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Latin America: Outsourcing New Hot Spot

"Latin America is expected to leverage its competitive advantages in certain high-growth areas of offshore outsourcing and continue to be an attractive labor arbitrage alternative," Chris Carrington, president of Americas outsourcing services at Capgemini said.

South America and Central America are increasingly becoming popular destinations for information technology outsourcing -- whether it is offshore, nearshore or even "rightshore."

"Central and South American countries are improving on outsourcing competitiveness," said Mark Minevich, international strategic advisor and principal at Going Global Ventures, a consulting firm that focuses on outsourcing in New York. He recently completed an in-depth research report on outsourcing centers that evaluated and ranked countries across the globe.

Costa Rica is the current leader in the region, according to the report's "Future Growth Index," which ranked the Central American country in third place globally behind only India and China. But this may soon change.

Staying Competitive

"Costa Rica will struggle to remain competitive because they'll be unable to maintain the population growth and skilled workforces necessary to remain attractive to source nations," Minevich said. "By 2015, we fully expect Costa Rica to drop from the top 10 and for Brazil to rise to number four. Brazil has huge potential, due to its large population, the creativity of its engineers and government programs supporting the IT-outsourcing industry."

Minevich told CRM Buyer that nations such as Brazil and Mexico are benefiting from expansion of what he called the "nearshoring" trend, which he defined as the practice of sending operations offsite to nations closer, both culturally and geographically, to the source nation.

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Capitalizing on Advantages

"Latin America has some built-in advantages as U.S. companies look for attractive nearshore alternatives for some of their back-office functions." He said those advantages include being in the same time zone as the United States and some government incentives already in place.

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Kumar said that TCS recently started serving an insurance client in Chile with a center in Uruguay as a nearshore location, augmented by a team in India as the offshore location. "The nearshore team brings in understanding of the local business environment, Spanish language skills and ability to understand and define the client requirements. While the offshore team brings in deep domain and technological expertise," Kumar said.

"This model allows us to meet the client's local needs by combining local knowledge with global expertise to provide a faster and lower cost solution to the client," Kumar added.

SOURCE

E-Commerce Times

AUTHOR

Brian R. Hook