Nearshore Americas | The New Axis of Outsourcing http://www.nearshoreamericas.com Experts in BPO, IT and Software in Latin America and the Caribbean Thu, 20 Nov 2014 17:35:44 +0000 en hourly 1 Argentina Sets up Special Agency to Monitor Foreign Trade http://www.nearshoreamericas.com/argentina-sets-special-agency-monitor-foreign-trade/ http://www.nearshoreamericas.com/argentina-sets-special-agency-monitor-foreign-trade/#comments Thu, 20 Nov 2014 17:35:44 +0000 http://www.nearshoreamericas.com/?p=42454 By Narayan Ammachchi Argentina has set up an agency to keep track of the international transactions of the companies operating in the country. Known as the Tracking and Tracing of Foreign Trade Transactions Unit, the agency will keep an eye on the import and export of goods and services. The agency comes into force barely a fortnight after the South ...

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By Narayan Ammachchi

Argentina has set up an agency to keep track of the international transactions of the companies operating in the country. Known as the Tracking and Tracing of Foreign Trade Transactions Unit, the agency will keep an eye on the import and export of goods and services.

The agency comes into force barely a fortnight after the South American country suspended the operation of US consumer giant Procter and Gamble on charges of inflating prices of goods imported from Brazil.

Upon launching the agency, a senior official stated that in recent months the government had identified 9,600 cases of forex law violations.

Argentina is concerned that a large number of corporations are hiding their profits in an attempt to avoid paying taxes. Beyond the violations, its major concern is the nation’s decreasing foreign currency reserves, a key tool to rein in on currency upheavals.

According to the official bulletin, the unit will “monitor foreign trade transactions, for its tracking and tracing” and “ensure compliance with formal and substantial requirements” in foreign trade reports.

It went on to say that such an agency was needed to ensure macroeconomic stability and prevent violations of forex-related laws.

Argentina, banished from the international capital markets following its default on bond repayments, is concerned over capital outflow. Growing inflation and decreased foreign investment have left the government unable to turn the economy around.

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In the Saturated Las Vegas Call Center Market, Only the Savvy Survive http://www.nearshoreamericas.com/intelligent-operators-prosper-las-vegas-saturated-call-center-market/ http://www.nearshoreamericas.com/intelligent-operators-prosper-las-vegas-saturated-call-center-market/#comments Thu, 20 Nov 2014 17:24:42 +0000 http://www.nearshoreamericas.com/?p=42450 By Duncan Tucker The ability to attract, retain and develop talent through strong recruitment, training and employee satisfaction programs is crucial in order to prosper in competitive environments like the Las Vegas call center industry. That’s the message from local service providers who insist that the challenges of market saturation can be overcome if you take the right strategic approach. ...

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By Duncan Tucker

The ability to attract, retain and develop talent through strong recruitment, training and employee satisfaction programs is crucial in order to prosper in competitive environments like the Las Vegas call center industry. That’s the message from local service providers who insist that the challenges of market saturation can be overcome if you take the right strategic approach.

One of the most prominent onshore hubs in the United States, Las Vegas is home to a dozen or so contact centers run by the likes of Sitel, TELUS International, Barclaycard, MGM Resorts International, UPS and Zappos. While labor costs are reasonable, there are signs for concern for those considering investing in the market. A recent report by Re/code noted that the Las Vegas startup community has been hit by a raft of layoffs and several high-profile suicides in the last two years. Moreover, earlier this month, the nonprofit Brookings Institution published a report stating that Nevada is suffering a severe shortage of talent in the science, technology, engineering and math (STEM) fields, which is hampering the state’s efforts to diversify its economy. However, this is unlikely to impact the call center outsourcing operations in the Las Vegas area that have fewer high tech demands and generally require less skilled service workers.

Curiously, despite the city’s prominence within the onshore call center industry, Katrina Menzigian, VP of Research Relations at Everest, told Nearshore Americas that “of the 25 or so established contact center outsourcing service providers we regularly follow, none seem to have significant delivery presence in the Las Vegas area. In fact, none were reported to us. Even assuming there are some things we didn’t capture, it’s fair to say that there’s not enough to really hit the radar screen.”

Why are so many major outsourcing providers avoiding the city? The fierce competition when it comes to recruiting to talent is one of the biggest challenges in Las Vegas, according to those who operate there, but they say this is can be overcome if you are an attractive employer with strong training programs and real career opportunities.

Make it Easy to Work for You

To get the inside perspective, Nearshore Americas spoke to Gabriel Bristol, President and CEO of Intelicare Direct, a call center service provider with facilities in Las Vegas and San Diego. “Currently in Las Vegas we have about 150 agents working various shifts to provide 24-hour, seven-day-a-week coverage for our various clients,” Bristol said. “In addition to Intelicare Direct, there are more than a half-dozen other centers (in Las Vegas) employing an estimated 4,500 to 5,000 agents, and that doesn’t count management or support staff.”

Asked about the biggest challenges of operating in the Las Vegas area, Bristol joked, “Other than the summer heat and monsoon season?” He then pointed to the need to attract the right talent. “The talent pool in Las Vegas isn’t that much different than it is in other cities, which is to say it’s mixed,” he explained. “The truth is every city has its challenges. In San Diego, where our other center is located, the cost of living is among the highest in the country. In Las Vegas, it’s a different challenge. Everyone knows the city attracts a certain level of transient residents, people who move here and move away almost as quickly when the experience of living here didn’t match their expectations. Hiring these people and then losing them quickly can really hurt the bottom line, so we take extra care during our employee screening to try and minimize that exposure.”

The key to overcoming this challenge is making your company a desirable place to work, Bristol said. “Intelicare Direct is a unique environment. We are an inbound customer service company only. We don’t do outbound calls. We don’t set appointments or sell magazine subscriptions. We handle inbound customer support only. That makes us special in the marketplace and as a result, we attract a lot of top tier talent from other call centers who want to work in our kind of environment.” Bristol continued: “To attract the top tier talent, we pay above the industry standard, only offer full-time employment with benefits and we’re a dog friendly and child friendly work place. In short, we make it very easy to work for us.”

The Market Continues to Grow

Employing a total of 1,395 agents at two different facilities in Las Vegas, one of the city’s largest call center operators is Nashville, Tennessee-based outsourcing provider Sitel. Cassidy Klundt, Sitel’s Las Vegas Site Director, told Nearshore Americas that he does not believe the local market is oversaturated.

There are “ten-plus call centers in the area, but it really depends on how you define that because you could have some call center operations of 10 to 15 folks and one person might call that a call center and another might call it a small operation,” he said. “There’s certainly a large number of call centers – and I think whenever you start to exceed ten-plus in a marketplace you’ve got to start to question the size of your operations and how you’re going to tap that market – but this market continues to grow and change.”

The most important thing from Sitel’s point of view is that “there’s a very large workforce,” Klundt said. “From a workforce perspective anywhere that you locate where the majority of the workforce is service-driven, that’s naturally going to translate to the call center environment,” he explained. “There’s a large casino base, there’s a lot of government employees and we have the largest air force base here too. So you have a large portion of the workforce coming from a servicing perspective and you also have a lot of families that are brought in because of the air force base and that translates to a very large labor force that is very conducive to the call center environment.”

Klundt added that labor costs in Las Vegas “are actually fairly reasonable. To put that into perspective, I had been running the Oak Ridge, Tennessee facility for the last three years before I came out here, and just from a labor market perspective there’s very similar costs in both markets and I think what really helps us is that Las Vegas is a much large market in comparison.”

Offer Career Opportunities

Klundt accepted that the Vegas labor market throws up certain challenges but insisted that these can be overcome through intelligent recruitment campaigns. “We always have to make sure we’re targeting the right folks. We have a pretty big mix of support types, like technical support, sales retention, customer service, so we have to consider how you target the right folks by way of advertisement,” he said. “This is a visually rich environment so you can’t necessarily count on a billboard because you cased used to that in Las Vegas. It’s all about involvement in the community and getting out to job fairs, and then we have a large portion of our sourcing that is referral-based, so we have ASET initiatives to make sure that our employees are really spreading the name of Sitel around the community by word of mouth, that’s a big part of our sourcing.”

Offering enticing long-term career opportunities is also “highly critical” to Sitel’s efforts to attract ambitious young workers who are less likely to leave after a few short months, Klundt said. In Las Vegas “there are more and more young and eager workers available and this is an ideal job and career opportunity for them,” he explained. “That’s a big value proposition for Sitel and I can attest to that. Being a Sitel for 11 years myself, I’ve actually gone through every position from agent to coach to operations manager to site director. Most call centers in this area cannot boast the track training programs that we have available to people to teach them the skills they need to excel in their career and move forward.”

Klundt added that he “would certainly welcome” the entrance of more colleges and higher educational institutions to help create a better educated workforce in the Las Vegas area. But one of the keys to prospering in this environment is for operators to ensure they have their own robust training programs, he said. “There that will require experienced workers but we don’t necessarily always require that previous call center experience – if you have service experience we’ll certainly teach you the call center side, that’s where we certainly benefit you greatly and that’s why I don’t think the market is over-saturated, at least from Sitel’s perspective,”  Klundt concluded.

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Atento’s Latin American Operations Lift Third Quarter Revenue http://www.nearshoreamericas.com/latam-operation-lifts-atento-3rd-quarter-revenue/ http://www.nearshoreamericas.com/latam-operation-lifts-atento-3rd-quarter-revenue/#comments Thu, 20 Nov 2014 17:18:49 +0000 http://www.nearshoreamericas.com/?p=42457 By Narayan Ammachchi Spanish call center operator Atento has reported a 70% increase in net income, largely due to the strong performance of the company’s units in the Americas, particularly Brazil. “Net income was US$8.0 million in the third quarter of 2014, compared to $4.7 million for the same quarter of the previous year, an increase of 70.2 percent,” stated the BPO firm ...

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By Narayan Ammachchi

Spanish call center operator Atento has reported a 70% increase in net income, largely due to the strong performance of the company’s units in the Americas, particularly Brazil.

“Net income was US$8.0 million in the third quarter of 2014, compared to $4.7 million for the same quarter of the previous year, an increase of 70.2 percent,” stated the BPO firm in a press release.

This is the first public announcement of quarterly results by the BPO provider after it listed in the New York Stock Exchange last month.

For the third quarter of 2014, revenue for the Brazil region was $307.7 million, an increase of 5% compared to the $293.0 million from the same quarter of the previous year. Overall, revenue for the Americas region increased more than 9%.

“Our performance in the Brazil region highlights the value proposition of Atento as a fully independent company,” Atento stated. The company added that its profits in the Americas region had helped it offset “the reduction in EMEA (Europe, the Middle East and Africa).”

Aside from Brazil, Atento also has delivery centers in Argentina, Peru, Chile, Colombia, El Salvador, Guatemala, Panama and Uruguay.

The company’s global revenue for the third quarter was $589.6 million, an increase of more than $9 million from the same quarter of last year.

For Atento, much of the income comes from the Spanish telecom giant Telefonica. In fact, Atento was founded as the customer service unit of Telefonica. Today, it is owned by the Boston, MA-based private equity firm Bain Capital Partners LLC.

Atento says that it has continued to “successfully diversify” its client base in the quarter, with non-Telefonica revenue accounting for 54% of total revenue.

According to the press release, its units in Mexico, Colombia, Chile and Peru are making good profits and winning many new clients. Customer care service dominates its offerings, although the company provides several other back-office services including CRM, recovery and sales.

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When Analysts Don’t Agree: Making Sense of Conflicting Outsourcing Activity Reports http://www.nearshoreamericas.com/ito-forecasts-conflicts-nelson-hall-isg/ http://www.nearshoreamericas.com/ito-forecasts-conflicts-nelson-hall-isg/#comments Wed, 19 Nov 2014 17:19:59 +0000 http://www.nearshoreamericas.com/?p=42394 By Bianca Wright When one headline states: “Number of New IT Outsourcing Deals Hits All-Time High” and another cries, “NelsonHall: ITO Spending Returns to Flat Growth in Q3, but Continued Decline in ITO Bookings Activity is a Concern,” it is easy for those in the sector to wonder just whom to believe. Getting an overview of the IT outsourcing sector ...

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By Bianca Wright

When one headline states: “Number of New IT Outsourcing Deals Hits All-Time High” and another cries, “NelsonHall: ITO Spending Returns to Flat Growth in Q3, but Continued Decline in ITO Bookings Activity is a Concern,” it is easy for those in the sector to wonder just whom to believe.

Getting an overview of the IT outsourcing sector can be tricky. Data abounds, but research reports can seem to contradict each other and it is difficult to tell exactly what is being measured and if different reports are measuring the same things.

These two seemingly contradictory reports are a case in point. If new outsourcing deals are at an all-time high, how can a continued decline in bookings be a concern? The trick is in interpreting each report within context, identifying the relevant sections and building a bigger picture overview of the sector as a whole.

Dominique Raviart, ITO Research Director at NelsonHall, advised that those scrutinizing the sector need to bear in mind that IT outsourcing refers to multi-year (mostly run services) contracts, and does not include short-term (build) services such as consulting, systems integration and application development.

“The ITO market is a maturing market in terms of contract opportunities with a fragmented vendor landscape. This has been true for 20 years. What is relatively new – in the last five to ten years – is the effect on prices of offshoring and of, increasingly, cloud computing in its infrastructure form – private and public clouds,” she said.

As a result, Raviart said, spending on IT outsourcing overall is declining annually by zero to three percent. “This depends on economic conditions and varies by geography and by service line. For instance, application outsourcing spending is still growing by two to three percent while IT infrastructure management tends to decline currently by one to two percent. Overall growth in ITO spending in 2014 and 2015 should be flat,” she said.

Raviart explained that clients now award their ITO work through multi-year contracts, and those bookings capture spending over a number of years, typically five. NelsonHall also tracks the combined TCV (total contract value) of those contracts on a quarterly basis. “Since 2002, TCV/bookings have gone down very significantly, in a non-linear manner, and the level of TCV is now half of that of the best year (2003: ~US$60bn),” she said.

Raviart added: “The value of contracts varies from $10m to $2 billion. The large contracts have long decision cycles, from 12 to 24 months. As a result of large contracts, booking quarterly variations are difficult to analyze. What matters is the trend over several quarters.”

For contracts with TCV over $100m, NelsonHall has noticed that the level of new scope contracts has decreased from 90 percent in 2003 to 30 to 40 percent currently. “This means that most contracts are now renewals. The market is therefore saturated, at this point. The market is currently saturated because only a certain number of clients have decided to outsource. However, new clients in non-traditional ITO geographies may decide to adopt outsourcing at some point in the future, typically public sector outside of the U.K,” she said.

Differing Interpretations

There are points of overlap. ISG and NelsonHall agree that the third quarter came in weaker for ITO awards. Esteban Herrera, partner with ISG, stated that there was a slower third quarter in ITO and that can be attributed to fewer new scope, as opposed to deal restructuring, awards.

ISG’s view of the sector, however, is somewhat more optimistic. “The year-to-date picture still remains solid,” Herrera said. “The broader market had a strong first half which boosted ITO’s year-to-date achievements in both annual contract value and counts.”

Herrera added: “Where we disagree is that we feel that the YTD (year-to-date) picture for ITO awards is more robust, whereas they (NelsonHall) see it lagging. It probably comes down to the fact that we have more data in our pool of contract awards to analyze.”

Herrera illustrated the point by noting that the ITO market needs to see only $1.3 billion in ACV (annual contract value) awarded in this fourth quarter to equal its overall 2013 numbers. In 2014, both ACV and number of contracts are at record highs for ITO.

Regional perspectives do vary, though. Herrera said: “In the Americas ACV is up nearly 20 percent this year, a remarkable performance in a mature market, with particular strength in infrastructure. Clearly, the most mature segment of the outsourcing industry in the most mature region is enjoying a bit of a resurgence as companies look to third parties for help with modernization of their IT.”

He explained that even though the number of awards increased only seven percent, ITO contract counts in the Americas sit at an all-time high through three quarters. “The trends in the Americas have been consistent: lower unit costs, shorter terms, more multi-sourcing, all wrapped up in an environment of greater spend as the economy recovers and companies look to fuel growth,” Herrera said.

EMEA (Europe, Middle East and Africa) ITO ACV rose nearly 15 percent over this time last year, and ITO counts increased by an even greater percentage, according to ISG. “Both measures reached an all-time high, despite indications of a slowdown in the third quarter. Infrastructure so far this year has outpaced its performance in any prior year, due in part to very strong activity. ADM presents a picture of consistency in EMEA, with year-to-date ACV exactly as it was a year ago. In fact, ADM has stayed within a very tight range since 2009,” Herrera added.

He went on to say that most of the sourcing activity in Asia-Pacific this year has been in ITO, and both ACV and number of awards set a record high.

Why the Discrepancies?

While NelsonHall points to the need for concern, ISG highlights a more positive outlook – and service providers are left wondering who to believe.

So why is there a seeming contradiction in terms of the research available? In many instances it has to do with the fact that different firms are not comparing the same things. Raviart noted that, from a broad perspective, NelsonHall and its competitors all make a number of decisions on contract timing – when do they include a contract in their numbers, at the time of the negotiations, at the signing, at the time you are aware of it and believe it is almost certain the deal will be closed and so on – in terms of TCV, on the geography, or on the service line.

“Deal coverage is also an issue: some countries have adopted the advisor model, especially the U.S., some rely on the Big 4, some use individuals, some use their internal capabilities and finally, some use a mix of all possibilities. Therefore coverage can be non-exhaustive or be biased by the nationality of the advisor firm, its investment in expanding its coverage and so forth,” she said.

Raviart reiterated: “We believe our booking analysis seems to us consistent with our annual spending analysis i.e. bookings are down and showing little-new scope contracts. Spending is also declining.”

Herrera explained that ISG’s Outsourcing Index defines the broader market as commercial contracts with an annual value of $5 million or greater. “This is the primary criteria we use when describing market trends. We do cover the public sector but we do so separately from the commercial market and our findings are presented every six months in the first and third quarter Index calls,” he said.

ISG also has a data exchange with more than 90 service providers in which they provide ISG with data on contract awards that are not announced publicly, as well as firming up its total contract value estimates on awards where no deal value was made public. “It all adds up to provide a very holistic picture of the market,” Herrera emphasized.

Tesla Martinez, Director of International New Business Development at Focus Brands International, who has worked with research companies around the world, said that firms need to ensure that their data is relevant, accurate and internationally cross-comparable.

“For example, in India A+B=C whereas in Brazil XY=C. Same outcome, different way of getting there. Understand how the researcher got there,” she explained, adding that, using the analogy above, it is important to understand that not all variables are available across markets, when looking at different research reports.

She advised that those in the ITO sector need to ask questions about different reports: Did the research use different variables? Which markets? Are they measuring the same data point?

Martinez explained that the ISG report measures different periods of time across the Americas. The second report, by NelsonHall, measures North America, leaving out the rest of the Americas, then measures Europe and “lumps in Brazil, India and China in a statement. This is not cross-regional comparable,” she said.

So while reports from different companies point to contradicting trends or statistics, it is often the case that they are not measuring the same things. The important lesson to learn is that research reports are specific to the context in which they are produced and the focus and methodology of the particular firm involved. An analysis of differing reports will likely highlight differences in approaches, focus areas and methodologies and help those in the sector extrapolate the data relevant to their context and needs.

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Privacy is Not Dead, It Just Has A Different Personality http://www.nearshoreamericas.com/killing-privacy/ http://www.nearshoreamericas.com/killing-privacy/#comments Wed, 19 Nov 2014 17:11:57 +0000 http://www.nearshoreamericas.com/?p=42426 By Carlos Chalico Humans are social beings by nature. We enjoy interacting with others; we constantly exchange information, ideas and beliefs. We have always done this through many different channels, whether face-to-face, in writing or by recording our messages on any available media. An important aspect of modern communications is being able to decide who we want to interact with ...

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By Carlos Chalico

Humans are social beings by nature. We enjoy interacting with others; we constantly exchange information, ideas and beliefs. We have always done this through many different channels, whether face-to-face, in writing or by recording our messages on any available media.

An important aspect of modern communications is being able to decide who we want to interact with and when we want to be left alone. This right was established long ago and it has evolved over time. It is what we call privacy.

With the development and evolution of IT, our capacity to communicate and connect with other people and things has grown considerably. The endless stream of data generated through our daily interactions is creating a real-time log of our own lives: who we call with our cell phone, who we talk to on social media, the clothing we like and buy, the causes we support online, the books we download from digital libraries, the movies and songs we watch or listen to, the schools we study at, our consumer profile generated through loyalty programs, even data related to our health.

We are very generous in creating data that can be associated with ourselves, but once a piece of data can be linked to an individual who does it belong to? Who owns our name and every single piece of data that could be associated to it? We do, but we need to understand and recognize that we have obligations as well as rights with regard to data security.

Who is Threatening Our Privacy?

Some people believe that privacy is dead. If that is the case then who killed it?

It’s not news to anyone that social media has totally captured our attention and that our dependence on the Internet has grown enormously. We can now buy almost everything online and an important portion of the services we generally use can be contracted through the web.

As a result it seems we all are preferring comfort over security and privacy. Online tools can make our lives easier and more enjoyable but we definitely need to be cautious when we are developing a life online. By not paying attention to what we share and how we share it we are essentially contributing to the death of privacy.

We must also examine how organizations manage their own privacy policies. A paper released by EY recognizes the following: “Consumers have seized the power to dictate what they want, when they want it, whom they buy from and how much they want to pay. Organizations, eager to please the voracious appetites of these super consumers, seize any opportunity available, often through an ever-emerging array of new technologies, to communicate, build relationships, gather reams of data and sell.”

The pressures of the market have led companies into an endless race to find the right tools to keep their clients satisfied. But the question is: are they able to evolve and adapt their privacy policies and procedures at the same pace? Some organizations may be manipulating personal data and consciously or unconsciously managing privacy issues improperly. Even regulators are having trouble in following this race so companies need to be very cautious and seriously consider the intrinsic privacy issues.

Can We Save Privacy?

Privacy is not yet dead; it is evolving in tandem with the development of new technology. When it comes to saving privacy we must be conscious as individuals of what we are sharing online: be it on the Web 2.0, social media, mobile devices, video games, online shopping or Internet banking. We need to understand that in our virtual lives we can face serious threats just as in the real world and, because of that, we need to avoid being data promiscuous.

So we must be very selective regarding whom we share data with. This involves understanding the regulations of the markets we interact with, reading the contracts of the companies we take services from, selecting the companies we are going to work with to be sure that they have solid and effective privacy policies in place, and using our common sense to avoid risky situations just as we would in the real world.

There is a lot that companies can do as well. The following is a list of recommendations to be considered:

  1. Know the geography of privacy. It is mandatory for every single organization to understand their compliance obligations on privacy matters in the different locations where they operate. There are many different regulations around the world that define how privacy must be protected.
  2. Properly analyze privacy-related risks. Enterprise risk management is a critical process in any organization but in order to be effective, enterprise risk management needs to be complete and this demands the integration of risks related to privacy. Every business must confirm that privacy matters are included in their current corporate risk management model.
  3. The earlier, the better. The future operation of a control will always be cheaper and more effective if it is properly managed in the very early stages of the design of a process or an IT application. This includes privacy controls. To this end, Privacy by Design is an excellent model that corporations can use when defining privacy strategy. This paper by the Privacy by Design team which busts three different myths on privacy, including its “death”, is worth reading.
  4. On paper and in life. To become effective, a privacy policy needs to formally exist but I know of different organizations that do not even have privacy policies in place, so an important recommendation for them is to define their policy and bring it to life as soon as possible.
  5. You are not alone. It is complicated to find a company that is not somehow dependent on third parties. I have found that many organizations do not take care of how the third parties they are working with are protecting the privacy of the clients, employees, suppliers that they are responsible for. All organizations need to understand the risks that can arise from their relationships with third parties.
  6. Dealing with emergencies. Any company can face the embarrassment of having to deal with a privacy breach. In order to properly react to these situations, contingency plans need to be prepared in advance and a clear and concise plan on incident response has to be prepared and regularly tested.
  7. Does it work yet? Controls can have a fantastic design but if they are not properly working they will generate no results. Considering this, a program to test the effectiveness sof privacy controls on at least ayearly basis is highly recommendable.
  8. Update. Based on the results of continuous monitoring and regular tests of the effectiveness of privacy controls, all companies need to define how their privacy policies will be updated. Remember that privacy is constantly competing with technological advancement.
  9. Create Awareness. Privacy controls will never prove effective if people are not aware of the company’s position regarding privacy and the importance that they play in it. An effective awareness program based on the corporate privacy policy needs to be in place.

Privacy is not yet dead but it is passing through a very challenging moment and its survival depends on the way both individuals and organizations deal with it.

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Barbados Agrees to Help the United States Fight Tax Evasion http://www.nearshoreamericas.com/barbados-signs-tax-evasion-law-fatca/ http://www.nearshoreamericas.com/barbados-signs-tax-evasion-law-fatca/#comments Wed, 19 Nov 2014 16:24:57 +0000 http://www.nearshoreamericas.com/?p=42434 By Narayan Ammachchi Barbados has agreed to share information with the U.S. under a new law aimed at preventing offshore tax evasion by American citizens. One of the most controversial laws of the Barack Obama administration, the Foreign Account Tax Compliance Act (FATCA) requires financial firms to report information on U.S. account-holders to the relevant tax authorities. By signing the ...

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By Narayan Ammachchi

Barbados has agreed to share information with the U.S. under a new law aimed at preventing offshore tax evasion by American citizens. One of the most controversial laws of the Barack Obama administration, the Foreign Account Tax Compliance Act (FATCA) requires financial firms to report information on U.S. account-holders to the relevant tax authorities.

By signing the agreement, Barbados has demonstrated its willingness to apply due diligence, stated the country’s Commerce Minister Donville Inniss, who signed the agreement on behalf of his country.

Inniss has, however, assured that the deal with the U.S. authorities will not take away the financial flexibility the government is propagating.

According to the U.S. Treasury Department, FATCA applies to U.S. citizens who have more than US$50,000 in their personal accounts. Firms that do not comply will face a 30% withholding tax on their U.S. investment income and could in effect be frozen out of U.S. capital markets.

Many analysts have criticized the law, but the U.S. government has defended it, saying that the FATCA will increase compliance by U.S. taxpayers rather than to enforce collection from foreigners.

It has been estimated that the U.S. Treasury loses as much as $100 billion annually to offshore tax non-compliance.

Several countries in Latin America and the Caribbean have already signed up for this U.S. law, including the Cayman Islands, which has long been suspected of being a tax haven. Other LAC countries that have signed the law include Bermuda, Costa Rica and Mexico, while Chile is said to be negotiating with U.S. authorities.

Barbados believes that signing the FATCA will help it fix loopholes in its own financial system. Under U.S. tax law, U.S. persons are generally required to report and pay taxes on income from all sources. The term ‘U.S, persons’ includes U.S. permanent residents regardless of where they reside.

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Real’s Depreciation Gives Sudden Burst to Brazil’s IT Exports http://www.nearshoreamericas.com/real-depreciation-incentivizes-brazilian-high-costs-remain-impediment/ http://www.nearshoreamericas.com/real-depreciation-incentivizes-brazilian-high-costs-remain-impediment/#comments Tue, 18 Nov 2014 20:16:15 +0000 http://www.nearshoreamericas.com/?p=42400 By Silvia Rosa The devaluation of the Brazilian real may contribute toward making Brazilian companies more competitive in the global market, but the high costs in Brazil still limit an increase of IT sector exports. Last year, Brazilian software and IT services’ exports totaled US$807 million, according to the survey published by the IDC and Brazilian Association of Software Companies ...

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By Silvia Rosa

The devaluation of the Brazilian real may contribute toward making Brazilian companies more competitive in the global market, but the high costs in Brazil still limit an increase of IT sector exports.

Last year, Brazilian software and IT services’ exports totaled US$807 million, according to the survey published by the IDC and Brazilian Association of Software Companies (Abes). Added to hardware and other services, such as Business Process Operation (BPO), the total exports from the Information and Communication Technologies (ICT) sector reached US$3.447 billion.

In 2014, Abes estimates that Brazilian exports should follow the growth of the Brazilian IT domestic market, which is expected to increase by 12% this year. According to a Brazilian Federation of Information Technology Companies (Assespro) survey, which has about 500 associates, about one quarter of exporting companies forecast a growth above 50% in international operation revenues for this year, while others expect stability on foreign sales income.

For 2015, Abes forecasts a somewhat better scenario, but Abes CEO Jorge Sukarie noted that uncertainties concerning the Brazilian political scenario and Brazilian foreign exchange stability could interfere in any decision to hire services from Brazilian companies.

The recovery of the U.S. economy, one of the main markets for Brazilian software and services sales, nevertheless, could benefit the Brazilian IT sector exports. “The USA is the largest IT market in the world and the recovery of the American economy could boost Brazilian exports. However, high costs in Brazil harm the competitiveness of Brazilian companies,” Sukarie said.

Others important markets for Brazilian exports are Latin America, especially Argentina, Colombia, Mexico and Peru; followed by Europe, mainly Portugal and Spain; and Asia. Brazilian exports are concentrated in the service segment, which accounted for 83.5% of total ICT exports in 2013.

Brazil’s IT Offerings

In the software segment, the operations are concentrated in software on demand, software applications, help desk, software as a service (Saas) and business consulting in the IT area, explains Roberto Mayer, vice president of public relation from Brazilian Federation of Information Technology Companies (Assespro).

“There are great opportunities in the foreign market for companies that use platforms of multinationals, such as SAP and Oracle, to offer solutions focused on sectors in which Brazil has expertise, such as the financial, agribusiness, oil and gas and education”, said Gláucia Critter Chiliatto, international executive manager at Softext.

Sukarie believes that Brazilian companies have a competitive advantage in offering customized solutions and applications for mobile devices, for example, games for tablets and smartphones. “Brazilian companies should be competitive not only on price, but through their experience and innovation,” Sukarie said.

One Brazilian company that has stood out in the international market for its innovative solutions for large multinationals such as Coca-Cola, Johnson & Johnson, McDonald’s, Pfizer, Walmart and others, is CI&T. The company, which was founded in 1995 and has its headquarter in Campinas in the state of São Paulo, offers scalable enterprise applications using several technologies such as mobile, cloud computing, analytics and social media.

CI&T has offices in the USA, Japan, Australia, China and the United Kingdom. “The depreciation of the Brazilian real can help to boost exports, but our internationalization strategy does not depend on currency fluctuation”, said Leonardo Mattiazzi, vice president of Innovation at CI&T.

By using multinational platforms, CI&T invests in providing innovative solution as a competitive differential. The company, for example, helped to develop the Coca-Cola 2014 FIFA World Cup campaign in Brazil. The project was built in Atlanta using the Google Cloud Platform. Coca-Cola invited fans around the world to share their photos to create the Happiness Flag – the world’s largest mosaic flag crafted from thousands of crowd-sourced images, submitted by people in more than 200 countries. The flag was unveiled during the opening ceremony of the 2014 FIFA World Cup.

Last year, international operations accounted for 30% of CI&T’s annual turnover, an increase of 30% compared to 2012. This year, the company expects to reach the same growth rate in exports and it forecasts higher growth for the coming year.

Innovation as a Competitive Differential

Innovation is an important factor for Brazilian companies to achieve success in the foreign market. Aiming to support the internationalization of Brazilian companies, Softex created an innovation strategy program that counted the participation of 45 companies this year. Nine of them were selected to participate in events and fairs abroad, where they could present their innovation strategies.

For 2016, Softex, in partnership with the Brazilian Agency for the Promotion of Exports and Investments (Apex), intends to launch an international module of the internationalization program, Inter-Com, which will be held in Silicon Valley, California. Since 2005, Apex and Softex have had a partnership in a project to spur software and services exports. More than 220 companies have already participated in this program.

One of these firms is Interact Solutions, based in the state of Rio Grande do Sul, in the southern region of Brazil. The company, the developer of the corporate management suite called Strategic Adviser (SA), has operations in nine countries, mostly in Latin America, and it plans to start a business in the United States and Europe. “We are already negotiating with local partners in Spain and Portugal. In Latin America, we have ended our operation in Panama and we are prioritizing exports to Uruguay and Colombia,” said Fernando Estrada, international business manager at Interact.

In 2014, its exports will account for 10% of the company’s revenues, which should total 7 million Brazilian real (almost US$2.69 million). “Exports have increased on average from 20% to 25%. The goal is increase the export participation to 20% of the annual turnover by 2016,” Estrada said. The Interact Solution executive explains that the devaluation of the Brazilian real helps to boost export revenues but, on the other hand, it increases costs with licenses and travels.

The share of exports in the Brazilian IT market is still small compared to other Latin America countries. According to the Assespro survey published this year, only 17% of IT companies actually export. “Exports account for, on average, less than 10% of companies’ revenues,” Sukaire said.

Prohibitive Costs

The high costs in Brazil are making Brazilian IT exports less competitive when compared to others countries in Latin America. “The cost in Brazil can be 10% to 15% more expensive than in Colombia or Uruguay,” said Estrada, from Interact Solutions.

According to specialists, the large domestic market is one of the main reasons for the small share of exports in the IT market. Brazil is the seventh largest IT market, which handled US$61.6 billion in 2013.

Other factors that affect the competitiveness of Brazilian exports are the high taxes and expensive workforce, not to mention the high levels of bureaucracy when doing business in Brazil. Meanwhile, Glaucia from Softex points to other reasons that also hinder Brazilian exports, such as the lack of resources for investing in internationalization, difficulties with foreign languages and the lack of knowledge about others markets.

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Infosys BPO Names New CEO After Incumbent Resigns on ‘Moral Grounds’ http://www.nearshoreamericas.com/infosys-bpo-appoints-ceo-thakkar-resigns/ http://www.nearshoreamericas.com/infosys-bpo-appoints-ceo-thakkar-resigns/#comments Tue, 18 Nov 2014 17:33:48 +0000 http://www.nearshoreamericas.com/?p=42419 By Narayan Ammachchi Infosys has appointed senior executive Anup Uppadhaya as chief executive officer of its BPO arm after the current CEO Gautam Thakkar suddenly submitted his resignation on what the company described as ‘moral grounds’. Thakkar’s resignation came hours after the Infosys board sacked CFO Abraham Mathews for violating the company’s code of conduct. Thakkar said he would take moral responsibility ...

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By Narayan Ammachchi

Infosys has appointed senior executive Anup Uppadhaya as chief executive officer of its BPO arm after the current CEO Gautam Thakkar suddenly submitted his resignation on what the company described as ‘moral grounds’.

Thakkar’s resignation came hours after the Infosys board sacked CFO Abraham Mathews for violating the company’s code of conduct. Thakkar said he would take moral responsibility for Mathews’ actions.

The Bangalore-based outsourcing giant has not revealed  precisely what code of conduct Mathews violated.

Uppadhaya joined Infosys in 1993 and has since held various senior management positions in the company. He most recently served as Senior Vice President and Global Head of Delivery for Financial Services.

Another senior executive, Deepak Bhalla, has replaced Mathews as CFO.

“I am very confident that under the leadership of Anup and Deepak, our BPO practice will become an exemplar on how business processes should be run,” said Infosys CEO and Managing Director, Vishal Sikka.

Thakkar had only taken up the position of CEO in April this year, following the retirement of Swami Swaminathan.

More than half a dozen senior executives have left Infosys in the last few months, with the outsourcing giant struggling to outperform its rivals.

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IDB Sanctions Loan to Help Dominican Republic Improve its Investment Climate http://www.nearshoreamericas.com/idb-sanctions-loan-dominican-republic-improve-investment-climate/ http://www.nearshoreamericas.com/idb-sanctions-loan-dominican-republic-improve-investment-climate/#comments Tue, 18 Nov 2014 15:49:21 +0000 http://www.nearshoreamericas.com/?p=42404 By Narayan Ammachchi The Inter-American Development Bank (IDB) has approved a US$250 million loan to help the Dominican Republic improve its investment climate and boost productivity. The fund will particularly finance the DR’s ‘Program to Improve Productivity’, which is designed to promote reforms that increase the productivity of small and medium-sized enterprises (SMEs). SMEs account for 97% of all companies in the ...

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By Narayan Ammachchi

The Inter-American Development Bank (IDB) has approved a US$250 million loan to help the Dominican Republic improve its investment climate and boost productivity.

The fund will particularly finance the DR’s ‘Program to Improve Productivity’, which is designed to promote reforms that increase the productivity of small and medium-sized enterprises (SMEs).

SMEs account for 97% of all companies in the Caribbean country and 30% of its GDP.

Since the late 1990’s, productivity in the Caribbean country has been flat compared to other countries in Latin America and the Caribbean, the IDB said, adding that the reforms will kick-start the growth that the country has long needed.

First, the Dominican Republic must reframe its banking regulation in order for small and medium-sized firms to access financing. In addition, the IDB says, the nation needs to streamline administrative procedures and adopt measures that enhance the business climate.

An improved business climate, analysts believe, will help bring workers and companies out of the underground economy, besides strengthening government institutions and policies to stimulate productive development and innovation.

For now, anyone can register their company online in the Dominican Republic. In its recent Doing Business Report, the World Bank expressed concern at DR’s decision to increase construction permit fees, but praised the country’s new credit information system that promises to protect personal data and the operation of credit reporting institutions.

In addition, the Caribbean country has now made trading across borders easier by reducing the number of documents required for exports and imports.

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Paraguay Mulls Tapping into Transatlantic Fiber-Optic Network http://www.nearshoreamericas.com/paraguay-mulls-tapping-transatlantic-fibre-optic-network/ http://www.nearshoreamericas.com/paraguay-mulls-tapping-transatlantic-fibre-optic-network/#comments Tue, 18 Nov 2014 15:44:46 +0000 http://www.nearshoreamericas.com/?p=42408 By Narayan Ammachchi Paraguay is considering tapping into the transatlantic fiber-optic network by laying cables through Brazil’s Paraná state. Estimated to take one year, the project would push down broadband prices in the landlocked South American country. According to a statement posted on the website of the country’s telecom regulator Conatel, the Inter-American Development Bank would facilitate negotiations with Brazilian authorities ...

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By Narayan Ammachchi

Paraguay is considering tapping into the transatlantic fiber-optic network by laying cables through Brazil’s Paraná state. Estimated to take one year, the project would push down broadband prices in the landlocked South American country.

According to a statement posted on the website of the country’s telecom regulator Conatel, the Inter-American Development Bank would facilitate negotiations with Brazilian authorities and provide technical assistance for the project.

Paraguay’s rugged geographic terrain has forced it to remain dependent on neighboring nations for interconnection. “This has driven up the price of telecom services, particularly broadband,” says a report from telecom research firm BuddeComm.

Paraguay has not disclosed how much money it has set aside for the cable project. Reports say the regulator is busy organizing meetings between different ministry officials to discuss how to negotiate with Brazil. According to the blueprint, Paraguay will have laid the cables by early 2016.

Since 2011, the Paraguayan government has vigorously supported the deployment of a nationwide fiber-optic backbone to reduce broadband prices. But its landlocked position has deterred private operators from building a fixed line network in sparsely populated regions.

But Carlos Slim’s subsidiary, Claro Paraguay, has recently revealed plans to invest around US$100 million in the expansion of its infrastructure in order to maintain its growth. With more than 7% of the market share, Claro is the third largest operator in Paraguay.

Another problem plaguing Paraguay’s telecom market is that the state-owned carrier Copaco has long retained a monopoly on all fixed-line voice services. In the mobile market, however, there has been competition since 1998, and there are over a dozen ISPs offering services.

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