Nearshore Americas | The New Axis of Outsourcing » News & Analysis http://www.nearshoreamericas.com Experts in BPO, IT and Software in Latin America and the Caribbean Mon, 13 Apr 2015 16:42:47 +0000 en hourly 1 Cuba, Central America Top U.S Agenda at 7th Summit of the Americas http://www.nearshoreamericas.com/resurgent-sets-agenda-favor-cuba-central-america-7th-summit-americas/ http://www.nearshoreamericas.com/resurgent-sets-agenda-favor-cuba-central-america-7th-summit-americas/#comments Mon, 13 Apr 2015 14:45:09 +0000 http://www.nearshoreamericas.com/?p=44655 By Sean Goforth Traditionally, the Summit of the Americas is a get-together that succeeds in showing how the hemisphere is, politically at least, coming apart. During the commodity super cycle from 2005-2012, when Hugo Chavez espoused an anti-American path toward economic development that gained adherents across a wide swath of the region, the conference served as little more than a ...

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By Sean Goforth

Traditionally, the Summit of the Americas is a get-together that succeeds in showing how the hemisphere is, politically at least, coming apart. During the commodity super cycle from 2005-2012, when Hugo Chavez espoused an anti-American path toward economic development that gained adherents across a wide swath of the region, the conference served as little more than a launch pad for verbal fireworks. More often than not the United States and its traditional allies, Colombia and Mexico, were mere spectators.

The 7th Summit shaped up quite differently. Given that Venezuela’s recession spells the end of generous handouts to Caracas’s professed allies, and that Chavez’s successor, Nicolas Maduro, is looking more and more desperate by the day, Venezuela is something of a spent force in the region.

Meanwhile, the United States has a strengthening economy, and has re-emerged as an energy player in the hemisphere. This is drawing more countries to seek closer trade ties with el norte. So, unlike recent summits, this time around many Latin American delegates steered clear of Venezuela and walked toward the United States.

Adding a bit of urgency, the 7th Summit was one of the last chances for many leaders from Latin America to engage with President Obama. The 8th Summit in Suriname is due to be held in 2018; by then someone else will occupy the White House. And even though Obama will be in office until January of 2017, most of his energy this year and next will likely go toward shoring up the projects that will burnish his legacy, namely securing the future of his namesake healthcare reform, and addressing some of the security challenges posed by terrorist groups in Africa, the Middle East and Asia.

Hence, the stage was set last weekend for the 7th Summit, held in Panama City, to be most meaningful since the First Summit in 1994. Of greatest importance was the prominent role that Cuba and Central America enjoyed.

Cuba, Central America…South America?

The most symbolic change was Cuba’s attendance at the Summit of the Americas. Until now, Cuba had been blackballed from the summit because the founding members decided in 1994 that they wanted the venue to uphold democratic values; that decision was reversed in 2012, paving the way for Cuba’s attendance this year.

Obama and Cuban leader Raul Castro shook hands and meet for an hour. One major change that Havana is pushing for is an end to the U.S. declaration of Cuba as a state sponsor of terrorism. Senate and White House aides reported before, during, and after the summit that Obama is working to drop the classification, which would pave the way for Cuba to gain access to global financial markets. But no major announcement occurred at the summit.

Beyond this, both sides tempered enthusiasm over a speedy restoration of U.S. ties with Cuba. On Saturday, with Obama sitting next to him, Raul Castro reiterated, “we need to be patient, very patient.” From Obama’s perspective, the quick move came on Dec 17, and now any steps he takes are likely to run up against the opposition of anti-Castro groups in Florida and New Jersey, the reality of Cuba’s paltry human rights records, and the bureaucratic weight of five decades of U.S. policies designed to isolate Cuba on the international stage. For Castro, the ultimate concern is ensuring that opening of the economy does not trigger calls for political reform that could threaten Castro’s hold on power.

Also, in recent months the Obama administration has launched an effort to help spur the development of Central America, as signified by a 2016 fiscal budget that calls for an additional $1 billion in aid to Central America.

James Bosworth, Director of Analysis at Southern Pulse, points out that Obama arrived in Panama City in a position of strength: “President Obama’s administration has managed a level of sustained engagement in both [Central America and the Caribbean] that has helped rebuild US influence and friendships.” Capping this off, Bosworth notes that recent US proposals to increase economic and security aid in Central America has been welcomed across the trouble spots of El Salvador, Guatemala and Honduras.

Nexus 2015: U.S. Dep. Asst. Secretary of State Francisco Palmieri will outline the Obama administration’s plans to energize Central American economies.

Nexus 2015: U.S. Dep. Asst. Secretary of State Francisco Palmieri will outline the Obama administration’s plans to energize Central American economies.

On April 30, U.S. Dep. Asst. Secretary of State Francisco Palmieri will detail the Obama administration’s plans to energize Central American economies in the Nexus 2015 keynote address.

Facebook CEO Mark Zuckerberg’s prominence in Panama City was one big surprise. In a business conference held alongside the summit, Zuckerberg hinted that Facebook saw Cuba as a potential destination for investment: “One day, as Cuba starts opening up, it will be something we might consider.” The cautious words nonetheless stirred frenzy. Zuckerberg’s express purpose was to champion Internet.org, a wide-ranging collaboration that includes big business, NGOs, and communities. Zuckerberg also met with Brazil’s Dilma Rousseff and, in a press conference with Panamanian President Juan Carlos Varela, announced that through Internet.org all Panamanians will have access to the Internet.

Still, this does not add up to broad U.S. reengagement with Latin America. An actionable consensus on immigration and trade remains elusive. And the focus on Central America is not without its critics, especially those who would like to see more intensive U.S. engagement across all of Latin America. Miami Herald columnist Andres Oppenheimer recently asked, “Has the United States given up on South America?”

At least for the duration of President Obama’s term the answer may be ‘yes,’ but even so that’s not necessarily a bad thing. For starters, greater U.S. involvement in South America has backfired consistently over the past two decades. In the present context, it is easy to imagine an active but clumsy U.S. policy in South America rescuing the Maduro government from a collapse of its own making by energizing the Chavista ranks, while also renewing dormant frictions over U.S. military partnerships in the region.

Obama’s best option for now involves letting the region’s populists keep up their old antics while showing that Washington is an honest broker in its select dealings.

Realistic Expectations

As with most high-profile conferences, the real importance of the 7th Summit will be determined by the policies and cooperation it inspires. And there is even more reason to be cautious this time around given that many countries are just beginning to feel the sting from the end of Venezuela’s generous oil diplomacy, and this threatens to choke off budding economies from Jamaica to Cuba. It’s not at all clear how the Caribbean and Central America will secure oil and gas in the future.

On a deeper level, Latin America’s most stubborn problem is not one Washington can readily solve: inequality. Over the past two decades, groups like USAID have played a major role in helping South American governments devise welfare programs. These have succeeded in getting children elementary education, reducing hunger, and expanding access to basic healthcare. Poverty has been dramatically reduced as a result, and today “extreme poverty”—defined by the World Bank as income of less than $1.25 a day—has been largely eliminated, except in pockets of Latin America.

Eric Olson, Associate Director of the Latin American Program at the Woodrow Wilson Center, said the U.S. should not extend a blank check to Latin America.

Eric Olson, Associate Director of the Latin American Program at the Woodrow Wilson Center, said the U.S. should not extend a blank check to Latin America.

However, in other respects broad plans for development has yielded few results, and as the U.S. reengages with the region the remedy is likely to involve finding the right bureaucratic partners, then slowly advancing better governance by increasing tax compliance and cleaning up law enforcement. “The U.S. should not extend a blank check to the region,” says Eric Olson, Associate Director of the Latin American Program at the Woodrow Wilson Center. Rather Olson notes that Washington should, “reach prior and mutual agreements with each country around benchmarks for success, disbursing resources as benchmarks are met.”

Further work on development will have to be carried out over the coming months and years. But even though such measures rarely grab headlines, Bosworth notes that the groundwork is already in place. Recent initiatives aimed at Central America and the Caribbean, he says, “are smart long-term policies that will pay benefits over decades.”

Even if the summit only succeeds in bringing together select parts of the hemisphere, that’s still progress, especially given the divisions that have persisted across governments in the Americas up to this point in the 21st century.

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AT&T Fined $25 Million for Customer Data Breach at Mexico Call Center http://www.nearshoreamericas.com/att-agrees-pay-25-million-customer-data-breach-call-centers/ http://www.nearshoreamericas.com/att-agrees-pay-25-million-customer-data-breach-call-centers/#comments Thu, 09 Apr 2015 17:23:35 +0000 http://www.nearshoreamericas.com/?p=44625 By Narayan Ammachchi AT&T has agreed to pay US$25 million in fines after two employees at its call center in Mexico confessed to accessing customers’ information and reselling it to strangers. Analysts say this is the largest fine ever issued by the U.S. telecom regulator for data security and privacy violations. The settlement comes amid intense federal investigation into AT&T’s ...

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By Narayan Ammachchi

AT&T has agreed to pay US$25 million in fines after two employees at its call center in Mexico confessed to accessing customers’ information and reselling it to strangers. Analysts say this is the largest fine ever issued by the U.S. telecom regulator for data security and privacy violations.

The settlement comes amid intense federal investigation into AT&T’s call centers in Mexico, Colombia and the Philippines. Neither the FCC nor AT&T has disclosed the name of the vendor that ran the call center on behalf of the telecom operator.

“This puts outsourcers under a lot of pressure,” said Peter Ryan, Lead Analyst with research firm Ovum, adding that data security is the big issue on the minds of both buyers and service providers.

“This is a drawback for the call center industry in Mexico, Colombia, Central America and also the Caribbean,” Ryan told Nearshore Americas.

Chief Global Strategy Officer for KM² Solutions, Maggi Williams does not think that nearshore operations are any more vulnerable to such scams than anywhere else. “The nefarious fiddler and thief is likely to pop anywhere and find the hole in the process that enables him or her. Sounds as though knowledge of this particular hole was pretty well spread around,” she said.

Globally call center data breaches and fraud are nothing new, but the settlement highlights the vulnerability of such centers. According to research by Pindrop Security, an Atlanta-based “phoneprinting” start-up, one in 2,900 calls to contact centers are attempts at identity theft. Pindrop’s researchers examined 105 million phone calls and looked at how fraudsters conned call agents.

The threat of insider collusion with fraudsters as in the case of AT&T employees selling data makes preventing such fraud even more difficult as they are able to access the stored data relevant to the customer. According to the Federal Communications Commission (FCC), the two AT&T employees disclosed personal details of almost 280,000 U.S. customers, including “full or partial” Social Security numbers.

This came to light in May last year when the FCC began investigating the suspected data breach at AT&T’s Mexico call center, which handles calls from Spanish-speaking U.S. customers. Who tipped off the FCC?  Ryan said, “it’s anybody’s guess. I think some employees at the call center informed the U.S. regulator.”

The investigation found that employees accessed protected account-related data, known as customer proprietary network information (CPNI), and obtained other personal information that customer care agents ask for before unlocking a customer’s mobile phone. The employees then sold that information to “unauthorized third parties” who allegedly peddle stolen cell phones or secondary market phones and also try unlocking such devices.

According to Ryan, “There has not been a significant issue around bribery historically, but we have had some anecdotal evidence of gang activity popping up in call centers in some Central American countries.”

To prevent such breaches, Ryan said call center operators have to check the criminal background of every new recruit to make sure that they have good credit rating. “When it comes to securing internal processes, they have to put in place a system that will lock the computers whenever managers find something suspicious. They even need to make sure that there are no personal devices on the floor, including pen and paper.”

Williams echoed Ryan’s comments, adding that she was “surprised that the service provider had such lax security protocols that this particular breach was able to go on so long and not become scuttlebutt in the call center.”

She said: “If you look at all of the things we try to do in terms of monitoring of agents, not having cell phones on the floor, no pen and paper, the industry tries to prevent this type of thing. Obviously people do find ways around it.”

Ryan said his firm recently conducted a survey during which they asked enterprises what qualities they look for when choosing outsourcer. Data security and fraud prevention appeared to be the second important factors for them, he said. “The security of clients’ data is absolutely top of mind for nearshore providers,” Williams added.

As part of the settlement, AT&T must put in place robust internal processes to prevent future breaches and notify customers if and when their personal details are stolen.

FCC Chairman Tom Wheeler stated that “the agency cannot and will not stand idly by” when a carrier’s lax data security practices expose the personal information of hundreds of thousands of Americans. He went on to say that the agency will punish every phone company that fails to safeguard the personal information of customers.

Travis LeBlanc, Chief of the Enforcement Bureau, stated that the regulator will make sure that all phone companies properly secure customer data and promptly notify customers when their personal data has been breached.

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Latin America Claims Part of the ‘Subscription Economy’ Pie, But Challenges Remain http://www.nearshoreamericas.com/latin-america-subscription-economy-pie-challenges-remain/ http://www.nearshoreamericas.com/latin-america-subscription-economy-pie-challenges-remain/#comments Wed, 08 Apr 2015 14:45:05 +0000 http://www.nearshoreamericas.com/?p=44583 By Anna Heim According to Gartner, 35 percent of the Global 2000 companies will generate revenue through subscription-based services and revenue models by the end of this year. Latin America is also following the same trend, and represents an interesting opportunity for those who are able to overcome its specific challenges. There is no doubt that the market is huge, ...

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By Anna Heim

According to Gartner, 35 percent of the Global 2000 companies will generate revenue through subscription-based services and revenue models by the end of this year. Latin America is also following the same trend, and represents an interesting opportunity for those who are able to overcome its specific challenges.

There is no doubt that the market is huge, and it is already bearing fruits for global B2C companies. As Netflix revealed during its fourth quarter 2014 earnings report, the film and TV streaming company has passed the milestone of 5 million subscribers across the region, with more to follow. “If you take that 5 million number that we talked about, and 65 million in terms of addressable [market], we think we’ve got a lot of room for growth in the market,” its CFO David Wells told shareholders during the earnings call that ensued.

In return, these big players are boosting the adoption of subscription models in Latin America, while creating new consumption habits. Once consumers have tried these offers and understood their convenience, they are much more likely to request similar payment facilities for other verticals. This is true for B2C, but also for B2B, with giants such as SAP entering the subscription economy to adapt to changing demands.

A panel discussion on subscription services at the Assinaturas Day in São Paulo

A panel discussion on subscription services at the Assinaturas Day in São Paulo

However, Latin America presents a unique set of challenges for subscription-based models, for which foreign companies need to be prepared. During its first months of operation in the region, Netflix made sure to keep shareholders informed about the difficulties it was facing on its path to success — which made its good results a pleasant surprise to non-believers.

“We’ve had payments issues and e-commerce trust issues that we’ve wrestled with and improved over the last 3 to 3.5 years,” Wells explained. “For example, many banks turn down all e-commerce debit card transactions due to fraud risk, making it a more challenging environment than our other markets,” the company noted in a previous letter to investors.

Brazil’s ‘Boleto’

Netflix made particularly clear that it would have to adapt to the “uniquely Brazilian form of payments known as Boleto Bancário.” Skype’s website gives one of the best explanations of this online/offline concept from a consumer perspective. “When you pay with Boleto Bancário, you can either visit a bank or retail outlet to make the cash payment, or pay via your online banking account,” it notes.

However, it also adds a warning: “Although we provide you with a payment confirmation in real time, the payment can take a little while to go through — generally three to seven days from the date of payment for the product to show up in your Skype account, but it can take longer depending on your bank.” As The Brazil Business points out, providers need to take other rules into account as well, such as the fact that overdue fees vary from bank to bank.

This can quickly become a headache for subscription services. Factor in fraud and default rates unseen in other markets, and it is understandable why many foreign companies may struggle when they first enter Latin America — not to mention the potential logistics pains if they sell physical products.

Benchmark’s Case

Benchmark Email can now charge customers in Brazilian currency, both via local credit cards and via 'boletos'.

Benchmark Email can now charge customers in Brazilian currency, both via local credit cards and via ‘boletos’.

In the case of US company Benchmark Email, its main difficulty was payment processing, Brazil manager Fillipo Madella recalls. When the DIY email marketing company started operations in the country in March 2013, it found out that many businesses — even larger ones — were unable to pay in dollars and/or via credit cards. As a result, its staff had to manually issue ‘boletos’ in Brazilian currency each month to charge its subscribers. “We were losing clients,” he confessed.

According to Madella, things changed when Benchmark started to work with Brazilian startup Vindi, which provides companies with recurring billing solutions. “It solved this problem for us,” he says. Benchmark is now able to charge clients in Brazilian currency, both via local credit cards and via ‘boletos.’ Not only does it generate less work behind the scenes, but it also remove barriers to entry, as clients feel more inclined to trust Benchmark.

Bench Email Brazil manager Fillipo Madella explain stat Brazil was the first country where Benchmark adopted recurrency - but others will follow.

Benchmark Email Brazil manager Fillipo Madella says Brazil was the first country where Benchmark adopted recurrency.

As a result, Benchmark might eventually adopt similar practices in other Latin American countries; it already has offices in Colombia, Guatemala and Mexico, which presents its own payment challenges, such as a preference for wire transfers. “Brazil was the first country where we implemented local recurrency, because of demand for ‘boletos’, but I think others will follow,” Madella predicted.

This reality creates many openings for a company like Vindi, which has been growing fast since its creation in 2013. According to its founder and CEO, Rodrigo Dantas, it hopes to reach 1,300 clients this year, mostly organically. “The recurrency market is booming in Brazil, and companies are looking for a service like ours,” he said.

Learning From Shoes4you

Vindi founder and CEO, Rodrigo Dantas hopes to reach 1,300 clients this year.

Vindi founder and CEO, Rodrigo Dantas hopes to reach 1,300 clients this year.

A former banking executive at Itaú Unibanco, Dantas was convinced to push forward with Vindi when he witnessed first-hand the failure of Brazilian Shoedazzle clone Shoes4you, which sent new pairs of shoes to its members on a recurring basis. Despite funding from high-profile investors such as Accel Partners, Redpoint Ventures and Flybridge Capital, the company’s managing team decided to cease operations in 2013 (its brand assets have since been sold).

Shoes4you’s core problem? A lack of proper payment tracking, which caused an unexpected hole in its business model. As a matter of fact, some members started to cancel payments directly through their banks, perhaps to bypass the company’s somewhat cumbersome cancellation process. Unfortunately, Shoes4you took weeks to notice, and kept on shipping them shoes in the meantime; word of the bonanza soon leaked out, and what started out as a small problem became a huge cash leak. When the company found out, it decided it was already too late, and ended up closing shop.

“I asked Accel whether Shoes4you would have closed had it used Vindi, and I was told it wouldn’t have, which convinced me to step on the gas pedal,” Dantas recalled. In addition to online subscription clubs, Vindi’s partners now also include offline businesses, such as English teaching schools and fitness centers.

Ongoing Migration

SmartFit uses Vindi's recurring billing solutions for its low-cost gyms.

SmartFit uses Vindi’s recurring billing solutions for its low-cost gyms.

One of Vindi’s international clients is low-cost gym chain Smartfit, which boasts a 700,000 client base through its 230 clubs in Brazil, Chile, Mexico and the Dominican Republic. With a monthly price point below US$25, it ended up driving smaller competitors out of business when they failed to adopt payment practices that were as favorable to customers.

While monthly subscriptions may seem similar to payments in installments, which have been extremely common in Brazil, they have the advantage of not generating any debt. Furthermore, they don’t involve credit card limits, which make them well suited to the country’s current economic context. “The migration has already started,” Dantas says.

This belief in the subscription economy led Vindi to organize Assinaturas Day (“Subscription Day”), a series of networking events aimed at federating its sector and discussing its issues. The latest and fourth edition took place within BRNewTech‘s monthly meetup in São Paulo, and attracted 250 attendees. Considering its success, Assinaturas Day could also turn into a full-blown conference, not unlike the Subscribed event organized by Zuora, which is one of Vindi’s US counterparts.

Building From Latin America

Leandro Faria, co-creator of metrics tracking dashboard Saasmetrics.co, says although it is till in private beta, Saasmetrics already has 51 clients.

Co-creator Leandro Faria says that, although it is still in private beta, Saasmetrics already has 51 clients.

One of the three entrepreneurs invited by Vindi to pitch their idea at BRNewTech’s event was Leandro Faria, co-creator of metrics tracking dashboard Saasmetrics.co, which focuses on subscription businesses. Although it started out as an in-house project within Stefanini’s big data venture Datastorm, it is now picking up steam on its own.

While it is still only in private beta, it already has 51 clients. Interestingly, most of these do not come from Brazil or Spanish-speaking Latin America: 54% are from the US and 21% from EMEA, Faria said. In addition, 112 companies have joined Saasmetrics.co’s waiting list to start testing its public beta as soon as it launches.

“We aren’t actively working on distribution and customer acquisition yet, but we might initially focus on the US, also because the main platforms we are integrating for automatic data collection (such as Stripe and HubSpot) have higher penetration rates there. We may give special attention to SaaS in the beginning, but our goal is to serve as a base for any subscription business,” he explained.

Beyond Monthly Billing

A demo of Saasmatrics' tracking dashboard.

A demo of Saasmatrics’ tracking dashboard.

Faria has also been sharing interesting advice with companies that want to launch their first subscription offers. In a blog post, he cautioned them against automatically associating subscriptions with monthly billing cycles, which can cause cash flow issues. “Yearly billing can make all the difference in the world for the health of your SaaS business,” he said.

Leiturinha co-founder Guilherme Martins emphasizes the need for retention incentives.

Leiturinha co-founder Guilherme Martins.

More generally, subscription-based companies can benefit from well-thought retention incentives. For instance, Brazilian book club for kids Leiturinha offers several pricing levels: “the longer the subscription period, the smaller the monthly price,” co-founder Guilherme Martins explained. The formula seems to have worked well, with the company now shipping books to more than 6,000 subscribers, for whom reading is quickly becoming a habit.

According to Dantas, this is one of the requirements for success: having a product or service whose consumption is truly recurring. Once that basic criterion is met, companies can now rely on a growing set of tools to track their metrics and boost their revenue. One thing is for sure: in Latin America and elsewhere, the subscription economy is here to stay.

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Conflicting Views on Latin America’s IT Services Growth, But Cloud Still Seen As Key Driver http://www.nearshoreamericas.com/strong-growth-forecast-latin-americas-services-market-region-quick-harness-cloud-technology/ http://www.nearshoreamericas.com/strong-growth-forecast-latin-americas-services-market-region-quick-harness-cloud-technology/#comments Tue, 07 Apr 2015 15:45:38 +0000 http://www.nearshoreamericas.com/?p=44575 By Duncan Tucker The Latin America IT outsourcing market is set to almost double in value from US$38.08 billion in 2014 to US$65.76 billion by 2019, according to a new study by market research firm TechNavio. The report, titled “IT Services Market in Latin America 2015-2019“, forecasts market growth to quicken from 9.74% in 2014 to 13.24% by 2019, equating to ...

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By Duncan Tucker

The Latin America IT outsourcing market is set to almost double in value from US$38.08 billion in 2014 to US$65.76 billion by 2019, according to a new study by market research firm TechNavio.

The report, titled “IT Services Market in Latin America 2015-2019“, forecasts market growth to quicken from 9.74% in 2014 to 13.24% by 2019, equating to a healthy compound annual growth rate of 11.55%. This is “natural” and inevitable growth, as more companies in the region become aware of the benefits of IT outsourcing and realize that they do not have the personnel to take advantage of the latest technology themselves, the author of the report, Faizan Akhtar, told Nearshore Americas.

However, Guilherme Campos, IT Industry Analyst at Frost & Sullivan, challenged this prediction, stating that it is unlikely for the market to exceed one-digit growth in this period. “In countries like Colombia, Mexico and Peru there is an expectation for two-digit growth in the years to come,” he told Nearshore Americas, “but Brazil, which accounts for half of the market, is expected to experience one-digit growth of about 7% or 8%. Even considering that some smaller countries are growing by two digits, I think 11.5% is a bit too optimistic.”  The IT services market usually grows at about three times the rate of GDP in Latin America, Campos explained. With recent studies forecasting GDP growth of about 2.5% for the next few years in Latin America, the IT services market will not experience two-digit growth, he concluded.

The TechNavio report shows that Brazil continues to dominate the Latin American IT services market with a 50.39% market share, followed by Mexico (15.1%), Argentina (6.43%), and Chile (4.48%), while the rest of Latin America combined accounts for the remaining 23.6%. Of the major players in the market, Campos noted that Brazil is currently losing market share, along with Argentina and Venezuela, while Mexico, Colombia, Peru and to a lesser extent Chile are all growing faster and gaining market share.

While the Latin American market is still “lagging behind other more mature markets like APAC (the Asia-Pacific region) and the United States,” Akhtar noted that businesses in the region have a greater appetite to try out new technologies. “When it comes to new technology like Cloud and mobility these guys are actually going and testing it out,” he said. Campos agreed that Latin American companies are early adopters and that the market makes a good laboratory for the testing of new technology such as cloud. “The main reason way companies turn to cloud is to reduce costs,” he said, noting that there is greater potential for savings in Latin America because the region is not as developed as some of the more mature markets. “I went to IBM’s main global cloud event and they said that some of the most complex cloud projects they have all around the world are in Latin America – in Mexico, Brazil or Argentina – because of the lack of infrastructure and the other challenges in the region,” Campos said.

TechNavio counts banking, financial services and insurance (BFSI); telecoms; the government and public sector; retail and logistics; and oil and gas as the key customer segments for IT services in Latin America. Of these, Akhtar said BFSI is likely to experience the most growth over the next five years. “It’s the one industry that is always at the forefront,” he explained. “They have to really lead when it comes to technology adoption from a business standpoint. There are other verticals that can be at the forefront, but BSFI always leads across any region, especially the banking sector.”

Drivers of Growth

The report states that the key drivers for growth in the region are the increased adoption of offshore business practices, increased broadband penetration, increased IT demand from the government sector, increased centralization of data centers and increased adoption of the latest IT initiatives. However, the author was keen to emphasize that above all “this is natural growth.” Akhtar explained that “as more and more organizations expand and venture into new product categories, they’re going to realize that they’re not fully competent in handling these functions. It’s just a matter of time before they decide to concentrate on their core businesses and ignore these other functions which need to be handled by experts. Yes, companies like to have full control and ownership over everything so they may get some satisfaction from that in the short-term but in the long-term they will feel the expenses and the hurts of managing something that is expected to continue to grow. So it’s just a matter of time before they realize the benefits that come with outsourcing IT services. It’s not a matter of whether it will happen, but when.”

A lack of tech-savvy workers among client organizations is also driving the increase in outsourcing, Akhtar said. New technologies such as cloud and mobility are so crucial to contemporary enterprises because they do not just support business functions but in many cases they’re becoming “one of the things that actually drive business revenue,” he explained. “The market is not prepared for this. It will not be a smooth transition. There are people at the lower level who are trained and used to IT support functions and they might be very good at what they’re doing now, but the market does not have enough skilled workers to handle this up-can-coming technology. That’s exactly why the organizations are turning to external service providers for help because they can provide those skills.” However, insufficient talent is also a problem for IT service providers in Latin America. “Even these companies are facing similar shortages when it comes to skill sets,” Akhtar added. “The market has not had time to prepare the resources to handle this kind of demand.”

Finding the Right Solution

Other challenges cited in the report include clients’ difficulty in choosing right solution and concerns over client satisfaction. With all of the marketing jargon that is thrown around today, the many clients that are new to IT outsourcing may struggle to determine which solutions best meet their needs. While their lack of knowledge of the market will mean some clients cannot understand why they should pay more or less for certain services, “they have to look beyond cost and choose from their options carefully to find what’s right for their business,” Akhtar said. Campos agreed that finding the right solution is problematic in today’s competitive market. “The challenge nowadays is that most IT providers have very similar portfolios. Everybody is focusing on analytics, cloud, mobility, security and social so it’s kind of hard to decide which solution would be better for your company,” he said. “It’s very complicated.”

The key buying criteria cited in the report are: cost-effectiveness, credibility and stability, scalability, scope, service and maintenance. Campos stated that, “as a buyer you need to have control and know that your information is secure so the IT provider needs to be reliable. After this you consider the need for the provider to have infrastructure, good connectivity and competitive prices. But if you just look at these factors it’s very difficult for a company to say one provider is more reliable than another, because they’re all huge. What’s the difference between IBM and Cisco and HP and Microsoft? It’s very hard, even for the big IT companies, to explain the difference between their solutions and those of their competitors.” Faced with this dilemma, most buyers typically make RFPs (requests for proposals) from three to five providers and base their decision primarily upon the prices they are offered rather than the solutions, Campos added.

Forward-thinking is crucial to making the right decision, Akhtar affirmed: “Cloud technology may not seem to make much sense to an organization at this point, but they must look long-term and think future-proof. What’s the point in saving a few dollars in the short-term with a solution that will became obsolete within a few years, or something that cannot be upgraded to the latest technology after a few years? Making that extra effort to find the right solution will pay off in the long term.”

Green IT Services

The report cites the increased adoption of green IT solutions as a key market trend, noting that “increased concerns over the global energy crisis and the focus on judicious use of energy have led the governments and corporates in Latin America to increase their investments in green IT. Currently, organizations are forced to adopt green IT initiatives to deal with certain issues such as increased carbon footprints, high energy bills, and other environmental concerns. As part of this initiative, organizations are seeking to use renewable raw materials, create awareness about water conservation and waste disposal, and increase energy efficiency.”

The paper explained that “the green IT initiative comprises three stages: assessment, planning, and implementation. It requires companies to create a baseline for energy usage and their carbon footprint, develop detailed roadmaps, and implement specific technologies to accomplish them. There is an increase in awareness about green IT among firms in Latin America, and many companies are expected to implement green IT investment plans in the near future.”

Campos disagreed with this assessment. “Green IT was a trend in 2010 and 2011. Everyone was talking about it but in the past two years I haven’t any providers trying to educate the market about it,” he said. “Due to the present economic conditions in Latin America I don’t think this is the moment for green IT to really grow,” he explained. “Green IT solutions typically cost 5% or 10% more and I speak weekly with CIOs and I really doubt that they would pay 10% more for green solutions while they are trying to reduce costs.”

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Medellín’s Free BPO Training Tackles FAO, Bilingualism and Eco-Gold Mining http://www.nearshoreamericas.com/medellins-free-bpo-training-tackles-fao-bilingualism-ecogold-mining/ http://www.nearshoreamericas.com/medellins-free-bpo-training-tackles-fao-bilingualism-ecogold-mining/#comments Mon, 06 Apr 2015 14:22:12 +0000 http://www.nearshoreamericas.com/?p=44516 By Loren Moss SENA, Colombia’s national career and technical education system, has opened a center in Medellín dedicated specifically to training Colombians with the skills they need to work in the BPO sector. The center is one of 177 training locations throughout the country, and 33 regional campuses, including 10 in Medellín’s Antioquia region, the others in the Antioquia department being ...

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By Loren Moss

SENA, Colombia’s national career and technical education system, has opened a center in Medellín dedicated specifically to training Colombians with the skills they need to work in the BPO sector. The center is one of 177 training locations throughout the country, and 33 regional campuses, including 10 in Medellín’s Antioquia region, the others in the Antioquia department being in Uraba, Puerto Berrio, Bajo Cauca, Magdalena Medio, Antioquia Occidente, and Antioquia Oriente.

Skills taught at SENA are free of charge, and available to all Colombian citizens, regardless of income. Courses include commerce and sales, logistics, finance and banking, IT, and accounting. SENA even has one center dedicated to ecologically responsible gold mining.

“We have a laboratory for 124 seats in BPO, one of the biggest, or the biggest I know of in the educational sector in Medellín at least. And for every one of the 124 seats dedicated to BPO, we have specific groups who learn and work with BPO techniques used in actual companies operating here in Colombia today. All the big BPO companies in Medellín work with us and they sponsor several training groups from the beginning of classes until the productive phase when they work as interns for those companies,” said Dr. Angela Valderrama, Subdirector of the BPO Commerce Center in an interview with Nearshore Americas.

Osvaldo Monroi, academic coordinator of the center, Ángela Valderrama, SENA director, and Luis Ospina (far right), SENA education director

Osvaldo Monroi, academic coordinator of the center, Ángela Valderrama, SENA director, and Luis Ospina (far right), SENA education director

“But additionally, we have 14 technologies, accounting and finance, business administration, human talent management, company management, document administration, library management, banking institutions management and finance assistance, financial administration and treasury, administration of pensions, administration of risk and insurance, sales management, marketing, logistics administration, and international negotiation. So, the idea is that all our youngsters should be able to strengthen their skills in these labs, and through that process of education they have marketable skills that they can take anywhere.”

SENA offers two types of educational paths for students interested in a BPO career. There are open enrollment periods every three months, where students apply via the SENA website for classes available at any of the 117 locations throughout Colombia, or for some classes, online education is even available. There are also customized programs that SENA tailors for BPO employers, which trains students to a curriculum specifically tailored to the needs of a particular BPO firm. SENA does this at no cost to the employer, beyond a commitment to hire students successfully matriculating through the program.

“For BPO we are strong in various areas. When we talk about back office processes, we refer to human resources, accounting and finance, document management, company administration; when we talk about marketing we refer to customer service, telemarketing, market research, social media, e-commerce, merchandising, logistics services, international commerce, and international negotiation. All these training capabilities are present our technical education centers. That’s the reason our BPO lab is not only for specific groups we have in contact center training, but for all the students. We are having a huge social impact, in the area of primary employment. 90% of the students that go through our contact center training are employed in contact centers. They undergo the company sponsorship during selection and training, then once they have the degree, the company hires them directly,” says Valderrama.

The program has not ignored the obvious need for bilingual capable students. With support from the government, SENA projects that it will graduate 8,500 English-bilingual qualified students in 2015. Valderrama notes that the Medellín mayor`s office has made English language skills a priority in the metro area, and is supporting SENA with resources to graduate more bilingual students.

SENA is an important part of the government’s social inclusion goals. Valderrama notes that more than 50% of their students are women, and many of them are heads of households. Classes are offered in three shifts, from 6am to 12 noon, from 2pm to 6pm, and from 6pm to 10 pm. The facility is accessible for disabled people; wheelchair friendly, and they have special training accommodations for the visually impaired.

Aside from contact centers, Valderrama notes that SENA graduates are competent in finance and accounting outsourcing, and other back-office skills. “We have had other huge companies, for instance in the commercial area, EXITO,” says Valderrama, speaking of the large Colombian retail chain of Wal-Mart style supercenters. “We educate 700 youngsters for them annually. We are effective in multiple areas. In the banking sector we also have educational alliances with all the big banks: Bancolombia, Banco de Bogotá, Banco de Occidente, Banco Agrario—we work with all these banks for the education of our youngsters. I think we are promoting talent here with this.”

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Uruguay Tech Startup Collokia Leverages Collective Experience For ‘Effortless Collaboration’ http://www.nearshoreamericas.com/uruguaybased-tech-startup-collokia-leverages-collective-experience-effortless-collaboration/ http://www.nearshoreamericas.com/uruguaybased-tech-startup-collokia-leverages-collective-experience-effortless-collaboration/#comments Thu, 02 Apr 2015 13:04:25 +0000 http://www.nearshoreamericas.com/?p=44492 By Duncan Tucker Veteran Uruguayan technology executive Pablo Brenner has just launched the beta version of his latest startup, Collokia, an ambitious collaboration tool aimed at improving efficiency in the workplace. The aim is to create a major global company that facilitates “effortless enterprise collaboration” first in the software development industry, and then in many other markets, Brenner told Nearshore ...

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By Duncan Tucker

Veteran Uruguayan technology executive Pablo Brenner has just launched the beta version of his latest startup, Collokia, an ambitious collaboration tool aimed at improving efficiency in the workplace. The aim is to create a major global company that facilitates “effortless enterprise collaboration” first in the software development industry, and then in many other markets, Brenner told Nearshore Americas.

The founder and CEO of Collokia, Brenner, 52, has enjoyed a long and successful career in the tech industry. Twenty years ago he co-authored the Wi-Fi Specification IEEE 802.11, and today, after many years living in Israel, he is back in his native Uruguay, where he serves as Vice President of Innovation at Globant. His latest project, Collokia, was founded with the help of CTO Jayson Minard, a former technologist at Prezi in Hungary. “I’d been thinking about this project for years and when I met Jayson I realized I’d finally found a guy who could implement it,” Banner said. “He moved to Uruguay in April 2014 and we started the project in June or July last year. We have a mixed team of 10 people from Canada, Russia, Hungary and Argentina.”

Collokia was financed with seed funding by a software company, Brenner’s own savings and additional investment from friends and family in Israel and the United States, he said, noting that there will be further fundraising efforts in the next couple of months. The company has offices in San Francisco and Montevideo, and is also planning to take on more staff once the beta phase is complete.

What Does Collokia Do?

Leveraging machine learning algorithms, statistical analysis and the interconnectedness of data and people, Collokia analyzes its users’ collective experience to help eliminate repeated mistakes, accelerate learning, better leverage unknown skills, and connect people who can help each other. Collokia claims to integrate seamlessly with users’ natural environments so that it can track their activity and immediately provide them with the most relevant resources whenever they need specific information. The proram will suggest specially tailored online results, point to the most up-to-date company libraries or recommend other workers within the same organization who have recently researched the same topic.

The aim is to “increase productivity and stop big companies from doing the same things and researching the same things over and over again,” Brenner said. “One of the things that big companies complain about is that they don’t know who knows what. It’s really difficult to keep track of who has been working with which technology because people don’t always keep records of it,” he explained.

Moreover, Brenner added, “reports from McKinsey show that workers spend about 30% of their time looking for information and researching. In many cases you spend hours or even days searching for something and when you talk to your co-worker he says ‘oh I was looking at that a couple of weeks ago and I also spent two days investigating it.’ There’s a lot of written work being done by people who are researching the same things, so basically we can look at what you’re researching and we can tell you ‘you should talk with this guy because he was researching the same thing three weeks ago.’”

Existing knowledge systems and collaboration tools require people to expend their time and energy manually sharing, indexing or updating their latest research, Brenner said. Many knowledge workers fail to do so, meaning the saved material is updated and other workers cannot always find the most up-to-date information on any given topic. But with Collokia, he claimed, “we can share the knowledge automatically without any additional effort.”

How Does it Work?

“We are writing all kinds of plugins for all of the different browsers and tools that people use so that we can automatically learn what people are doing. They don’t need to tell us, because we can learn from their actions. There are two things we can learn: one is the user’s expertise and the other is whether they need help,” Brenner explained.

When software developers use Collokia, for example, its plugins will be compatible with all of the tools used in programming, as well as basic browsers and search engines. “Whatever you search in Google we can show you the information that’s related with what you’re doing,” Brenner said. “If you search for some software library book in most cases you will find the best results on the second or third page – not on the first page. That’s because the way that Google works is that the more people that use or click on a specific library then it appears on the first page. But as things keep changing in the software industry, the newest things don’t have enough hits yet to appear at the front. So one of the things we will be able to do is reorder Google search results according to the information that’s relevant for each user because we know what they’re working on. So the same search will bring different results for different people.”

Brenner showed Nearshore Americas a demo of how the Collokia plugin works with Google to provide more relevant, annotated search results and personalized recommended searches based on recent user activity. “In many cases if you search for a person on Google you get a Wikipedia box on the side,” he said. “So what we’re working towards is that whenever someone searches for something on Google we will be able to show on the side all the internal information that the company has on the topic: who the experts are, what the related documents are inside the company, etc.

The Software Market

“In the short-term the first market that we’re going to is the software development market,” Brenner said. “Today’s development is not like the old days when programmers used to write all the code themselves. But today a lot of software programmers don’t write all the code; they search through libraries for examples of the code and then they start working on it. In many cases there’s someone in the same company who has already gone through that – somebody that can show you that you’re not looking at the best example or the most updated library.” In such cases, Collokia will advise users, “You’re not working with the most updated library. The CTO decided that we don’t want to use that library anymore; this is the right library to use,” Brenner explained.

“So by looking at what people do on Google or on Stack Overflow we will be able to save time for the programmers and let them know where to find the right examples or advise them to talk to someone who has already been researching the same topic,” he added. “One other example is whenever you have a program error in your software, people typically go to Stack Overflow or Google and start researching, when we can probably give them the immediate solution by putting them in contact with someone in the company who has already been looking at the same problem and found the solution.”

Brenner decided to start by targeted the software industry for several reasons. “It’s an industry we know very well,” he said. “Software companies have a better understanding of the need to buy these kinds of tools – they’re early adopters. This could be very useful for the consulting industry as well, or the finance and investment banking industries. But these guys are much slower at adopting new technology.” Furthermore, he believes Collokia can have a significant impact in the software development market. “We want to increase the productivity of software programmers, which I believe is extremely low today. Obviously we’re much more productive than 20 years ago but we’re still reworking and wasting a lot of time.”

Preparing the Launch

So what does the immediate future hold for Collokia? “We’re just finishing the minimum viable product and we will be installing it at a big software company where we will start testing. Then by May we’ll start beta testing with some other customers and by September we’ll probably be launching the real product,” Brenner said.  “The idea is for this to be a global company solving a global problem. We’re aiming to focus on the U.S. market and in India where there are a lot of programmers and where increasing productivity is very important.” After targeting those two key markets, Collokia “will then probably go to Europe, Israel, Latin America, etc.,” he added.

Collokia will be available in free and commercial versions. “The enterprise version uses information that we obtain from private companies – obviously we will not be sharing information from one company to another. We will charge for this version and it will have all kinds of capabilities and statistics for each company,” Brenner said. Meanwhile, in the open version, “people will be able to share information with friends, family or the community of programmers all over the world. And we will be able to use the information we collate through crowdsourcing to increase the enterprise version,” he added.

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Puerto Rico’s IT Sector Evolves to Service Aerospace Industry http://www.nearshoreamericas.com/puerto-ricos-sector-evolves-service-aerospace-industry/ http://www.nearshoreamericas.com/puerto-ricos-sector-evolves-service-aerospace-industry/#comments Wed, 01 Apr 2015 15:54:53 +0000 http://www.nearshoreamericas.com/?p=44458 By Bianca Wright For Puerto Rico, the vision of a sought-after and established knowledge service economy is coming to fruition, according to the Puerto Rico Industrial Development Company (PRIDCO). Rumors of the saturation of the IT outsourcing market seem to have been misguided; Puerto Rico’s IT outsourcing sector has evolved to meet the sophisticated needs of its clients. PRIDCO executive director ...

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By Bianca Wright

For Puerto Rico, the vision of a sought-after and established knowledge service economy is coming to fruition, according to the Puerto Rico Industrial Development Company (PRIDCO). Rumors of the saturation of the IT outsourcing market seem to have been misguided; Puerto Rico’s IT outsourcing sector has evolved to meet the sophisticated needs of its clients.

PRIDCO executive director Antonio Medina explained: “Puerto Rico has been a manufacturing powerhouse for over 70 years, with traditional segments like textiles. Now we are seeing a movement of the economy to a knowledge service economy. We are moving from a focus on software, customer service, and call centers to more complex research and development for the aerospace industry such as the design of engine parts.”

Medina emphasized that Puerto Rico had long been recognized as a destination for software development. Microsoft Corporation, for example, has made Puerto Rico its manufacturing center for all Office and Vista products intended for the U.S. market.

The benefit of Puerto Rico as an IT outsourcing destination is that it is part of the United States and its population are U.S. citizens, but it offers incentives such as tax breaks. “Although we are part of the U.S, we can negotiate tax rates with companies and they do not pay federal tax rates,” he said. While it cannot compete with other nearshore destinations in terms of labor costs, Puerto Rico offers a highly skilled bilingual workforce.

San Juan-based software development and engineering company Wovenware serves mid-sized companies in the U.S, the UK, Canada, the Caribbean, and Latin America. COO Carlos Melendez said: “Offering the lowest price, which happens in other regions around the globe, is no longer enough: companies need offshore IT resources that do more than just follow the spec, but also provide insights and advice about how to best bring a project to life.”

He emphasized that Puerto Rico has emerged as the nearshore resource of choice for IT because of three key factors: technical skills, economic advantage, and cultural alignment. He, too, is seeing interest in the outsourcing of more complex IT projects. “Everyday we see increased interest in more sophisticated developments especially in mobile app development and big data. And Google recently launched its customizable smartphone pilot Project Ara here in Puerto Rico, for all of the reasons I’ve mentioned,” Melendez said.

Aguadilla: Hub For P.R Aerospace Industry 

The aerospace industry, in particular, has increasingly recognized Puerto Rico as an important hub – and it is not Puerto Rico’s capital, San Juan, that is attracting attention. Aguadilla with its Rafael Hernández International Airport, a former U.S. Air Force Base on the northwest of the island, is emerging as the center of the aerospace industry in Puerto Rico, and for the IT and knowledge services that support it.

As a U.S. jurisdiction, Puerto Rico is primed to service the aerospace market as it “complies with the regulation that states that defense and military-related technologies may only be accessed by U.S. citizens,” according to PRIDCO.

“We have seen significant growth in aerospace, with a 50% increase in the number of jobs committed in the aerospace segment, and recent expansions by companies like United Technologies. In addition, Lufthansa Technik is building a facility for maintenance, repair and overhaul (MRO) in Aguadilla,” Medina said.

BPO and IT services companies are expanding in Puerto Rico to service this aerospace market. On 9 March, Infosys BPO and PRIDCO opened the new 12,000-square feet, 250-seat site in Aguadilla. Infosys will use the new center to deliver “complex order-to-cash business processes for clients in the aviation sector.”

Anup Uppadhayay, Chief Executive Officer and Managing Director of Infosys BPO, said in a statement 
“The new center in Aguadilla, Puerto Rico is a promising regional hub for Infosys BPO. We envision it as a center of excellence for the aviation and aerospace industry.”

He added that the availability of a highly skilled and talented workforce, coupled with the positive business environment fostered by the Puerto Rican government, makes this a favorable destination for Infosys BPO. “Our team here will play a key role in continuing to renew and accelerate process innovation and automation for our clients,” he said.

Honeywell Aerospace is also expanding in Puerto Rico, with a new $35 million electromagnetic compatibility and environmental test laboratory, its second site in the territory. According to Honeywell, the new lab, slated to open in the third quarter of 2015, will support its global aerospace and defense operation in app and software development and aeronautics engineering design. Honeywell’s aerospace technologies are used by commercial and defense aircraft around the world.

In fact, the aerospace industry has set up a number of facilities on the island. According to BusinessInPuertoRico.com, Pratt & Whitney is performing engineering design and analysis for the jet turbine power plants of several aircraft from its InfoTech Aerospace Service‘s division, while Lockheed Martin has more than 60 employees conducting software support services from Puerto Rico for its global operations. The AXON Group and Pratt & Whitney have also established a world-class SAP services center in Puerto Rico, and provide infrastructure services such as information technology security and compliance, and custom application services.

Beyond Aerospace

While the focus is on evolving into more sophisticated IT outsourcing offerings to service niche markets, Puerto Rico still benefits from traditional call center investments. Grupo Ferré Rangel and InfoCision, for example launched their CommSense joint venture in Aguadilla in November 2014. According to Five9’s TMCNet, CommSense provides English-Spanish bilingual voice calls, e-mail blasts and social media customer support and marketing.

Medina added that Atento also expanded recently, announcing a $500,000 investment and the creation of 200 new jobs at its Caguas facility.

The evolution from the provision of basic call center and IT services outsourcing to more sophisticated offerings has been both organic and planned.  “We are definitely seeing a trend of growth based on the concept of exporting services and exporting knowledge,” Medina said. “With Puerto Rico’s highly-educated human capital with its very strong STEM (science, technology, engineering and mathematics) background combined with a significant industrial base, we see that the knowledge service exporting services continues to become more complex in nature.” Medina added that a company like Honeywell not only offers IT support but also global management, procurement, marketing and legal work as an outsourced service with a center of excellence in Puerto Rico.

“As people became more comfortable with the market and started better understanding the level of capabilities of our human capital, there has been a natural evolution towards sophistication,” he said. “However, within the industrial development strategy we have a very clear focus on these emerging segments including aerospace, IT and KSO, among others. Therefore there is a concerted effort to provide growth in these areas by seeking strategic opportunities and attracting them to Puerto Rico.”

Melendez added that they have seen growth in specific industries as they tackle the challenges of Big Data and increasingly mobile workforces. “Our customers include companies in the healthcare, logistics, and aviation services industries, all of which have unique and exciting opportunities for application development and modernization. Our recent projects include machine learning implementations for big pharmaceutical manufacturing plants, integration initiatives for health insurance claims data, and the transformation of a hard-wired, terminal-based IT infrastructure for baggage handling services into a SaaS-based, fully mobile set of applications that have massively improved accuracy and efficiency for aviation service workers at major global airports,” he said.

For Melendez, the key is in providing not only programming skills, but also strategic counsel on how to transform aging IT infrastructure into flexible, value-creating new applications. “Specifically, the IT executives we work with tell us they struggle with the need to reduce technical debt, which is critical for aligning IT with higher-level business goals. We are also helping companies with their big data initiatives, including the implementation of machine learning algorithms into establish business processes,” he said.

While aerospace and its related industries may be offering opportunities for IT outsourcing companies eager to contribute in the knowledge services economy, it is clear that it is not the only point of innovation and evolution in Puerto Rico’s IT sector. “We foresee continued growth,” said Medina.

The Stats Tell the Story

Population: 3.548 million (2014)

IT Sector

  • New jobs committed (since Jan 13 to present): 608 jobs committed
  • New jobs created (out of the committed since Jan 13 to present): 253 jobs
  • Committed investment (since Jan 13 to present): $12.7 million

Knowledge Process Outsourcing

  • New jobs committed (since Jan 13 to present): 4,570 jobs committed
  • New jobs created (out of the committed since Jan 13 to present): 950 jobs
  • Committed investment (since Jan 13 to present): $16.5 million

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Peru’s Stability Key As It Shifts From Serving Spain to South America http://www.nearshoreamericas.com/perus-stability-shift-focus-serving-spain-south-america/ http://www.nearshoreamericas.com/perus-stability-shift-focus-serving-spain-south-america/#comments Tue, 31 Mar 2015 13:00:26 +0000 http://www.nearshoreamericas.com/?p=44432 By Duncan Tucker The fact that Peruvian outsourcers predominantly serve clients in Latin America rather than the United States means the recent strengthening of the dollar against local currencies has had little impact in the South American country. Peru’s economic and political stability has also insulated it against disruption of the market. However, the continued economic crisis in Spain has ...

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By Duncan Tucker

The fact that Peruvian outsourcers predominantly serve clients in Latin America rather than the United States means the recent strengthening of the dollar against local currencies has had little impact in the South American country.

Peru’s economic and political stability has also insulated it against disruption of the market. However, the continued economic crisis in Spain has seen Peruvian service providers lose business, forcing them to lower their already-competitive prices and innovate and diversify their offerings as they concentrate further on servicing the Latin American market, particularly Chile and Argentina, instead of Europe. The lack of market maturity and bilingual capabilities inhibit Peru from cracking the North American market for the time being, but analysts and industry experts say the nation remains well positioned to serve its South American neighbors while it works to overcome the various challenges it faces.

Unaffected by Depreciation

Despite the fact that the Peruvian sol has fallen in recent months – like many other Latin American currencies – as a result of reduced demand for commodities, the Peruvian economy appears entirely capable of weathering the storm, with the government having taken decisive action to stimulate the economy. According to a March 2015 report by investment promotion agency ProInversion, Peru’s GDP has risen steadily every year for over a decade and it is forecast to keep climbing from US$204 billion last year to $212.7 billion in 2015 and $229.5 billion in 2016. The predicted growth rate in GDP of 5.4% for this year and the next puts it well ahead of Colombia (4.5%), Chile (3.7%), Mexico (3.7%) and Brazil (1.8%).

Political consistency is the key to Peru’s economic stability, according to Peruvian business executive Jose Mendoza. “Politically we’re so stable that we’re almost on autopilot. We’re not a country that has suffered from severe economic problems and everyone is conscious of the fact that the economy is the key to stability. And all of our governments have stayed on the same economic path in the last 15 years. That’s very important,” Mendoza – who boasts 25 years of experience in business development, strategy, sales and marketing for tech companies in Peru, Mexico, Ecuador and the United States – told Nearshore Americas.

Sebastian Menutti, an Enterprise Communications Industry Analyst who covers the Peruvian BPO market for Frost & Sullivan, agreed that stability is key to Peru’s appeal: “In the last five to ten years Peru and Colombia have been the most stable countries in Latin America in terms of economics and even from a political point of view. This is a key driver for setting up a business in Peru.”

The reason why the recent depreciation of the Peruvian sol has not affected outsourcing operations is because the currencies have also fallen in other Latin American countries where Peru’s clients or rival service providers are located, Menutti added. “If you measure the market in U.S. dollars then theoretically [the Peruvian market] has been affected by the depreciation of the local currency, but from a competitive point of view I think that all the countries in Latin America – including Peru’s key competitors like Colombia and Mexico – they’ve also been affected by the depreciation of their currencies against the U.S. dollar,” he explained.

Shift from Spain to Latin America

What has impacted Peru’s outsourcing market is reduced demand owing to the economic crisis in Spain, Menutti added. According to ProInversion, Europe represented 50.51% of the market for Peruvian contact centers in 2012, considerably more than South America (26.96%), North America (5.65%) and Central America (1.13%). But Menutti believes this has begun to change in the last few years, with Argentina and especially Chile becoming the key markets for Peruvian contact centers.

“The economic crisis in Spain has generated social and political pressure for contact centers and their clients to bring back onshore some of the work that was previously offshore,” he said. “Peru is still a lot cheaper than Spain but now there are more people in Spain who are willing to work in contact centers because of the high level of unemployment. Recruitment and training costs have also fallen in Spain because contact centers are experiencing much lower attrition levels because of the unemployment too.” Menutti continued: “This has been a challenge for Peru in the last two or three years, one that has led many contact centers to focus more on their Pan-American operations.” This has also led to contact centers in Peru offering lower prices, he explained, because of the extra capacity they have as a result of losing contracts with providers in Spain.

Carla Segura Suarez, CEO of Siglo Outsourcing Peru, told Nearshore Americas that the breakdown of the industry’s reliance on Spain “could have been a good thing in the long term because it took us out of our comfort zone.” Segura Suarez, who is also the founder and president of the Peruvian BPO and ITO Association (APEBIT), which is comprised of 35 businesses, explained that “it used to be easier to negotiate prices but there was less innovation. After what happened with Spain our businesses began to search for alternatives and new solutions in order to manage their prices better. I think we’re a lot more stable now because of that.”

Setting the Right Price

The Peruvian BPO market, which counts Peruvian multinationals like Grupo Romero, Grupo Interbank and Grupo Gloria among the biggest domestic clients, has become “very intense with a lot of competition” in recent years, Mendoza said. This has led many providers to look to specialize in specific fields like SAP and applications maintenance outsourcing, while offering increasingly low prices in order to win clients, he explained. Yet “a low price does not guarantee the right person for the job,” Mendoza noted. Moreover, providers soon found that they “could no longer sustain those prices so they started to add hours in order to make up for it. The clients began to realize that the development costs were rising above their estimates and that the market prices were dishonest and this caused conflict in negotiations.”

Mendoza believes that service providers in Peru now “have the opportunity to establish long-term relationships with their clients by charging the correct price instead of trying to win more business by lowering their prices in an unsustainable manner.” The man-hours model is becoming more efficient, he noted, and “the more serious Peruvian businesses are maturing and prioritizing results over prices, but the majority are still looking for the lowest prices.” When questioned about such practices, Segura Suarez said she was not aware of any such incidents but acknowledged that “there could have been cases of this because whenever prices begin to fall there can be a lack of trust as everyone tries to recoup their costs.”

Other Challenges

Segura Suarez added that “in the last year, new technologies such as virtual agents, voice biometrics and text-to-speech software, have reached Peru. They’ve not yet been fully implemented in Peru but this is starting to happen. There should be strong development of this technology in the contact center space in 2015 and 2016… These new technologies have worked well in other countries so the big challenge in Peru is for the population to adapt to this technological change. How will we implement this technology in the different provinces with different cultures?” Unlike in countries such as Chile, Colombia and Argentina, Peru’s “provinces are still very underdeveloped,” she said, noting that the contact center industry and the economy in general would benefit from further decentralization beyond the big cities like Lima, Trujillo and Arequipa and into the more remote mountain and jungle regions.

Retention is another major challenge facing Peruvian service providers today, Mendoza said. “There’s a lot of demand for talent,” he said, so “as your project is moving forward your talent leaves because someone is offering them more money elsewhere. So new less experienced people come in and you don’t have the same level of talent that you started with, and the level of service begins to decline badly. That’s where the problem is, in constantly maintaining a good level of service.” What can be done to mitigate this? “Young people like to work in an urban bubble,” Mendoza replied. “If you make them feel like their workplace is their home and give them opportunities to develop their professional careers then I think they’ll stay. Of course money comes into it, I think money accounts for about 30% of decisions, but a more important aspect is what their employers and their work environments are like. I know a lot of companies that don’t pay great wages but their staff are happy, talented and extremely loyal. It’s important to recycle talent, promoting from within and maintaining a close relationship with local universities. This will help you to achieve what the client wants: a more constant level of service in the long-term.”

Improving Service Quality

Menutti agreed that “retention is a key challenge for Peruvian contact centers,” noting that “a lot of them have introduced coverage plans to fight back against attrition.” However, Menutti believes that the key challenge facing Peru is the need to improve quality, as its low costs are “not enough for it to compete against countries like Colombia, which has a similar price point but is more competitive from a quality point of view.”

The maturity of the market is closely related to the level of quality in Peru and this should improve in time, he said: “When bigger contact center providers enlarge their operations in Peru they usually bring the best practices from all over the world and introduce them to Peru. That’s an important part of improving the quality of services.” Menutti also mentioned that “quality has a lot to do with the people providing the services. So education is key to providing quality services.”

Mendoza believes that Peru is well on its way to improving in this respect, noting that “the education sector is also going through some very important changes. They’re raising professors’ salaries, investing in infrastructure, innovation centers and high-performance schools and providing grants for the most promising students. A lot of great talent is coming out of the universities now.” Mendoza added that “sometimes Peruvians are not aware of their own abilities, but they’re very creative. Many people have come from difficult circumstances and scarce resources and they’ve proven capable of meeting tough challenges. That ability is a competitive advantage in any field. They’ll always try to find a solution, no matter how complex the problem. It’s in their nature and it’s a very important characteristic in successful people.”

The potential of Peruvian talent was amply demonstrated this month when a team of students from Peru’s Universidad Nacional won the third place in the global coding competition CodeVita after what the Indian multinational TCS – which organized the competition – described as “an extremely hard-fought final.” The six-hour final required competitors to solve “coding problems that tested their technical knowledge, their ability to execute and implement computer code in a structured setting as well as their speed, agility and creativity,” TCS said. The finalists from Peru received an internship offer from TCS as well as a $3,000 dollar reward.

The North American Market

While Mendoza is confident that Peru can emulate the progress that countries like Mexico have made over the last twenty years, he admits that the level of English in his country still leaves a lot to be desired. “This is another challenge that we face and it’s going to take us a little longer to fix this. Many people understand English but when they need to interact they struggle to speak in English,” he said. This inhibits Peru from competing seriously with other Latin American countries for a stake of the lucrative North American market. However, even if the level of English were to improve significantly, Menutti suspects that Peru is better off “consolidating its status as a services hub for other countries in Latin America.” Because aside from the current scarcity of English speakers in Peru, other countries such as Mexico, Colombia or the Central American nations hold greater appeal due to the cultural affinity and geographic proximity they can offer clients in the United States.

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Social, Mobile, Analytics and Cloud Dominate Brazil IT Despite Slowdown http://www.nearshoreamericas.com/brazil-draft/ http://www.nearshoreamericas.com/brazil-draft/#comments Mon, 30 Mar 2015 13:27:34 +0000 http://www.nearshoreamericas.com/?p=44343 By Silvia Rosa After having seen double-digit growth rates in recent years, the Brazilian Information and Communication Technology (ICT) sector should register moderate progress in 2015 due to the slowdown of the Brazilian economy. Consultancy firm IDC predicts 5% growth for the Brazilian ICT market this year, which should attain US$165.6 billion. This rate is lower than the average expected ...

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By Silvia Rosa

After having seen double-digit growth rates in recent years, the Brazilian Information and Communication Technology (ICT) sector should register moderate progress in 2015 due to the slowdown of the Brazilian economy.

Consultancy firm IDC predicts 5% growth for the Brazilian ICT market this year, which should attain US$165.6 billion. This rate is lower than the average expected for Latin America this year, 5.7% for the IT industry and 6% for the telecom sector. “The IT sector continues to grow above the GDP and, despite the slowdown of the Brazilian economy, there is opportunity for companies to improve their efficiency through the use of technology,” said Pietro Delai, research manager at IDC Brazil.

Globally, the IT sector should grow at around 3% to 4% this year, totaling US$ 3.8 trillion. This year’s forecast places Brazil as the sixth largest ICT market in the world.

In 2014, events such as the Fifa World Cup and the presidential election affected Brazil’s economic growth, resulting in a reduction of investments in the IT market. The consolidated figure for 2014 has not yet been revealed, but the Brazilian Association of Software Companies (ABES) estimates that this sector grew at around 7% to 8% last year.

After showing a 7% increase in its turnover in Brazil last year, Stefanini – a global provider of technology-based business solutions – is one of the companies forecasting lower revenue growth this year. The group revenue totaled 2.35 billion Brazilian real last year. “2014 was a difficult year and we expect an even greater challenge this year. On the face of this, we have to break paradigms and work more proactively,” said CEO Marco Stefanini.

SMAC in the Middle of IT

According to Stefanini, the projects area should be the segment most impacted by the slowdown of Brazilian economy. The company intends to double its revenue by 2016 and has focused on trends related to social tools, mobility, big data and cloud computing, a segment often referred to as SMAC (Social, Mobile, Analytics and Cloud).

Overall, hardware was the segment most impacted by the slowdown of the Brazilian economy in 2014, while software sector remained robust. “The hardware sector grew at around 6% last year, while software showed a 10% increase, with services showing progress between 6% and 7%,” said Jorge Sukaire, ABES CEO. The telecom segment accounts for almost 80% of the total investments in Brazilian ICT sector and it should reach US$ 104 billion in revenue this year, a 6% increase over the previous year.

Cloud computing and mobile services should concentrate investments this year. IDC points out SMAC (Social, Mobile, Analytics and Cloud) as a trend for 2015.

Mobile service offerings and professional services for corporate networks will lead the demand. According to IDC, 2015 will be the year in which 4G is expected to reach critical mass in the country, reaching 11 million users, which will boost revenue growth of mobile data in 16.2%, compensating for the decrease of 1.7% on fixed voice services. Sales of computers, tablet devices and smartphones should represent about 45% of all IT investments in Brazil during this year, totaling US$ 27.5 billion.

The expansion of connectivity and the popularity of smartphones should increase investments in the Internet of Things as well. For 2015, IDC forecasts that 130 million devices will be connected, accounting for half of all the connected devices in Latin America. The main projects should be restricted to large companies – 19% of companies said they had plans in IoT for the next 12 months – aiming to improve the quality of products and further increase productivity. “Brazil is not an early adopter market and investments in this area are still slow compared to other countries such as China,” said Delai.

The use of mobility should also grow in the corporate area. Companies, which seek operational efficiency and cost reduction, should focus on the mobilization of processes through the use of corporate devices to work.  “Companies are still in a slow process when you look at the use of mobility to gain productivity and accelerate processes,” Delai said.

Mobility is one of Capgemini’s focus areas in expanding its operation in Brazil this year. In order to grow in a scenario of weak economic growth, Capgemini intends to focus on innovation and competitiveness, expanding their offerings related to client experience, mobility, insights, and date and cloud services. “We intend to combine the experience that we have in consulting area with our services portfolio to take on strategic and innovative projects,” said Paul Marcelo Lessa Moreira, CEO of Capgemini Brazil.

The company’s goal is to grow between three and five percent this year. In 2014, Capgemini invested in the construction of service centers and expanded its operations in some Brazilian cities such as Salvador, Campinas, Curitiba and Porto Alegre, as well as opening a global center of infrastructure services in Araraquara, a city in the countryside of the estate of São Paulo.

The advancement of mobility will boost demand for “endpoint security” in 2015, a market that should reach about US$ 117million in Brazil this year. “Companies are concerned about data security,” said Delai.

Infrastructure and cloud services will also remain in the spotlight in 2015. Most companies that adopt cloud-based services will do so in hybrid environments, i.e., in private and public networks.  Delai expects that the growth of IT infrastructure as a service will boost the demand for public cloud, which should show a 50% increase in revenue this year.

In the same way, Big Data analytics and Business Intelligence have also returned as a trend among large and medium enterprises in 2015, with investment in the sector estimated at US$788 million. “In Brazil, companies usually seek big data solutions to stop losing money, but the use of this tool to identify business opportunities is still incipient,” explained Delai.

To the Third Platform

Another trend identified by IDC is the investment in the third platform – that involves technologies such as IoT, 3D printing, Cognitive Systems, Robotics, Neural Interfaces and Next Generation Security – which will be the basis for accelerating innovation inside companies, and will require development from the developers, due to the changes in architecture of applications, which no longer have a focus on predicting a certain processing capacity and which starts to prioritize elasticity. According to IDC, there are few skilled workers for this transition, which could increase the cost of hiring these professionals.

The lack of professionals continues to be a problem in the IT sector in Brazil. “The training of new professionals hasn’t grown in the same pace of the sector and the labor cost in Brazil remains above the Latin America average,” said Delai.

Despite the devaluation of the Brazilian real making IT exports more competitive, the huge tax burden and high labor costs harm competitiveness. “The outsourcing contracts in the IT sector are long-term. Nobody closes a contract because the exchange rate is more advantageous,” explained Delai. “The devaluation of the real is favorable to exports, but, on the other hand, increases the cost of importing products in the hardware and software segments,” Sukaire said.

Another problem that Brazilian companies will have to deal with is the change in the tax legislation. The government raised the payroll tax for IT services companies this year to 4.5% of 2% of revenue. “This measure should increase cost for IT companies. Changes in tax laws increase regulatory risk and worsen the business environment,” said Sukaire.

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Qualfon Inaugurates Major BPO Center in Guyana http://www.nearshoreamericas.com/qualfon-open-largest-bpo-complex/ http://www.nearshoreamericas.com/qualfon-open-largest-bpo-complex/#comments Fri, 27 Mar 2015 18:28:06 +0000 http://www.nearshoreamericas.com/?p=44367 By Narayan Ammachchi BPO provider Qualfon has opened its largest campus in the Guyanese capital of Georgetown. Spread across a 10-acre plot in East Bank Demerara, the campus is expected to grow to accomodate over 6,000 workers over the next five years. Qualfon first arrived in Guyana ten years ago. This is Qualfon’s third contact center in the Georgetown area. In ...

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By Narayan Ammachchi

BPO provider Qualfon has opened its largest campus in the Guyanese capital of Georgetown. Spread across a 10-acre plot in East Bank Demerara, the campus is expected to grow to accomodate over 6,000 workers over the next five years. Qualfon first arrived in Guyana ten years ago.

This is Qualfon’s third contact center in the Georgetown area. In a statement, the firm said it had already begun recruiting customer service representatives, technical support representatives and managers.

Kirk Laughlin, the Founder and Managing Director of Nearshore Americas, was among several guests who spoke highly on what Qualfon and Guyana have created together.

“What is impressive about the commitment of Qualfon is that it is enabling a new generation of young people to become globally fluent. Those people can take the fluency and do amazing things. They can start their own businesses, rise to senior level positions in Qualfon, putting them in touch with a global ICT industry that is growing very fast and changing quickly,” he said. “There is something very special here and this is what is really powerful about the prospect of the business outsourcing industry in which outsiders like me, observe the specialness, the unique features that even people in that country don’t fully recognize.” Laughlin’s comments were featured in several local media reports.

Beyond its size and the level of employment that the campus will generate, it is also noteworthy for its “green” features, including solar panels, a rainwater harvesting system and an onsite waste-water treatment facility.

Other facilities include a cafeteria, call center training center and a health club. The campus will eventually contain two call centers, with one of the centers becoming operational by May. Another contact center, with 114,000 square-feet floor space, will also house a community center and an interfaith chapel.

Qualfon says Guyana has a huge potential to become the call center capital of South America because it is the only nation on the continent where English is the first language and it offers a cost structure that is competitive with India and the Philippines.

Laughlin agreed that Guyana is a “surprising prospect” within the Latin American and Caribbean BPO and ITO space. “Guyana has made it very clear that this country is willing to work with investors to meet them half-way, to provide value, to expose to these investors what the value is,” he said.

In addition to Guyana, Qualfon has delivery centers in the United States, the Philippines, Mexico, and China. Qualfon’s capacity grew substantially in May last year when it acquired U.S. call center firm Center Partners, adding 2,500 employees and six delivery centers in North America.

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