Covid-19/Reshoring shared services?

7 April, 2020 – It’s the talk of the town… The current crisis would bring back the services jobs that companies have far-shored for the last 2 decades.

Nearshoring will gain a bit of momentum, indeed. But given the wage cost differences with far-shoring and the nature of the work sent to e.g. India or the Philippines, I do not expect a one-on-one transfer-back. Nearshore wage costs and employee aspirations simply are prohibitive to re-shoring the very transactional work that was sent to low cost countries across the globe.

It’s not just me thinking this. In a recent SSON survey, only 4% of executives expected to re-shore activities as a reaction to the current crisis. By contrast 58% see pushing the accelerator on AI and RPA as the more likely response.

GBS and SSCs will very likely bring the processes back home – on-shore and nearshore. They will increasingly opt for distributed, networked service delivery models.

Locations with mature shared services/delivery ecosystems could benefit from this. At least if they can adequately respond to an accelerated need for digitally educated and STEM talent.