November 17, 2003
By Julie Johnsson

"Near-shore" outsourcing: Robert Blackwell Jr. says the relative proximity of Mexico gives it an advantage over India as an outsourcing locale. Photo: John R. Boehm

At a time when a growing number of American information technology consultancies are tapping into India's workforce, Chicago's Electronic Knowledge Interchange is looking south, not east, for cheaper labor.

The $10-million-revenues firm has struck an alliance with Mexico's largest systems integrator, Softek S.A., that will expand Electronic Knowledge Interchange's (EKI) customer base in Latin America while giving the firm access to Softek's large base of software programmers, who generally draw lower wages than their peers in the U.S.

The Chicago consultancy anticipates savings comparable to the 40%-to-60% discounts that its counterparts enjoy on work performed in India, while sparing its executives exhausting commutes to the other side of the globe.

While the vast majority of outsourcing is occurring in Asia, EKI sees a chance to differentiate itself with a "near-shore" partner.

For starters, Softek employees will be able to travel freely to Chicago or to customer sites without having to obtain special work visas.

And proximity to its programmers is a plus in EKI's niche, which tends to involve heavy interaction with its customers.

"If you need a review session with a design team, or the customer needs help, it's a four-hour flight," says Robert Blackwell Jr., who shares CEO duties at the firm with Diego Ferrer, a native of Venezuela. "It's essentially the same thing as going to Texas."

EKI doesn't plan to lay off any of its 75 employees as a result of the new arrangement, avoiding an increasingly controversial side effect of the recent boom in offshore outsourcing. "If anything, we're going to grow," says Mr. Blackwell.

The technology boutique, which custom-builds tools and processes for e-commerce and other Web development, will rely on staff in Chicago to design and lead projects performed overseas.