Smarts for hire: near-shoring--the other face of outsourcing--can turn development into a brain game.

Three major trends are creating a new outlook for professional services in Latin America, specifically as they relate to information technology: Convergence of telecommunications, information technology and mass media; globalization of professional services as a means of creating value; and diversification as a method for diminishing risk and responding to market dynamics.

Technological convergence allows the creation of more innovative products and services in shorter turnaround times. A clear example is Apple, which went from being a computer maker with 2% of the global market to being the major player in sales of digital music players, at 70% of the market.

In the context of professional services, the impact can be seen in the increasing demand for qualified professionals and in the need to adopt new technologies more quickly and to reduce the time it takes to develop solutions.

Globalization of services as a means of creating value has helped countries like the United States reduce the cost of applications development by up to 50%, according to technology consultancy Forrester Research. It also has helped countries like India grow on average 8% during the last two years.

It should be noted, though, that the buyers of globalized services are not confined to the United States or Europe. Latin American companies increasingly buy services, which they are sourcing from other countries in the region or from India and China.

The latest trend, diversification or dispersion of services, allows better response times in business processes, improves the availability of services, and facilitates the diversification of service-globalization risk strategies, which complements the most common models in India, or if need be in China. This tendency has given rise to corporate initiatives known as right-placing, right-sourcing or follow-the-sun.

That final element is especially relevant to companies in Latin America, since it opens new possibilities for local service providers in a global market forecast to reach US$455 billion in 2007, according to Forrester.

This creates an enormous opportunity in the area of globalized services by way of a model known as near-shoring, defined by consultancy Gartner as sourcing from a neighboring or nearby country. The customer, provider and local economies can share in the benefits of this model.

From the client point of view, no matter if the company is in the United States or in Latin America, benefits are twofold: It's a chance to diversify, and to obtain services unavailable from Asian providers and, as a result, reduce the total cost of projects through lower indirect costs and by placing more of the work in lower-cost locations. This is possible thanks to being close and because work can be done without the obstacle of huge scheduling differences in time and distance.

For service providers, the opportunity is a chance to get access to the North American market, worth nearly $153 billion in 2007, according to Forrester. In addition, global services contracts tend to be spread over several years, which brings stability to both the buyer and the provider.

From the point of view of local economies, near-shoring represents a chance to create high value-added jobs with high salaries to match. What better product to export than knowledge? It's an intangible product which doesn't require the destruction of natural resources, it's an investment in human capital--a nation's primary resource--and creative capacity can be infinite, and thus a source of wealth.

For this model to work, there must be a three-way commitment. The buyer must have a mature model for selecting providers and establish multi-year commitments based on clear and mutually beneficial metrics. The seller must commit to adopting a quality model such as CMMI and Six Sigma, understand the buyer's business completely and must add value. Local authorities, too, must make a commitment to supporting outsourcing as an industry, as well as the development of human capital.

BLANCA TREVINO * BRAVO FORUM

Blanca Trevino is President and CEO of Softtek. She was named the Bravo Business Awards Technology Leader of the Year in 2004.