Brazil, Mexico and Colombia are targeted for expansion

By Chandan Das

The fourth largest Indian IT firm Tech Mahindra, the information technology arm of the US $7.1 billion Mahindra Group is among the leading communications service provider globally. Having operations in over 25 countries with as many as 17 sales offices and a total of 13 delivery centers worldwide, Tech Mahindra has now set its focus in the Latin American region with a view to draw on the growing local telecom market in the region as well as to use it as a center for near shore delivery for its clientele worldwide. Here is an excerpt of an interview with Mr. Harshul Asnani, Tech Mahindra Head for the US West, Midwest and Latin America.

Telecom Basis

“Our interest in Latin America is actually two-fold – first, to utilize the region as a hub for near shore delivery for our global clientele and, second, to tap into the burgeoning local telecom market,” revealed Mr. Asnani. Elucidating further, he said, “We are seeing increased interest from our global customers to work with us in Latin America. It (Latin America) offers the right blend of skilled resource pool and a relatively low cost base that will allow Tech Mahindra to serve its global customers in North America and Europe’.

Targeting Telecom: "Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself" - Harshul Asnani, of Tech Mahindra

Another aspect which prompted Mahindra Tech to expand its footprint in the Latin America is the rapid acceleration of the region’s economy that is spurring growth in IT and Network spend enhanced mobile/ broadband penetration as well as large-scale consolidation in the telecom sector. According to Mr. Asnani, all these aspects offers vast opportunities for a specialized Telecom-focused System Integrator like Tech Mahindra to play a key role. “Given our deep telecom experience and integrated offerings, we are well poised to deliver value to Latin American clients in terms of Network Engineering, BSS/ OSS, Integration, Transformation and VAS.

Feet on the Ground

Every new market that one ventures into has its unique set of opportunities and challenges and it was no different for Tech Mahindra when it set its footprint in Latin America. According to Mr. Asnani, the local language, regional taxation and laws are the potential challenges for the company in the Latin American market. “We realized early in the game that trying to do business in Latin America remotely from the US or India will not take us anywhere,” he says, adding, “We need feet on the ground and, hence, we are looking at hiring local employees, expanding our existing delivery center in Sao Paolo and also actively considering mergers and acquisitions in the region to create a self-sustaining ecosystem in the region.”

At the same time, the Tech Mahindra head for Latin America operations pointed out that they are still in the initial stages of building their business in the region and are leveraging the existing infrastructure of its subsidiary Mahindra Satyam (formerly Satyam Computer Services Ltd., which Tech Mahindra acquired in 2009) in Sao Paolo to build our business. We are pursuing organic and inorganic means of growth in the region,” Mr. Asnani said.

The LATAM Advantage

According to Mr. Asnani, the biggest advantage or opportunity that he sees in Latin America is the growing economy and rapidly expanding communications industry in the region, which offers Tech Mahindra great prospects in the areas of system consolidation, integration and IT/ Network transformation. At the same time, he says that the export promotion agencies in Brazil, Mexico and Colombia have been very receptive to Tech Mahindra and have offered a variety of benefits to set up its operations in these countries. “However, this is still under consideration,” he clarified.

Mr. Asnani further said, “Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself.” At the same time, the Tech Mahindra executive pointed out that they are looking at a dual strategy of using our base for local as well as international operations.

Moreover, Tech Mahindra finds that geographically, LATAM has a distinct advantage over India given the time zone proximity to US, Canada and even Europe. According to Mr. Asnani, another big advantage that LATAM brings is language, which is a big plus for Latin speaking European countries for whom offshoring mean Latin America and not India.

Preferred Locations

Presently, through Mahindra Satyam, Tech Mahindra has approximately 80 professionals on its rolls in Brazil and they intend to increase the employee strength during the ensuing quarters. In addition, the company also has resources deployed in Mexico on customer projects.

Talking about his company’s future plans in the region, Mr. Asnani said, “We are very bullish about Latin America and are looking at it as our next frontier of growth. According to him, the company’s initial go-to-market focus will be in Brazil, Mexico and Colombia, which comprise almost 70% of Latin America’s economy. In the next phase, they would look at Argentina, Chile and Peru.

“In terms of recruitment, we are considering using Brazil as our delivery hub for Latin America. The recruitment will be done in lockstep with the contracts we are able to bring to the region. In line with our strategy to look at LATAM as a self-sustained P&L center, we will hire local talent and build our base closer to the availability of talent pool, Mr. Asnani said, adding, “In addition to Sao Paolo, we see good potential in locations Campinas, Londrina, Belo Horizonte, etc.”

Mr. Asnani further said that Tech Mahindra is also actively looking at acquiring a company that can bring it either unique capability or local relationships that complement the strong telecom solutions and SI expertise that the Indian tech firm can bring to the Latin America market. “An acquisition would also bring us quick access to management bandwidth, market accessibility and better scalability,” pointed out.

“Our intent is to hire local talent and plough investments that would further fuel our growth in the region. We want Latin America to be a self sustained unit with its own sales, presales, delivery and back office support. In view of this, we are also talking to local companies that we can either partner with or acquire,” Tech Mahindra boss in-charge of the company’s affairs in LATAM assured.

Targeted Verticals

Talking about the targeted verticals, Mr. Asnani said, “While Mahindra Satyam will continue its focus on other verticals, Tech Mahindra is exclusively focused on Telecom. With over 35,000 professionals deployed globally, we are one of the largest Telecom SI and outsourcing firms in the world. We are investing in building high level of competencies in technologies such as Cloud computing, Web 3.0, 4G etc which will define the future of telecommunications.” He further said that Tech Mahindra is looking forward to bringing this expertise to the Latin American market and is seeing a lot of similarities between the emerging markets in Asia/Middle East and Latin America. “Therefore, we are keen to replicate our experiences and business models that we have successfully applied in other parts of the world,” he asserted.

When asked about the company’s clientele in Latin America, Mr. Asnani said, “Over and above some marquee international and regional customers we have in the region through Mahindra Satyam, Tech Mahindra has also been chosen by a large Latin American Telecom company as preferred software solutions partner.  We are also in active discussions with some of our other multinational customers to set up base in Latin America.”

Exporting Services from LATAM to India

Referring to the issue of exporting services from the Latin American region to India, Mr. Asnani said, “The amount of work executed in Latin America v/s India would essentially depend on the nature of the project, the contractual terms and commercials. However as a thumb rule, we believe that if we have to be successful, we need to deliver close to the customer. And this has more to do with the outsourcing maturity of customers and the language issues in trying to do work out of India.” Mr. Asnani further said that they believed that roles where a high amount of customer interfacing is required need to be based out of their local delivery center in Latin America or even on customer premises (as deemed appropriate). “The low end work can be carried out in India, which still offers reasonable cost advantage over Brazil,” he opined.

Tech Mahindra Versus the Competition

Commenting on his company’s role vis-à-vis other multinationals in Latin America, Mr. Asnani said, “Tech Mahindra today enjoys an enviable position in the telecom world. Our expertise spans IT, BPO and network technologies, which helps us to bring end-to-end solutions to our telco customers. This, coupled with our creative business models and experience in helping some of the leading telecom operators worldwide in their transformation journey, gives us a unique advantage as we make our foray in the LATAM market.”

He further said that while there is a couple of American multinationals in the telecom space in LATAM, Tech Mahindra does not see many Indian tech firm playing in this area. “Having met CXOs in some of the top telecom operators in the region, I am convinced that there is room for a specialized and domain focused organization like us to play a role. We see a distinct service and expertise gaps in the market that we intend to fill”, the Tech Mahindra boss for Latin America observed.

A Decade Ahead

When asked to comment on Tech Mahindra’s position in Latin America a decade from now, Mr. Asnani remarked, “A decade is too far out to predict in this dynamically changing world! Tech Mahindra aims to be among the leading companies in all the markets we serve. We hope to consolidate our leadership position in India, USA and Europe. Latin America is a centerpiece of our Americas strategy and if I had a crystal ball, I would hope to see us as a well respected

Currently the Head of US West, Midwest and Latin America at Tech Mahindra, Harshul is a business development executive with 15 years of accomplishments in strategic solution sales, structuring large deals, building consulting/outsourcing practices and management in the IT industry. He has worked at leading IT product and consulting firms like Wipro, Compaq, HCL Technologies and Patni Computers in a variety of sales and business development roles prior to joining Tech Mahindra.

In what is sure to be one of the biggest blockbuster deals of 2010 in Latin America IT services, worldwide sourcing superpower Capgemini revealed just how much Latin America means to its global vision by acquiring a controlling stake in Brazil’s CPM Braxis last week. (Astute readers may remember Capgemini’s own David Poole forecasting the company’s destiny in Brazil several months ago.) Capgemini is essentially jumping aboard a fast-moving locomotive –  Brazil represents about half of all of LatAm’s IT services market, and it continues to clock double-digit annual growth rates.

Read on for an exclusive view into the origins of the deal, what’s in store for CPMBraxis and how Capgemini is ramping up to become one of the preeminent forces servicing both domestic Latin America customers and as a Nearshore partner for U.S. corporations.

A Surprise Move

For starters, few of those who are close to the Brazil outsourcing industry expected that CPM Braxis would be open to surrendering a majority share or even consider “selling” any part of the firm, having only established the company a few years ago. But, according to David Shpilberg, vice chairman and co-founder of CPMBraxis, Capgemini approached CPMBraxis originally and it was largely because Shilberg had a long association with Capgemini’s CEO Paul Hermelin that the talks began to take shape. “Remember we were not for sale,” said Shpilberg in an interview with Nearshore Americas. “We were raising money directly from private equity .. I have a long relation with Paul dating back to my days with Ernst and Young.” (Shpilberg is a member of Nearshore Americas’ Power 50 Ranking for 2010.)

Capgemini’s pursuit of CPMBraxis was largely based on a single reality – it had a very small presence in Brazil and had to often rely on secondary partners to provide services to customers, most of whom are large multinationals. (Capgemini currently has about 2,600 employees in five Latin American countries, including Argentina, Guatemala and Chile.)

Ross Tisnovsky, Vice President of Research at the Everest Group, was surprised by CPM Braxis’ decision. “CPM seems to be independently oriented and I thought they would try to stay independent,” said Tisnovsky. Capgemini is paying $298 million to obtain the 55% share, and the company has an option to purchase the remaining 45% between three and five years later.

Tisnovsky praises Capgemini for increasingly becoming the model of the globally distributed services players – having established solid hubs around the world. The firm has 56,000 employees in Europe, followed by close to 30,000 in Asia-Pacific and – with the CPM Braxis holding – about 8,100 in Latin America, which is just a bit more than the firm has in the U.S. Tisnovsky contrasts the positioning of Capgemini to many of the India-based players, who he argues will always maintain their operational base in India. “India companies are fundamentally focused on India, the core of the business will always there.  Capgemini has not always been focused on a core geography,” he says.

Among the keys to the deal were, according to Shpilberg:

• The current CPMBraxis leadership will stay in place, led by CEO Jose Luiz Rossi
• Capgemini capitalizes on CPMBraxis’ strength in remote infrastructure management, where technicians can constantly analyze the functioning of IT infrastructure for clients. (A thriving business for Nearshore customers.)
• Capgemini acquires key accounts in the financial services area as well as telecom and manufacturing, while leveraging its existing relationships in utilities where CPMBraxis had little exposure.

In interviews following the news last week, Capgemini’s Hermelin made it clear that expanding market share in Brazil is not an easy task. IBM (which arrived in Brazil close to 100 years ago), Accenture, HP and Dell are all active and have the technican acumen and capital firepower to continue building formidable businesses.

Looking forward, Shpilberg anticipates an “acceleration in cloud services” for the newly combined provider.  One of the weak points in the portfolio of many (but not all) Brazilian IT firms has been a slow-to-ramp-up cloud strategy as we outlined in these pages several months ago. As competition continues to heat up among the three key IT services groups in Brazil – a) large multinationals b) domestic incumbent providers and c) India-based providers – there will undoubtedly be an increasing awareness of which group has portfolio shortcomings and how to attack that from a strategic position.

“Our goal has always been to become a top ten player,” said Shpilberg. With the stroke of a few pens, that goal is now reality.

The fallout from the visa hike issue is still being felt across the global outsourcing industry.  One of the obvious questions is whether large India firms will aggressively reshape their operating models to accommodate the new visa costs – or – is it just a mild bump in the road to continued expansion in the Americas?

Giving us an exclusive perspective on the issue is Ameet Nivsarkar , NASSCOM Vice-President for Global Trade, who is in charge of international and policy relationships for the India ITO/BPO advocacy group.

What long term impact do you think the visa fee hikes will bring to the way in which India outsourcing firms conduct business in the United States?

The fee per say is not going to be a large cause of concern. Our bigger concern is the direction all of this is taking. This is not the first attempt the US. Congress has taken to discriminate against India firms.

This is the first time we are seeing legislation go into law. Obviously India firms are concerned, and this certainly will add to the bottom line.

Do you anticipate that U.S. lawmakers will introduce further laws that will hamper or complicate business process and IT service delivery by Indian firms into the U.S.?

If you look historically in the past, in the last 18 months there has been many types of legislation introduced that go against India firms. There have been attempts made to completely ban access for visas for these firms.  As comprehensive as immigration reform is, we worry that we might see more issues on that front.

What is Nasscom doing to help educate and provide different perspectives for the lawmakers?

We have been working on this for some time. We have spoken to the lawmakers who passed this bill. We have made the case that US customers will ultimately be impacted.  I think this is being done with an eye on the elections – and unemployment is high, so there are political issues at play.

In your view, do you believe these actions are a determent to the long-term competitiveness of U.S. businesses?

Definitely the US is trying to stay competitive globally. Lawmakers seem to be taking a short term approach  instead of looking at the long term. The cost of doing business in the US will go up. Obviously companies will look at other options to do business. The objective the lawmakers are citing – to create more US jobs – is commendable but the reality is they are making it difficult to operate in or locate operations in the US.  It’s terribly short sighted. If you look at science, tech, engineering and mathematics- there are not enough skilled workers currently.

It is the view of Nearshore Americas that the new visa “surcharge” will become an incentive for India outsourcers to  rely increasingly on Nearshore operations to deliver services. Do you agree or disagree?

I would think so. Companies are going to evaluate all the options, whether Canada or Latin America. The visa fee issue alone is not a deal-breaker, but if we get to the point of another step that is a deal breaker, then providers are really going to evaluate their options.

What is your overall view on the value of Latin America in contributing to the success of India outsourcing firms? Are there any drawbacks you see in leveraging Latin America?

We believe the future is extremely bright. We do believe that  India will continue to  be the center of gravity in global services. Latin America can bring in language capabilities and time zone and proximity benefits and we are firmly convinced the way forward will be to have a globally distributed model – pulling on the strengths of every location worldwide.

By Kirk Laughlin

It’s not hard to remember back to 1995-1997, when the Internet boom began to gather some real traction. Firms like Netscape, Lucent and Cisco were suddenly red hot darlings that became emblematic of a new generation of  Wall Street investment targets. There were plenty of skeptics of course who didn’t like the price-per-earnings ratios of these companies or didn’t believe the aggressive forecasts of top executives. And then there were the very real concerns about risks and the seeming intangibility of the Internet, backbone buildouts and why broadband mattered. Back then, Google had yet to be born and the eye-ball grabbing power of search was not really well understood.

So, what does the investment climate of the mid-90s have to do with 2010 investment in Nearshore outsourcing? Plenty and I’ll explain why.

What’s We Have in Common

Fifteen years ago, investing in Internet and next-generation tech firms took some guts. Some part of you had to believe in a vision, and that explains why those who look at the world in purely rational, beancounter terms would never touch investments that had to do with the Web. They’d be happy investing in stalwart companies like Caterpillar (who revealed its HRO nearshoring journey to Panama last year) or Sears, with proven track records, miles and miles of history and the appearance of rock-solid foundations.

When you look at investment options in Nearshore outsourcing, you are seeing – from a very broad perspective – a group of countries and suppliers who have a lot in common with the Ciscos of 1995. Sure, there are plenty of Sofftek’s and Avantica’s who have been delivering Nearshore services for more than a generation, but the ‘newness’ of this industry can’t be understated. Tens of thousands of U.S. enterprises don’t know the first thing about delivering professional services out of Chile, El Salvador, Panama or Guatemala. In other words, the raw material to ignite the Nearshore firestorm has barely been gathered. But when you combine the technology underpinnings of the Internet, VoIP, and real-time collaboration tools along with the tectonic shifts going on with globalization and increasing exports out of lower cost nations, there is clearly a major upside ahead for this industry.

But you might be thinking, of course you would say that, your online business (Nearhore Americas) is built mostly around the emergence of Nearshore outsourcing. And that point would be valid. But I’m also an investor and one who is willing to take some risk for long-term reward. (I began investing in Emerging Markets back in 1997 after several trips to Vietnam, China and Thailand where it became evident that with the right governance, capital, rule of law and talent, sustained growth will naturally follow.)

Those who are currently sealing deals are destined to maximize their investments over the next five to ten years vs. those who still are waiting for a big seal of approval to appear somewhere so they are fully and absolutely confident the deal should go forward.

Risk: Front and Center

I speak to investors and outsourcing buyers all the time – and it’s remarkable how similar they sound when confronted with whether or not to take steps to invest in the Nearshore growth story. It’s almost as if they have to whip clear decades of conceived notions about Latin America and the Caribbean and, from scratch, embrace a new vision of the region that is based on 201o and beyond. In addition to recognizing the value of doing work in the region, they also have to confront the issue of fear. What are my risks? How do I know I can trust the privacy protection laws? Can I take my clients down to there on a regular basis? And what is my long term payoff?

The process of examining whether to invest should naturally involve in-depth  scrutiny. But that scrutiny should also very much include analyzing the level of risk you as an nearshore outsourcing customer are truly willing to take on. Page upon page of information within Nearshore Americas will – if we’re doing our jobs right – get you much of the basic information you would require about the markets themselves, the key in-country industry leaders and how to initiate and manage your engagements. But the next step – the one that involves committing to investing in Latin America or the Caribbean wholly depends on just how willing you are to “get in” at a time when the value is still significant.

The Real Winners

It’s interesting to recognize the fact that once buyers are active in the Nearshore market, they may actually find new providers or decide to switch county destinations. They are able to make these changes because they have achieved material advantages through first-hand experience that will drive them deeper into more value-based relationships. Those who are currently sealing deals are destined to maximize their investments over the next five to ten years vs. those who still are waiting for a big seal of approval to appear somewhere so they are fully and absolutely confident the deal should go forward.

I’m here to say that day will never come. The risk takers are those jumping on planes now to fly down to Jamaica, Costa Rica, Brazil and Mexico to get projects up and running by the fall. Fifteen years from now, who we will look back on as the real winners in the Nearshore outsourcing boom?

Redundancy and availability are essential checklist items in disaster zones

By Dennis Barker

Earthquakes, floods, and hurricanes. Mother Nature has cruelly reminded us again this year that the Nearshore region runs the risk of natural disaster. Obviously anyone doing business in a meteorological danger zone has to think strenuously about their provider’s ability to recover from a disaster and maintain business continuity. Or maybe it’s not obvious.

Andrew Fazio, director of commercial sales at Flow, a telco/cable/Internet provider and data center operator based in Jamaica, told us that clients aren’t always aware of all the issues or ramifications connected to disaster recovery.

“Business continuity is a hot topic for us, and it’s in the forefront of our thoughts during hurricane season. But when we speak to clients about it, we find that they don’t always realize what’s involved,” Fazio said. “It takes up more discussion time than any of our other services because it hasn’t received enough attention, and people don’t always appreciate the effects of lost data.”

Such as: “Forty percent of all companies that experience a major disaster will go out of business if they cannot gain access to their data within 24 hours,” Gartner says.

Ask this during the pursuit phase: “Show us specifically how you will keep things running during a disaster.” And the particulars need to be detailed in the contract.

Here are some crucial elements that should be part of your discussion with an outsourcing provider and should be part of their recovery and continuity practices:

Risk analysis. What are the threats, and what are their potential costs? Knowing there’s a hurricane season is one thing, but getting details for the season approaching is what matters. At Flow, staffers meet with members of the Office of Disaster Preparedness and Emergency Management, as well as experts from the Meteorological Service, to get the lowdown on what might lie ahead.

The perfect partner would have a fully functional replica of your system ready to go, so that operations can be restored instantly.

A DR planning team. This should consist of the savviest IT people, at least one ultra-techie who knows how everything works, an operations person who knows how everything runs, and someone from the business side who understands business functions — and the company pessimist. At Flow, one person is dedicated to safety and disaster preparations, Fazio told us. This team should shape policies and procedures.

A DR action team. Does the provider have people who know data replication? Do they have certified DR engineers? Application and database specialists? Have any been tested by real disasters?

The IT plan. A well-designed configuration can go a long way toward averting disaster. Your provider should have a map that details every nook and cranny of their IT universe. Explore it. Ask them to explain how they achieve redundancy for every single essential item. How do they maintain high availability? Ask what happens if that power supply blows out or that backup server goes down. What’s the backup schedule? If their idea of backup is simply storing tape in another location, look for a different partner.

Ask about automation. “Data center automation is the point of doing things on a computer,” says Dana French, president of Mt Xia, a tech consulting company specializing in data recovery, business continuity, and design of very large data centers. “There’s a tendency with offshore resources to build systems that are managed on an interactive basis, whereas the goal in a business continuity environment is to build functions and systems to manage themselves.”

The battle plan. Of course they have a plan. But make sure it spells out who does what when, and spells that out for every possible scenario. Backed up with contingency plans, like who does what if X is out sick. You know that scene in the movies where one guy says “We better go to Plan B” and the other guy says “We don’t have a Plan B”? That’s seldom funny in real life.

Practice drills. The plan and all related procedures need to be tested. Ask your provider if they’ve simulated a severe power outage or server crash. Have they pretended to have an earthquake? Ask them what happened and what they learned.

Defined recovery points. The SLA needs to specify recovery point objectives (age of files that must be recovered to resume normal operations) and recovery time objectives. Specifics relating to redundancy and availability also need to be negotiated and included in the contract.

Hotsite. The perfect partner would have a fully functional replica of your system ready to go, so that operations can be restored instantly.

Ideally, a provider is able to keep your assets out of harm’s way. What Flow does is offer clients the option of colocation services in Curacao, “out of the hurricane zone and earthquake belt,” Fazio said. The company has its own fibre connection to its facilities on the Dutch island in the southern Caribbean.

Ultimately, French says, you and your provider need to look at things from the standpoint of business functions rather than system functions. “The big question should be how do I ensure that my business functions are running rather than my computers running,” he says.

“What I have found,” says French, who has outsourced projects to Mexico and Poland, “is that providers are more intent on tasks associated with the system rather than with business functions. They will perform that task as quickly as they can, and turn it over as quickly as they can, but they will not necessarily consider how that task ties into the business continuity environment. They end up retrofitting business continuity rather than building it in from scratch.”

Finally, when considering a provider, “concentrate on their understanding of business continuity principles and practices,” French says. “Have them explain their understanding of BC. Ask them to define it and what it means in terms of the services they provide. Ten people will give you 15 different definitions of business continuity. Pick the one that matches what you think.”

In an Exclusive Video Interview, President Laura Chinchilla Looks to Accelerate Investment by Reducing Bureaucratic Barriers and Educating More Engineers

San Jose, Costa Rica (PRWEB) July 22, 2010 – President Laura Chinchilla Miranda identified the three most important steps she will be taking to increase the flow of investment capital into Costa Rica during an exclusive interview with Nearshore Americas, the leading online media site dedicated to Latin America outsourcing and investment.
Chinchilla, who stepped into office in May, said that in order to sustain and expand foreign investment the
federal government must eliminate “complicated rules” that create a bureaucratic hurdle for investors. In
addition, the country must commit to enriching students with more exposure to science and technology. “We
need more engineers,” the president told Kirk Laughlin, the founder and editorial director of Nearshore
Americas. Finally, Chinchilla said logistics that enable the smooth flow of goods and services must also improve.
During the interview at the Presidential House, Chinchilla expanded on what Costa Rica is doing to become
more competitive globally, why Asia is such a big target for trade now and into the future and also what she is personally committed to doing to halt the expanding presence of narcotics traffickers in Costa Rica.
Although in office for just two months, the sense among many Ticos is “Laura”, as she prefers to be called, is
settling in very comfortably as chief executive of this nation of four million people. She is praised for being
decisive when necessary, but also blazing a path of her own that is distinct from her mentor and predecessor
Nobel Peace Prize winner and two time president; Oscar Arias.

Yet, the new president must confront a variety of complex issues. Movement toward a liberalized telecom
market which effectively breaks the current monopoly has moved along at a glacial pace, despite commitments the country made to open its telecom market under the CAFTA treaty ratified in 2008. Exports were hit hard last year and the economy declined by 2.5%. Costa Rica also ranks 121st out of 183 countries in the 2010 World Bank’s Ease of Doing Business Index, a clear indicator that a slow moving bureaucratic establishment can have a stifling effect on innovation and investment.

Chinchilla concludes the interview by remarking that Costa Rica is a wonderful country and she feels it is a
“great privilege” to serve as president.

About Nearshore Americas:
Nearshore Americas, launched in September, 2009, is among the world’s most popular media websites covering
the outsourced services industry, based on web traffic. The brand investigates key trends driving the emergence
of Americas-based investment and outsourcing, providing exclusive interviews and case studies, video reports
and other features. The site is dedicated to providing valid, high quality analysis about developing successful
partnerships in the region. The primary audience for Nearshore Americas includes C-level executives, investors
and sourcing decision-makers. For further information, contact: Services@Nextcoastmedia(dot)com

Brazil and Colombia Also On Genpact’s Radar

Confident that the right kind of finance and accounting talent can be found to support its growth, Genpact is pushing forward with plans to expand its operations in Guatemala City. The company  currently employs about 1,000 people but that number will likely climb dramatically with the expansion.

Nitin Bhat, Vice President & Country Manager at Genpact in Guatemala, outlined expansion plans with Nearshore Americas last week which include opening a second facility within the city in the near term. Although Bhat did not specify how many people will be hired, local sources say the company could potentially double the size of its labor force.

Bhat admits that Guatemala City does not have a lot of history to fall back on in nurturing a global services ecosystem, where college graduates would automatically be aware of some of the career options available.

Genpact’s positive experiences in Guatemala City appear to be similar to that of Capgemini, another major BPO and global sourcing player which also performs F and A functions. The expansion by Genpact naturally raises the question of how quickly the firm can hire and train associates to perform processes like general accounting and procurement tasks. Bhat admits that Guatemala City does not have a lot of history to fall back on in nurturing a global services ecosystem, where college graduates would automatically be aware of some of the career options available.

“The industry is not as established.. it  has not been here a long time. People may not be looking at this as a long term career option,” said Bhat, who adds that Genpact tries hard to change that perception by stressing the career opportunities available with Genpact.

Originally, the firm’s facility provided exclusively call center services, but as the company contracted more clients from the U.S. seeking finance and accounting, Bhat said recruitment efforts uncovered “plentiful F/A talent.” At the current time, the company delivers more F/A services to Latin American clients than those based in the US.

Don’t expect Genpact to put all of its bets on Guatemala alone. “We are actively considering opening other Nearshore operations,” he said, singling out Brazil and Colombia as being “on the radar.” He said the organization considers both the inherent attractiveness of a particular country along with “customer appetite.”

Colombia continues to appear on the short list of many global sourcing and BPO providers. A recent decision by HP to open a delivery center in Medellin may well turn out to be a bellweather moment in the transformation of Colombia, once considered an “off limits” destination for global delivery. Colombia country representatives have done their part to curry interest also. The vice president of the country recently traveled to India and visited Infosys, among other organizations, sources say. But the same sources say Infosys simply will not set up shop in Colombia because of the lingering stigma the country carries in the eyes of U.S. based customers. Rival TCS however has already established a small operation in the country.

As for Genpact, the provider undoubtedly has to seriously be examining destinations beyond Guatemala and the two facilities it operates in Mexico – Juarez and Caborca.

"Nearshore destinations must ensure they have a steady supply of human resources to meet demand" Capgemini's Steve Rudderham

By Steve Rudderham

Nearshoring is gaining more interest and higher levels of global respectability among companies  looking for long-term sustainable benefits, as they strive to remain competitive in an increasingly crowded global business environment.Offshoring is no longer the only option for companies seeking a highly skilled workforce, with a cost advantage.
Indeed, Gartner finds that interest in Latin America as an outsourcing destination has increased dramatically over the past years, making it the second most-popular region after South Asia. One of the biggest questions facing the Nearshoring community is: What can we do – together – to sustain the momentum?

 Moreover, executives who do not currently outsource to Latin America expect their company to consider the region as a resource for outsourcing in the future. Yet as a community, we need to ensure that we are ready to meet the challenges that these demands will bring. While data points to significant growth in the region, local government agencies and the nearshore business community must work to sustain Latin America’s momentum and expand the region’s service offerings from contact centers, to the coveted F&A work, procurement, analaytics and beyond.

Similar time zones, geographic proximity and cultural affinity are among some of the factors that give Latin American nearshoring destinations a leg up on their offshore counterparts, as North American companies have steadily increased outsourcing, but there is a need to re-invigorate this momentum and ensure it doesn’t plateau.     

The sustainability of this nearshoring trend rests on the collaboration of and communication between local governments and businesses, and between providers and clients.

Invest In Your Workforce 

Despite the geographical advantages, local governments need to understand that these factors alone won’t let their countries compete with the outsourcing hotbeds such as India and China. Getting ahead of these traditional powerhouses requires transitioning beyond sophisticated IT infrastructures which in many cases are already present; and into developing the local workforce to perform the kind of value-added work that will put nearshoring on a par with offshoring.

 This is not to say that Latin America does not have the human capital for value-added services such as F&A work. It does, but as the demand for these services continues to grow, nearshoring destinations must ensure that they have a steady supply of human resources to meet the demand. The mindset at the moment is for voice processes to be nearshore, and then any higher value processes to be assessed for offshoring.

We have seen successes where the local governments have set up iniativies and investment boards to partner with providers in bringing work nearshore. Guatemala, for example, through their ‘Invest in Guatemala’ initiaitive provided a very flexible platform for providers to approach the government to drive change. For example they  made it significantly easier for skilled workers to enter the country and assist in transitional work, by granting Indian professionals work visas on entry.

This change in policy happened relatively quickly, as a result of the government’s attentiveness to the issue. Other Latin American nations have begun to follow suit. For example, PRONicaragua, the promotion agency aimed at generating economic growth in the country, continues to invest in educating and training its workforce. Similarly, Colombia has begun to work closely with U.S. companies to identify and address their business needs in the region as their local workforce improves on language and skillset.

Communicate Your Advantages

Cultural factors are also at work to keep nearshoring destinations from losing their brightest minds. There is a perception that nearshore workers crave the US as a home, and to work in the outsourcing industry only provides a stepping stone to their dream. On the contrary, Latin American workers that move to the U.S. tend to move back to their home countries to be closer to their families and communities. I’ve witnessed this firsthand while visiting centers in Guatemala and Nicaragua; and speaking with professionals who’ve lived in Houston, Dallas and Los Angeles, yet chosen to return home bringing their invaluable work and cultural experience back with them.

Local governments also need to do a better job communicating these advantages to the global business community. They need to ensure that the relevant data on their countries’ demographics – for example, the number of F&A graduates and the kind of work that they’ve gone into – is readily available to potential clients / investors. They also need to clearly state how ‘available’ their workforce is for these roles.

 Should the foreign companies chose to invest, will they see an immediate return on investment or will they need to train and develop the country’s workers at a higher investment cost, and a higher risk? Such proof points are essential yet still lacking for many Latin American countries.

Address Perceptions, Together

Another paramount issue that governments and communities need to address is the perception on safety. The mindset that many U.S. clients have about risk and political unrest in Latin America is still a problem. To clarify, it’s not that there is political risk; it’s that this is often the client’s perception. Cities like Bogota are more safe and advanced yet the reaction when you tell people you’re going to Columbia is still one of uncertainty. Yet countries like Colombia and Chile obtain high rankings in recent global surveys for ease of doing business, safety and overall business environment. Still there’s a lot of education needed in the U.S. about what is happening in Latin America, and there’s no substitute for guided tours where interested executives are shown the city, as well as the centers where the work will be done and get a first hand experience by talking to the associates doing the work as well as experiencing the local culture. Providers seem to do this in pockets currently but local governments need to step up and help make this happen.

The global business community also has an important role to play. We should seek ways to partner with local governments to focus on the education of their workforce. Governments also need to make it easier to for corporations to do business through initiatives such as simpler and lower taxation, tax incentives and the development of infrastructure-ready environments, but these are just the entry ticket to the game.

The growth of Latin America as an outsourcing destination will only be sustained as long as businesses see long-term stability and growth of the workforce. The sustainability of this nearshoring trend rests on the collaboration of and communication between local governments and businesses, and between providers and clients.  It will also be determined in part by educational campaigns designed to impact and change longstanding perceptions of the region. It’s in the best interest of local governments and our community to ensure that this is a top priority.

Steve Rudderham (#14 on Nearshore Americas 2010 Power Ranking)  is current vice president of client engagement for Capgemini. He previously served as senior vice president, business leader for Genpact’s Latin America operations.

By Tarun George

If you’re a Latin American country marketing yourself to US sourcing customers,  your chances have already been either helped or hurt by your national image, even before you begin. It’s called a ‘nation brand’, and Nearshore players have always been painfully aware of its impact on securing foreign investment.

We caught up with Simon Anholt, who first coined the term in the late ‘90s. During the last 12 years, Anholt has advised the governments of more than 40 countries on questions of national identity and reputation, and foreign investment promotion.

Anholt talks here specifically about some of the myths associated with the topic, the Nearshore countries that rank highest on his Nation Brands Index, how the world sees Latin America, and how to improve that image.

Could you explain the concept of Nation Branding as it relates to countries marketing themselves to attract foreign investment?

First of all I have to stress that “nation branding” is a term I dislike, because it suggests that it’s possible to change the image of a country using marketing communications techniques. There is absolutely no evidence that this is possible; no country has ever succeeded in doing it; and I have never advocated it. The phrase I coined in 1998 was “nation brand”, which is an observation about the importance of national image in the modern world. If a country doesn’t like its image – and most countries don’t – then the only way to change, update, enhance or otherwise influence that image is through the things the country does, not by the things it says.  

Influencing a country’s reputation is primarily a matter of policy, strategy, innovation and investment over a very long period – it has nothing to do with logos, slogans, advertising or PR campaigns. So the term “branding” is misleading and I prefer to avoid it.

How does this all relate to marketing for foreign direct investment? Only indirectly. Foreign direct investment can, in some cases, be stimulated by carefully targeted marketing, although in most cases it is more about sales than marketing – targeting appropriate investors in a direct, personal approach and offering the correct incentives. Consumer-style mass marketing techniques tend to be pretty ineffective when you’re dealing with a relatively small, highly informed, highly discerning and skeptical target audience. To call an FDI campaign ‘nation branding’ is simply wrong: it is sectoral promotion, and cannot contribute directly to the country’s overall image – partly because such marketing is directed at that small, niche audience and not at international public opinion (which is what people usually mean when they talk about “nation branding”).

Obviously if FDI promotion is so successful over many years that it measurably improves the country’s economic performance, this may, in time, improve the country’s image. But that’s a different matter. 

Latin America needs to get to grips with this important topic of national standing, stop focusing on superficial marketing tricks, and become a center of expertise for understanding and managing national and regional reputation.

In your experience, to what extent does the ‘brand’ of a country dictate the amount of investment by international companies, and why?

 ‘Dictate’ is too strong a word. There is no question that a country’s overall image has an influence on the amount and type of investment a country attracts, but since we are talking about significant business decisions made by professionals, the influence of the country’s background reputation is bound to be less than in the case of “consumer” transactions such as tourism, exports, cultural relations and so forth.

Simon Anholt: "Almost all Latin American countries need to emerge from the generic “brand” of their continent, which is an outdated and unhelpful one, by proving their specific relevance to consumers, tourists, investors and commentators in other parts of the world"

How would a Latin American country go about improving its national brand? Are there specific steps that you would recommend for a country looking to market itself to US companies?

 Almost all Latin American countries need to emerge from the generic “brand” of their continent, which is an outdated and unhelpful one, by proving their specific relevance to consumers, tourists, investors and commentators in other parts of the world. The way to achieve this is no different for Latin American countries than for any other country: they simply need to develop the structures and strategies that will enable them to project a constant, unbroken stream of dramatic evidence that each country deserves the reputation it desires. There are no short cuts to this, and it must be sustained for generations before it results in a real, measurable, permanent change in the country’s international standing.

Simply bragging about their achievements or attractions cannot improve their country’s reputation, although for the purposes of stimulating FDI it’s obviously essential to let target audiences know what the country has to offer.  

Which Latin American countries occupy the highest places on the Anholt-GfK Roper Nation Brands Index 2009, and what accounts for each of their success respectively?

 Brazil ranks 20^th overall, followed by Argentina in 23^rd place and Mexico in 28^th place. Then there’s a big gap until Chile at 38^th, and Cuba, Ecuador and Colombia all near the bottom of the list of 50 countries (there are presently no other Latin American countries included in the study, but this could change in the future). In one sense, these overall rankings don’t tell us a great deal, since they represent the average scores given to countries by all the 20,000 people in 20 countries who are polled in the survey, across all the 40 different questions we ask them, in topic areas which include governance, people, culture, products, tourism, sport, the environment, investment, business, education, and so on. 

 The governments which use the Nation Brands Index to track their countries’ international reputation tend to look in much more detail at how certain segments of audiences in certain parts of the world rate certain aspects of their country or its population.

Brazil’s reputation has been rising steadily since I launched the Nation Brands Index in 2005, while the other Latin American countries (like most countries in the Index) don’t move much from one year to the next – one important finding of the survey over the last five years is how rarely most people ever change their minds about other countries. Argentina and Mexico tend to stand out from the generic “Lat-Am” image, mainly for cultural reasons: people around the world have some familiarity at least with the traditional music, dance, cuisine and lifestyle clichés associated with these two countries; the rest of Latin America suffers from a weak profile, very little knowledge, and a great weight of negative associations such as violent crime and lawlessness, political and financial instability, oppressive regimes, poverty, disease, drugs and corruption.  Brazil is in a class of its own – many of people’s spontaneous associations with the country are quite negative, but overall, the country simply stands for ‘joy’ in the public imagination.

 Are there any Latin American countries actively incorporating Nation Branding strategies in their marketing efforts, and are they seeing positive results? Are you working with them specifically?

 A number of them have experimented with logos and slogans and advertising and PR campaigns, but since no attempt has been made to set specific goals or targets for these initiatives, nor any means of measuring their performance, we cannot know how successful these efforts are. I have been working with Chile during the last year, and a good deal of progress has been made in setting up the systems, structures, strategies and policies that will enable Chile to exert more control over its international reputation than in the past.

What would you say is the current global perception of the Latin American region in terms of offshore services investment? Is that image improving or worsening compared to other outsourcing destinations like Asia or Central and Eastern Europe?

 Definitely improving, and this movement is led by Brazil. Generally, there needs to be more partnership, more collaboration and cooperation and best practice sharing between the IPAs, tourist boards, ministries of foreign affairs and institutes of culture if Latin America is going to continue to exert more influence in the world. Latin America needs to get to grips with this important topic of national standing, stop focusing on superficial marketing tricks, and become a center of expertise for understanding and managing national and regional reputation.

BLOG REPORT FROM PROCOMER ITALLIANCE EVENT  IN SAN JOSE, COSTA RICA

Layoffs at larger tech companies like HP and slow downs in expansion at many IT services players in and around San Jose has appeared, at least temporarily, to have loosened up what was once considered one of the tightest labor markets anywhere in the Nearshore region.

A number of local executives said during the IT alliance event this week that Costa Rica´s labor market has become more advantageous for global sourcing and IT oriented employers, many of whom saw HP snap up close to 1,000 qualified IT professionals since arriving in 2006. Other well known tech players with sites here include Intel, Google and Baxter, among others. The tide has shifted as HP reportedly laid off several hundred during the last 18 months, and a host of other firms trimmed staff in response to the economic crisis. Still, it is clear that Costa Rica, like much of Latin America, weathered the storm without too much economic damage.

Other Developments:

• The failure of the government to take the final steps necessary to make competitive telecom services a reality is causing underlying frustration for both business people and citizens who remain ¨stuck¨ with monopoly provider ICE, which controls fixed line, mobile and electrical services. The president of a 30-person software development firm said that businesses have been tolerant of the lack of aggressive innovation on the part of ICE, but that tolerance will run if Costa Rica falls behind the rest of the world on connectivity and digital infrastructure innovation. ¨If the monopoly is still in place three years from now, that´s going to be a problem for us,¨ said the executive. (The government has declared that the telecom market is liberalized, but the reality is approvals for competitive entrants to initiate services has been stalled.)
• I sat down with Clotilde Fonseca, the new Minister of Science and Technology within the new Chinchilla government, who stressed that being provided with high speed connectivity is not the panacea it is often made out to be. What really matters in Fonseca´s eyes is a more serious understanding of how to fully exploit what the digital revolution has to offer. ¨The real revolution happens in the mind… we must have a better grasp of the power of the digital platform,¨ she said. Fonseca is working hard to bring a new spirit of fresh thinking to her own ministry by being more proactive in aligning with the leading actors in science and technology in the domestic private sector. ¨We have been very good here in Costa Rica linking with other countries over the years, but we have not been very good at linking up with the different actors within our own country.¨ Fonseca´s approach, influenced by her own consensus building in the non-profit sector, is likely to be a welcomed change. The bureaucratic, paper pushing culture of the Costa Rican government has slowed progress and that can obviously be a real problem in an area as dynamic as high tech. Fonseca seems determined to change that culture.
• Procomer´s IT Alliance event welcomed participants from the USA, Trinidad, Dominican Republic and India among other countries. The event featured a panel discussion on Innovations in Nearshore Outsourcing with Jeevan Zutshi, of Argus Advisors, Diego May from local IT services player Avantica and Tony Mataya, Partner, ThinkSolutions, and moderated by yours truly. The panel discussion focused largely on the increasingly high value services provided from the Nearshore, but at the same time there was recognition that many US business people have a narrow and often outdated perception of life and business culture in Latin America.

- Kirk Laughlin, Editorial Director