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La empresa global de sistemas de México Estrategias de Empresas Mexicanas en el Exterio Encuentro Nacional PROSOFT 2. Mayo 200

11 45 Estrategias de Empresas Mexicanas Softek

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Page 1: 11 45 Estrategias de Empresas Mexicanas Softek

La empresa global de sistemas de México

Estrategias de Empresas Mexicanas en el ExteriorEncuentro Nacional PROSOFT 2.0

Mayo 2008

Page 2: 11 45 Estrategias de Empresas Mexicanas Softek

25 años de historia en América Latina

Pionero y líder de la industria Near Shore®

Acerca de Softtek

Mayor empleador privado de profesionales de TI del país

Oferta Proveedor global líder en servicios de TI y procesosSoluciones locales,

regionales y globalesCreador y líder de la industria Nearshore

Alternativa fuente al outsourcing desde India

Líder en América Latina

Presencia Sirviendo en Norte América, América Latina, Europa & Asia30 oficinas de venta y

operaciónPresencia directa

en 13 países8 Centros de Entrega Global

México, Brasil, España, China

Perfil Clientes Corporaciones líderes en los mercados en los que operamos>70% del ingreso con clientes recurrentes

6 organizaciones Fortune 50+100 clientes activos

Su Gente ~ 6,000 profesionales de TI“Great Place to Work” en Argentina, Brasil y México

Innovador programa de interfase con universidades

La más baja rotación para jugadores globales

Atendiendo clientes en 20+ países

En México

Entre las 500 empresasque más empleo generan

Mayor exportador de servicios de aplicaciones

La empresa con más centros globales en el país

Entrena al mayor número de profesionales de TI al año

Page 3: 11 45 Estrategias de Empresas Mexicanas Softek

Growth relative to the IT services industry

35%

10%

14%

11%

20%

14%

10%

2%

0%

46%

42%

39%

33% 34%

20%

10%

Softtek

World

wide I

T ser

vice

s (1)

Mex

ico (2

)

Brazil

(3)

Offshore

IT S

ervi

ces (3

)

Perot S

yste

ms

(4)

Accentu

re (4

)

Keane

(4)

CSC (4)

TCS (4)

Info

sys (4

)

Satyam

(4)

Wip

ro (4

)

Patni (

4)

Synte

l (4)

Covansy

s (4)

… anddomestic markets.

… and renowned North American

vendors.

Slightly below tier 1 Indian vendors, and faster than

most tier 2 Indian vendors

Outperforming the offshore

segment…Faster than the global market …

CA

GR

’04

-’06

Source: (1) Forrester(2) Select(3) IDC(4) Public Filings

Page 4: 11 45 Estrategias de Empresas Mexicanas Softek

0

50

100

150

200

250

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07

Start of Near Shore®

Services

Rev

enue

US

D M

illio

n

Acquisition of GE’s

Ddemesis

Softtek is Founded

Acquisition of China’s IT UNITED

Local Multinational Global

Phases of evolution

First International office (Peru)

Four people join the founder

Key learning period

Page 5: 11 45 Estrategias de Empresas Mexicanas Softek

Latin America is already seizing the Opportunity

Gartner - Cool Vendors in IT Services and Outsourcing, 2005

“Softtek represents a

unique combination of

being a formidable offshore service

provider and being the only non-Indian

vendor to pose serious

competition”

Page 6: 11 45 Estrategias de Empresas Mexicanas Softek

OffshoreServices

GlobalIT

Services

$18

$443

$587

$5524% CAGR

6% CAGR

2005 2010

Global IT Services Market ($ billions)

Note: Not drawn to scaleSource: JP Morgan with data from IDC and 2005 NASSCOM-McKinsey report

“An economic downturn in the U.S.

will increase demand for global services in 2008 as the Fortune 1000

seek to reduce costs”

NeoIT – December 2007

Why become a global service provider?

Page 7: 11 45 Estrategias de Empresas Mexicanas Softek

The diversification imperative creates an opportunity

Practicality

Reliance on one sourcing destination

Time zone and distance

Competition for talent

Currency appreciation

Geopolitical

94%of US companies

outsource IT domestically only

59%Cite management challenges as top

reasonRobert Half

CIO MagazineApril 1, 2008

Page 8: 11 45 Estrategias de Empresas Mexicanas Softek

Alternatives The right balance depends

on company specific needs Business drivers Risk policies Cost pressures Productivity targets Availability of resources Infrastructure Reliability Need for interaction and

communication Export restrictions Business culture affinity

Alternatives to India Brazil Canada China Eastern Europe Ireland Israel Mexico Philippines Russia Vietnam

Page 9: 11 45 Estrategias de Empresas Mexicanas Softek

Why Mexico?

Legal Framework in place (NAFTA) Geographical and cultural proximity Time zone No trips to the other side of the world Communication is enhanced Infrastructure in telecommunication,

power and transportation Low risk status Cost

Page 10: 11 45 Estrategias de Empresas Mexicanas Softek

Outsourcing Works, So India Is Exporting JobsSeptember 25, 2007

… In one project, an American bank wanted a computer system to handle a loan program for Hispanic customers. The system had to

work in Spanish. It also had to take into account variables particular to Hispanic clients: many, for instance, remit money to families

abroad, which can affect their bank balances. The bank thought a Mexican team would have the right language skills and grasp of

cultural nuances.

But instead of going to a Mexican vendor, or to an American vendor with Mexican operations, the bank retained three dozen engineers at

Infosys, which had recently opened shop in Monterrey, Mexico.

Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican

engineers working 150 miles south of the United States border. “

This is a buyers market

Buyers decide where to outsource

Providers respond(Infosys opened shop in Monterrey in October 2007)

Salaries stay in Mexico. Profit goes to India

Mexico is becoming a buyer’s choice

Page 11: 11 45 Estrategias de Empresas Mexicanas Softek

Some deterrents to consider Near Shore® Services

Cost Expectation of same cost as India/Philippines Countries have a different cost base Cost is competitive (in many cases more competitive than)

considering the Total Cost of Engagement Country perception

IT in Mexico? Is it scalable? Big internal demand has created seasoned talent pool IT graduates and financial industry consolidation has created more

talent available State and Federal Government support programs taking off

Misinformation Assumption that nearshore is the same as off-shore There are very tangible and practical differences Always consider the Total Cost of Relationship

Page 12: 11 45 Estrategias de Empresas Mexicanas Softek

Mexico as viewed by the analysts

Page 13: 11 45 Estrategias de Empresas Mexicanas Softek

Opportunity comes with challenges

Cost Alternatives have to remain competitive Consider total project cost, not only base

rates Quality

Certified (Six Sigma, CMM 5, PMI, SAS/70 .…) Mature methodology and processes Technologically savvy

Reliability On time, on budget & fully bilingual

Scalability

Page 14: 11 45 Estrategias de Empresas Mexicanas Softek

Softtek is LATAM’s largest private player…E

mp

loye

es

6,000

108,000

80,500

49,200

72,000

15,00011,700

16,000

Softtek TCS Infosys Satyam Wipro Patni Syntel Covansys

… but when compared to Indian playersa fraction of tier 1

half or smaller than tier 2

Page 15: 11 45 Estrategias de Empresas Mexicanas Softek

Emerging as a Global Player

Maintain sustained growth in Latin America

Providing global services from Mexico, Brazil & Spain

Softtek has successfully surpassed a series of challenges

Combining high quality & cost competitiveness

Strongly positioned to thrive in the new IT services landscape

Low mindshare amongst buyers

English speaking professionals in non

English-speaking countries

Strong internal market

Skepticism from industry and government in early

stages

Economic and political uncertainty

Lack of acquisition targets

Limited scale when compared to other regions

Outsourcing mindset just started to gain speed

Higher base costs than India

Lack of CMMi and Six Sigma resources in

LATAM

An unbalanced offer-demand ratio in LATAM

in spite of … in spite of … in spite of …

Page 16: 11 45 Estrategias de Empresas Mexicanas Softek

Differentiators

Global Delivery Model

Bring value to a wide range of engagements

Outstanding customer

experience

Corporate principles EntrepreneurshipSofttek’s Culture

Ability to perform

Strategic Vision

Focus on global competitiveness

Early-mover on global services in the Americas

A recurring client base

Strong partnerships

Beliefs

Page 17: 11 45 Estrategias de Empresas Mexicanas Softek

Value proposition

Fills a gap left by

India-centric sourcing

OutstandingCustomer

Experience

World-Class cost efficient

services

NearshoreOnshore OffshoreOnsite

Reduce Complexity of 

IT Services Management

Globalize IT Operations

Optimize Cost

Support Business Evolution

Solid service features

Tangible value for clients

Page 18: 11 45 Estrategias de Empresas Mexicanas Softek

Key features of the model

Fills a gap left by

India-centric sourcing

OutstandingCustomer

Experience

World-Class cost efficient

services

Page 19: 11 45 Estrategias de Empresas Mexicanas Softek

Key features of the model

Fills a gap left by

India-centric sourcing

OutstandingCustomer

Experience

World-Class cost efficient

services

Page 20: 11 45 Estrategias de Empresas Mexicanas Softek

Focus on world-class competitiveness

Process maturity

Scale

Customer intimacy

Evolution through specialization

Strong ERP solutions capabilities

Cross-industry practices

Vertical focus Evolving BPO

practice

Longstanding customer centric

relations

Management involvement

Flexibility to meet evolving SLAs

Highly personalized

delivery model

Investing aggressively in key global-competitiveness elements

Strong local markets

presence

Ability to rapidly ramp-

up teams

Robust recruiting program

Globally competitive workforce

Organic + non-organic growth

Global Delivery Model

Near ShoreOn-site On-shore Off-shore

Page 21: 11 45 Estrategias de Empresas Mexicanas Softek

Total Cost of Engagement

Fully Loaded Rate

+

Fu

lly L

oad

ed R

ate

($$

$)

Offsite leverage(% of people working in a lower cost location)

Offshore

Softtek

Direct costs

Onsite costsOffsite costs

Indirect costs

Project OverheadAllocation Cost at Client Site

Attrition CostsConnectivity & Telephone

Transition & Knowledge TransferProject Trips

Relationship ManagementProductivity Losses

Risk Management CostsAttrition Costs

Increased offsite leverage allows a lower Total Cost of the Engagement

Page 22: 11 45 Estrategias de Empresas Mexicanas Softek

Key features of the model

Fills a gap left by

India-centric sourcing

OutstandingCustomer

Experience

World-Class cost efficient

services

Page 23: 11 45 Estrategias de Empresas Mexicanas Softek

Fills an existing gap

InteractivityRapid Response to Change

DiversificationSkills Availability

Multi-Language Support

Global Sourcing Gap

Global sourcing needs

Asia-centric sourcing

Page 24: 11 45 Estrategias de Empresas Mexicanas Softek

Near Shore® Features

NAFTA • Advantageous immigration regulations• Access to more visa types: E, TN, L, H1• Lesser impact of new regulations• Sound infrastructure• Strong intellectual property protection

Proximity • Importance of being close• Relationship management is easier• Seamless Project Tracking and oversight

Time Zone • Importance of working concurrently • Seamless interaction on iterative development projects,

short term projects or enhancements• Practical issue resolution

Cultural Afinity • Similar business culture• Business culture affinity facilitates day-to-day team

integration

Cost Advantages • Significant lower rates than the US• Lower communication & infrastructure costs• Lower Indirect Costs than offshore model

Explicit arguments

4 Hour Flight

Through this Model we have achieved 80% Near Shore,20% Onshore Ratio in projects

Page 25: 11 45 Estrategias de Empresas Mexicanas Softek

Near Shore® Features

Lower RiskFewer risks to business• True complement to a single-country strategy• Lower geopolitical risk• Fewer immigration restrictions• Lower currency fluctuations

Diversification Support diversification strategies• Lowers single-country risk• As the Americas service center• As a component in a right placing strategy

Lower TCE Lower TCE (Total Cost of Engagement)• Less overhead than offshore• Lower communication costs• Lower indirect cost than India

Non- Explicit arguments

Page 26: 11 45 Estrategias de Empresas Mexicanas Softek

Evolution of global delivery model

Time

Value

Fill the gap left by India

Total Cost ofEngagement

ProductivityGains

Global Nearshore

1996 2001 2003 2006

•Same time-zone•Similar day-to-day culture

•Short flights•Trade agreements

•Lower indirect costs

•80-100% leverage of nearshore

•Low attrition

•Mature quality model

•Digitized processes

•Domain expertise

•Outstanding customer experience

•Follow the sun

Building strong capabilities from Mexico has and will continue to be key

Page 27: 11 45 Estrategias de Empresas Mexicanas Softek

Softtek Global Nearshore™ Model

North AmericaAguascalientesEnsenadaMexico CityMonterrey

South AmericaPorto AlegreSão Paulo

EuropeA Coruña

AsiaBeijing

Near Shore® Delivery Centers

Allows follow-the-sun solutions

Page 28: 11 45 Estrategias de Empresas Mexicanas Softek

Key features of the model

Fills a gap left by

India-centric sourcing

OutstandingCustomer

Experience

World-Class cost efficient

services

Page 29: 11 45 Estrategias de Empresas Mexicanas Softek

A Great Customer Experience

Business Value Experiential Value

Two Components

Quality

Skills

Cost

Person’s Needs & Wants

Lifestyle

Cultural Affinity

Tangible Intangible

Both Components impact our client’s bottom lineProductivity, High Customer Satisfaction, Cost Efficiencies, Faster ROI

Page 30: 11 45 Estrategias de Empresas Mexicanas Softek

Self Assessment of Business Value Promise

• May not be enough:– Sophisticated

customers are big commoditizers of value

– Tier 1 India firms are opening Near Shore operations

– More Mexican firms may enter the global market (and we want them to!)

– “The world is flat”

• It is a great starting point:– We are the “Near Shore

niche” leaders– “Rightplacing” is the next

wave– Newcomers will play “catch-

up”– Our Near Shore Model is a

Global Delivery Model

Business Value alone warranties competitiveness, differentiation comes from Experience Value

Page 31: 11 45 Estrategias de Empresas Mexicanas Softek

Our promise

Improve our Customer’s Working Lives

Page 32: 11 45 Estrategias de Empresas Mexicanas Softek

Softtek Experience lifecycle

Analyze Experiential World of the Customer

Design the Experience

Structure the Customer

Experience

Build the Experiential

Platform

Experiential Innovation

•Improve our customer’s working lives

•Sociocultural context of the individual (needs/wants/lifestyle)•Analyze Business Concept (requirements/solutions)

•Connect between strategy and execution•Specify the value the customer can expect from the experience (EVP=Experiential Value Promise)

•Identify Customer’s needs•Personalize our interaction

•Dynamic Exchanges and contact points with customers•Focus on Intangible elements (Value, attitude, behavior)

Page 33: 11 45 Estrategias de Empresas Mexicanas Softek

The elements of our experiential value

1. Built on the elements that have made us thrive

2. A platform that specifies the value our customer can expect

3. Continuously innovate to maintain the edge

Experiential Foundation

Experiential Platform

Experiential Innovation

Page 34: 11 45 Estrategias de Empresas Mexicanas Softek

Experiential FoundationG

eo

polit

ica

l

Me

xica

n H

um

an

C

ap

ital

So

ftte

k’s

Cu

lture

Proximity NAFTA Stability

Day-to-day Culture

Ingenuity FriendlinessExpertise

Familiarity

The Human Element

Quality Oriented

EntrepreneurialO

ur

Pe

ople

Support

SkilledFocused on Customer

Passionate about their

role

Page 35: 11 45 Estrategias de Empresas Mexicanas Softek

Experiential Value PromiseE

xper

ien

tial

F

ou

nd

atio

nE

xper

ien

tial

P

latf

orm

Inside-out Outside-in Inside-in

Exp

erie

nti

al

Inn

ov

atio

n

Improve our Customer’s Working Lives

Geopolitical

Mexican Human Capital

Softtek’s Culture

Our People

Maintain High-TouchUnderstand our

Customer’s Context

Page 36: 11 45 Estrategias de Empresas Mexicanas Softek

“The ‘value added’ for most any company, tiny or enormous, comes from the Quality of Experience provided”

Tom Peters

Page 37: 11 45 Estrategias de Empresas Mexicanas Softek

La empresa global de sistemas de México

Estrategias de Empresas Mexicanas en el ExteriorEncuentro Nacional PROSOFT 2.0

Mayo 2008