Nearshore Americas | The New Axis of Outsourcing Experts in BPO, IT and Software in Latin America and the Caribbean 2015-04-26T03:28:59Z http://www.nearshoreamericas.com/feed/atom/ Narayan Ammachchi <![CDATA[Capgemini is Reportedly in Talks to Acquire iGATE]]> http://www.nearshoreamericas.com/?p=44914 2015-04-23T18:13:38Z 2015-04-23T18:13:38Z By Narayan Ammachchi French outsourcing firm Capgemini is reportedly in talks to purchase Indian IT outsourcing firm iGATE, according to the Times of India. The paper says the acquisition is more or less certain because Apax Partners, which financed much of iGATE’s US$1.2-billion acquisition of Patni Computer Systems in 2011, converted its debt into equity four months ago to become the ...

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By Narayan Ammachchi

French outsourcing firm Capgemini is reportedly in talks to purchase Indian IT outsourcing firm iGATE, according to the Times of India.

The paper says the acquisition is more or less certain because Apax Partners, which financed much of iGATE’s US$1.2-billion acquisition of Patni Computer Systems in 2011, converted its debt into equity four months ago to become the largest shareholder in the company.

“Apax’s stake in the company now stands at 29%, while combined stake held by the promoters stand at 25%,” said TOI, which also stated that French IT company Atos and Genpact had also made bids to acquire iGATE.

Founded by Sunil Wadhwani and Ashok Trivedi, iGATE, which posted $1.27 billion in annual revenue for 2014, is one of the world’s fastest growing IT outsourcing firms. If the reports are true, this will be one of the biggest acquisitions in the global IT outsourcing industry.

While iGATE has its headquarters in the United States, its major operations are based in India. The company first moved into Latin America in October 2008, when it opened a $2 million delivery center in Guadalajara, Mexico.

Following the acquisition of Patni Computer Systems in 2011, iGATE also took on Patni’s delivery center in Queretaro, Mexico and another of its facilities in Sao Paulo, Brazil.

Although it began its operations in Guadalajara with 50 employees, there were reports that iGATE would add another 150 employees in later years. Its Mexico offices offer Spanish-language service to the company’s U.S. mortgage industry clients.

According to reports, iGATE derives 70% of its revenue from the U.S. market, with GE Electric and Royal Bank of Canada among its major clients.

The firm has has a workforce of over 31,000 spread across more than 70 offices and customer delivery centers in North America, Europe, Asia and Australia.

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Narayan Ammachchi <![CDATA[Latin America Performs Poorly in Networked Readiness Index]]> http://www.nearshoreamericas.com/?p=44909 2015-04-23T17:10:01Z 2015-04-23T17:10:01Z By Narayan Ammachchi Most countries in Latin America are failing to exploit the potential of ICT to drive social and economic transformation, according to the World Economic Forum’s Global Information Technology Report 2015. According to the data from the report’s Networked Readiness Index (NRI), which measures 143 economies in terms of their growth in ICT infrastructure, Latin America has to go a long way to ...

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By Narayan Ammachchi

Most countries in Latin America are failing to exploit the potential of ICT to drive social and economic transformation, according to the World Economic Forum’s Global Information Technology Report 2015.

According to the data from the report’s Networked Readiness Index (NRI), which measures 143 economies in terms of their growth in ICT infrastructure, Latin America has to go a long way to catch up with the advanced world.

Overall, though, trends are encouraging: 14 of the 23 countries in the region have increased their score since last year; 19 of them have done so since 2012. Chile (38th) leads the region, almost 100 places ahead of Haiti (137th), the worst performer in Latin America and the Caribbean.

In particular, Costa Rica (49th, up nine since 2012), Panama (51st, up six), Peru (90th, up 16), and Bolivia (111th, up 16) have posted some of the largest score gains.

Argentina has moved up nine positions to reach 91st place in this edition, its best performance since 2012. The South American country’s Internet bandwidth capacity doubled in 2013, thanks to a new submarine cable connecting Argentina with Uruguay and Brazil.

Topping the index is Singapore. The United States (7th) and Japan are the only non-European countries among the top 10 nations on the Index.

The report praises El Salvador, which climbed 23 positions to be ranked 80th on the index.

“The digital divide across nations is increasing and this is of great concern, given the relentless pace of technological development. Less developed nations risk being left further behind and concrete actions are needed urgently to address this,” said Soumitra Dutta, Anne and Elmer Lindseth Dean at the Samuel Curtis Johnson Graduate School of Management at Cornell University and co-editor of the report.

Although Mexico is ranked 69th, up from 79th, the report notes problems with the country’s business and innovation environment and its overall regulatory framework. The country’s capacity to leverage ICT, according to the report, is limited by the level of education of the population.

“ICT uptake among businesses and the population at large remains very low, not only in global comparison but even within the region, which is known for its low level of ICT adoption,” the report states.

Although Argentina’s ICT infrastructure is improving, the report expresses concern with the country’s dismal political and regulatory framework.

“In particular, Argentina’s judicial system performs badly both in terms of independence (126th) and efficiency (142nd out of 143 when it comes to challenging government regulations). Intellectual property protection is poor (135th) and venture capital scarce (137th).”

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Sean Goforth <![CDATA[Nexus 2015 Adds Exclusive Session on the State of Cuba’s Internet]]> http://www.nearshoreamericas.com/?p=44895 2015-04-23T22:48:30Z 2015-04-22T17:33:42Z By Sean Goforth The organizers of Nexus 2015 have announced the addition of a special Cuba ICT talk, by one of the world’s leading Internet experts, to the agenda for next week’s conference in New York City. In an exclusive Q&A discussion, Doug Madory, the Director of Internet Analysis at Dyn, will discuss how the state of Cuba’s Internet and IT infrastructure helps provide new ...

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By Sean Goforth

The organizers of Nexus 2015 have announced the addition of a special Cuba ICT talk, by one of the world’s leading Internet experts, to the agenda for next week’s conference in New York City.

In an exclusive Q&A discussion, Doug Madory, the Director of Internet Analysis at Dyn, will discuss how the state of Cuba’s Internet and IT infrastructure helps provide new clues on the immediate and long-term readiness for ICT investment in the country. Nexus – widely regarded as the premier conference and home for the thriving IT and business services industries of the Americas – takes place on Thursday, April 30th at the Apella Events Center in Manhattan.

Hailed by the Washington Post as “the man who can see the Internet,” Madory is a leading analyst on the undulating terrain of Internet connectivity across the world. Based largely on data collected from hundreds of Internet service providers across the globe, Madory and Dyn monitor Internet traffic in order to gauge trends, and forecast how networks can be connected and optimized.

Working with local partners, Madory and Dyn Research have developed a track record of making sense of IT-related anomalies with speed and precision. In recent years, this has allowed Madory and Dyn to offer insights on the Arab Spring as it unfolded, and chart out shifts in Iraq’s stability. When it comes to Latin America, Dyn’s research has gained the following of major media outlets like Bloomberg, Vice and the Miami Herald. In early 2013, for example, Dyn Research broke the news that ALBA-1, the first Internet submarine cable connecting Cuba to Venezuela, had been dormant for nearly two years.

In 2013 Dyn Research broke the news that ALBA-1, the first Internet submarine cable connecting Cuba to Venezuela, had been dormant for nearly two years.

In 2013 Dyn Research broke the news that ALBA-1, the first Internet submarine cable connecting Cuba to Venezuela, had been dormant for nearly two years.

Since President Barack Obama’s December 2014 announcement that the United States planned to normalize relations Cuba, excitement over the normalization of U.S. ties with Cuba has led to widespread misunderstanding over the state of Cuba’s  telecoms network, in turn fueling unrealistic short- and medium-term expectations of the pace of growth in ICT-related businesses in Cuba.

“Cuba’s emergence on the Nearshore ICT stage is stirring a tremendous amount of intrigue and interest. We hope that in Doug’s talk we can clear up a lot of confusion and reveal the real facts around what the country is really able to support for IT and BPO businesses,” says Kirk Laughlin, founder and managing director of Nearshore Americas.  “Quality Internet is an obligatory cornerstone to successful nearshore partnerships. Some of that understanding is missing in the recent, overheated enthusiasm about Cuba’s opening.”

At Nexus, Madory will explain how Cuba’s telecom sector might open up. Given his expertise of how Internet access can expand in other countries that have been digital laggards, such as Myanmar, Madory has a keen eye for how bandwidth can be effectively auctioned, how fixed line networks can be effectively coupled with broadband and relevant equipment, and what to expect as IT latecomers scale-up and become a part of the global IT community.

And while much of the focus has been devoted toward U.S. ties with Cuba, the Caribbean country may also be a ripe for partnerships with companies in other countries. China’s telecom companies could allay Havana’s suspicions of industrial spying from U.S.-based companies. At the same time, major Mexican telecoms, which are on the verge of losing domestic market share due to recent telecom reforms, may also be eyeing investment in the Cuban market.  Madory is expected to note which partners may help modernize Cuba’s telecom sector.

Madory’s remarks at Nexus 2015 will offer the most detailed vision yet of the Cuban IT market. Registration for Nexus closes next Monday. If you’re a member of the press, and would like to attend Nexus, send us a note here.

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Narayan Ammachchi <![CDATA[Survey: Agents’ Lack of Knowledge is the Biggest Pain Point in Customer Service]]> http://www.nearshoreamericas.com/?p=44886 2015-04-22T16:08:11Z 2015-04-22T16:08:11Z By Narayan Ammachchi A lack of knowledge among call center agents is hindering voice-based BPO providers‘ ability to meet their clients’ needs, according to a survey by Forrester Consulting. The results of the survey are no doubt a matter of concern for the call center industry, with the majority of respondents expressing concern with agents’ insufficient knowledge and inconsistent answers. “Contact center agents need to ...

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By Narayan Ammachchi

A lack of knowledge among call center agents is hindering voice-based BPO providers‘ ability to meet their clients’ needs, according to a survey by Forrester Consulting.

The results of the survey are no doubt a matter of concern for the call center industry, with the majority of respondents expressing concern with agents’ insufficient knowledge and inconsistent answers.

“Contact center agents need to have 30-pound brains to be able to handle the breadth and depth of today′s customer issues,” said Ashu Roy, CEO of eGain, a cloud customer engagement solutions vendor that commissioned the survey.

“The only viable solution to this challenge is smarter knowledge that can guide them quickly and accurately to answers and through processes,” Roy added.

The research firm said it surveyed 5,000 consumers across the United States and covered a broad set of industries, including retail, communication service providers, banking and financial services, property and casualty insurance, health insurance, healthcare providers, utilities, and government.

“Customer service managers agree that the right knowledge delivered to the customer or agent at the right time in the service resolution process is critical to a successful interaction,” stated Ian Jacobs of Current research.

“Done correctly, knowledge can be used to personalize an interaction, increase customer satisfaction, reduce call handle time, and make operations more efficient”.

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Narayan Ammachchi <![CDATA[China Lends $5 Billion to Cash-Strapped Venezuela]]> http://www.nearshoreamericas.com/?p=44879 2015-04-22T15:38:58Z 2015-04-22T15:38:58Z By Narayan Ammachchi China has agreed to lend Venezuela US$5 billion, with the crisis-hit South American country in desperate need of funds to balance its budgets. The loan was announced by President Nicolas Maduro, although China has neither confirmed or denied the news. Maduro did not elaborate on the conditions of the loan or reveal how he intends to use this cash. China has lent ...

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By Narayan Ammachchi

China has agreed to lend Venezuela US$5 billion, with the crisis-hit South American country in desperate need of funds to balance its budgets. The loan was announced by President Nicolas Maduro, although China has neither confirmed or denied the news.

Maduro did not elaborate on the conditions of the loan or reveal how he intends to use this cash.

China has lent Venezuela $50 billion since 2005, according to a study conducted by the Inter-American Dialogue. Much of this money was provided through so-called oil-for-loan deals. Therefore, analysts say, this latest aid could also be the part of a similar agreement.

The sudden drop in global oil prices has left Venezuela in a catastrophic economic crisis, with people across the country making beelines for government-run shops for basic goods and food grains.

The socialist country is heavily reliant on oil to fund its everyday expenses. Figures from the country’s oil ministry suggest the price of Venezuelan oil has almost halved from $97 in April 2014 to $50 this month.

As oil exports dropped while the country’s social welfare programs expanded, the government now needs oil to trade at around $120 a barrel to break even.

In recent months there have been a string of protest marches and strikes across the country. Shortages in basic staples such a flour, cooking oil and milk are also worsening the situation.

Moody’s recently downgraded Venezuela’s government bond ratings to Caa3, one step above default. This came after President Nicolas Maduro toured the OPEC countries, calling on member states to cut back on production.

Some analysts estimate that government revenue will fall by $30 billion and that the economy will contract by 7% in 2015.

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Narayan Ammachchi <![CDATA[Ford to Invest Billions in Mexico’s Car Manufacturing Industry]]> http://www.nearshoreamericas.com/?p=44869 2015-04-22T15:02:16Z 2015-04-22T15:02:16Z By Narayan Ammachchi U.S. auto giant Ford has announced that it will invest US$2.5 billion in the construction of new automobile manufacturing plants in the Mexican states of Chihuahua and Guanajuato. The announcement comes just days after South Korea’s Hyundai and Japanese carmaker Toyota revealed their plans to build automobile plants in Mexico. Now it is abundantly clear that global automakers ...

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By Narayan Ammachchi

U.S. auto giant Ford has announced that it will invest US$2.5 billion in the construction of new automobile manufacturing plants in the Mexican states of Chihuahua and Guanajuato. The announcement comes just days after South Korea’s Hyundai and Japanese carmaker Toyota revealed their plans to build automobile plants in Mexico.

Now it is abundantly clear that global automakers are ramping up in Mexico. The trend began late last year, when General Motors said it would invest $3.5 billion to expand and modernize its four auto manufacturing plants.

Ford will create 3,800 direct jobs, while Toyota said it will create in excess of 2,000 jobs in Mexico. It seems automakers are shifting from offshore to nearshore, taking advantage of Mexico’s low labor costs and proximity to the lucrative U.S. market.

Other advantages that manufacturers want to capitalize on are Mexico’s free trade agreements with nearly 45 countries and and the country’s robust transportation network that makes it easy to export cars and trucks.

In a statement, Ford announced three major projects: a new engine plant in Chihuahua, expansion of diesel engine lines in Chihuahua and a new transmission plant in Guanajuato.

“Ford is making a significant commitment to our business in Mexico with investment in two new facilities, while aiming to make our vehicles even more fuel-efficient with a new generation of engines and transmissions our team in Mexico will build,” said Joe Hinrichs, Ford’s President of The Americas.

Auto engines manufactured in Mexico will be exported to the United States, Canada, South America and the Asia-Pacific region.

Ford already has 11,300 employees in Mexico, and the company’s top model cars – including the Ford Fiesta, Fusion and Lincoln MKZ – are manufactured in the country. Ford has also established an Engineering Center in Mexico, which employs more than 1,100 engineers.

“Currently within Ford, Mexico is the fourth vehicle producer, the fourth largest engine producer and is the second largest nation supplying Ford’s global manufacturing facilities,” said Gabriel Lopez, Ford Mexico’s president and CEO.

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Bianca Wright <![CDATA[CITY PROFILE: Medellín’s Innovation Initiatives Drive Interest in IT Services Outsourcing]]> http://www.nearshoreamericas.com/?p=44868 2015-04-22T14:49:55Z 2015-04-22T14:49:55Z By Bianca Wright The city of Medellín, in the Aburrá Valley of the Andes Mountains, is positioning itself as a hub of innovation for IT services and Knowledge Process Outsourcing. Elkin Echeverri, a director at Ruta N, a corporation created by the city of Medellín, UNE and EPM to promote the development of innovative technology-based businesses, describes Medellín’s ITO/ KPO sector ...

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By Bianca Wright

The city of Medellín, in the Aburrá Valley of the Andes Mountains, is positioning itself as a hub of innovation for IT services and Knowledge Process Outsourcing. Elkin Echeverri, a director at Ruta N, a corporation created by the city of Medellín, UNE and EPM to promote the development of innovative technology-based businesses, describes Medellín’s ITO/ KPO sector as “vibrant, with wide perspectives but at an early stage.”

Camilo Gomez, Managing Director at Medellín Smart Services, noted that in 2013, Medellín experienced economic growth that was above cities like Ciudad de Mexico, Buenos Aires and Montevideo. He added that the city has received various awards such as City of The Year from The Wall Street Journal 2013, Peoples Choice Award from the World Wildlife Foundation in 2014, it was ranked 17th in Tholons Top 100 in 2014 for service providers in BPO and ITO.

Gomez said: “IT and BPO companies in Medellín are delivering high quality solutions throughout the world with international standards such as CMMI, ISO 9001 ISO 27001 among others.”

Stimulating Growth

Several initiatives aim to stimulate growth of the sector. “A great example of the IT dynamic in the city is Medellín Smart Services, a private initiative that connects 14 ITO, BPO and KPO companies and focuses on developing new business opportunities in the Healthcare, Energy and Construction segments by leveraging the capabilities of all its members,” Gomez said.

Medellín has a Cluster Community with six active Clusters supported by the Mayor’s Office and the Chamber of Commerce, Gomez explained. One of those Clusters is the ICT Cluster, which started in 2011 and currently has more than 2,780 companies connected to it.

Medellín Smart Services was born as one of the three strategic segments of the ICT Cluster in the city. “Since its creation a year ago, it has helped mature the level of trust and increase the work dynamic of its members. This is competition at its best, since many of its members are normally competing for customers, in this arena, they actually cooperate and work together to create and mature new businesses where they can leverage their unique strengths and capabilities. The initiative is focused on created new added value services for the health, energy and construction sectors,” Gomez said.

He went on to say: “As the group and companies in it mature, new and more sophisticated services can be offered which helps to move Medellín from basic BPO and ITO services to added value services and more knowledge demanding businesses.”

Echeverri explained: “Ruta N is the city leader toward innovation as the main economic engine of the city, innovation as a new source of socio-economic change. This transformation is about obtaining knowledge and high value services economy in our region.”

Ruta N is developing a technological district in the local neighbourhood of Sevilla. According to Ruta N, “this district will provide the basis for economic development in this area, attracting companies engaged in topics related to science, technology, and innovation, especially in the areas of health, energy and STI.”

The significance and importance of the Ruta N Corporation building, located in the new Northern area of Medellín, has put a physical stamp on the city. “This complex is one of the most important urban projects of the last years, not only because its new and innovative, but also because it is emblematic, especially thanks to the area in which it is located, which includes important spaces such as the University of Antioquia, The Explora Park, the Planetarium and the Botanical Garden.” As of June 2014, the facility housed 32 companies from 12 countries and had over 900 employees.

Ruta N’s project hopes to consolidate an innovation and technology district in the Sevilla neighborhood, drawing on the international examples of 22@ Barcelona, the MaRS Discovery District in Toronto or the one built in the state of Nuevlo Leon in Mexico.

Echeverri said that the main objective is to “generate the supply of innovation capacity and ‘services technologies’ for this segment of our local economy.”

Echeverri explained that Medellín is emerging as a specialist in:

  • Life sciences: clinical trials, CRO and high level medical treatments such as Clinlogix
  • Energy: Engineering Services
  • Construction: Design Services
  • Some legal services
  • Software testing and security testing: Companies such as SQASA, Choucair Software Testing and Fluid work in this field.
  • Design and build of specialized software such as Ceiba Software.
  • ITO advanced services

Medellín is also becoming a site for consulting in innovation services, where other cities and companies from other regions and countries buy consulting services from companies in Medellín.

Growing Attractiveness

Medellín’s attractiveness as an ITO/ KPO destination is centered on its sophisticated ecosystem and innovation Environment, as well as the availability of high-level human resources, according to Echeverri. “It offers good local market perspectives and [is the] best point of ingress into Latin America for new business in ITO/KPO, because of its geographical position and stable economy,” he said.

Echeverri also suggests that the general attractiveness of Medellín is a potential promoter of this business segment. He said that Medellín’s attractiveness in terms of international human talent and monetary capital, centers on the good quality of life and the innovation capacity of the city. The city also benefits from good ICT infrastructure and advanced public and private partnerships.

“Today, the currency devaluation (the Peso in relation to the US dollar), has increased the competitiveness of the country and of the city enormously for international ITO/KPO services. This situation possibly will remain the same for many years in the future,” he said.

Despite these positives, Medellín is facing challenges, including the level of bilingual-multilingual capabilities. Building skills capacity is high on Medellín’s agenda, including stimulating English fluency. “The city has a bilingual policy with a budget of US$23 Million focused on certifying 1,500 teachers and 15,000 in B1 English,” Gomez said.

Other challenges include the levels of skills for exportation services and the need for massive generation of ICT high-level human resources.

Echeverri remains optimistic about the Medellín positioning in this space. “ITO/KPO is one of the most important areas in Medellín’s future; it is a key area,” he said.

The Facts

  • Population: 3.5 million
  • According to the IEEE Smart Cities Initiative, five of the 15 largest companies in Colombia are located there, with an operating income of US$20.8 billion, including multinational companies.
  • The IEEE Smart Cities Initiative also noted that Medellín has 80 higher education institutions, and has produced 13 percent of all graduates in Colombia in the last 10 years.
  • Medellín’s ICT cluster houses 2,780 companies.
  • There are approximately 200 ITO/BPO companies, generating US$ 700 millions per year in revenue, according to Echeverri.
  • Between 14,000 and 15,000 employees are employed in the sector.
  • The main objective of this segment in the city is to generate revenue of US$3 billion in 2020 with 65,000 employees, Echeverri noted.
  • The city’s sector needs to reach CAGR of 20 to 25 percent per year between 2014 to 2020, according to Echeverri.
  • Medellín Smart Services connects 14 ITO, BPO and KPO companies.

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Narayan Ammachchi <![CDATA[US Contact Center Industry Created 13,669 New Jobs In First Quarter of 2015]]> http://www.nearshoreamericas.com/?p=44855 2015-04-21T16:23:53Z 2015-04-21T16:23:53Z By Narayan Ammachchi The contact center industry in the United States created 13,669 new jobs during the first three months of this year, as Convergys, HGS and Teleperformance continued to expand in the North American market. Although more than 5,000 jobs were lost due to the closure of several call centers, the industry recorded net growth of 7,965  jobs during the period, said ...

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By Narayan Ammachchi

The contact center industry in the United States created 13,669 new jobs during the first three months of this year, as Convergys, HGS and Teleperformance continued to expand in the North American market.

Although more than 5,000 jobs were lost due to the closure of several call centers, the industry recorded net growth of 7,965  jobs during the period, said Jobs4america, which tracked the job growth.

“Quarter after quarter the American contact center industry continues to grow,” stated Matt Zemon, Chairman of jobs4america and CEO of American Support. “This quarter we once again recognize AAA for their continued job creation as well as BPO’s like Convergys, HGS and Teleperformance for continuing to promote the value of US-based sales and customer service to their clients.”

Corporate Call Center created 1,400 jobs in Blue Bell, PA, while Convergys created 1,000 in Phoenix, AZ. Indian outsourcing firms Hinduja Global Solutions (HGS) and Firstsource created 750 and 350 jobs respectively during the period.

Startek, which had closed dozens of call centers across the United States due to cancellation of contracts with a few telecom clients, appears to be making a comeback.  This year it added 682 employees to its workforce in the United States after launching a delivery center in Hamilton, OH.

But other U.S. call center firms like Sitel appear to be downsizing their operations in North America. Sitel has shed nearly a thousand jobs in the past three months, while Maximus and iQor removed 1,500 and 250 respectively.

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Narayan Ammachchi <![CDATA[Patriot National Inc. Acquires Vikaran Solutions for $10 Million]]> http://www.nearshoreamericas.com/?p=44858 2015-04-21T16:22:57Z 2015-04-21T16:22:57Z By Narayan Ammachchi U.S. BPO firm Patriot National, Inc. has agreed to acquired Chicago-based technology company Vikaran Solutions, LLC, along with the latter’s software development center (MPCS) in India. Fort Lauderdale, Florida-based Patriot said it paid US$10 million for the two entities and both of them will soon be merged into its subsidiary Patriot Technology Solutions. Vikaran Solutions provides software and services ...

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By Narayan Ammachchi

U.S. BPO firm Patriot National, Inc. has agreed to acquired Chicago-based technology company Vikaran Solutions, LLC, along with the latter’s software development center (MPCS) in India.

Fort Lauderdale, Florida-based Patriot said it paid US$10 million for the two entities and both of them will soon be merged into its subsidiary Patriot Technology Solutions.

Vikaran Solutions provides software and services to the property and casualty industry. Analysts say the acquisitions will expand Patriot National’s technology product offerings and provide an outsourcing platform in India.

The acquisition adds several new clients to Patriot in the insurance sector, besides adding over 70 programmers.

“The team at Vikaran built our proprietary Workers’ Compensation Expert system, and together they bring extensive experience in technical consulting, design and development for the commercial and workers’ compensation insurance industry,” said Steven M. Mariano, Chief Executive Officer of Patriot National.

This is the fourth acquisition for Patriot after it listed its share in the U.S. market earlier this year. Recently, it acquired TriGen Insurance Solutions, a specialty insurance brokerage based in Boca Raton, Florida, with offices in Orlando and Atlanta. As recently as last week, it bought Hospitality Supportive Systems, a Springfield, Pennsylvania-based managing general agent and insurance program administrator to the hospitality industry.

“We have collaborated with Vikaran and MPCS for several years and I have the highest level of respect and confidence in their technical skills, innovative thinking and ability to execute,” stated Judith Haddad, President of Patriot Technology Solutions.

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Duncan Tucker <![CDATA[Latin America’s Complex Data Protection Laws Not Cause For US Firms to Reshore]]> http://www.nearshoreamericas.com/?p=44844 2015-04-21T14:56:20Z 2015-04-21T14:56:20Z By Duncan Tucker Data security regulation in Latin America is becoming an increasingly significant and complex concern for U.S. businesses that outsource to the region, but there is little evidence that it is leading them to bring nearshore work back onshore.  Data protection laws vary from country to country across Latin America and their implications for outsourcers are not always ...

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By Duncan Tucker

Data security regulation in Latin America is becoming an increasingly significant and complex concern for U.S. businesses that outsource to the region, but there is little evidence that it is leading them to bring nearshore work back onshore. 

Data protection laws vary from country to country across Latin America and their implications for outsourcers are not always immediately clear. Concerns over data security in the region were reignited with the recent news that AT&T was fined US$25 million after data customer breaches at call centers (the names of the service providers were not disclosed) in Mexico, Colombia and the Philippines. Yet this was not necessarily evidence that data protection laws are more lax in the Latin America; on the contrary, in several countries regulation appears more robust than in the United States.

Latin American data protection laws differ from both the European Union and U.S. models. Unlike the E.U., there is no international treaty or regional body that regulates personal data protection in Latin America. And in contrast to the United States, many Latin American countries have enshrined data protection in their constitutions, although in some cases they do not yet have specific laws to build upon those congressional guarantees. But this is beginning to change. Colombia, Costa Rica, Mexico, Peru and Uruguay have all implemented detailed data security regulations and breach notification rules in recent years, while Brazil also has privacy laws in draft form.

Regional Differences

“It’s hard to say if regulation is tougher in Latin America or the United States. They’re different but they’re both increasingly tough,” Brian Hengesbaugh, a Partner at Baker & McKenzie law firm, told Nearshore Americas. “Places like Mexico, Argentina and Colombia are taking what could be described as a comprehensive approach to data privacy. As in the European style, any personal data is subject to regulation regardless of your industry sector and there are a comprehensive set of rules that you have to deal with. Whether you’re outsourcing business contact data, customer, consumer or employee data, whatever it is, it’s all going to be regulated,” he explained.

“In the United States we take both a sector-specific approach to privacy and a data-specific approach to privacy. So the financial, healthcare and telecom verticals all have sector-specific privacy rules, which can be quite rigorous and then there are data-specific rules, like the breach notice rule that applies at state level any time you have a social security number or credit number or health data,” Hengesbaugh added. “Each state is a little bit different but there’s a set of highly sensitive data that in quite a few states will be subject to affirmative security duties and in virtually all states it will be subject to breach notice duties. And then there’s the overlay of things like the federal trade commission authority that will pursue anything that it considers to be unfair or deceptive in the privacy world.”

Data Concerns Not Driving Reshoring

There has been some suggestion that concerns over data security in Latin America are leading buyers in the United States to reshore work that they had outsourced to the region. Everest Group noted recently that the proportion of new onshore delivery centers among all new set-ups by major service providers almost doubled from 21% to 39% from the first half of 2012 through the first half of 2014. Everest cited four main factors behind this onshore growth: “service complexity is rising faster than adequate offshore/nearshore support skill depth; buyers are pressing for easier coordination and better alignment than offshore/nearshore centers can provide; data security regulations are driving a preference, if not a requirement, for onshore services; and providers are increasingly exploring new models and newer tier-2 locations in onshore geographies.”

Nearshore Americas spoke to several industry insiders who dismissed the suggestion that data security concerns are driving onshoring. “We don’t have any data security concerns in Latin America at the moment,” said Phil Calvin, Vice President of Enterprise Technology Risk Management at financial services firm State Street, while Toby Redshaw, the CEO of Kevington Advisors, also debunked the idea.

“I started outsourcing to Latin America for FedEx in the 1990s and I’ve never heard of a single case where re-shoring from Latin America happened over data protection. In fact, outsourcing to Latin America, especially Mexico, is growing,” said Redshaw, who has strong knowledge of the subject, having helped write the Safe Harbor Provision, a part of the E.U. Data Protection Directive designed to prevent accidental information disclosure or loss at companies outside of the European Union.

As for the recent incident involving AT&T, Redshaw said, “I wouldn’t see this as an indication of some big trend.” Rather than driving re-shoring, it will probably just lead buyers to check even more thoroughly around third-party risk, he added.

Hengesbaugh agreed: “I don’t think it’s ever on the table to reshore work back to the States. What is on the table is ‘Gee, shall we go to the next country over?’ There’s a reason that buyers are sourcing something and it’s generally a cost reason so they’re probably still looking for that cost advantage. If there’s a local regulatory issue that they really don’t like then they’ll go to other countries in the region, but they won’t bring it back to the States.”

What Are the Major Concerns?

So what should buyers be wary of? “The first question that an American business would ask is not ‘is the law tougher in Latin America?’ but ‘should it even apply?’ If I’m putting a call center in Mexico but all my customers are in the United States, does the mere fact that my call center is in Mexico attract application of the Mexican data protection rules? And if so, is it the full set of Mexican data protection rules? Because if so, I may not want to open my call center there because of their comprehensive approach to data protection,” Hengesbaugh said. “There’s an important threshold question to ask, which is just by placing a call center or a business processing center there do I really have to comply with the local rules in additional to the rules where my customers are located? That’s a pretty important question but rarely do you find a perfectly clear answer.”

Hengesbaugh continued: “That’s a really big deal. In Mexico for example, the notice and consent rules could be tougher than in the States in terms of getting consent from individuals – even in the financial services sector, which is pretty regulated in the States. That would be a huge competitive disadvantage to have to deal with another layer of consent. Most of the time the analysis is ‘Do I really think the local rules will apply?’ and ‘If I do, what are the implications?’ And if there’s any kind of hint that they would be bad then that would be a reason not to go to that market.”

Hengesbaugh noted that “U.S. businesses are looking carefully at how the rules are written because they don’t like to incur any risk like that.” Yet he also observed that legal ambiguities mean regulations are not always enforced when outsourcers are involved. “One advantage of a place like Mexico is that the authorities have been relatively aggressive about enforcement against businesses with Mexican consumer but not against BPO providers or anybody who has access to data from the U.S.,” he stated.

India Example Shows Possible Solution

As for how the Latin American scenario might play out, Hengesbaugh pointed to lessons that can be learned from India. “A few years back India adopted stricter privacy rules and for a while it looked like if you put your call center or your business process center in India you’d then need extra consent from all your U.S. consumers because that’s what the India rules would require. It caused a lot of concern but eventually the Indian authorities came out and said the notice and consent duties only apply if you’re dealing with Indian consumers. This meant that call centers and business process centers only had to worry about India’s information security obligations, which are relatively easy to comply with,” he explained.

If Latin American countries want to become particularly attractive nearshore destinations then the “logical thing to do” would be to loosen data protection laws slightly, Hengesbaugh said. However, he added, “the challenge if you were writing legislation for a Latin American jurisdiction is that you might want it to be more relaxed to attract business from the United States, but if you were trying to attract business from Europe you might want it to be stricter. So you’re caught in a bit of a conundrum. For Europe you’d like to have a strict enough law to get an adequacy binding from the European Commission, like Argentina has, but for U.S. customers you’d rather have a more relaxed law to not make it more difficult for them.”

Ultimately, Hengesbaugh concluded that “the way India ultimately resolved its problem was a reasonably good way to go.” By setting strong baseline rules it comes close to E.U. data protection standards, but by ensuring that those rules don’t apply to non-Indian citizens it ensured that the market remains attractive to U.S. investors. “I think that’s a pretty good resolution but it requires a lot of sophistication to get that done in an open and clear way,” he added.

Which way Latin America decides to go on this pivotal issue will prove increasingly important as more and more countries pass data protection legislation. “I would expect that five years from now virtually every Latin American jurisdiction will have some form of protection – even Brazil, which is the big one that’s not got data protection laws in place yet,” Hengesbaugh said.

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