1) The document discusses how European firms are seeking nearshore options closer to home to reduce risks associated with offshore outsourcing. 2) Spain is emerging as a credible nearshore destination for European firms due to its large skilled IT labor pool, lower costs compared to countries like India, and cultural affinity with Europe. 3) The document advocates that European firms consider Spain as an alternative or complementary location to India for global delivery strategies due to Spain's strengths in areas like domain expertise, potential to scale in Latin America, and locality advantages for European clients.

2. Valueshore
Euan Davis
Principle Analyst
Forrester Research
September, 2009

3. Talking points
• Recessionary pressure continues to dominate IT
spending
• New ways of contracting emerge linked to sourcing
maturity
• Firms seek common service essentials from globally
configured sourcing deals
• Offshoring no longer just equals “India” but many
European minds fixate on the Indian pure-plays
• Clients seek to reduce risk and investigate near-
shore options closer to home
3 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

4. Agenda
• Why executives need global delivery strategies
• Firms move nearshore to solve offshore issues
• Spain emerges as a credible offshore destination
4 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

5. Europeans vote with their wallets
Desire to increase
applications and
infrastructure
outsourcing
Watch for a surge in
leveraging global
service delivery
5 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

6. Understanding Global Delivery
► Integrating rich domain expertise, broad
technical skills, and project management
discipline across a network of low-cost
locations through consistent and robust
processes, tools, and infrastructure to
maximize the timely delivery of superior IT and
BPO solutions
6 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

7. Service scope sticks on application work
7 Entire contents © 2009 Forrester Research, Inc. All rights reserved.
August 2009 “How Europeans Tune Global IT Service Delivery Models”

8. Agenda
• Why executives need global delivery strategies
• Firms move nearshore to solve offshore issues
• Spain emerges as a credible offshore destination
8 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

9. The changing offshore location dynamics
• Many countries are jumping on the offshore
bandwagon as an economic development strategy
• But just because the Economics Minister says it’s an
offshore location does not make it so
• Country assessments focus on government stability
and infrastructure quality
• But not important issues like cultural affinity for
offshore work and the scale and health of
indigenous vendors
9 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

10. Aggressive blends exacerbate internal risks
External risks External risks compound internal risks External risks
Time zone • Lack of governance Vendor
differences • Lack of management stability
• Weak IT processes/outsourcing process
maturity (requirements gathering, change Cultural and
Country language
management, specification writing,
infrastructure differences
testing/QA, SLAs, documentation)
• Internal customers unprepared for the
Management rigidity of the outsourcing relationship Governance
challenges • Improper project selection
• Unrealistic expectations
• No recognition that vendors lack business Distance to
Security knowledge vendor
Source: Forrester Research
10 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

11. European firms seek nearshore skills
• Some countries are more mature than others
– Mature nearshore delivery hubs in Eastern Europe
– Russia rich in software development expertise
– Spanish industry expertise
• Many European service providers focused on Poland
– Pure plays have gone further East
• What counts in deciding a nearshore location
– Country stability; infrastructure quality, cultural affinity
and the quality of local labour count
• What about Spain?
11 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

12. Agenda
• Why executives need global delivery strategies
• Firms move nearshore to solve offshore issues
• Spain emerges as a credible offshore destination
12 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

13. Skills, scale and location underpin Spain’s appeal
• Large skilled IT labour pool
– Check out the ratios
• Industrialized software factories
– Check out how the rates compare
• Domain expertise
– Check out the large firms punching above their weight
• Potential to scale with Latin America
– Spain/Latin American delivery model offering skilled
pool
13 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

14. IT salaries feed lower rates
14 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

15. Graduates feed a large local IT labour Pool
15 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

16. Which firms should consider a move to Spain
• Spain as an alternative to India
– Make an inventory of current applications
– Document current best practices
– Pilot applications with the right critical mass
– Invest in the business analyst function
• Spain as a source of complementary skills
– Specific functional process expertise
– Investigate the industry and IT service capabilities
– How can the model scale through Latin America
16 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

17. Spain as an alternative to India? Decision steps
17 Entire contents © 2009 Forrester Research, Inc. All rights reserved.
February 2009 “Complementing India With Nearshore Strategies: Spotlight On Spain”

18. Spain as a source of complementary skills?
• Do your internal preparation
• Make sure you have a
transformation roadmap—how
you will move
• Make sure you have sufficient
sourcing deal governance
• Operational control of the
nearshore service delivery
model
18 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

19. Focus on the site visit and locality for success
• Site visits are an essential part of the sourcing
process
– Meet them on Spanish soil
• Leverage the regional autonomy
– Offers negotiation levers on business tax rates
– Drive discounts on a deal with location rebates
• Seek out local support organizations
– For advice and back up
– Value shore team; Invest in Spain
19 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

20. If you remember nothing else
Global delivery is used in most large
1 outsourcing deals
2 European firms need nearshore options
Spain offers a credible nearshore
3
destination
20 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

21. Thank you
Euan Davis
eudavis@forrester.com
Complementing India With Nearshore Strategies:
Spotlight On Spain:
http://www.forrester.com/Research/Document/0,7211,46904,00.html
Value Shore
valueshore@valueshore.org
www.valueshore.org
21 Entire contents © 2009 Forrester Research, Inc. All rights reserved.

22. Final Questions, Comments, Discussion?
22 Entire contents © 2009 Forrester Research, Inc. All rights reserved.