• Capgemini is Bullish on LATAM and Sees Brazil and Guatemala as Key Engines

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  An Interview with David Poole,  VP and Head of LATAM BPO Services, Capgemini

  By Dennis Barker

  When Capgemini decided to venture into Latin America, it was like the beginning of any serious relationship: Exciting, promising, but not without reason for a few jitters.

  “Latin America is one of the fastest growing regions in the world, and will continue to be. We’ll see huge growth, particularly in Brazil” – David Poole

  “All our clients had been asking about Latin America,” said David Poole, vice president and head of American Business Process Outsourcing at Capgemini. “But it had always been an area where we were nervous to tread. It was in the early days a different economic environment, with unpredictable currency and different tax structures. It was a complicated place to do business.”

  The biggest concerns revolved not around what might seem like the usual outsourcing challenges — finding capable workers, dealing with cultural differences, meeting clients’ cost objectives — but business issues.

  “Our group had found it was not the easiest place to grow a business portfolio,” Poole said. “The big thing was creating enough scale to operate in an efficient way. Most of our clients are some of the largest companies in the world. They are not Latin American entities but multinationals. To meet their needs, it can be difficult unless you have the scale to do that.”

  Unilever Turning Point

  Capgemini’s agreement in 2008 to acquire and manage Unilever’s financial shared service centers in Sao Paulo and in Santiago, Chile, helped provide that scale. As part of the deal, Capgemini would provide BPO services for Unilever’s businesses in Latin America. “The Unilever acquisition gave us coverage in all the Latin American countries,” Poole said. “We can create scale to provide services even where we don’t have a physical presence.”

  While Chile and Argentina are prominent in Capgemini’s LATAM plan, Brazil “has been quite amazing for us,” Poole said. “There are a lot of large Brazilian multinational companies, but Brazil is a huge market in its own right, especially for BPO services. Clients are seeking rigorous process, rigorous control. We’ve seen a great deal of interest from domestic companies, looking for lower-cost locations within Brazil.” Regional differences in operational and employment costs can range from 15 to 20 percent, he said.
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• Exclusive: Can it Get Any Hotter in Colombia? Convergys Commits to Bogota

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  Nearshore Americas has learned that global contact center giant Convergys, which serves half of the Fortune 50, is setting up a BPO  service center  in Bogota after receiving clearance to operate in a new free trade zone in the northern part of Bogota.

  As many as 2,500 seats will occupied at the center within three years, according to two reliable sources. The center, which should be operational in June, will also offer financial back-office support services.

  Colombia is without question one of the hottest outsourcing destinations in Latin America, and its transformation has been one of the biggest stories to hit the headlines in the Nearshore community in the last several months.

  Convergys spokesperson John Pratt declined to comment late today on our report.

  “This does not come as a surprise, really,” says lead BPO and call center analyst Peter Ryan, of DataMonitor, commenting on the development. “There is a lot of capacity in Colombia and the country has the potential to become the next big thing in South America,” said Ryan, comparing its rise to Chile and Argentina, which have become globally recognized outsourcing centers.
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• The Rising Value of the Secondary Nearshore City

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  The natural belief for most US nearshoring customers is that the big cities – Bogota, Guatemala City, Mexico City, Santiago among others – are the optimal destinations to establish services relationships.

  The reality, as we are seeing more clearly than ever, is that the big cities are not the only option, and that prospective buyers should look very closely at some of the rising secondary cities across Latin America. Many of them have international airports, are located near a major university and are eager to welcome new business investment. The other critical factor is there is often less wage pressure which helps both providers and clients anticipate how to manage projects for the longer-term, knowing that competition for workers won’t spiral out of control.

  For bigger countries like Mexico, Brazil and Colombia, there are a long list of secondary cities that are well positioned to become more visible on the global services map.

  Doug Gattuso of Neoris says Cuiliacan, Mexico has been a star performer

  Such is the case for Neoris, a global IT services and consultancy firm with a strong Nearshore presence, which employs several hundred staffers at a satellite center in Cuiliacan, Mexico. Speaking this week with Doug Gattuso, Neoris’ vice president and managing director for the US, he talked about the appeal of “rural” centers (Cuiliacan is tiny compared to Mexico City, with about 600,000 residents.) The city hosts two universities, including a technical college – Instituto Tecnologico De Culiacan – where Neoris pulls much of its talent.

  For bigger countries like Mexico, Brazil and Colombia, there are a long list of secondary cities that are well positioned to become more visible on the global services map. Barranquilla, Colombia – for example – is a city with over 1 million residents and, is becoming better known for its professional services capabilities.
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• Will Haiti Forever Change Outsourcing in Latin America? Experts Respond

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  The devastation of the Haiti quake is bringing up questions about the influence the United States should exert in Western Hemispheric issues over the coming months and years.

  
  

  
  
  

  
  

  By Kirk Laughlin, Editorial Director

  By Kirk Laughlin, Editorial Director
  While Haiti is the poorest nation in the Americas, there are numerous other countries that struggle with democratic freedoms, economic stability and educational investment. These issues happen to be the very same issues that drive how global services leaders scrutinize whether, and how much, to invest in a particular country. This raises a key question: How much impact does investment in outsourced services assist in the economic growth and political stability of an emerging economy? And, furthermore, will the expansion of Latin America-based outsourcing grow even stronger with the rising awareness of the positive impacts US businesses can deliver to these emerging economies?

  Nearshore Americas asked several industry thought leaders about these issues. You may be surprised by some of the answers – as always feel free to voice your opinion in leaving a comment at the end of this article.

  Worries Over Risk will Hurt Poorer Countries

  Michael Corbett, Chairman of the IAOP

  Traditionally, underdeveloped countries have been able to lift themselves from poverty based on their natural resources or by being a sought-after location for trade and tourism. Outsourcing has the potential to be an even more powerful force for lifting people in poor countries out of poverty. Regardless of where a country is located or the natural resources it may or may not posses, every country has the one thing outsourcing needs – people.

  When poor countries educate their people and connect them to the Internet those new workers become immediate contributors to the global economy.  They can help meet the needs of companies and their customers anywhere around the globe.  And, the value of these new workers only grows over time.  As the overall economy becomes more knowledge-based their brain power becomes the new natural resource fueling continued growth.

  Sadly, the power of outsourcing both here in the Western Hemisphere and elsewhere around the world is not being fully realized. Why?  Because leaders in the developed countries lack the political will to support outsourcing.  Instead, in the US for example, outsourcing is attacked by political leaders as ‘anti-American’ because of its short-term impact on domestic employment.

  Although it would be nice to think that outsourcing in Latin America might expand as a result of recent events, the reality, I fear, may prove to be quite different.

  Instead of companies that outsource being seen as socially responsible, they are instead forced to work hard to hide what they are doing for fear of political and consumer backlash.  Political leaders in the world’s top economies are not leading globally at all, they are actually helping to vilify the very companies taking those first, risky steps.

  What’s happening in Haiti right now may actually make the situation worse, not better.  It’s going to cause some executives to think even longer and harder about outsourcing to poor countries with fragile infrastructures.  Imagine if you were running an international corporation that was dependent upon work being done by Haitians in Haiti.  The recent tragedy would give further pause to even the most forward-looking businessperson.

  Although it would be nice to think that outsourcing in Latin America might expand as a result of recent events, the reality, I fear, may prove to be quite different.  Without the political will at home and given the risks that the recent events in Haiti highlight, we may well see a decrease not an increase in companies outsourcing to the world’s poorest of countries. Corbett is Founder and Chairman of the International Association of Outsourcing Professionals.

  More LATAM Governments will See Outsourcing Upside

  Peter Ryan is a Lead Analyst at Datamonitor

  There is no question that ongoing US investment will be crucial in the development of Latin America as a location for the delivery of added-value services. With an economy moving into recovery, albeit slowly, American enterprises are certain to have learned recessionary lessons in regard to cost management and removing as many non-core overheads as possible from their balance sheets.  Housing the delivery of these services in Central and South America is certain to continue.

  However, the potential investment role played by firms based in other developed and developing nations also cannot be overstated in importance.  Latin America will equally benefit from possible delivery engagements with companies based in Spain, Portugal and other parts of Western Europe that are interested in taking advantage of price point arbitrage, a large labor pool and ever-increasing language skills among university graduates.  As well, the increase in interest among Indian-based services organizations for possible roll-outs in Latin America has been strong over the past few years.  And, with Indian labor becoming more saturated forcing higher wage rates, being able to diversify into a region in which services work may be done at lower price points is an excellent diversification move.

  It must be recognized that openness to foreign investment in LATAM is very strong currently

  In sum, investment from any location in Latin America is certain to be a positive thing for that region.  Not only will the associated increase in jobs help develop a growing middle-class, it will also bring about economic and political stability, and reduce the ideological swings that have pervaded this region historically.  In addition, it will also put pressure on universities to increase emphasis on language skills, business education and technology, all of which will have significant knock-on impacts on raising living standards and the value of services performed for internal consumption and export in these economies.

  While not every country is certain to adopt investment strategies favoring foreign investment, it must be recognized that openness to foreign investment in LATAM is very strong currently, and should demand remain strong from the US and abroad, there is considerable chance that more governments will look to this path for economic growth. Ryan heads call center analysis at Datamonitor. He previously wrote a special report on Cuba Outsourcing for Nearshore Americas.

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• Honduran Students, Carrying an Evolved World-View, See Beyond Borders

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  By Kirk Laughlin, Editorial Director

  I wonder what it would feel like if educated people I met in nearby countries in this Hemisphere had no recognition of New England, the place where I was born and grew up. How would I feel if they looked at me as if New England – its seafaring history, the Tea Party and Native American Tribes - was pretty much irrelevant.

  The group from Del Campo School in Tegucigalpa, Honduras
  

  In meeting with several groups of high school and college students in Honduras last week, during a tour of the country’s growing global services industry, one of the first things we talked about was how much these students understood about the United States, its influence in Latin America and the model of democracy and transparency it represents. But as they talked about their own personal encounters with Americans, they uniformly described instances where people had no idea where Honduras was – or simply, that it was another stone-age third-world country that didn’t matter.

  It’s surprising in a way that these students show little to no anger about this wide-gap in awareness. They are accepting of the way things really are, showing a maturity that is well beyond what you might expect from typical 16 and 17-year-old youths, all of which have Facebook accounts through which they often learn about the larger world beyond their borders.  As highly fluent English-speakers,  developed in most cases through English exposure and practice since age 5, these students talked openly about their personal hopes and the transformative dreams they have for Honduras, which in recent months has been a target of worldwide condemnation because of the coup to replace a president (Mel Zelaya) who was, according to countless Hondurans, moving the country down a dangerous path away from democracy. More »

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