Seeking to capitalize on the nearshore advantage — proximity to home, closer time zone, geopolitical risk mitigation, and availability of low-cost IT professionals — is Softtek, Latin America’s largest private IT-services’ provider and the leading nearshore service provider for North America.

“Our model takes advantage of proximity,” says Beni Lopez, CEO, Softtek, U.S.A. The advantages of being located nearshore are evident in the close interactions that Mexico-based Softtek has with its clients. For one of its larger customers, it runs treasury applications, which involve the movement of large sums of money into and out of accounts. “Treasury is right in the sweet spot of nearshore,” says Lopez. “The collaborative factor is high,” he adds.

The company runs some 60 to 70 separate treasury applications for this customer, some of which it has developed, while the rest have been developed by the customer internally. Overall, Softtek runs some 1,500 applications for its customers; 80% of its revenue comes from applications maintenance and support, and 20% from development and testing.

For more than 20 years, Softtek has served the technology needs of some of the world's largest companies, such as GE, Citigroup, HP and EMC — offering a full range of IT services, including application development and maintenance, IT-infrastructure support and BPO. It is especially strong in SAP enterprise- resource planning applications, and is building its Oracle capabilities.

Post-acquisition of GE's Global Development Center in Mexico in 2003, Softtek greatly expanded its portfolio of applications and services. As part of the deal, it also acquired GE's U.S.-based subsidiary Ddemesis, providing a range of services to several units of GE, with more than 500 software developers. GE is under contract to purchase services from Softtek through the end of 2006, thus providing it with a solid revenue base.

Beni Lopez CEO(U.S.A.), Softtek

The company has three development centers in Mexico, two in Brazil and one in Spain (to serve the European market), and over 1,000 workers dedicated to serving the needs of U.S. domestic companies. The legal protections offered by the North American Free Trade Agreement (NAFTA) greatly benefit Softtek and its customers. NAFTA provides a legal framework for contract obligations, intellectual-property protection, and data privacy. Mexico is free of U.S. government export bans, such as those that restrict nationals from specific countries with nuclear weapon programs from working in certain industries.

Softtek's main competition stems from captive operations of U.S.-based companies, as well as three or four Mexico-based service providers. At the same time, Softtek and other leading providers, working in conjunction with the government, are integrating small to mid-size businesses into their services, thus increasing the capabilities and number of companies that participate in the nearshore arena.