With financial institutions going increasingly global, it is not surprising that they expect their service providers to do so as well.

Two bankers, a former banker turned consultant and an executive at a global service provider that counts many banks among its clients took to the stage at this week’s Nearshore Nexus event to discuss how banks use outsourcing to ease their entry into new markets and refine their global strategies.

Juan Ruiz Coronado, a senior vice president at Citi, said that for global banks – or those with aspirations of going global — outsourcing is only part of a broader strategy that also encompasses shared services organizations and captive centers.

Juan Ruiz Coronado, an SVP at Citi, makes a point about global delivery at Nearshore Nexus.

“Without that fundamental understanding, it’s hard to get benefit from outsourcing,” he said.

In particular, he said banks must carefully evaluate which skills they want to keep in-house and which should be provided by service provider partners. Citi, which serves customers in more than 140 countries, uses a blend of onshore, nearshore and offshore resources.

Centralized Governance

Such a blend of resources is not uncommon – at least among large banks – and can add management complexity and overhead. It can also result in the kind of fragmentation that could negatively impact a global strategy, said Kurt Pearson, a senior vice president at Wells Fargo Bank.

Wells Fargo last year announced a plan to expand into 20 countries. Earlier this year it hired executives to lead its operations in Asia and in EMEA (Europe/Middle East/Africa).

“Without a centralized governance group, you can end up operating as multiple small businesses,” Pearson said.

Such a group can work with a bank’s service partners to identify and target “efficiencies and synergies that wouldn’t be viable for individual business units,” he said. A governance organization should include experts in risk management and vendor management, as well as legal advisors, Pearson advised.

Selecting partners with a broad range of skills can also counteract the fragmentation that can occur within any large company, but especially global ones, said Ankur Prakash, vice president and chief operations officer for TCS Latin America. Some 43 percent of the India-based service provider’s revenues last year came from the banking/financial services/insurance vertical.

“It’s possible for you to find a provider to do one job or one initiative,” Prakash said. “But what will happen when you need to integrate it into your larger strategy? You risk creating an island of knowledge within your company.”

While cost is a part of any services strategy, for companies with mature service strategies it takes a back seat to factors such as accessing talent with desirable skills, mitigating risk and entering new markets, said Adrian Hee, a former managing director at Wells Fargo and now executive principal at CoastPoint Consulting.

Turning to Transformation

Banks should not focus too heavily on any one element when evaluating providers, whether it’s cost or talent availability, Prakash said.

“If you worry only about time zone, you would do everything where a company is headquartered. If you are concerned only about cost, you’d do everything from a remote village in India. If you consider only talent availability, you’d do everything from Boston where so many strong universities are located,” he said. “You need to get the right mix of time zone, cultural affinity, cost and quality.”

Coronado said the right service providers – those that have capabilities that align with company strategy — can help banks step up their global game and shift their focus from operational improvement to business transformation.

“Providers need to help their clients think that way,” he added, but clients must do their part by sharing their strategic objectives. “You don’t want to just say you want a project completed in a certain time frame without giving the context of why you need it and how it will affect your outcomes,” he said.

It all goes back to business objectives, Prakash said. “You can find a company that will develop an application for you. But your end objective is not just developing an app. Your ultimate objective is to gain market share. You have to look for a partner that can guarantee the success of that app and help you achieve that goal.”

Maybe it’s those commercials starring fictional coffee farmer Juan Valdez and his mule sidekick, but Latin America isn’t generally considered a technologically advanced part of the world.

Latin America’s not-so-technical image is changing, however. Recent research by Tata Consultancy Services (TCS) reveals the region is ahead of many other parts of the world in adopting both mobile and Big Data technologies, two areas widely viewed as key to future competitive advantage.

A TCS study released earlier this year found that Latin American companies planned to invest $1.63 million in mobile initiatives this year, ahead of both Europe ($1.59 million) and North America ($1.43 million), though behind Asia-Pacific ($2.41 million). By 2015 Latin American companies will increase their mobile investment from $1.63 million to $2.72 million, a jump that puts the region ahead of all others.

Bullish on Big Data

Similarly, Latin American companies lag only behind their counterparts in the United States when it comes to using Big Data. Some 50 percent of Latin America companies report having at least one Big Data initiative, according to a new TCS study. That is behind the U.S., where 68 percent of companies have a Big Data project, but ahead of Europe (45 percent) and Asia-Pacific (39 percent).

Mexico matches the U.S. in Big Data activity, with 68 percent of companies in both countries saying they are using Big Data. Those countries are edged out only by India, where 70 percent of companies are involved in Big Data initiatives.

Interestingly, while Latin American companies were not among the biggest spenders on Big Data projects, they expect to attain a higher ROI than companies in other parts of the world.

The research also revealed a notable difference in how Latin American companies choose to handle their Big Data, compared to their global counterparts. LatAm companies are far more likely than companies in other regions to outsource Big Data processing and analytics activities to external service providers. Seven percent of LatAm companies outsourced these Big Data functions, vs. fewer than 4 percent of companies in any other regions.

A big difference between Agile and other software development methodologies is Agile’s insistence on frequent communication between developers and the business constituents they serve. This results in software that better serves the business need.

Bringing business people and software developers together can be a challenge when they are located in the same office complex. So it’s easy to imagine the degree of difficulty that can result when they are located on different continents, a not-uncommon occurrence given companies’ frequent use of offshore resources.

The communication difficulty is lessened considerably if developers work from nearshore delivery centers – which is why the value proposition of a nearshore delivery model is especially strong when it comes to Agile development.

At a TCS delivery center in Latin America, development teams find that working in the same time zones as their clients makes it possible to meet with business stakeholders as often as desired. Many projects utilize daily “standup” calls in which developers and clients compare notes on progress. These short calls – a mainstay of Agile development — help avoid the kinds of misunderstandings that can result in time and budget overruns, or worse, software that doesn’t meet expectations.

One of our TCS development teams traveled to the offices of its client, a Fortune 100 health care company in the United States, at the outset of a project to meet their peers and create the all-important synergy that is required for any Agile team to succeed.

Their goal was clear and simple: build relationships with their counterparts and work on team integration.  After the team separated — physically but not mentally – they had established a good rapport with their U.S. peers. This scrum team has been working together for one-and-a-half years now.  Synergy has been always very strong, much as if they were all together in one place.

This kind of contact, coupled with the close cultural affinity that Latin American developers enjoy with their U.S. clients, yields an added benefit: a strong sense of teamwork that can be lacking in offshore delivery models and that helps boost satisfaction with outsourcing.

Few complaints about outsourcing involve cost or efficiency. When companies are asked to compare the abilities of external service providers with their internal staffs, external teams stack up well in categories involving work ethic, ability to follow established business processes and overall value. There is less satisfaction with external partners in areas like initiative and innovation.  In a recent survey from HfS Research, the biggest perceived gap between internal and external teams was “understands my business.”

This isn’t surprising, given that external providers often lack the broader context behind business requirements. That context is the “secret sauce” behind the success of nearshore Agile development projects.

Nearshore developers show a remarkable sense of ownership, strong commitment to their respective teams and a high degree of business understanding, given their close interaction with clients. Latin American developers are also often quick to suggest alternate solutions to business or technical issues, thanks to a culture that highly values innovation. They really enjoy researching and providing technical guidance, given their innovative nature.

When developers value the positive factors that agile methodologies provide — constant improvement, quick response to changes, recognition and collaboration — and stay in close touch with their clients via communication technologies like videoconferencing, instant messaging and desktop sharing software, the result is a solid and integrated team, no matter where the individuals are located.

As one member of a TCS development team based in Montevideo Uruguay said: “The more we can communicate and the closer our relationship becomes, the better I understand how my clients work.”

Rosina Marmion is a delivery manager for Tata Consultancy Services, based in Montevideo Uruguay. She has 13 years of experience in the IT field, including experience leading Agile software development teams.

A few weeks ago we shared findings from research that found Latin American companies were among the most aggressive investors in developing mobile applications. That doesn’t mean Latin American companies will necessarily outpace their global competitors, however, in winning new business via mobile apps.

While companies will have to spend on mobile initiatives to benefit from them, the strategy behind the spending is a far more important indicator of success than simple dollar amounts. Tata Consultancy Services (TCS), sponsor of the global New Digital Consumer study, found little correlation between spending and mobile success.

TCS categorized survey respondents as leaders or laggards, based on how respondents ranked themselves against the competition on a seven-point scale. Somewhat surprisingly, there wasn’t much difference in what the two groups are spending on mobile initiatives.

It’s the Customer Experience, Stupid

TCS concluded that companies must focus on creating mobile apps that can offer high benefits to consumers when they are on the move. Sounds intuitive, right? Yet companies don’t always seem to grasp it – given the large numbers of apps that offer little more than the same kinds of static information contained on company websites.

In its report based on the study, TCS offers examples of companies that “get” it and offer mobile apps useful to consumers in the five stages associated with the lifecycle of any product or service: research, buy, use, maintain and renew. Insurers Humana and Aetna, for example, offer apps that help folks find doctors, clinics or hospitals while they are traveling that will accept their health insurance. Disney has a mobile app that enables theme park visitors to check wait time for rides and locate characters, among other functions.  Also included are detailed case studies of several leader companies.

6 Essential Elements for Mobile App Strategy

TCS also shared what it believes are six essential elements for creating and executing an effective mobile app strategy:

Consider digital mobile consumers a new consumer segment, one that will require new product development and marketing strategies. Eighty-two percent of respondents categorized as leaders treat mobile consumers as a unique segment, vs. just 28 percent of laggards. Likewise, 85 percent of leaders had created products specifically for the mobile consumer, compared to 30 percent of laggards.

Segment customers based on the extent to which they are in motion and offer features based on their mobile consumption. Examples given include Progressive, which sends drivers weather alerts in hopes they will help prevent accidents, and an app from healthcare provider Geisinger that reminds folks of medical appointments and prescriptions that need to be filled.

Look broadly at mobile technology, following the lead of insurers that are exploring mobile gear that can be installed in customers’ cars. Progressive Insurance, for example, now has a device that can help determine personalized insurance rates based on a person’s driving habits.

Use data to provide superior mobile experiences. TCS found leader companies were four times more likely than the laggards to send special offers to consumers based on location data generated from mobile devices, more than five times more likely to use real-time data to interact with consumers, and more than three times as likely to change pricing data for mobile consumers

Offer device-specific mobile experiences. According to the research, 25 percent of leaders’ mobile apps were developed specifically for tablets, vs. 17 percent for laggards. Leaders say that by 2015, 23 percent of mobile apps will be designed just for tablets, as compared to 16 percent of laggards.

Experiment quickly and be prepared to make major changes in products and customer-facing processes. TCS points out that Starbucks is overhauling its existing retail experience with mobile consumers in mind rather than simply trying to retrofit its existing model. Starbucks has partnered with and made a financial investment in payments provider Square, which ultimately will enable Starbucks customers to order and pay for drinks using smartphones before they even enter a store, according to the coffee chain’s chief digital officer.