Nearly $5 million goes to BPO in Choco region

By James Bargent

An unusual alliance that has brought together multinational business and international aid with the local public and private sectors is set to test the social impact of outsourcing with a bold new project in Colombia’s Afro-Colombian heartland.

Last week, Spanish-language outsourcing specialists Atento threw open the doors to a new 110-seat call center in the city of Quibdo, capital of the poverty-stricken department of Choco. The new call center will provide services for multi-national telecommunications giants Telefonica/Movistar.

The call center is the result of an agreement struck last year between the United States foreign aid agency USAID and the National Association of Colombian Businessmen (Andi) to develop new and innovative approaches to improve economic opportunities for one of Colombia’s most marginalized minorities – Afro-Colombians. “We wanted to do something unprecedented,” said Santiago Pinzon, the executive director of Andi’s BPO and IT Chamber.

The Afro-Colombian population not only endures high unemployment and poverty levels but also suffers disproportionately from the violence and displacement of Colombia’s internal armed conflict. As a result, the population has been the focus of USAID’s Afro-Colombian and Indigenous Program (ACIP), a 5-year scheme designed to address these issues, which began in 2011.

The program has focused on areas such as land rights, institution building, training and employment. Over $4.5 million of the budget has been directed toward Choco, and nearly $2 million of that is dedicated to strengthening access to economic opportunities.

Impact on Outsourcing

For Pinzon, whatever the underlying causes of the population’s problems, these economic opportunities are key to improving the situation. “It is something that is very close to impact sourcing – it is not social responsibility but it is competiveness instead,” he said.

The organizations settled on the BPO and ITO sectors as the best mechanism to drive the program and attracted their private sector partners with funding from USAID and promises of extensive public sector support – including a training program for candidates run by Colombia’s government run job creation and training body, SENA.

The program appealed to Atento as it allowed the company to deepen its strategic ties to Telefonica/Movistar while offering the opportunity to act on its stated social responsibility policies, according to the company’s Colombia Director Alberto Castaneda. “Inclusion and diversity are part of our policies and this was a good opportunity to make that policy reality,” he said.

Quibdo was selected as the site for the new call center as a city that epitomizes the issues that plague the Afro-Colombian population. The city has a population of approximately 100,000 people, around 90% of which are Afro-Colombian and over half of which came to the city in the last 20 years after being displaced by violence elsewhere in the region. Unemployment hovers around the 20% mark, while underemployment and poverty levels are much higher.

 Quibdo & Afro-Colombians

Development in Quibdo and the surrounding region has also been stymied by endemic political corruption. For 20 years, politics in the region was a closed shop, run by the Sanchez de Oca family, members of which have faced various investigations for corruption and ties to paramilitary groups. However, this changed in 2011 with the election of current Mayor Zuila Muna, a long-time campaigner for Afro-Colombian rights who has worked closely with the other organizations in bringing the new call center to Quibdo.

The issue of security is also an ongoing concern in the city, where both the guerrillas of the Revolutionary Armed Forces of Colombia as well as drug trafficking paramilitary groups maintain a presence. However, those involved in setting up the project have been working with the Ministry of Defense on security issues and it is not something that has worried Atento. “It is very safe,” said Castaneda.

Although Quibdo’s social issues have created numerous challenges for implementing the new call center project, they also represent an opportunity, according to Castaneda. “For us it has been very convenient to set up in populations with high unemployment,” he said. “It favors us because there is not the possibility of attrition [and] they are more committed to the work, and, on the other side, we benefit the community because we represent a source of employment.”

The number of people eager to join a professional workforce in the region also leaves some room for growth, Castaneda said, although the comparatively shallow pool of workers educated to a degree level and with professional experience imposes limitations on how far the operation could be scaled up. “We can’t do a thousand seats, but we would like to be able to expand,” he said.

For the moment, Santiago Pinzon is satisfied with the 110 seats in Quibdo and the prospect of more jobs in similar schemes around the country. Pinzon believes these schemes will help demonstrate in measurable ways how Colombia’s outsourcing boom can have an impact on social development in the country. “We are basically incorporating a new way to promote economic development in the city,” he said. “But what we also want to do is develop clear tangible results on the impact of outsourcing on Colombia.”

Klender of Deloitte: List of global corps setting up in LATAM grows.

Narayan Ammachchi

Latin America is quickly establishing itself as a preferred destination for global corporations seeking to set up shared service centers (SSC), with more and more players pursuing new locations in Brazil and the Andean states to perform back-office functions. “Proximity and cost structure are some of the factors favoring the region,” says Mark Klender, Principal, Deloitte Consulting, which has recently surveyed nearly a hundred global corporate executives to gauge shared services trends and preferences.

The number of shared services centers is declining in the U.S. and Canada, but rising in Latin America, particularly in South America, the survey found. When Deloitte conducted a similar survey in 2011, Latin America had come second after Asia, but this time round the region has turned out to be ‘the first destination of choice’ for setting up SSCs.

More than 11 percent of respondents said they prefer Brazil, while only 10 percent preferred India, which the consulting firm regards as ‘the mainstay’ of the sourcing industry. In the survey, a considerable number of executives expressed interest in Mexico and Argentina.

Another interesting piece of news is that nearly 50 percent of SSCs servicing Brazil today are based within Brazil, and the South American country’s major cities such as Sao Paulo, Rio and Itajaí are increasingly becoming the hotspots for shared services centers.

More striking still, many corporate companies are using their LatAm centers to process back-office functions for operations in Europe and Asia.

As an example, Brewer AmBev, which has a very large regional shared services in Sao Paulo, is serving not just operations in the region, but also the firm’s operations in Canada. Diageo’s SSC set up in conjunction with the Indian outsourcing company Genpact is also exploring ways to  serve the British liquor company’s operations in Europe.

Long list of Shared Services

Many global multinationals have already set up SSCs in the region. “The list is long and the names include HSBC, MacDonald, Pepsi, Walmart, Amway, Siemens, Roche, Nestle, Johnson and Johnson, Procter and Gamble,” said Klender.

What is playing to the advantage of Latin America is the region has many countries and a majority of their residents speak a single tongue. “Many firms are setting up one SSC for every four or five countries. In other words, they set up one SSC in South America and another in Central America,” said Charles Arid, global practice leader, shared services, at PricewaterhouseCoopers (PwC).

According to Deloitte, labor cost and availability of workforce has continued to be the decisive factor defining where you will locate your shared services center. Availability of physical space, technology infrastructure and skills in languages are the ​​other factors of importance.

Interestingly, analysts say, most of the SSCs are serving as pan American centers but a vast majority of them are concentrated in four major countries – Brazil, Chile, Mexico and Argentina. That is because global multinationals in Latin America have 75 percent of their operation in generally two or three countries.

Klender says the number of SSCs will increase in the days ahead as the region consumes more goods and services. The consumer goods company Unilever, which sold its finance shared services to Capgemini, has joined hands with IBM to handle HR functions for its workers in Brazil, Mexico and Chile.

“Organizations are increasingly leveraging shared services and outsourcing initiatives to reduce costs, increase efficiency, achieve greater agility and improve compliance,” Arid said.

Where Are the LatAm Vendors?

Though SSCs are growing in number across Latin America, it is hard to find a regional vendor servicing a global client. Many SSCs set up by homegrown companies appear to be run by their own subsidiaries.

Analysts say a lack of knowledge about the benefits of setting up specialized centers for discreet business functions is holding back many small and medium businesses from leveraging shared service centers. Many don’t trust the argument that SSCs help cut cost and are also unwilling to conduct a feasibility study.

Corporate firms, on the other hand, are appearing more willing to outsourcing their back-office functions than set up captives or SSCs with third party vendors.  A past survey from HfS Research showed 70% of companies preferring to outsource and 52% increasing investments in shared services.

Klender says the biggest challenge for corporate companies is selecting the right country to set up the shared service center. “If you pick the wrong country you may not be able to save as much cost as you had expected,” he said.

“Shared services market is maturing in the region. LatAm companies don’t need to have their back-office functions processed in countries like India,” Klender added.

By Jon Tonti

Some small to medium sized software providers in Latin America seek specialization in business verticals and languages while others do not.  Experience can create value, but is method or know-how the principle ingredient.  NSAM talked to four Nearshore software development experts to understand how providers find their niches and how important those niches really are.

Often is the case a company moves in a particular direction because of the talent it hires.  Arin Sime, CEO of Agility Feat explains that after initially setting out to provide outsourced development services without a particular focus, his company began hiring people with exceptional ability in design, user experience, and frontend web development. “You find awesome people and you build the business around their exemplary skills,” said Sime.

The expertise of Agility Feat’s Costa Rican nearshore team enabled Sime and his colleagues to focus the business towards startups or small and medium companies (that behave like startups) that need design, process flow architecture, and implementation in an end-to-end lifecycle.  The US leadership team of Agility Feat already had good experience in startups and offshoot technology projects for small and medium sized companies; hence the melding of the skill sets from both sides of the organization produced a unique company with more focused services.

Ruby, Rails, Python, Mobile…..             

Others outfits like Tekton Labs specifically chose their technologies based on gaps in the marketplace.  “We chose Ruby on Rails, Python, Mobile and other open source technologies because they are something new in Latin America and especially in Peru,” said Kenneth Lopez, a consultant at Tekton.  “Most of the other companies here in Peru were only dealing with Java and .NET so the differentiation helped us grow.”  Lopez added that the company then employed SCRUM methodology (a derivative of Agile, which is already the standard in LATAM according to some experts and thus a non-differentiator).  The business verticals in which Tekton works developed more organically through referrals from other clients.  “We ended up working in retail, health, digital marketing, and human resources by chance,” explained Lopez.

In contrast to the organic movement into business verticals at the behest of current and potential clients, Tekton also draws upon its accumulated knowledge base in areas such as digital marketing in conjunction with Rails development for Facebook apps to push new ideas to potential clients.

Personal experience plays no small part either.  Mauricio Duran, president of Definity First was invited to intern at Microsoft at the at age 21 straight out of Mexico, where his company has operations now.  He was quickly impressed by the powerful tools and technologies offered by Microsoft.  “I was a UNIX guy, but ever since that year in 1997 I feel Microsoft tools and technologies are the right thing to use because of their reliability, scalability, and support,” said Duran.  “Despite, Microsoft being a giant company they have limitations too, I saw where I could build the stuff [on top of the Microsoft techs] that they didn’t have the time to build.”

Some firms that have grown organically in certain directions based on client and overall market need have run into skill shortages when going far into a specialized technology, which is not a problem specific to Latin America, says Barnaby Sheridan, Senior Partner at Velocity Partners, which has operations in Argentina, Uruguay, and now Colombia.  “We have stuck to base technologies like .NET and open source, and have stayed away from particular industries, we can do work for any client that has a software intensive model,” he said.  In terms of organic growth spurned by client demand Sheridan mentioned that “Ruby is huge and we have also seen a big call for more test automation.”

Although Agile methodology is not considered a differentiating factor anymore and instead the standard for nearshore software providers, there are many companies that run halfhearted Agile systems and don’t live and breathe it.

Maturation = Specialization, not Necessarily

It might seem intuitive that as software providers mature they naturally go in the direction of specialization in particular business verticals or technologies.  We have it drilled into us in business school the need to differentiate and specialize.  However, with software development firms, that is not necessarily true.  “If the metrics that you are using for success of the company are number of employees, countries you are in, or locations you have it might be more advantageous to reach larger-broader markets and not specialize too much,” commented Sime.

Some think specialization must yield better results, but is that true?  “Specialized providers have the sales advantage because the buyer thinks they get more for their money, I don’t want to harp on process, but if you are a good development shop and know what you are doing, it shouldn’t really matter,” commented Sheridan.

Lopez also does not believe buyers will automatically get more value from providers that specialize in certain business verticals.  “I think it is more about the company and the culture that will deliver value.  When we started with health companies in Peru, we didn’t know anything about health, insurance, or medical services, but they saw the value we could provide with our technology and methodology.  They provided the industry knowledge, we became experts, and it worked very well,” he stated.

Although Agile methodology is not considered a differentiating factor anymore and instead the standard for nearshore software providers, there are many companies that run halfhearted Agile systems and don’t really live and breathe it.  Sheridan commented that if a company is not going to specialize in a platform or business vertical, specializing in a methodology is another way to differentiate.  Of course, the provider must be wholly faithful to the methodology for it to be a true differentiator.

However, there are contrasting viewpoints to the method triumphs specialization assertion.  Sime explained that because of his US team’s wide ranging experience in multiple platforms the company originally set out to offer development services in any language by hiring on a client by client basis if need be. “Ultimately it is not a great business strategy, you are trying to be everything to everybody. Now we specialize in Ruby on Rails development and Python,” indicated Sime.

Duran also thinks that there is value in using providers that have extensive knowledge in a particular domain as those developers building the product have seen it all with respect to the behavior of said technology.

Specialized Shops Turning Away Business or Reselling it?

Some development shops that have decidedly gone towards particular technologies reject projects that are based in other technologies where their expertise is lacking.  To the contrary, other shops will take the contract and farm it out to another firm with the necessary expertise.  That begs the question, how much of this goes on?  “I think a fair amount,” stated Sime.  He mentioned that Agility Feat has considered doing it with projects close to their domain of expertise, but has stopped short because it would distract from the company’s core mission.  Sime informed that if his company were to take part in such activities his company’s name would still be on the final product so Agility Feat would have to ensure the quality of all aspects of the development process and final product.

“Yes, that happens a lot, a lot, a lot.  Especially in countries like Peru or other countries where the companies don’t have a lot of experience with new techs like mobile or Ruby on Rails they end up selling the contract over and over again until it is acquired by some company that is actually good at it,” remarked Lopez.

When asked about the pitfalls of reselling contracts and extending the chain of responsibility for an end product Lopez explained that transparency is the only way to ensure success.  “The companies that approach us and say they have a contract that belongs to company X in New York, which was then passed to a company Y in Mexico, and now company Z in Peru or whatever, are really open with the client because the development team has to talk directly to the client.  In that situation it will work, when you try to hide it and there are intermediaries in the communication channel that is where I will not go and don’t recommend anyone to go. With full transparency and direct access to the client there should be no problem.”

CEO Regal: Quality found in Uruguay

By James Bargent

For high street bookstores, squeezed by the explosion in e-books from one side and the dominance of online retailers like Amazon on the other, the death rattle has been sounding. However, for an enterprising pair of literature lovers backed by a nearshore software development team, the new digital age has instead been marked by the sound of opportunity.

E-book retailer Zola Books was the brainchild of former literary agent Joe Regal and ex-Sotheby’s’ AVP Michael Strong. “They realized that there was a gap in the market for book readers, publishers and authors – to bring all those parties together in a social environment,” said Charlie Berg, Zola Books’ Chief Technology Officer.

Within that environment, users can not only purchase books but also construct their own literary social media network, sharing recommendations, reviews and even underlined passages with their peers. They can also connect with authors, who can use Zola to market directly to readers via a free email-marketing platform, and monitor sales information with a custom dashboard.

Retailers and publishers can also connect with their customers, to collect economic data or market new books, and independent booksellers can even claim a free branded storefront.

In addition to this, there are the Zola curators, bloggers and reviewers who share their comments and recommendations for the latest releases with their followers, and, for those who favor the less subjective views of algorithms, there is Zola’s “Curation Engine” – a custom built recommendation engine.

Revolution Brought About By Technological Advance

Two years into its life, and many of the Zola Books team’s innovative ideas about literature, retail and technology are now being made reality by nearshore ITO operations. The driving force behind the move into nearshoring was Berg, who has 20 years experience in the outsourcing sector, as well as around a dozen start-ups on his CV.

Berg’s first forays into outsourcing were focused on the offshore market, particularly India, but it was his more recent experience of working with ITO operations in Ecuador that influenced the direction he has taken Zola in.

While working as head of technology at a New York digital development firm, Berg first turned to nearshoring after finding a shortage of quality US-based engineers for projects that required a team of developers integrated into the production cycle.

The results, he says, were impressive. “This is a more agile approach, you are in touch with these people as if they were in your office, using Skype, IM, emails etc and they are involved in the day-to-day development,” he said.

Berg returned to Ecuador while looking for development teams to augment the resident engineers at Zola but turned his attentions elsewhere after having trouble recruiting in sufficient numbers.

Uruguay: Burgeoning Nearshore Destination

After dismissing Argentina over concerns about political and economic stability and Costa Rica over price, he turned his attentions to Uruguay, which colleagues in New York’s CTO Club – a private members club for technologists – had recommended as a burgeoning nearshore destination.  “I’ve had such a good experience with Latin America in general and this was the next place to look,” he said.

On an exploratory trip, Berg evaluated conditions in the country and met with ten potential service providers.

Uruguay, he found, may not be the cheapest destination – some of the quotes he received were as high as costs in the United States and on average at least two thirds of the price – but these high prices were matched by high quality conditions. “[Uruguay] is first world – there’s no question,” he said. The infrastructure is the equivalent to the United States.”

He also found the country possessed the high quality human capital he had been searching for. “I was very impressed, there was no question in my mind that these guys are as capable as US engineers or engineers in India or anywhere elsewhere.”

With their nearshore software development team up and running, the Zola Books team is now eying up an expansion into Europe and the UK. Berg, meanwhile, hopes to facilitate that expansion with a tech team that blends various IT development models. “My ideal company would have engineers in the States where I can actually talk to them and they can talk to me and the product definition people, they would be supplemented by a nearshore team and then for special projects that are more separable I might use an offshore.”

Berg believes this flexible model is not just the future for Zola, but the way forward for all IT operations. “I think that what’s going to happen is it will come to a mix of resident engineers, nearshoring and offshoring,” he said, “because in my mind it is driven by the project and what you are trying to get accomplished and because they offer different value.”

For Zola, meanwhile, by creating their own unique retail model, offering book lovers their own different value, Regal and Strong hope to find the opportunity in the publishing world’s crisis.

Capturing the systemic and noteworthy advancements in Mexico economics, IT and political leadership over recent months, Nearshore Americas today announces a special series of white papers that will be published in our pages over the next several months reporting on these newly arising market conditions.  

The white papers, stemming from a collaboration with the country’s leading global technology advocacy group – MexicoIT, are oriented to provide unusually deep insights to the foundational shifts occurring in Mexico that are giving way to improvements in education, investment climate, fluency in global services and overall business attractiveness.

The first two white papers are now available for free download in Nearshore Americas “Premium Reports” section. They include:

• Taming the Aztec Tiger: Turning Mexico’s Economic Successes into a Win-Win for Global Sourcing
• The Nieto Factor: A New Government Aims to Strengthen Mexico’s Global Value Proposition

The Nearshore Americas editorial team is currently researching several other papers that will be published throughout 2013, reporting on the influence of major outsourcing firms in the country, special achievements by small to medium software and services exporters and also detailed portraits of contributions made by innovative firms  in digital animation, gaming and mobile applications. Watch our pages for further updates!

By Ann All

For many residents of Mexico, it rankled when Latin America got only a passing mention in a debate on foreign policy held shortly before the 2012 U.S. presidential race. It was Republican candidate Mitt Romney, not eventual winner President Barack Obama, who brought up Latin America, saying the region offered a “huge opportunity” for the U.S. No Latin American countries earned a specific mention in the debate, just Romney’s more general statement about the region. The candidates mostly stuck to discussing the Middle East and China.

Presidential Priority

Latin America is definitely on Obama’s radar now, due in part perhaps to the growth in America’s Hispanic population and what many experts see as its importance as a voting bloc in U.S. elections. According to an Associated Press story, Hispanics will make up 26 percent of the American population in 2043, up from 17 percent today. As the story notes, many Hispanic immigrants maintain close ties to their home countries.

It may or may not have been politics that prompted Obama to make a whirlwind visit to Mexico last week, but it definitely landed the country in the headlines. While immigration and crime tend to dominate discussions of Mexico in the U.S., Obama put the focus squarely on businessduring his visit.

According to a Forbes story, Obama announced that Vice President Joe Biden will participate in regular, bi-national, high-level discussions designed to further strengthen economic ties between the two countries. He also met with prominent Mexican business executives, including Carlos Slim Domit, chairman of Grupo Carso and son of the world’s richest man. And he praised Mexican President Enrique Pena Nieto for his efforts to pass legislation that will open up Mexico’s telecommunications market, a move that is widely seen as one of the most significant achievements of Pena Nieto’s first six months in office.

As a USA Today story noted, Obama spoke to an enthusiastic audience of Mexican students about the need for the U.S. to “recognize new realities, including the impressive progress in today’s Mexico.” He also mentioned that “some Americans only see the Mexico depicted in sensational headlines” and that attitudes toward Mexico can be “trapped in old stereotypes” about violence.

And misperceptions are found in Mexico, as well, Obama said, with some Mexicans thinking America wants to take over Mexico while others believe the U.S. ignores the country.

Misperceptions about Mexico

While Obama spoke of the need to correct such misperceptions, it may not be easy. A recentsurvey by the Chicago Council of Global Affairs found that favorable ratings of the country are at their lowest point since the council began asking about relations between the two countries in 2002. Mexico got a mean score of 43 on a scale of 0 to 100, down from a score of 60 in 2002.

When it comes to economic relations between the two countries, 64 percent of Americans see Mexico as an economic partner rather than an economic competitor. Yet many respondents underestimate the importance of Mexico as a trade partner. Just 20 percent were aware that Mexico is one of America’s top five trading partners. An encouraging 57 percent, however, believe the two countries are working in the same direction on trade and economic development.

More encouraging results: The number of Americans who believe the North American Free Trade Agreement (NAFTA) has had a positive impact on the U.S. economy stands at 50 percent, up grom 42 percent in 2004. The number is even higher among respondents under age 45 and those with a college education.

This article was originally appeared on NSAM’s sister publication Global Delivery Report.

Kops: Outsourcers are not strategic about the sale

By Tim Wilson

Let’s face it – outsourcers as a whole are not the world’s best marketers. Some struggle to get the word out, and, ironically, most aren’t comfortable leaving the marketing in someone else’s hands. Fair enough – assuming an outsourcer has its own marketing house in order. Many don’t and, as in any industry, some companies, and some regions, do better than others. “Brand is everything in outsourcing,” says Deborah Kops, outsourcing consultant at Sourcing Change. “Latin America has a lot of opportunity, but people understand India better. Frankly, Latin America has a lot to learn when it comes to branding and marketing.”

In Latin America, as in other parts of the world, the heavy lifting when it comes to marketing outsourcing opportunities is done by government and industry organizations. While that can be effective – specifically to the extent that it can tie in with economic policy and public resources – it is limited in that it tends to focus on the appeal of a region and not a company. By comparison, the advantage of an outsourcer getting its unique marketing message together is that it has to go through a process of self-examination.

“We are starting to understand what we don’t know,” says Kops. “But the buyers are frustrated – in the main they don’t think they are getting the promise of outsourcing.”

Problems with Sales and Marketing

As it stands, it is mostly up to sales teams to extend their brands into the buying community. The irony is that in hard times marketing budgets get hit hard, yet in hard times a strong argument for outsourcing can still be made. The problem isn’t only that outsourcers lack a marketing department, but that when they do have one it is not aligned with sales – a problem that affects all businesses. In fact, a recent report from Chief Marketing Officer (CMO) Council found that a mere 16% of marketing and sales departments consider themselves to be “extremely” collaborative.

That comes as no surprise to close observers like Monique Reece, founder of MarketSmarter, who argues that marketers can improve by focusing on five key areas: breaking down sales and marketing silos; improving the sales process; winning new business; organizing around customers (not products);  collaborating/automating; and making everyone a marketer.

“It requires the focus of everyone in an entire organization,” Reece argues, adding that “marketers need real face-to-face time with customers in order to understand their biggest challenges.”

From an outsourcer’s perspective, that means getting to know buyers so that the right message is sent, and the right response is ready. And whether the offering is nearshore or further afield, outsourcers need to be savvier at marketing across cultural divides, and at addressing protectionist tendencies.

“Most companies don’t use social media as part of their communications’ strategy. As a tool it has not been embedded in the management of business services delivery”

Anger against Outsourcing

“Cost will always be a factor, but there is some rising nationalism in the United States,” says Kops. “I am working with clients who are saying this context is important. There is slight concern about sending jobs offshore, and some disappointment with offshoring. It is not often that you find people who are completely enamored with outsourcing.”

A new immigration bill pending in the United States’ Congress could crimp the ability of big Indian players like Infosys, Tata Consultancy Services, and Wipro to bring workers to America. The bill is favored by some of the United States’ biggest IT companies, and may in fact help those nearshore providers who are able to capitalize on the opportunity – and the message– by arguing that the same work can be done nearby just as well, and at reasonable cost. But first they have to commit.

“Outsourcing companies spend very little money on sales, marketing, and branding,” says Kops. “Marketing is the front door of any business, but outsourcers aren’t strategic about the sale.”

Which means they are often not well-equipped to capitalize on the jurisdictional support offered by government agencies. And when they do, they lack the internal alignment with their own sales forces, right down to collaboration on sales plans and execution.

“If the marketing department has only a target revenue number and little say into how it will be achieved,” notes Reece, “how can they create effective marketing programs to help salespeople achieve their goals?”

The influence flows both ways, with marketers also able to aid the sales team. Assuming they are supported within the organization, they have the opportunity to research industry trends and move to more customized solutions that address specific customer needs. Sadly, outsourcers aren’t adept at this.

“I look at outsourcing as a fifteen year old, with plenty of room for growth,” says Kops. “For example, most companies don’t use social media as part of their communications’ strategy. It hasn’t been harnessed for outsourcing. As a tool it has not been embedded in the management of business services delivery.”

And its value is being lost on the marketing front, too. As outsourcing becomes less of a cost play, and margins tighten, marketing knowledge may be a key differentiator for outsourcers – especially as they take on the market’s big players.

“I believe fundamentally that India remains supreme on a macro basis,” says Kops. “But knowledge processes remain people dependent, and there are some Tier 2 and Tier 3 players from India that still don’t get it. Either way, you still need brains.”

The brains in the industry say that sales and marketing have to integrate, with Monique Reece from MarketSmarter reporting that a lowly 12% of marketing and sales teams have access to the same customer information on an integrated basis. For outsourcers the world over, getting the marketing and sales groups on the same page seems like a good place to start.

Fraga: Back to 70′s style protectionism?

By Luke Bujarski

Esteemed economist Arminio Fraga Neto recently issued a mixed assessment of the macroeconomic and political environment of Brazil, noting that the government is indeed “listening” to the needs of the private sector but also doing too much to protect specific industries. Fraga was one of several notable speakers at the recent “Brazil Summit”, organized in New York City, by the Brazil-American Chamber of Commerce, where global services was one of the prime topics of discussion. Many participants agreed that Brazil’s political leaders are better engaged with industry that at any time in recent memory.  “The government is starting to listen,” explained Francisco Ricardo Blagevitch, the President of Brazilian end user support solutions company ASYST, when asked about how the policy environment has changed around global services.  “They are starting to connect the dots that the global services industry is more than just about jobs – it’s about Brazil’s long-term competitiveness. In 2010, Brazil’s ICT industry employed 2.5 million people with an average growth rate of 9.9 percent, according to data from BRASSCOM.

In response to the needs of the global sourcing community, BRASSCOM, Brazil’s main IT advocacy group, recently partnered with McKinsey to develop the ICT 2022 plan aimed at ensuring the viability of a healthy technology and innovation ecosystem in Brazil. Focusing on human talent, infrastructure, business environment, financing, and digital promotion and education, ICT 2022 will match objectives with government investments as the country looks to meet the IT needs of a growing economy.

One bone of contention addressed by the audience was Brazil’s high tax environment.  On a positive note, Mauro Vieira, Ambassador of Brazil to the United States also noted that greater tax relief will go even further to strengthen Brazil’s already attractive investment climate. As part of ‘Brasil Maior’ (Better Brazil), a government plan to strengthen competitiveness through policy aimed at supporting specific industries – manufacturing, technology, and international commerce specifically – the government aims to adjust social security obligations based on gross revenue instead of payroll, as a means of lowering the tax burden.

Focus on Innovation

Those within sourcing circles understand well that Brazilian IT firms must compete beyond cost as a delivery platform for global services. “Even bad IT firms are growing in Brazil,” expressed Bruno Guicardi, President of IT services firm Ci&T, in highlighting existing market opportunities across Brazil’s domestic ICT sector.

But Guicardi also stated that when it comes to the global market “we [global Brazilian IT firms] are not in the business of competing on cost. Innovation and quality is what differentiates us in the global market place.”

As the world’s 4^th largest ICT market, domestic demand for IT professionals has strained opportunities to service demand in foreign markets. In 2011 Brazil’s financial services industry invested US $10 billion in technology; in the public sector there were more than 25 million electronic tax declarations; Petrobras, Brazil’s oil mogul, aims to double production capacity over the next seven years according to Jose Roberto Fagundes Netto, General Manager of Research and Development at PETROBRAS; manufacturing is Brazil’s third largest IT buyer after finance and telecom. Likewise in agriculture, the demands for IT innovation will continue to grow.  According to data from BRASSCOM, 25 percent of the world’s food supply is grown in Brazil.

Fraga Warns of Big Government

Economist Fraga keynoted the event with some sobering analysis about Brazil’s macroeconomic and government policies and their impact on future growth.  “The government reminds me a little too much of Brazil in the 70s. It comes in practice in many different forms – where the government is guiding and pushing different sectors through subsidies and protections.  Inflation is at the top of my concerns. Great weight has been put on state-owned companies [PETROBRAS] to keep prices low at the pump.”

Fraga also acknowledged and praised the Brazilian government for its transparency.  “To the government’s credit nothing is done in disguised fashion, it’s all there. It’s not like what’s going on in Argentina where the numbers are unclear. The government means well, I think they’re willing to listen and try some new ideas.”

Fraga also expressed concern about the low rate of investment in Brazil, which has declined from 19 percent of GDP to 18 percent from 2011 to 2012.  “More emphasis needs to be put on productivity and education.  The needs [in infrastructure] are dramatic we need to put more money into our ports, airports, roads, sewerage, power creation. Another thing that bothers me right now is that the presidential race has already started. It is way too early for politicking.  All of a sudden the ability to cooperate has gone down to very low levels.  People spend a lot of time campaigning and coalitions.”

On a more positive note Fraga stressed confidently that there are things that will prevent us in going down the wrong direction. “We have strong institutions with a good track record. We have a stable social political environment.  When you look at the emerging economies you don’t get that everywhere.  We also have a strong independent press that has done an excellent job in keeping things in check.  The quality of the debate on national issues is excellent.”

Globant’s Michref: Getting vulnerable youths connected

By Narayan Ammachchi

TesteAR, a manual software testing training program created and launched by Globant, has won this year’s prestigious Foundations for the Future (F4F) Award for corporate social responsibility (CSR). The award – instituted jointly by the Nearshore Executive Alliance and Nearshore Americas – is designed to create awareness about the importance of social impact programs in the Latin America global services industry.

“We examined several CSR programs currently underway in Latin America. But Globant’s TesteAR program appeared to fit the bill,” stated Rebeca Hassan, Executive Director of  Nearshore Executive Alliance.

Launched in 2010, the TesteAR program has trained as many as 150 youths in manual testing – a process used by IT companies to verify the quality of a software product. “Four youths found employment in Globant itself in the first year of training. More than 85 percent of the trainees have got jobs so far,” informed Francisco J. Michref, Globant’s CSR Coordinator.

Most of these training programs have taken place in Argentina, the Latin American country whose software industry earned US$900 in export revenue last year. “Those four testers are no longer with Globant, they moved up the value chain and found better jobs elsewhere in the region,” said Michref expressing his happiness at the success of the training program.

TesteAR chooses its candidates among the poor families and trains them for four months at its facilities across the region. The curriculum for the program was also devised by its own team of software developers.

It is a known fact that the software industry in Latin America is running short of skilled talent. “The labor market is really tight everywhere in the region. I don’t think you can find out any software engineer sitting idle without a job,” said Alex Robbio, Vice President of Belatrix, in a recent interview with NSAM.

Therefore, analysts say, programs like TesteAR are a win-win for both the jobless youths as well as the outsourcing industry.

Accepting the award at Nearshore Nexus was Globant’s Fausta Ballesteros, joined by Steve Rudderham and Rebecca Hassan of the NEA.

Scholarship for Participants

During the course of the training, every participant is paid $150 in monthly scholarship and travel expenses.“We are in contact with most of our former students. They all have found out a job,” Michref said. In addition to software testing, youths are also taught computer basics and the English language.

Runner-up for the F4F award was Qualfon, a global BPO company that has launched a string of social development programs for the welfare of its employees and their families in the South America country of Guyana.

Globant’s program was viewed as unique in many sense. Globant funded the program solely on its own for the initial two years. “From last year onwards,  local municipal authorities have started sharing 50 percent of the training cost,” Michref said.

“Remember, business is not just about making money, it also requires contributing to building a better society,” said Hassan, who became executive director of the non-profit NEA four months ago.

“The goal of TesteAR is to rescue vulnerable young adults, who neither work nor study. We have also extended a helping hand for the students to land a right job in a right company” 

In 2011, Globant held training programs in the Argentinean city of  Tandil and the capital Buenos Aires. More than 100 persons took part in the program and almost all of them found jobs soon after the completion of the course.

“The goal of TesteAR is to rescue vulnerable young adults, who neither work nor study. We have also extended a helping hand for the students to land a right job in a right company,” says Michref. He went on explaining how some of the Globant employees volunteered to help the trainees with the task of facing interviews and sharpening their skills further.

Software testing does not require complex studies, and trainees can easily learn the ropes of the trade in a matter of days and launch a lucrative career in the IT industry. “Our program has benefited more than 600 people indirectly,” Michref said.

“No major company strategy is complete these days without a statement on corporate social responsibility (CSR). Companies espouse their desire to invest in communities and care for the environment,” said Hassan describing the need for instituting an award for CSR programs. Global outsourcing firm Teleperformance won the award last year.

Opertti of IDB: “Tremendous” benefits for CALA nations

By Tarun George

Earlier this month in New York City, a panel of Jamaican trade officials and ambassadors came together to once again make the case for increased investment in the Caribbean island nation. What was different was their audience. Instead of focusing on American executives as usual, this time they targeted the Jamaican business elite, living and working in the US. In other words, they were leveraging potentially their greatest asset outside their own country: the national diaspora.

The Example of Indians

It’s difficult to overstate the potential positive benefits of overseas diasporas to their home countries. “As a national government, how you leverage the migrants living in other countries has tremendous implications,” said Fabrizio Opertti, Chief of Trade and Investment at the Inter-American Development Bank. “It means new ideas, new contacts in the companies in which they work, new opportunities when they decide to come back home, and new practices and ideas which they’ve seen in the countries they migrated to.” Over the years, diasporas have been particularly useful in driving foreign direct investment (FDI) back to their home countries. “For example, the Indians who migrated and set up in Silicon Valley have been responsible for much of the FDI into India since the 90s.”

Opertti did caution against labelling overseas diasporas as the sole cause of successful FDI examples like this. But the IDB is engaged in research around what he called Dimensions Driving Diasporas (DDI), to find out how exactly diasporas grow and contribute to their home economies. “We’re gathering data on a few DDI projects in the Trinidad and Tobago animation sector, and also programs in El Salvador and Mexico,” he said.

Diaspora success stories are well and good, but how can they be encouraged and taken further? As Opertti says, “The challenge for the IDB is to prevent these individual cases from remaining isolated occurrences, but to create the platforms that facilitate this movement of ideas and resources from the diasporas.”

With that in mind, the IDB is currently working on several new diaspora initiatives, specifically with the goal of services realization:

The Colombian Global Services Loan Program: Recently approved by the IDB executive board, and slated to begin operations this year, this is a program that deals specifically with mapping the Colombian diaspora abroad, and match-making for business partnerships and collaborations. This initiative would be focused on the Colombian services and investment sector. Last year, the IDB approved a $12 million loan to help Colombia expand its services trade globally.

Online Diaspora Marketplace: Having just passed the approval phase, this project aims to create a regional marketplace of diaspora resources and business ideas, for the development of the Central American nations. According to Opertti, the IDB is collaborating with the investment promotion agencies of several of these countries in order to implement the program.

Latin American International Diaspora Engagement Alliance (La Idea): A new initiative by the US State Department, La Idea seeks to connect US Hispanic and Latin American entrepreneurs in a wide variety of sectors. The IDB works with this program specifically in international investment promotion.

How to Leverage?

There is a huge role for the investment promotion agencies and ministries of commerce of LatAm countries in building partnerships with overseas diasporas.  Opertti said he sees an increasing willingness on the part of these countries to engage nationals living abroad. Jamaica, mentioned earlier, is one example of a proactive approach. In fact, Jamaica is hosting a Diaspora Marketplace Expo in Montego Bay in mid-June, with the specific purpose of showcasing new business ideas to conference attendees, many of whom will be part of the Jamaican diaspora living in the US.

“The IDB provides resources to countries, but they need to do outreach to their diasporas,” said Opertti.  “They must identify who the qualified nationals abroad are, provide them with opportunities through meetings and events, and help them consider their home countries as alternatives for investment.”

Possibly the most obvious mistake in this area, according to Opertti, is the temptation to use a blanket approach and tackle the diaspora as a whole. Instead, it’s critical to use a sector-specific approach, even within the services industry. The KPO diaspora for example, is very different from the ITO diaspora. This is where the civil society of a country can be very useful. According to Opertti, there is a significant role for non-profit organizations or trade associations, in developing targeted relationships with diasporas along specific lines of the services industry.