Critical Factors to Consider Before Selecting a Nearshore Location, Part 7: Connectivity and Infrastructure

Critical Factors to Consider Before Selecting a Nearshore Location, Part 7: Connectivity and Infrastructure

A nearshore location’s connectivity and infrastructure is the is sixth category analyzed in the T&T IFC whitepaper “7 Critical Factors to Consider Before Selecting a Location in the Booming Nearshore Market.” In the weeks to come, we will publish more sections in an ongoing series that will further break down the aspects that go into the nearshore decision-making process. You can also read the introduction and other sections here:

Connectivity and Infrastructure

Good connectivity is beginning to be taken for granted in all locations, but it still plays a factor in selection. While access to high-speed services is now less of an issue than it might have been in the past, the standout locations are defined by their ability to offer both reliable and fast connectivity at a great price.

“Bandwidth tends to be a cost question,” says Johan Gott, an analyst at Chicago-based global consultancy AT Kearney. “You can probably get the bandwidth you need anywhere almost. It’s just a question of how much it’s going to cost.”

He says this is rarely a concern in a place like Mexico, for example, given that it is connected to many of the same underwater sea cables as the United States and can offer fast and cheap connectivity, with complete redundancy, across the country. But in some places where labour may be cheap, this can be a concern. He has seen such concerns more in Africa, but it can apply to smaller Latin American or Caribbean nations as well.

“Countries with telecom monopolies tend to be much more expensive, and where it is a much more competitive market, it tends to be easier,” says Gott.

Not to be overlooked is the physical infrastructure available in a nation. While most cities that are regularly considered for outsourcing can offer reasonable levels of quality in terms of roads, transportation, and basic services, that isn’t always the case, particularly in the lesser-developed countries in Central America or the Caribbean.

“That goes for telecom infrastructure, building infrastructure, even airports and things like that — which are not to be taken for granted in all countries in the region,” says Sebastian Menutti, an industry analyst at the San Antonio-based consulting and research firm Frost & Sullivan.

Then there is the question of office space. While available real estate for smaller shops can generally be found anywhere, the question can become trickier when a company has hopes of scaling. Jamaica, for example, is one location being held back by its lack of “Class A” office space that companies generally look for.

Gott says that office space “can be a bottleneck,” but “it’s usually not the biggest hurdle” aside from drastic situations, which he has seen deter companies from entering markets like Cairo. “The government has to be pretty responsive,” he says.

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