Salaries & Benefits Low Business Taxes National Health Insurance Low Business Risks Political and Economic Stability Security & Privacy IP Protection

Proximity to US

Easy Access

Time Zones

Compatibility

Business Practices

Language

Culture

Quality of life

Government Programs

Powerful R&D Incentives

Hiring/Training Incentives

Business Immigration

Top Tier Talent

Educated

Dedicated and Available

Business Savvy

Competitive Costs

Exchange Rate Arbitrage

Salaries & Benefits

Low Business Taxes

National Health Insurance

Low Business Risks

Political and Economic Stability

Security & Privacy

IP Protection

Well Located in North America Over 60% of the US population lives within a two-hour flight to Toronto Source: Statistics Canada; Canadian International Merchandise Trade (12/2007)

Over 60% of the US population lives within a two-hour flight to Toronto

Ontario’s Capital – Toronto Third largest financial centre by employment in North America Headquarters of the 5 largest domestic banks 85% of the 41 foreign banks in Canada are headquartered in Toronto 6 of the top 10 life insurance companies have their Headquarters in Toronto The Greater Toronto Area (GTA) generates 20% of Canada’s GDP The Toronto Stock Exchange is the 7 th largest in the world based on Market Cap Source: Greater Toronto Marketing Alliance (122007)

Third largest financial centre by employment in North America

Headquarters of the 5 largest domestic banks

85% of the 41 foreign banks in Canada are headquartered in Toronto

6 of the top 10 life insurance companies have their Headquarters in Toronto

The Greater Toronto Area (GTA) generates 20% of Canada’s GDP

The Toronto Stock Exchange is the 7 th largest in the world based on Market Cap

Canada Ranked Third Among Best Places to do Business Source: The Economist 'Pocket World in Figures, 2007' (12/2007) 1. Denmark 2. Finland 3. Canada 4. Singapore 5. Ireland 6. Netherlands 7. United Kingdom 8. United States 9. Switzerland 10. Hong Kong 11. Sweden

UN Human Development Index Source: United Nations, Human Development Report 2007/2008… statistical update 2008 It is about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests. Rank Country 1 Iceland 2 Norway 3 Canada 4 Australia 5 Ireland 6 Netherlands 7 Sweden 8 Japan 9 Luxembourg 10 Switzerland 11 France 12 Finland 13 Denmark 14 Austria 15 United States 94 China 102 Philippines 132 India

Top ten by GDP Ontario: Ninth Largest Jurisdiction in North America Figures for 2007, Ontario’s at PPP. Source: US Bureau of Economic Analysis, June 5, 2008 Ontario Ministry of Finance, OECD

Sourcing Trends Megadeals > Multisourcing More Suppliers, Smaller Contracts Global Suppliers Establishing “best shore” locations Changing (Maturing) Drivers Co$t > Resources, Quality and Co$t Companies Requiring More Predictable Returns and Must Avoid Risk Certain locations make sense for specific applications One Size Doesn’t Fit All

Megadeals > Multisourcing

More Suppliers, Smaller Contracts

Global Suppliers

Establishing “best shore” locations

Changing (Maturing) Drivers

Co$t > Resources, Quality and Co$t

Companies Requiring More Predictable Returns and Must Avoid Risk

Certain locations make sense for specific applications

One Size Doesn’t Fit All

Source: Statistics Canada *Month of November 2006 (1/2007) Offshore Strengths Best Kept In-House Ontario’s Sweet Spot for Outsourcing Global Sourcing Strategy Creating the Portfolio Highly Efficient Highly Creative Freestanding Highly Interactive

Canada’s Quality is Recognized “ U.S.-based buyers apparently believe that what they may give up in terms of cost savings by going to Canada is more than compensated by the gains they make in terms of proximity, communications and culture.” DiamondCluster International, 2006 Global IT Outsourcing Report American companies outsourcing their IT prefer the nearshore Canadian value proposition as an alternative to offshore options, according to new research from IDC… The study also discovered quality is more important than cost savings when outsourcing IT. “ Global Sourcing Trends Necessitate Considerations of Nearshore Sourcing in Canada” (IDC, March 2004)

Ontario’s Outsourcing Industry Strong and Successful Providers IBM Global Services

The Takeaway The Right Resources World-class Talent Pool Exceptional Technological Infrastructure Competitive Costs/Powerful Incentives Attractive Salaries & Benefit Packages Low Total Cost of Engagement Valuable R&D and Hiring incentives Lowest Risk Political/Economic Stability Legal Protections Security (IP & Data) Easy to do Business Close Proximity Same Time Zones Same Language Not everything for everyone Do the right thing in the right place Key Component of a Global Delivery Strategy

The Right Resources

World-class Talent Pool

Exceptional Technological Infrastructure

Competitive Costs/Powerful Incentives

Attractive Salaries & Benefit Packages

Low Total Cost of Engagement

Valuable R&D and Hiring incentives

Lowest Risk

Political/Economic Stability

Legal Protections

Security (IP & Data)

Easy to do Business

Close Proximity

Same Time Zones

Same Language

Not everything for everyone

Do the right thing in the right place

Key Component of a Global Delivery Strategy

Thank You! Eric Hochstein Ontario Ministry of International Trade and Investment [email_address] 847-277-0240

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