Organisations, operating in this technology-driven world, frequently have to decide what intellectual property they wish to retain, what to develop and what to automate to deliver major benefits. There is no doubt that until now sourcing strategy has contributed profoundly in executing these benefits; however, the game is changing.
Last year, saw the biggest decline in outsourcing intent that we have seen in KPMG CIO Survey. This year, it is expected to increase, but it still leaves us with an overall downward long-term trend. Painful trade-offs such as cost savings vs growth, organisational cohesion vs knowledge and innovation, and speed vs. quality have resulted in the collapse of many outsourcing deals before the end of contract.
Attracted by fewer time zone differences, geographical proximity, and more cultural and language similarities, sourcing strategies are starting to lean more towards the gig economy and nearshore sourcing. CFOs believe that complex activities such as analytics, trading and several finance functions can now be outsourced profitably and with confidence to ‘nearshore’ locations.
In order to address CFOs’ objective to identify best-suited location for set-up of nearshore/offshore centres, a five-week location strategy analysis based on secondary research was undertaken by KPMG, with a focus on peer analysis and site assessments.
After observing the financial footprint of global banks in 47 sites, 22 were assessed in detail to draw an initial list of potential sites to meet CFO’s agenda for setting up of nearshore centres against the following criteria: financial attractiveness (30 percent), infrastructure (20 percent), talent profile (25 percent), risk profile (10 percent), business environment (15 percent), giving an overall weighting of 100 percent.