U.S. solution providers are discovering that when small businesses and IT consulting firms outsource help desk services and others to consultants in other countries, particularly India, they are losing money.  Thus, many U.S. solution providers are choosing to use near-shoring service models.  

Solution providers are starting to think about outsourcing services to Canada, where they can either beat or match the prices of Indian subcontractors and get high quality technical services.  According to experts, the cost for India-based services, while suspected by many to be 30 cents on the dollar is actually closer to 60 cents on the dollar.  

Companies choosing to sign outsourcing contracts end up paying 5 to 7 percent in order to manage it in the U.S.  The cost to manage outsourcing contracts in India is 20 to 25 percent, meaning adding the additional 60 percent makes the cost 85 percent higher than if solution providers use a near-shoring services model.  

Many clients and solution providers are stating that using Indian subcontractors, particularly for help desk support has also caused some problems because of the language barrier.  U.S. solution providers believe that near-shoring to companies in Canada will help improve communications and the qualities of the solutions they can provide to English-speaking clients.

IT consulting firms such as CompuComm, with three North American service support centers – one in Dallas and two in Toronto, Ontario – are starting to focus on Canada and the U.S. to provide a majority of their services.  While still using some help from Indian solution providers, companies like CompuComm would like to focus more on Canada for help.

While Canada is less expensive than the U.S., it is still not necessarily the lowest cost option, as India is still often most affordable.  Still, many English speaking customers would prefer to have voice support that is understandable.  CompuComm is also considering adding an offshore support source in Costa Rica in order to offer more dependable and comprehensive support.

For more information on this trend for solution providers, see the attached link.

Blogged By:  Joshua Feinberg