Spain as a nearshore destination

In recent years, the terms related to the concept of outsourcing have multiplied exponentially: "offshoring", "nearshoring" or "value shoring" are already words of common use, as well as irrefutable evidence of the impact of globalization on the business strategies of large companies.

Geographic and cultural distances, linguistic affinities and geopolitical stability have become increasingly important in the face of pure economic considerations of cost savings, which has forced many suppliers to rethink their competitive differences and reposition themselves in a changing fractionated market . As a result of all this, in the face of an "offshore" model based on the cheap labor of China and India as reference countries, the "nearshore" is emerging with increasing strength, with production centers and operations close to the client.

Many fall into the error of associating the concept of "nearshore" with the nationality of the company, as if it were a patriotic aspect. In such a way, that promoting Spain as a nearshore destination for Europe would mean promoting the Spanish company as recipient of the technological investments of the different member states. Nothing is further from reality. Do not forget that the birth of the "nearshore" model has contributed many Indian companies, with the opening of subsidiaries in Asia, South America or Europe, in the search for greater proximity to their customers. As an example, Tata Consultancy Services (TCS), the largest computer services company in India, has been opening centers in Uruguay, Brazil, Chile, China, Australia, the United Kingdom and Japan since 2002, representing as a whole a percentage of income greater than 5%.

The "nearshoring" market currently comprises 15 countries that are especially interesting for various reasons. If in the 90s, it was Ireland that was very successful in providing outsourcing services under this modality, the new locations are now in central and Eastern Europe, in coutries such as Poland and the Czech Republic.

Focusing on the subject in question, all Spaniards are aware of the opportunities that the "nearshore" model can represent for us, that is, the promotion of employment, the contribution to GDP, the professionalization of the sector, the attraction of talent.However, we must be realistic in the assessment of our initial condition and rigorous in determining the future positioning we want to achieve, as well as the strategies to carry it out.

In recent years, software factories based in Spain have multiplied, extending to all regions(Andalusia, the Basque Country, Galicia, Aragon, Asturias, and Castilla-León). Accenture has 15 centers in Spain with a staff of around 4,000 people. HP, after its merger with EDS, will have as many development centers. Nevertheless, most of the activity of these factories goes to Spanish customers, so the multiplier effect on revenues and the achievement of the desired economies of scale in costs could be much higher.

Recently, demand policies have been applied to promote the internationalization of our country, such as the initiative of the Spanish Association of Consulting Firms (AEC) together with the state company for the Promotion and Attraction of Foreign Investments (INTERES).However, such initiatives may be ignored if they are not accompanied by supply policies that seek to improve the competitiveness of companies, a role in which the main agent, if not the only one, is the Administration itself. In a way, let me compare it, it's like promoting tourism internationally in Spain without promoting the conversion of a hotel industry based on the sun and the beach. Fiscal policies are needed that encourage investment and innovation in technologies, and a firm commitment to education and talent, because, not in vain, the lack of qualified professionals is the main threat that looms over us, and the most important future differential factor of all markets, including Chinese and Indian.

Antonio Crespo de la Mata
Managing Director of Quint Wellington Redwood