The seven hills of nearshoring: Lisbon might be Hitachi Vantara’s best-kept secret

Nearshore locations aren’t created equally. Enterprises defining their location strategy must consider everything from the availability of talent to the local language and time zone. It’s no easy task, especially given that each service provider has a unique approach and different capabilities in each region. One such provider is Hitachi Vantara, whose strategy focuses on three core delivery hubs: India, Vietnam, and Portugal. The HFS team recently visited Hitachi Vantara’s Digital Engineering Center in Lisbon to understand first-hand why the location is pivotal to its strategy execution, capability development, and product delivery.

Enterprises looking for a partner with a nearshore presence in Europe should take a close look at Lisbon and Hitachi Vantara, thanks to its wide global footprint.

Portugal has become the nearshore El Dorado for digital transformation and innovation, and Hitachi is well-placed to take full advantage

When it opened in 2006, Hitachi Vantara’s Digital Engineering Center in Lisbon focused on serving financial services clients in Portugal. Today, the center delivers services for clients across every industry and geography; however, the team estimates that almost three-quarters of its revenue continues to originate from the UK.

The reason Hitachi Vantara is doubling down its investment in Portugal is multifaceted. Firstly, locals often comment everything in Lisbon is only “20-minutes away,” and the city’s access to global enterprises is no different. In the same time zone as the UK and only one hour behind most of Europe, the city is excellently positioned to support clients across the continent while sitting between other key time zones in India and North America. Additionally, a good portion of Portugal’s workforce is bilingual, with a particular focus on English, reducing communication barriers; it’s a key driver behind the growing ex-pat community, making more talent available to Hitachi Vantara. Finally, while access to top talent remains challenging, Lisbon is home to the country’s top universities, meaning Hitachi Vantara’s Digital Engineering Center is well-placed to attract skilled individuals. Having all these benefits while remaining a cost-effective option makes Lisbon such an appealing nearshore location.

We see Portugal as a tremendous location for service delivery within the application engineering ecosystem. Our mission of client-centricity continues to draw not only talent engineers, but also enterprises looking for new locations to add to their lists. HFS Research’s data illustrates the importance of our approach to delivery.

– Roger Lvin, Hitachi Vantara’s President and Board Member

In HFS’ recent Pulse survey, shown in Exhibit 1, almost two-thirds of Global 2000 executives told us they are “extremely satisfied” with their engineering services delivery from Portugal, which included process automation, internet of things (IoT), application modernization, artificial intelligence, data and insights, and cloud. Despite this, Portugal continues to fly under the radar, with only 3% of executives surveyed advising they are considering the country for IT and BPO service delivery, below the 6% average behind the likes of Mexico (11%), China (14%), and India (20%).

Exhibit 1: While Portugal isn’t considered a leading location for IT and BPO services, almost two-thirds of organizations are extremely satisfied with the services they have received from this delivery location.

Sample: 602 executives across Global 2000 enterprises
Source: HFS Research Pulse Study, H2 2022

Hitachi Vantara’s Digital Engineering Center puts innovation and customer-centricity at the center of its engineering services

The Digital Engineering Center in Lisbon supports clients all the way from defining a strategy and roadmap to delivering innovative solutions that drive true value for enterprises. It delivers solutions leveraging emerging technologies like automation, artificial intelligence and machine learning (AI/ML), and IoT. To help with this, Hitachi Vantara relies on a centralized approach with solution accelerators, solutions, and standardized processes shared across geographies, culminating in the engineering services outlined in Exhibit 2.

During our visit, we saw first-hand the work the provider is doing with LiDAR (light detection and ranging) technology, including projects they have already delivered, such as a laser tracking system to remove the need for ticket barriers, CCTV, and privacy concerns.

Exhibit 2: Hitachi Vantara’s portfolio of engineering services focused on innovation and customer experiences

Source: Hitachi Vantara and HFS Research, 2023

While the leadership at Hitachi Vantara’s Digital Engineering Center could certainly talk the talk, the proof is in the pudding. We spoke to a handful of the 300 employees at the center to understand how they were helping customers solve their business needs. Outlined below is a handful of client engagements managed in Lisbon:

• A food tech startup, which aims to prevent food loss and wastage while improving supply chain logistics, turned to Hitachi Vantara to help develop an AI-driven solution to support shelf-life decision making and a complementary mobile and cloud platform to make it accessible on hand-held devices.
• With the help of Hitachi Vantara, a UK leader in the hospitality sector created an enterprise gateway to simplify the data exchange of digital systems. The scalable architecture layer allowed the organization to launch new digital ordering channels accounting for one-third of revenue.
• Through a strategic partnership that started six years ago, Hitachi Vantara provides a wide range of innovation, engineering, and support services to continuously enhance the core products of a global leader in customer data science and analytics. One product, Shop on Lab, leverages insights from more than one billion shoppers worldwide to help customers make better data-led decisions.

The Bottom Line: Portugal is a hidden gem for nearshore capabilities.

Enterprises should recognize that it isn’t a case of “either-or” for nearshoring and offshoring—they often deliver their best results when leveraged in combination. For European clients, Portugal is flying under the radar, but that could be set to change. An increasing number of IT and business service providers are expanding their operations in the region, including Hitachi Vantara. Organizations looking for a partner with a European presence backed by global capabilities should look toward Hitachi Vantara. The provider’s focused investments in the country, complemented by its wider global footprint, make it a partner worth considering for European enterprises.