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4.3. Morocco as a Nearshore destination

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In an integrated global economy, a country is privileged if it can find a comparative advantage in an industry where major positions have not yet been taken. Morocco has identified an opportunity to become an offshoring centre for Europe’s francophone and Spanish-speaking firms. According to a 2003 McKinsey Global Institute study, from 2003 to 2018, business process offshoring in Morocco could add 0.3 percent annually to its GDP growth, reduce its international trade deficit by around 35 percent, and create a total of some 100,000 new jobs (Taoufiki et al., 2005). The study predicted that business process offshoring has yet to take off in a significant way among companies in Europe’s French-speaking countries that include Belgium, France, Luxembourg and Switzerland as well as in Spain. This market is to grow to about £6 billion in the next ten years (ibid). However, the fact that most existing offshoring vendors are predominantly English speakers is the main obstacle for these countries that recognize that offshoring is vital to remaining competitive.

Actually, language is a key factor in outsourcing decisions, according to Firm1. «The issue of language is huge» they said. «You don’t have confidence in someone who doesn’t speak your language. When you send technical requirements in French to a farshore country like India, they may be misapprehended and thus the result would be inaccurate». Firm4 also acknowledged that offshore staff language skills add yet another dimension to their skills mix. In fact, their clients often need immediate reactivity to their requests and in most cases their teams in Paris don’t have time to intervene for any translation. Similarly, Firm2 recognized that the existence in Morocco of developers with Spanish language fluency was an important factor in moving most of their work to Casablanca.

Geographic proximity to potential clients is also a competitive advantage. By launching a few special nearshore centres which offer easier administrative procedures and world-class infrastructure and services, Morocco can develop a comparative advantage as the offshoring destination of choice for European companies. These special development zones aim at creating an attractive business environment for multinational companies to set up captive business process units close to their headquarters. In fact, all my respondents agreed that distance introduces difficulties. According to Firm4, there are many reasons for these difficulties including communication, control and supervision, coordination, and building trust. They observed that despite the idea of virtuality in which distance supposedly does not matter, they faced many problems when they offshored some of their projects to Indonesia. It was too difficult to manage remotely with too many time zones away. While Morocco offers time overlap to Europe and less travel time. Firm1 also described Morocco as offering a cheaper real-time communication relative to distant places that are thousands of miles away. They argued that nearshore is better for outsourcing business-critical work that necessitates an equivalent time zone and a short time to travel and that the shorter the distance the less difficulty is imposed in resolving issues. Proximity to Europe and good air connectivity makes it easier to schedule onsite visits to their Moroccan affiliate. With only a flying time of 3 hours from most European airports, managers in Europe have regular monthly face to face meetings with their development team in Morocco. However, Firm3 believe that geographical distance could be handled at an offshore location if the company approves good management practices in place and adopts thorough specification and failsafe project controls.

On the other hand, while distance is a quantifiable factor, the impact of cultural differences is more complicated to determine. These differences are one of five risk areas that Gartner says organizations must think about before going offshore (Tana, 2006). And as seen in the literature review, differences in culture could have a great impact on transaction costs at the interfaces where the interaction between the offshorer and nearshorer is intensive and therefore complex. Firm2 was satisfied with the shared business ethic with Morocco that they described as business culture in the country as “westernized”. Firm3 also praised the proximity of business culture between Morocco and France and criticized however farshore cultural differences that they think can impact on the quality of service that is being delivered.

« In some cultures you might encounter the “boss is always right” syndrome. As a result, keeping quiet about existing problems can be regarded as not complaining. Unfortunately, not being told of a problem at the time, when it can be solved quickly and easily, not only makes it difficult for you to deal with it later but sometimes makes it impossible to solve at all. »

Based on Firm3’s experience, in a multicultural software development team, cultural issues may create many problems, either in the decision-making process or in the actions of team members, but more often than not, when there are differences in thinking and behaviour, Firm3 believe that they are more the result of personality than culture.

In addition to the general cultural pitfalls, Firm1 noted some business-specific differences, such as meetings and paperwork. While their European employees find Lengthy daily meetings acceptable, Their Moroccan employees view them as a waste of time. Their attitude however quickly changed with time; and they were able to adapt their behaviour to the context of their projects

Finally, Firm4 noted political and historical linkages factor in the offshoring decision. They claimed colonial ties and Diaspora linkages were important in the case of the French/Moroccan and Spanish/Moroccan economic relationships. In France, in particular, there’s considerable interest in sending work to former French colonies such as Lebanon and Morocco. Eastern Europe, however, was nowhere near as attractive to French companies.

In summary, Software firms recognize that Nearshoring does present both a tactical and strategic continuum. Global software providers have adjusted rather quickly. A trend to rightshoring, that is a hybrid of offshore and nearshore strategies, can be observed on the part of various boards of management in order to minimize risks and maximize cost savings. Within just a few years, American and European IT providers have built many “Offshore Development Centers” where they offer their clients a menu of rightshoring locations. In addition, nearshoring destinations represent one of the competitive threats for Indian firms. As a result, the top Indian firms have been expanding their global presence for some years into nearshore locations. Some of these Indian firms now offer a locational menu of choices to their clients and have even assimilated some of the nearshoring discourse. For example, India-based TCS can now offer its European clients services that include a nearshore option to Morocco.