In today’s business world, the growing freedom of international trade coupled with a trend toward globalization is influencing the way we conduct business. One of the effects of globalization is labor arbitrage, which refers to the movement of workers or jobs because of changing economic conditions. Global labor arbitrage occurs when jobs move to nations where labor and the cost of doing business is inexpensive.
Heartland Labor Arbitrage
At Bell Techlogix, our delivery model is based on heartland labor arbitrage, which focuses on tools, labor and facilities based in the United States. Within this domestic service delivery model, we leverage geographic areas of the country where the total cost of doing business is lower, yet the quality of service matches or exceeds what a client might experience with an offshore delivery model. We also leverage our highly integrated software platforms to make our people more efficient and more effective. In other words, heartland labor arbitrage delivers services originating from the United States at a very high level of quality combined with a total cost of ownership that’s competitive.
Trending Business Demand
We see a general trend in the market driven by the quality of a service desk or a I.T. help desk interaction between a business user and a service provider, such that certain business users who are mainly English-speaking want more of a cultural alignment with how they interact with the support organization.
Within our own business, we’re finding a trend toward a domestic delivery model with heartland labor arbitrage embedded in it. We are seeing more and more requests for proposals actually specifying a U.S. domestic delivery model, where we then lead with heartland labor arbitrage, which is also at the innovative epicenter of how we provide our Service Desk 3.0 offerings to the marketplace.
The concept of heartland labor arbitrage is resonating with commercial enterprise and public sector organizations that want to buy services that emanate from the United States, that are concerned about security, where their data resides. Because of the regulatory environment we live in, whether it be HIPAA (Health Insurance Portability and Accountability Act) compliance, PCI (Payment Card Industry) data security standard compliance, ITAR (International Traffic in Arms Regulations) and others, certain classes of buyers really prefer or require their service, their infrastructure and their data to be onshore. It’s a confluence of events that actually plays to our advantage as service providers.
Right now, the premise of purely going offshore to reduce total cost because labor is less expensive than domestic labor is eroding, due to a number of factors:
- higher geo-political risks with offshore models
- high cost of living inflation offshore
- higher turn-over rates of employees offshore
- high cost and increased complexity of connecting to systems and facilities offshore
The cost of doing business offshore is increasing, whereas we believe that providing services located in middle America –Indiana in particular- can be extremely cost-effective versus those business models that are leveraging an offshore delivery model.
Challenges of the HLA Delivery Model
To provide the highest quality heartland labor arbitrage delivery model:
- you need to be operational 24/7/Always
- you need to be multilingual
- you need to be able to deliver a global service from the United States
To keep costs low, many service providers that offer global service delivery will follow the sun, which is to say their European operation will start the day providing services, then they shift to a U.S. operation before moving to an Asia-Pacific operation as the sun moves across the sky. They always operate during standard business hours somewhere in the world through a delivery hub for that time window.
If you’re originating all of your services from the United States, one of the challenges is covering the off-hours time windows –the after-hours coverage for the global or bi-coastal users where you maintain the right staffing levels with the right skills available 24/7, recruiting the right people at the right cost point – your global follow-the-sun coverage model built right here in the U.S. through continuous operations with optimal personnel management.
If you need to staff and support a specific physical customer location -have boots on the ground and touch labor, so to speak- we accommodate these challenges as well through targeted recruitment for a specific client and/or partnerships to deliver services on customer premise in any geographic location required.
Bell Techlogix Success
Through heartland labor arbitrage, Bell Techlogix is successfully delivering global service for Americas, EMEA and APAC based users, as well as servicing the U.S. operations of multinational companies; all with our services emanating front the United States. We deliver global services to these buyers, who are looking for a high-quality service that would scale and be available 24/7/Always.
From a sales standpoint, we’re writing contracts in the United States, yet delivering on those contracts to practically any country in the world, based on where the end users or the IT operations are located for that service.
Heartland Labor Arbitrage works, and it works well for us.