Five Reasons Why Non-US Providers Are Beefing Up Their US Centers

By Outsourcing Center, Beth Ellyn Rosenthal, Senior Writer

Five Reasons Why Non-US Providers Are Beefing Up Their US Centers

Non-US-based outsourcing service providers are currently beefing up their US operations. A constellation of events are making this beneficial for both outsourcing buyers and providers.

“Every provider wants a US presence,” observes Denis Winkler, Director at Alsbridge. “And if they already have a presence, it’s growing.”

Some of the factors creating this new geographical attitude include:

  • The type of work outsourced
  • Visa issues
  • Offshoring maturity
  • Economics
  • Small-to-medium-sized firm acceptance

Increased regulatory and compliance work is the biggest factor

Yogendra Goyal, head of North American sales for WNS, says regulatory and compliance work is a major factor in this growth. Keeping the government happy is a major assignment for companies operating in:

  • Insurance
  • Financial services
  • Healthcare
  • Energy and utilities

The insurance industry is a case in point. In the US, there are 51 state insurance departments in addition to the federal government. Each one has different rules and regulations. Often, document preparation requires interfacing with local or federal agencies. “You can’t do this from India,” he says.

In the case of both insurance and financial services, the service provider often needs to obtain specific licenses to perform certain tasks. Most of the licensing agencies require the licensees to be American citizens. Guy Kirkwood, head of channel at Xchanging, says the provider has two banking licenses in Europe, enabling it to carry out securities processing and fund management administration in these highly-regulated financial markets.

Federal regulations actually prohibit information about nuclear power from leaving US shores. Foreigners are not even allowed to work on this data. “We do a lot of the ‘more sensitive’ work,” says Reece McCurdy, who heads WNS’s South Carolina service center.

McCurdy adds the WNS operation handles roadside assistance for insurance companies. “The clients want someone answering the phone who can talk about the local geography comfortably,” he reports. “Sometimes the jobs require a deep knowledge of American customs and culture.”

Visa issues

On June 27 the US Senate passed the Border Security, Economic Opportunity and Immigration Modernization Act of 2013. The new law increased the number of the coveted H1B visas service providers need to have their experts travel to America to work. However, the law added much stricter rules on H1B visa approvals for companies that already have 15 percent of their workforce here on these visas.

“The new law is making it harder for the provider to supply personnel who can travel back and forth,” reports Winkler of Alsbridge. Providers are finding it easier to just deploy their US-based resources and skip the labyrinthine visa process. “You can supply onshore resources immediately and don’t have to wait for the offshore staff to get their visas,” he says.

Offshoring maturity

After more than a decade of offshoring, many companies are discovering there are just certain things they shouldn’t have moved out of the building. A good example, says Winkler, is call centers where the buyer did not properly segment call types before offshoring.

India and the Philippines are great at simple tasks like data entry, and they are more economical, too. “But do you want your $1 million investor calling India?” he asks rhetorically.

Today, Big Data analytics and advanced call identification technology allow companies to accurately segment their markets. “Some part of their customer base might need a US presence, where premium customers can get a higher level of customer service. Companies increase retention and cross-selling opportunities,” Winkler notes.  At the same time, some US firms want to outsource more complex work, having grown comfortable with outsourcing tasks like data entry, payroll or benefits administration. But they “are just not comfortable with sending complex work offshore, especially if it is customer-sensitive,” says McCurdy. So clients specifically request that the South Carolinians handle this segment of their business.

In addition, “they are concerned about the politics,” McCurdy adds.


Labor arbitrage was the spark that lit the offshoring flame. But wage inflation has flashed out of control. Kirkwood says today Xchanging has resources in Bangalore, India that are more expensive than resources in northern England doing similar work. That is why the provider is focusing on tier-three Indian cities, which he defines as “having universities but no airports,” to reduce wage inflation and attrition.

That said, American resources are relatively expensive. “There is a huge price difference,” Winkler says. He has seen Indian administrative salaries as low as $2 an hour. McCurdy says the South Carolina center pays as much as $15 more per hour per FTE. “There’s a significant different in the dollar amount,” he observes.

However, Goyal reports that WNS’s buyers are not balking at paying the higher US rates. “They want the right resources,” he says.

SMB Acceptance

McCurdy says the small and midsized firms (SMB) are particularly interested in his operation. “They are not comfortable with offshoring yet but clearly understand the benefits of outsourcing,” he observes. Typically they are worried about their brand, he adds.

WNS’s new center in Columbia, South Carolina

WNS’s built from the ground up center is a good example of the trend. “We opened this center to perform work our customers asked us to do that we couldn’t do offshore,” says Goyal. “This is work we had to do locally,” he continues. Until the center in Columbia opened its door, WNS “didn’t do this kind of work,” he notes.

The center opened in September 12, 2012 with 25 people. McCurdy expects to have 200 working in Columbia in the next 12 months. WNS built the center to house 700 employees.

Why South Carolina? McCurdy says the area is known for its insurance employee talent base. The state has a favorable business climate; it’s a right-to-work state. Even better, the current governor supports outsourcing and is encouraging local businesses to consider sending work to the WNS center.

Columbia is the state capital and its largest city. It is also home to the University of South Carolina, another source of talent.

US-based outsourcing service providers have taken note of this trend and are growing themselves. Cognizant Technology Services, for example, purchased the insurance service center from ING U.S., a retirement, investment and insurance firm. It’s based in Minot, South Dakota.

About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].

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