The Business Case
We have seen in practice that the nearshore sourcing model
represents a good alternative between the desire to reduce outsourced
services and application development costs and the concerns or
uncertainties and risks posed by giving up these activities to a
foreign, distant location.
The availability of strong IT skills combined with the ability to
deliver services remotely using a stable IT infrastructure and lower
billing rates, compared to U.S. billing rates, form a strong business
case for nearshore service delivery, particularly in the case of custom
application development. Canada’s proximity to the United
States, large community of IT expert professionals, and attractively
valued currency uniquely position Canada as a preferred provider of
nearshore sourcing services. There are clear advantages of staying
closer to home when outsourcing. Close proximity to a service provider,
as based in Canada, allows companies to develop intimate working
relationships, which translates into better communication and control
of day-to-day project management, quality of service, and quality
control.
"Canada is a highly attractive outsourcing source region for many U.S.-based companies," said Dan McLean, director of Outsourcing and IT Utility services research for IDC Canada. "Among the key advantages Canada provides are a lower-valued currency, strong language and cultural similarities to the U.S., plus comparable technological adoption and skill. These factors position Canada as a potential powerhouse for outsourcing to foreign markets, particularly those with which Canada shares cultural similarities." - Source: IDC's 2004 whitepaper on Global Sourcing Trends Necessitate Considerations of Nearshore Sourcing in Canada
