Nearshore Americas | The New Axis of Outsourcing http://www.nearshoreamericas.com Experts in BPO, IT and Software in Latin America and the Caribbean Fri, 15 May 2015 23:05:57 +0000 en hourly 1 Speculation Grows Over Telefonica’s Potential Acquisitions http://www.nearshoreamericas.com/speculations-rise-telefonicas-potential-acquisition-axtel/ http://www.nearshoreamericas.com/speculations-rise-telefonicas-potential-acquisition-axtel/#comments Thu, 14 May 2015 16:55:55 +0000 http://www.nearshoreamericas.com/?p=45300 By Narayan Ammachchi Speculation is mounting that Telefonica will make a bid to acquire Axtel or MegaCable to retain its share in Mexico’s telecom market, which is undergoing a dramatic transformation following government reforms and AT&T’s purchase of Iusacell and Nextel. But the Madrid, Spain-based operator has neither denied nor confirmed that it was moving in to purchase. Megacable is ...

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By Narayan Ammachchi

Speculation is mounting that Telefonica will make a bid to acquire Axtel or MegaCable to retain its share in Mexico’s telecom market, which is undergoing a dramatic transformation following government reforms and AT&T’s purchase of Iusacell and Nextel.

But the Madrid, Spain-based operator has neither denied nor confirmed that it was moving in to purchase. Megacable is the second largest cable operator in Mexico, with a market share of around 40%, while Axtel is a small fixed-line operator.

Speculation has grown since the publication of a recent article by The Financial Times, in which Francisco Gil Díaz, Telefónica’s Mexico president, said the acquisition of MegaCable and Axtel could help the Spanish firm consolidate its position in the North American country.

Operating under the brand Movistar, the Spanish telecom giant is the second biggest operator in Mexico and has reportedly invested US$ 13.5 billion in the country over the past decade. Last year, there was similar speculation that Telefonica would acquire Iusacell, but it ended up being bought by AT&T instead.

The arrival of AT&T is posing a threat to Telefonica, so much so that aggressive expansion is the only option for the company to retain its market share in the country.

Months ago, Telefónica sold out its British subsidiary O2 UK. Analysts expect that the Spanish telecom giant will use the proceeds of this sale to bolster its operations in emerging markets, particularly Mexico and Brazil.

Last September, Telefonica launched a 4G-LTE network in Mexico and reports say it will expand this high-speed network to 20 more cities by the end of this year.

Telefonica controls 20% of the Mexican telecom market, a small figure compared to the 70% of America Movil.

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State Dept’s Francisco Palmieri: “We Are at a Historic Moment in the Americas” http://www.nearshoreamericas.com/state-depts-francisco-palmieri-historic-moment-americas/ http://www.nearshoreamericas.com/state-depts-francisco-palmieri-historic-moment-americas/#comments Thu, 14 May 2015 16:42:02 +0000 http://www.nearshoreamericas.com/?p=45301 In his keynote address at Nexus 2015, Francisco Palmieri, the Deputy Assistant Secretary for the Caribbean and Central America at the U.S. State Department, declared that change in U.S. foreign policy in the region is creating enormous opportunities for private sector investors.

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In his keynote address at Nexus 2015, Francisco Palmieri, the Deputy Assistant Secretary for the Caribbean and Central America at the U.S. State Department, declared that change in U.S. foreign policy in the region is creating enormous opportunities for private sector investors.

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Brazilian Businesses Invested $60 Billion in IT Last Year http://www.nearshoreamericas.com/report-brazil-enterprises-invested-60-billion-information-technology-year/ http://www.nearshoreamericas.com/report-brazil-enterprises-invested-60-billion-information-technology-year/#comments Thu, 14 May 2015 15:33:13 +0000 http://www.nearshoreamericas.com/?p=45294 By Narayan Ammachchi Enterprises across Brazil shelled out US$60 billion in information technology in 2014, making the country the world’s 7th biggest IT market, according to a study released by the Brazilian Association of Software Companies (ABES). The primary beneficiaries of this investment were software and IT services firms, who received $25.2 billion in total. Much of the investment came from micro ...

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By Narayan Ammachchi

Enterprises across Brazil shelled out US$60 billion in information technology in 2014, making the country the world’s 7th biggest IT market, according to a study released by the Brazilian Association of Software Companies (ABES).

The primary beneficiaries of this investment were software and IT services firms, who received $25.2 billion in total.

Much of the investment came from micro and small businesses, while medium-sized enterprises accounted for just 4.33%, according to the study, which was commissioned by ABES but was conducted by IDC.

According to the report, Brazil accounts for as much as 46% of the Latin American IT market.

In recent years, many global technology firms – including German firm Bosch Service Solutions, the Indian IT outsourcing firms Tech Mahindra and Wipro, and Spain’s Indra – have expanded operations to Brazil.

As recently as this week, Unicom Engineering, a provider of application platforms and lifecycle support services for software technology developers, expanded to Brazil with the launch of an office in Sao Paulo.

The study shows that the IT market in Brazil, including hardware, software and services, has grown by 6.7% compared to 2013. Software makers and IT services firms have also registered a significant growth during the period.

The southwest region of the country received the lion’s share of investment, with 60.67%. The south claimed 14.53%, while the mid-west and the northeast regions seized 10.9% and 10.1% of the investment respectively. The states in the north of the country received less investment.

At the end of last year, there were 120 million Internet users in Brazil. ABES expects the country’s Business Intelligence and Analytics market to reach $788 million this year.

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Latin America Can Lead the Way in SMAC Evolution But Challenges Remain http://www.nearshoreamericas.com/latin-america-lead-smac-evolution-work/ http://www.nearshoreamericas.com/latin-america-lead-smac-evolution-work/#comments Thu, 14 May 2015 14:56:31 +0000 http://www.nearshoreamericas.com/?p=45281 By Bianca Wright The importance of solutions that offer integration of Social, Mobile, Analytics and Cloud – often abbreviated to the acronym SMAC – is increasingly difficult to ignore. Although the term was coined a few years ago, it is rapidly becoming the key buzz-term in IT, whether on-, off- or nearshore. As SMAC continues to evolve and client needs ...

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By Bianca Wright

The importance of solutions that offer integration of Social, Mobile, Analytics and Cloud – often abbreviated to the acronym SMAC – is increasingly difficult to ignore. Although the term was coined a few years ago, it is rapidly becoming the key buzz-term in IT, whether on-, off- or nearshore. As SMAC continues to evolve and client needs change, Latin American companies are embracing the change and tackling aspects of this type of integration.

Katharine Rudd, Managing Director of Transformation Services at Alsbridge explained that SMAC is a pretty broad spectrum of services and technologies that is moving quite quickly with regards to evolution.

Alsbridge's Katharine Rudd, Managing Director of Transformation Services, said Latin American companies need to consider SMAC in the context of customer interaction and analytics.

Alsbridge’s Katharine Rudd said Latin American companies need to consider SMAC in the context of customer interaction and analytics.

Patrick Millar, Co-Founder and CMO at Formatic.Ly, emphasized that “Everybody is social, everybody is mobile; so from the perspective of the customer (all of us), the need for companies to have good social media engagement and good mobile technology is critical. This is a given; Darwinism will thin out the ranks of companies that don’t have excellent social and mobile strategies.”

He added that analytics and cloud are critical for providers of mobile and social. “Consumers don’t care about how their social and mobile solutions are provided, as long as they are easy to use, reliable and secure,” Millar said. “Providers of the social and mobile services need to stay on top of the rapidly changing analytics and cloud ecosystem so they can deliver best in class services.”

Minacs’ VP of Solutions Architecture & IT Governance Neri Basque added that, for companies trying to stay on top, integration of SMAC is of paramount importance. “Expectations are such that consumers will only prove loyal to the solution of the moment, the innovative and customer-centric solution,” he said. “The next generation has very limited loyalty and patience, thus it’s important to be ready and flexible.” The message from all seems clear: ignore SMAC at your peril.

The SMAC Evolution

While the current emphasis on SMAC is gaining attention, SMAC itself is evolving. Millar noted that the trend continues to shift radically toward more mobile and more social. He cited the Kleiner Perkins annual state of the internet slide deck which shows massive shifts in usage that are happening on very short timelines.

Millar added that the buyer of software development services for social and mobile is switching – arguably has switched – from the technology group to the marketing team. “The CMO will be outspending the CIO in these areas,” he said.

In addition, he noted, cycle times are shorter than ever. “Formal releases every few months (or years) are going the way of the dinosaurs. Apps and cloud-based platforms are being continuously updated, which creates the need for excellent DevOps skillsets,” Millar said.

Millar emphasized the increasingly greater demand for analytics to measure how well the social or mobile solutions are working. “Gone are the days of assuming that an app will help polish the company’s brand. That app now needs to have demonstrable ROI. Analytics are not just ‘chart porn’; they are critical to understanding customer behavior and shifting trends at a detailed level,” he said.

According to Millar, the level of analytics now being delivered is resulting in new classes of employees being needed. “The much-hyped Data Scientist is a real need to go through the statistics being generated and make sense of them,” he said.

Minacs’ VP of Solutions Architecture & IT Governance Neri Basque said SMAC will have great impact on user experience and the Internet of Things.

Minacs’ VP of Solutions Architecture & IT Governance Neri Basque said SMAC will have great impact on user experience and the Internet of Things.

Basque highlighted two areas where he sees the most impact with regards to SMAC: User Experience and the Internet of Things (IoT). “With the evolution of SMAC, the next generation of enterprise applications is beginning to focus on usability, end-user experience, and easy portability,” he said. “These measures will ensure the architecture is integrated, managed, and personalized providing a contextually relevant experience to end users supporting their new work style.”

With the expectation that there will be 20 billion connected IoT devices by 2020, Basque said that IT departments will need to provide an information infrastructure layer capable of processing vast amounts of data streaming into the enterprise in real-time, as well as learning from this information and making real-time intelligent decisions.

Millar added that security is front and center for consumers of social and mobile. “While common sense, it should be stressed that social and mobile applications are not an area to take short-cuts. The power of the infrastructure can work for you, but also massively against you if your security is breached,” he cautioned. “It is quite possible that a failure of your mobile and social stack due to a security breach could also mean a failure of your company due to massive loss of consumer trust.”

He noted the need for significant advances in testing methodologies and services. “Due to the scale that consumer apps and cloud solutions can experience, they need to be tested in very different ways to understand how the systems will handle potentially extreme loads,” Millar said.

Latin America Makes Its Mark

With shifting and evolving focus areas, it is easy to assume that the U.S is keeping in step while other parts of the world – Latin America included – rush to keep up. That is not quite the case, however.

Basque explained: “The Latin American region is addressing the SMAC trend, in a lot of cases even better than we are in North America. Latin American companies have had to adapt a lot faster, case in point is the growing service models through WhatsApp driven by sheer customer demands.”

He added that companies in the region are more advanced and creative, younger, smaller and able to take more risks. “Local teams are trying to be innovative and competitive. Take Guadalajara, for example; they are known to be the Silicon Valley of Mexico due to the number of IT-related engineers, proximity to California, and the investment that companies like IBM and HP have made there.”

Tyler Pharr of Alsbridge noted LatAm's visible interest and investment in SMAC, particularly in Mexico.

Tyler Pharr of Alsbridge noted LatAm’s visible interest and investment in SMAC, particularly in Mexico.

Tyler Pharr, a Director at Alsbridge based in Mexico City, said: “There is visible growth and interest and investment around SMAC, certainly in Mexico.  IBM recently announced their opening of a cloud center in Querétaro, featuring their SoftLayer cloud technology, that will deliver cloud services locally to Mexican clients as well as nearshore to U.S customers.” He added: “Providers like Argentina-based Globant focus on newer technologies, value-added services and innovative solutions that include SMAC as well as Big Data, gaming, consumer experience and wearables.”

Millar added that there is more than a little irony in the fact that Latin American markets are sometimes more advanced than the U.S in their use of SMAC technologies. “The primary computing device in much of Latin America is the smart phone – and people are doing more with their smart phones there than many people in the U.S,” he said. “I would love to see more of this innovation and creativity make its way into the software development projects that are worked on by teams in this market.”

The trend can yield increased interest in nearshore, too. “The most obvious Latin American connection is with regards to customer interaction and analytics. Offshore and nearshore contact center and client interaction and engagement will be greatly affected by mobile integration and business analytics, via big data and cloud,” Rudd said. “Every consulting and services company now has digital advisory services and offerings, which SMAC falls right in the middle of.  How to deliver digital transformation and how to leverage outsourcing will be key in the next five years.”

Alsbridge MD Bill Huber highlighted SMAC’s significant potential for Latin America.

Bill Huber, Managing Director at Alsbridge noted that SMAC has significant potential for Latin America. “For one thing, SMAC technologies, together with automation, neutralize some of the advantages of offshore labor costs. In addition, a significant percentage of customer-facing ‘digital’ application development is being performed in an ‘agile computing’ model – meaning closer to the business with accelerated development times, with social media and mobile apps at the forefront,” he said, emphasizing that this type of work favors geographic and time-zone proximity.

“At the same time, the large-scale offshore “factories” are becoming less advantageous. This means that smaller-scale development shops with greater cultural affinity – such as can be found in LATAM – can be an advantage,” Huber said.

Avoiding Obstacles

It is not all smooth sailing for Latin America, however. “The A in SMAC is not well served in the nearshore community,” Millar noted. “This is potentially a great growth opportunity for nearshore companies as there is a dire shortage of people in this space in the U.S also.”

He added that analytics is not only about providing interesting data sets and charts, but also about interpreting the data and providing meaningful commentary. “I am only aware of one nearshore company that is looking into this with the eye to hiring data scientists,” Millar said.

Millar went on to say that cloud presence would continue to be a tough issue to work through. “At this time I am only aware of Amazon and Microsoft having big cloud data centers in South America and these are only in Brazil – Sao Paulo for both, Rio also for Amazon. I believe that IBM may have more data centers in South America but am not aware of the details. Working remotely in North American data centers will be slow and painful – there is no avoiding the latency involved in the long round trips for data.”

Other challenges for Latin American companies include English skills and client business understanding. Basque emphasized: “The challenge is to make sure that every project keeps SMAC top of mind; that it actually becomes second nature, in your development DNA.”

He emphasized that Latin American companies need to demonstrate:

  • Technological relevance: When LatAm developers are consistently and appropriately showing U.S developers cool new ways to do things in the new SMAC world, then they will have arrived. This is only happening in selective instances at this time and has much room for improvement across the industry.
  • Cutting edge methodologies: While Agile has been fairly broadly adopted in Latin America, it has not been adopted uniformly well. There is plenty of room for growth, but there are stand-outs who are doing well.
  • Demonstrated innovation: If providers in LatAm want to succeed with SMAC technologies, they need to do better in the innovation space. The world is flat in terms of talent and ideas, so we should be hearing of more ideas coming from Latin American firms rather than the assumption that the clients have all the ideas.
  • Design thinking: Design is often left as a last minute consideration or, in the case of nearshore, something that is done in the US. The most progressive firms are encouraging clients to incorporate design in the overall flow of the project.

Millar cautioned that evolution is not a smooth process; it is one of punctuated equilibrium, where longish periods of slow change are interspersed with rapid explosions of diversity. “In the fossil record we have events such as the Cambrian explosion. In IT, this period will be looked back on as one where many companies that could not adapt either died or were absorbed my more successful ones,” he said.

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Twenty-four Hours in Port au Prince, Haiti http://www.nearshoreamericas.com/twentyfour-hours-port-au-prince-haiti/ http://www.nearshoreamericas.com/twentyfour-hours-port-au-prince-haiti/#comments Wed, 13 May 2015 23:43:06 +0000 http://www.nearshoreamericas.com/?p=45268 By Kirk Laughlin Like many people in the Nearshore services marketplace, I have long considered Haiti to be a market that will one day “get there” and become a viable contender for BPO business, but that day always seemed to be in the distant future. Much like Cuba, Haiti may be near, but it is far from a regular focal ...

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By Kirk Laughlin

Like many people in the Nearshore services marketplace, I have long considered Haiti to be a market that will one day “get there” and become a viable contender for BPO business, but that day always seemed to be in the distant future. Much like Cuba, Haiti may be near, but it is far from a regular focal point for new BPO investment interest. When CFI Haiti – the investment promotions group – invited me to visit Port au Prince recently, I gladly accepted and in a short span of time I was able to toss aside a bunch of inaccurate notions about the country and replace them with a list of unexpected assets and points for further inquiry.

Below is a time-lapse summary of what I saw, who I talked to and what observations and thoughts were generated along the way:

May 5th 3:46pm EST: Arrive on a Copa flight from Panama into Port au Prince.  Passed through three checkpoints, first stop was to collect a US$10 entry fee, second was the immigration folks and third was customs. All were done expeditiously: From de-planning to stepping into the CFI transport van, not more than 20 minutes elapsed. Traffic moved leaving the airport, although congestion was commensurate with what you would expect for an emerging-markets city of 700,000.

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4:55pm EST: Checked-in to the brand new Marriott Hotel, approximately 10 miles from the airport. The $45 million, 175 room hotel opened in February – where former President Bill Clinton was on hand along with Digicel’s founder and CEO Dennis O’Brien, who credited Clinton for pushing him to invest in the hotel three years ago when things were looking pretty grim in Port au Prince. Digicel, the dominant mobile carrier in Haiti and across much of the Caribbean, also operates a 1,000-person plus operations center just adjacent to the Marriott (Haiti has added 2,500 new hotel rooms in the last three years, totaling nearly 4,500 for the whole country). The hotel is equipped to handle small conferences and exhibitions, by the way, and also houses a nice restaurant opening to a large, sun-baked patio.

7pm EST: I met up with two local entrepreneurs – Ricardo Merores and Edouard Baussan –  who own and operate a small BPO firm called “Davos International.” Both men studied in North America, and Ricardo gained significant professional experience working at a BPO center in Toronto. We ventured over to a new rooftop lounge at the Karibe Hotel, just outside of Petion-Ville which is a prime hub for shopping and nightlife. Ricardo and his partner were open about the fact that “selling Haiti” remains a serious challenge. The lack of a strong track record for BPO operations, a perception of instability in government, and assumptions that a French-speaking country has little to offer an industry demanding English-speakers are among the biggest obstacles.  While enjoying a few bottles of “Prestige” – the national beer – we had a more serious discussion about what Haiti really offers and how wide the gap is between reality and perception (a familiar topic for virtually anyone doing business in Nearshore). So far, Davos has been supporting domestic back-office work, mainly in government and insurance.

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9:30pm EST: Back at the Marriott, and having interacted in the last few hours with maybe 20 or more Haitians – all speaking great English – I began to already question my assumptions about Haiti being a ‘French-first’ market.  Started looking at data on the levels of deportees returning to Haiti from the United States, and based on summary review, learned there has been a steady increase in recent years.

May 6th 8AM EST: On our way with team CFI Haiti to our first stop – a former warehouse, textile mill that has largely been converted for use in services and BPO. Claude Apaid, CEO of Triangular S.A., and owner of the complex welcomed us in – and explained the reason he has begun investing in BPO: “We expect Haiti to be increasingly well positioned to support global services.” His argument that Haiti was “becoming more competitive” prompted a quick bit of research on the World Economic Forum’s Competitiveness Index rankings. Haiti, again being the poorest of countries in the Americas, does struggle in virtually every competitiveness category – however the surprising finding came when reviewing the country’s “labor market efficiency,” which placed Haiti at the exact same level as Colombia, Guatemala and Panama and above the Phillipines, Mexico, Brazil and India. The figures seemed to reflect Haiti’s relatively strong support for fair labor practices (Claude, by the way, made clear that unions are a non-factor in the BPO industry in Haiti). Claude also stressed the strength of Haiti’s ICT infrastructure – slowly but steadily loosening the monopoly grip by the former government incumbent which is required now to lease capacity and, as a result, broadband prices appear to be dropping (our quick assessment: Telecom costs are probably somewhere in the medium to high category as compared to other markets in the region. Another point for further inquiry).

9am EST: Claude, who both operates his own BPO and also rents space to local BPO operators, rounded up a group of agents. We met nine – all with outstanding English skills, and virtually all of them had lived in the United States – one for over 40 years.  The individuals not only spoke well, but they presented well – confident without being boastful. There was a palpable sense that they felt fortunate to have a full-time, professional  job and remarked that many more friends and associates who had previously lived in the United States are among those looking for work in Haiti. The going rate for BPO agents? We gathered the range is somewhere between $300 and $400 per month, but with further analysis a sharper figure is sure to emerge.

 

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10am EST: A whirlwind tour of available office space was initiated, and our guide was Darragh Dolan, a Digicel executive and native of Ireland who has lived in Haiti for over six years. We toured two multi-story office buildings – both of which are owned by Digicel and acquired through acquisition (staff in both offices were integrated into Digicel’s main ops center about four miles away). Both buildings are clearly suitable for BPO operations – equipped with HVAC, telecom and electricity links and relatively easy access to public transport. The buildings (one measuring 1494 sq. meters and the other 1217 sq. meters) have the capacity to support – as many as 250 to 300 agents, depending on configurations.

Noon EST: Informative luncheon back at the Marriott with top executives from Digicel, CFI Haiti and also the head of a startup BPO talent recruitment firm.

2pm EST: Shuttled over to CFI’s main office to hear a really interesting presentation from Pierre Liautaud, the executive VP of Infrastructure at GB Group, which is engineering a very ambitious – 400+ hectares – ‘integrated economic (free trade) zone’, which in essence is a combination port, business park, and residential center all about 30 minutes north of Port au Prince, on the seaside. The office space is effectively a shell, within which BPO operators can customize their operations. The ‘Port Lafito’ project is intended to create more than 25,000 new jobs in Haiti by the year 2020.

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3pm EST: Summary discussions with team CFI around labor, tax incentives, rule of law, economic and political stability and overall message CFI is trying to get to the larger outsourcing community. Nailing down an exact number of adult-age, ready to work English speakers in Haiti was a bit challenging – but the conservative figure we came away with was: 20,000 Haitians.

4pm EST: Venture back to the airport – easy passage through security and after one final check from a random police officer (he quickly backed away after explaining what I was there for), I boarded my flight back to Panama.

Summary: You can only get so far during a quick 24-hour visit, but without question I came away with the sense that Haiti is building a pretty powerful argument to find its niche in the Nearshore BPO services market. With costs comparable to another strong new upstart – Guyana – and proximity that beats many other destinations, Haiti has the opportunity to build a compelling case. Political instability is certainly an issue – the upcoming elections seemed to have paralyzed the country to some degree with a large number of candidates seeking the presidency. Nonetheless, all Nearshore markets have their liabilities and Haiti – if it plays its cards right – can capitalize on its increasingly cosmopolitan, multi-lingual asset base to become one of the surprise Nearshore players in the next several years.

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Foreign Investment Fell Across Much of Latin America in 2014 http://www.nearshoreamericas.com/year-foreign-investment-declined-sharply-latin-america-report/ http://www.nearshoreamericas.com/year-foreign-investment-declined-sharply-latin-america-report/#comments Wed, 13 May 2015 15:22:48 +0000 http://www.nearshoreamericas.com/?p=45258 By Narayan Ammachchi Thanks to a drop in commodity prices and the slowing Chinese economy, foreign investment in Latin America hit a sharp decline in 2014. The top 10 regional economies all saw a decrease in FDI in 2014 except for Panama, says fDi Markets, a research unit of British business daily The Financial Times. The region’s major economies, Mexico and Brazil, captured the ...

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By Narayan Ammachchi

Thanks to a drop in commodity prices and the slowing Chinese economy, foreign investment in Latin America hit a sharp decline in 2014. The top 10 regional economies all saw a decrease in FDI in 2014 except for Panama, says fDi Markets, a research unit of British business daily The Financial Times.

The region’s major economies, Mexico and Brazil, captured the lion’s share of investment into the region; together they accounted for 56% of capital investment.

But the Brazilian economy dipped into recession, while Mexico grew moderately. When it comes to inward investment, Mexico is far ahead of all other countries in the region.

Thanks to its growing manufacturing sector and a string of policy reforms, Mexico was the leading location for FDI from North America, with the country attracting US$16 billion last year.

“Mexico also led for number of projects attracted, at 365, but this was a 15 per cent decline on the previous year’s figure,” the report added.

Foreign investment declined considerably in Brazil and Colombia. There was a 41% drop in FDI in Colombia, while most of the region’s smaller countries, except Panama, are finding it extremely difficult to attract foreign investment, the report said.

Panama was the only country among among the top 10 regional economies to witness a growth in number of FDI projects, with a 19% increase. With the expansion of the Panama Canal underway, analysts expect the country to see more foreign investment in the years to come.

Panama has spent $5.3 billion on widening the canal so that it can handle ships three times bigger than the ones it handled before.

The fDi Markets predicts that Panama’s economy will continue to grow by about 7% this year.

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World Economic Forum Foresees Major Policy Changes in Latin America http://www.nearshoreamericas.com/speakers-world-economic-forum-foresee-major-policy-latin-america/ http://www.nearshoreamericas.com/speakers-world-economic-forum-foresee-major-policy-latin-america/#comments Wed, 13 May 2015 15:16:26 +0000 http://www.nearshoreamericas.com/?p=45255 By Narayan Ammachchi Many Latin American countries are likely to reform their economic policies, particularly crisis-hit nations like Argentina, Venezuela and Brazil, according to business leaders and policy makers gathered at the 10th World Economic Forum. Argentina and Venezuela are going to the polls later this year, while Brazil’s economic stalemate is forcing President Dilma Rousseff to think of different ...

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By Narayan Ammachchi

Many Latin American countries are likely to reform their economic policies, particularly crisis-hit nations like Argentina, Venezuela and Brazil, according to business leaders and policy makers gathered at the 10th World Economic Forum.

Argentina and Venezuela are going to the polls later this year, while Brazil’s economic stalemate is forcing President Dilma Rousseff to think of different ways to reverse the country’s economic fortunes.

“With the October election, Argentina has a dramatic possibility for change,” Agustin Etchebarne, General Director, Fundación Libertad y Progreso, Argentina, said. “The recent cycle of populist policies has run its course. The only question is how deep the changes will be.”

If Venezuela holds parliamentary elections by the end of the year, the opposition is most likely to win, because President Maduro’s approval rating is under 30% and the economy is sliding ever more deeply into crisis.

“Opinion polls show that Venezuelans increasingly oppose government interference with private property,” said Luis Vicente Leon, President, Datanalisis, Venezuela. “I am absolutely certain that we will see important changes in our economic model.”

Thanks to economic pressure, Brazil has already undergone some changes. Abandoning a few populist programs to reduce fiscal imbalance is just the beginning.

“We had to adjust, because if we didn’t, the cost would have been even greater,” said Jose Augusto Coelho Fernandes, Director of Policy and Strategy, Confederação Nacional da Industria (CNI), Brazil.

Brazil now has many investment opportunities in infrastructure, where a solid regulatory framework is already in place, and its weaker currency is making exports more competitive.

Colombia has already made significant progress in dealing with the FARC rebels through  negotiations that the government hopes will not only bring about peace but also make way for reforms.

The two sides have already reached agreements on land reform and put in place measures to fight illicit drugs.

“The peace process is not an end in itself. It is an opportunity to accelerate the country’s transformation,” said Oscar Adolfo Naranjo Trujillo, Minister of Post-Conflict, Human Rights and Security of Colombia.

Analysts are also expecting new generation leaders to take up policy-making positions in Cuba after the Communist Party holds its next convention in April next year.

International institutes, like the IADB and ELAC, are already lobbying hard to make Latin America pursue reforms and policies to improve productivity, address persistent inequality and promote inclusion.

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Mexico’s Start-Up Ecosystem Drives Talent Development and “Global Reach” http://www.nearshoreamericas.com/mexicos-startup-ecosystem-drives-talent-development-innovation/ http://www.nearshoreamericas.com/mexicos-startup-ecosystem-drives-talent-development-innovation/#comments Tue, 12 May 2015 18:14:00 +0000 http://www.nearshoreamericas.com/?p=45223 By Emily Stewart Mexico is known for many things: tequila, tacos and mariachi music. But technology, innovation and startups? Actually, yes. The country has become an increasingly powerful player on the Latin American innovation map. It ranked 66th on the 2014 Global Innovation Index, behind Chile (46), Panama (52), Costa Rica (57) and Brazil (61), but ahead of Colombia (68), ...

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By Emily Stewart

Mexico is known for many things: tequila, tacos and mariachi music. But technology, innovation and startups? Actually, yes.

The country has become an increasingly powerful player on the Latin American innovation map. It ranked 66th on the 2014 Global Innovation Index, behind Chile (46), Panama (52), Costa Rica (57) and Brazil (61), but ahead of Colombia (68), Uruguay (72) and Peru (73). Gartner estimates that the Mexican IT market is worth US$64 billion and anticipates it will grow nearly 3% through 2018.

Mexico’s tech talent pool has already caught the attention of some big names in innovation.

Global Reach

Enterprise software and computer hardware giant Oracle established its third international development center (following the U.S. and Mexico City) in Guadalajara in 2011. The engineering operations of Ooyala, which provides video solutions for media companies, enterprises, broadcasters and operators all over the globe, are based in Guadalajara and have been since 2010. There is a Microsoft Technology Center in Mexico City, and Cisco inaugurated a global services center in the city earlier this year.

Growth is fueled by a number of factors – universities, government initiatives, investment. The Mexican startup scene has also proven a major contributor, becoming an increasingly important driver of the country’s growing technological prowess.

“I think [the startup industry] is moving very rapidly and growing very fast, and it keeps accelerating the pace,” said Marcus Dantus, the founder and CEO of Startup Mexico, a privately-held innovation company and campus based in Mexico City. “There are more projects coming out of universities every year, there are more people participating, and there are more people wanting to become entrepreneurs.”

“It’s still at an early stage, but it’s developing and growing rapidly,” said Diego Serebrisky, Managing Director at Mexico City-based venture capital firm Alta Ventures.

Talent Development

Dantus said that “talent abounds” in Mexico, adding that about half of the country’s population is under the age of 30 and claiming that Mexico now graduates more engineers per capita than any other country in the world.

But it is not just students who are going the startup route – seasoned professionals are looking in that direction, too. Fabian Aguilar Urbán, Fund Manager at Angel Ventures Mexico, explained that his team is coming across more and more startups with CTOs who are ex-employees of companies like Cisco, Google and IBM. “You do get a lot of skills if you work at a big corporation,” he said.

Serebrisky echoed Aguilar Urbán’s sentiment that it is not just students who are contributing. Seasoned technology professionals are getting into the game, as are serial entrepreneurs whose previous ventures have fallen outside of the technology realm. “It’s very broad. It’s not just the 20- to 24-year-olds,” he said.

He offered up two examples. Mobile payment company Clip was launched in April 2013 by Adolfo Babatz and Vilash Poovala, who previously worked at PayPal and Visa. According to CrunchBase, Clip has raised upwards of $8 million in venture capital funding. Similarly, Vicente Fenoll, the founder of peer-to-peer lending platform Kubo, had previously built the more traditional microfinance company Fincomún.

There have been a number of catalysts at play in this expansion of startup activity in Mexico.

Andres Barreto, serial entrepreneur and seed investor at Socialatom Ventures, pointed to the 2010 launch of Mexican.VC and its 2012 acquisition by 500 Startups as important drivers, as well as the 2013 establishment of the National Entrepreneurship Institute (INADEM), which is specifically aimed at developing a stronger entrepreneurial ecosystem in Mexico. “There’s been a boom in the startup industry,” Barreto said.

INADEM distributed more than $650 million in 2014, leading to the creation of 6,000 new companies and 73,000 new jobs. More than $1 billion in venture capital funding was committed to Mexico last year as well. Argentina-based accelerator and seed fund NXTP Labs has announced an agreement with Mexico’s naranya*LABS to invest $8 million in Mexico. Telefónica accelerator Wayra, which launched in Mexico in 2011, is still going strong, as is 500 Mexico City. While in 2010, there were approximately 40 venture capital funds committed to Mexican companies, today, there are around 80.

Overcoming Hurdles

The Mexican startup industry certainly appears to be up and running, but there are still a number of obstacles to overcome.

First of all, what shape will the startup scene take? Dantus, Aguilar Urbán and Barreto agree that a carbon copy of Silicon Valley is not the answer. They instead encourage a global approach, though they differ on exactly what that entails.

Dantus sees Mexico as an innovation bridge from Latin America to the United States and Europe, and Aguilar Urbán’s view is similar. Barreto, on the other hand, sees the greatest potential in Mexican companies and talent building global products. All agree that Mexico cannot just focus on Mexico. “The temptation of the Mexican market is that it’s a big market, so it is very tempting, but it’s half the size of the U.S. market, and it’s not half as difficult – it’s more difficult,” Barreto said.

The role of startups in producing tech talent in Mexico is unclear as well. While some engineering graduates are going the entrepreneurial route, others are still heading straight to software development factories and larger companies. Oracle plucks much of its Guadalajara talent straight from universities and trains them with specific skill sets to work on and develop products at scale.

“Big corporations are taking the lead in creating high-tech experts, but I think that’s going to change soon enough,” Aguilar Urbán said.

Beyond Acquihires

What does this mean for Mexico’s startups?

Acquisitions – and acquihires – may not be as likely as many entrepreneurs hope. HotelTonight, Uber and Yelp have gone straight to the Mexican market. They are hiring commercial and sales teams locally, but not engineers, and they are not acquiring local copycats.

That being said, Serebrisky clarified that there are still opportunities for local iterations of proven ideas – depending on the nature of the business. While it may not work for Facebook or Uber to acquire in order to order markets, for others, it does. “For some it makes sense to do the acquisition of local players because it gives them a head-start in having a team, in connections, and gives them an initial market share of an existing base of clients,” he said.

And even without acquisitions, companies that are looking for Mexican technological talent may not search in startups and may instead go to the bigger players, recruiting more senior workers directly from companies like Ooyala, Oracle and even Rocket Internet. Reports indicate Amazon is set to land in Mexico in 2015, but it is not clear yet who they will be interested in hiring – or from where.

Mexico’s startup and technology industry provides quite a bit of food for thought for entities large and small considering nearshore opportunities in the country. Most are still testing the waters, but the prospects are very real. “There is a true opportunity in hiring teams in Mexico,” Barreto said.

Expanding Opportunities

One such example is 3D Robotics, an open-source unmanned aerial vehicle technology company and the manufacturing arm of DIY Drones. The company’s manufacturing operations are in Tijuana, Mexico, and its founder, Jordi Muñoz, was named in Inc.’s 35 Under 35 Coolest Entrepreneurs of 2014.

Bismarck Lepe, the co-founder of Ooyala, has kept development operations in Mexico with his latest venture, Wizeline. The bulk of the company’s engineering efforts is based in Guadalajara.

Google has a good-sized office in Mexico City, as does Facebook. And they certainly won’t be the last to take notice. “Some of the tech multinationals have opened or are opening operations and large offices here, and in part, I think that’s because many of them see that it’s a good place to have headquarters or offices that are regional, so that it’s not only Mexico but other countries in the region they cover from here,” Serebrisky said.

There is no question that Mexico is becoming an increasingly powerful player on the technological map, nor that its talent pool is attractive. Those looking for hiring opportunities will find them.

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Report: Smartphones and 4G Create Demand for Mobile Services in Latin America http://www.nearshoreamericas.com/smartphones-4g-networks-create-demand-mobile-apps-latin-america-report/ http://www.nearshoreamericas.com/smartphones-4g-networks-create-demand-mobile-apps-latin-america-report/#comments Tue, 12 May 2015 17:27:45 +0000 http://www.nearshoreamericas.com/?p=45246 By Narayan Ammachchi Thanks to the growing popularity of smartphones, businesses across Latin America are increasing their IT budgets for mobile value-added services (MVAS), according to a study by Pyramid Research. More than 40% of Latin American enterprises already use some kind of enterprise MVAS, such as mobile apps and Internet of Things/M2M (machine to machine) services. Moreover, 85% of Latin American ...

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By Narayan Ammachchi

Thanks to the growing popularity of smartphones, businesses across Latin America are increasing their IT budgets for mobile value-added services (MVAS), according to a study by Pyramid Research.

More than 40% of Latin American enterprises already use some kind of enterprise MVAS, such as mobile apps and Internet of Things/M2M (machine to machine) services. Moreover, 85% of Latin American enterprises expect their MVAS spend to increase in the next 12 months.

Large IT service providers, such as IBM and HP, are currently the major providers of MVAS in the region.

Four out of ten enterprises have partnered with large IT service providers to help them manage their MVAS, while 24% have opted for network service providers, according to Pyramid.

Nevertheless, mobile operators will continue to engage in collaborative partnerships with IT service providers and technology vendors.

“This is a great opportunity for MNOs and technology vendors, as enterprises are making MVAS a top priority to increase the mobility of their workforce,” said Daniel Ramos, senior analyst at Pyramid Research.

The research firm says network operators can capitalize on the market by developing and implementing MVAS over LTE, the high-speed Internet service network also known as 4G.

The adoption of corporate-owned and employee-owned smartphones and tablets will also generate demand for MVAS. “The combination of LTE and smartphone adoption will empower employees to work from virtually anywhere, which will boost the demand for MVAS services further,” Ramos added.

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StarTek Acquires MDC Partners’ BPO Unit for $16 Million http://www.nearshoreamericas.com/startek-acquires-outsourcing-unit-mdc-partners/ http://www.nearshoreamericas.com/startek-acquires-outsourcing-unit-mdc-partners/#comments Tue, 12 May 2015 16:42:15 +0000 http://www.nearshoreamericas.com/?p=45241 By Narayan Ammachchi U.S. call center firm StarTek Inc. has reached a deal with MDC Partners to acquire the latter’s BPO unit Accent Marketing Services for US$16 million. With more than 2,300 employees and delivery centers in six U.S. locations as well Jamaica, Accent serves as many as 18 clients from several industries, including telecom, technology, retail, financial services and consumer products. ...

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By Narayan Ammachchi

U.S. call center firm StarTek Inc. has reached a deal with MDC Partners to acquire the latter’s BPO unit Accent Marketing Services for US$16 million.

With more than 2,300 employees and delivery centers in six U.S. locations as well Jamaica, Accent serves as many as 18 clients from several industries, including telecom, technology, retail, financial services and consumer products.

“The purchase builds upon our strategic plan to diversify our client base and enhance our customer engagement solutions,” said Chad Carlson, President and CEO of StarTek.

Accent, whose annual revenue exceeds $67 million, fits well with StarTek, particularly because it has many clients in the U.S. telecom industry, which is StarTek’s key industry vertical.

Telecom firms account for nearly 80% of StarTek’s revenue but about four years ago this heavy reliance on such clients pushed StarTek closer to the brink of crisis, forcing the company to close nearly a dozen call centers across the United States.

In its recent quarterly report, however, StarTek claimed that revenue from verticals excluding telecommunications/cable and media increased 197% to $16.1 million compared to the same quarter the previous year.

“The acquisition highlights not only the ongoing consolidation within the contact center outsourcing space, but StarTek’s increased presence in the North American CRM services space,” commented Peter Ryan, a Lead Analyst with research firm Ovum.

“More generally, this is also a clear sign of ongoing market tightening among CRM outsourcers.  This trend has been manifesting itself during the recent past, and shows little sign of changing as vendors position themselves both in terms of scale and capabilities in order to win new business and retain existing contracts.”

It seems that MDC decided to sell Accent in a bid to free up funds and focus on areas where it can make money relatively easily.

“The sale of Accent allows MDC to emerge as an even faster-growing, higher margin and less capital-intensive business overall, centered on the activities that we expect will deliver the most growth in value to our shareholders over the long-term,” said David Doft, Chief Financial Officer of MDC Partners.

The acquisition of Accent expands StarTek’s operations to Jamaica, a market that has seen a significant surge in call center activity in recent years.

Upon incorporating Accent’s 2,300 employees, StarTek will have more than 50 clients and over 14,000 employees across five countries.

Like most of its peers, Accent provides customer care service through important channels including phone, online and social media.

StarTek says Accent’s Customer Engagement Agency model will enhance the analytic capabilities that the company gained through its acquisition of Ideal Dialogue in 2013.

“Accents’ data-driven approach helps brands maximize their engagement with consumers and enables brands to influence behavior, all while generating a better return on investment,” StarTek said in a press release.

StarTek hopes to close the transaction by the end of this month.

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