Nearshore Americas | The New Axis of Outsourcing Experts in BPO, IT and Software in Latin America and the Caribbean 2015-04-30T14:24:48Z http://www.nearshoreamericas.com/feed/atom/ Kirk Laughlin <![CDATA[Nexus 2015: Central America Can Become the Region’s “Next Great Success Story”]]> http://www.nearshoreamericas.com/?p=45005 2015-04-30T14:24:48Z 2015-04-30T14:24:48Z By NSAM Staff Spurred into action by the humanitarian crisis that drove 65,000 unaccompanied minors to the U.S. border last summer, the Barack Obama administration is working with its regional counterparts to make Central America the next great success story in the western hemisphere. Enhancing security, education, infrastructure and economic prosperity will create a wealth of business opportunities and enable the ...

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By NSAM Staff

Spurred into action by the humanitarian crisis that drove 65,000 unaccompanied minors to the U.S. border last summer, the Barack Obama administration is working with its regional counterparts to make Central America the next great success story in the western hemisphere. Enhancing security, education, infrastructure and economic prosperity will create a wealth of business opportunities and enable the region to fulfill its potential and achieve the same level of success that Colombia has done in recent years. That was the central message of the keynote address that Francisco Palmieri, the Deputy Assistant Secretary for the Caribbean and Central America at the U.S. State Department, delivered at Nexus 2015, the premier executive-level event for the thriving nearshore IT and BPO marketplace, in New York City on Thursday.

An annual industry event organized by Nearshore Americas, Nexus brought together 175 attendees from 14 countries, including a record-breaking 35 guest speakers and an array of senior IT, BPO and finance decision makers, at the Alexandria Center in Midtown Manhattan. Palmieri kick-started this year’s event with an insightful keynote address that explored the biggest opportunities and the challenges facing the northern region of Latin America and the Caribbean.

“We are at a historic moment in the Americas,” Palmieri told the audience. “Change is underway in the region and in U.S. foreign policy. There are opportunities for American businesses which understand that this hemisphere is where you have partners who share your vision and your values.” Trade is crucial to the prosperity of the entire region, he said, noting that the western hemisphere accounts for 40% of all U.S. exports and over US$1.9 trillion in U.S. goods and services a year. The United States and Mexico alone exchange $500 billion in goods and services every year, Palmieri stated, while the Dominican Republic-Central America Free Trade Agreement has also seen trade almost double from $35 billion when it was enacted in 2005 to $60 billion in 2014.

New business opportunities are arising in tandem with the expansion of the region’s middle class. Poverty has fallen by 16% across the region in the last decade, and “though the gap between the rich and poor is still far too wide, it is narrowing in Latin America faster than in any other region of the world,” Palmieri noted. In a bid to encourage trade and employment growth, earlier this month President Obama launched the Young Leaders of the Americas Initiative, which will “help young entrepreneurs and civil society leaders across the entire region access the training and the resources and connections they need to start new ventures, including the small businesses that create over half the jobs in the region,” Palmieri said.

“The opportunities for the private sector are enormous, both in terms of reaching consumers and in terms of creating skilled and adaptable workforce in the hemisphere,” Palmieri said.

“The opportunities for the private sector are enormous, both in terms of reaching consumers and in terms of creating skilled and adaptable workforce in the hemisphere,” Palmieri said.

“The opportunities for the private sector are enormous, both in terms of reaching consumers and in terms of creating skilled and adaptable workforce in the hemisphere,” he added. However, greater development is needed in order for the region to fulfill its potential. “In spite of the region’s abundant resources, over 31 million people in the hemisphere still lack access to electricity. Power generation in Latin America and the Caribbean will need to double by 2030 to meet growing demand, and, the region will need over $700 billion in power sector investments,” Palmieri said.

Enhancing Regional Security

Palmieri has garnered a wealth of first-hand experience in the region throughout his 25-year career, having served in the Dominican Republic, El Salvador, Honduras and Venezuela, and overseen over $800 million in International Law Enforcement and Narcotics programs in Mexico and Colombia. Throughout his speech he repeatedly emphasized the importance of security in the region, and how this impacts economic prosperity. He also acknowledged the United States’ shared responsibility for meeting security challenges in the region.

“Through the Merida Initiative, the Caribbean Basin Security Initiative, and the Central America Regional Security Initiative, we have been helping our neighbors counter organized crime and international drug trafficking organizations. And we have made progress. But more needs to be done to address security threats, especially in Central America,” Palmieri said.

“The humanitarian crisis we witnessed last year when more than 65,000 unaccompanied children arrived at our southern border proved that we need to do more – much more – to address the underlying social and economic causes fueling insecurity and desperation in Central America,” he added. “From a foreign policy perspective, this crisis was a warning sign that serious and long-standing challenges in Central America are worsening. And it became clear that if we don’t address those challenges, waves of undocumented migrants will continue to come.”

But how do you address the deep-rooted problems of poverty and insecurity and the lack of opportunities that drive this migration? First, you must recognize the key problems. Palmieri observed that businesses in Guatemala and Honduras are “choked by high energy costs, cumbersome bureaucracy and inadequate infrastructure.” Meanwhile, governments struggle to provide adequate services “because their rates of domestic revenue collection are among the lowest in the world.” If current trends persist, he added, “six million young people entering the Central American workforce over the next decade will be unable to find jobs.”

The Alliance for Prosperity

The Obama administration has met with the presidents of Guatemala, Honduras and El Salvador over the last year to create the Alliance for Prosperity, a regional initiative to “improve the business climate, create economic opportunity, invest more in education, infrastructure and energy, increase domestic revenue, strengthen judicial institutions, and tackle corruption,” Palmieri said. This alliance is already paying dividends, he added, with murder rates falling in Honduras and Guatemala, while “El Salvador has passed an investment stability law… launched an anti-extortion task force, increased tax revenue by more than 20%, and Guatemala has entered into an agreement with Mexico to develop a natural gas pipeline that will reduce the cost of power in Central America.”

President Obama has requested $1 billion from next year’s fiscal budget to support the Alliance for Prosperity. Over $400 million of those funds will go to programs to promote economic growth and prosperity in Central America, Palmieri explained: “Our prosperity agenda envisions Central America as an integrated regional market of 43 million people that creates linkages and economies of scale so that local businesses can become more competitive and the region can be more attractive to international investors. To realize that vision, we will support programs to enhance trade facilitation and promote transport and customs and border integration.”

The Obama administration believes these measures will not only stabilize the region but also create enormous opportunities for investment. Foreign investors will also begin to witness improvements in personal security and the rule of law, as Obama’s budget request includes $300 million “to improve citizen security, promote police and justice sector reform, and confront organized crime,” Palmieri said, plus another $250 million  to strengthen democratic and judicial institutions. “As Vice President Joe Biden has said, ‘There’s no reason why Central America cannot become the next great success story in the western hemisphere,’” Palmieri affirmed.  

But governments cannot do all the work. The private sector has an important role to play in creating employment opportunities and economic prosperity in the region, Palmieri emphasized. Fortunately, businesses are already recognizing the region’s great potential, he added, noting that “$2.4 billion in foreign direct investment flowed into Guatemala, Honduras, and El Salvador last year.”

While admitting that the U.S. strategy for turning things around in Central America is “ambitious,” Palmieri expressed confidence that it will succeed and pointed to the progress that Colombia has made as evidence of that. “Colombia was once among the most dangerous places on Earth. With U.S. assistance, Colombia strengthened its institutions, made its government more transparent and accountable, increased taxes, and fought corruption in its courts and police force,” Palmieri said. “Today, Colombia boasts one of the most robust economies in all of Latin America, and has advanced farther than ever before towards ending its internal conflict. Plan Colombia worked and our plan in Central America will too.”

U.S.-Cuban Relations

Ever since President Obama announced plans to normalize relations with Cuba last December, relations with the communist island have dominated coverage of U.S. foreign policy in the region. The shift in policy toward Cuba is “a game changer for how the United States is being viewed in the region,” Palmieri said – one that has “recast our approach to the hemisphere, looking to the future instead of to the past.”

“The president’s new policies have eased restrictions on travel, expanded authorized commerce, and set the stage for increased flow of information to, from, and within Cuba,” he explained. “The new policies raised limits on remittances, opened travel in all authorized categories to increase people-to-people contact, and now allow Americans to support the Cuban people through projects related to entrepreneurial training, microcredit, and development, among others. The regulatory changes announced in January by the Treasury and Commerce departments will increase the financial resources to support the Cuban people and the emerging Cuban private sector, and will enable U.S. companies to expand telecommunications and internet access within Cuba.”

These historic changes present a broad array of business opportunities. Palmieri noted that New York Governor Andrew Cuomo recently led a trade mission to Cuba, enabling New York executives to explore economic opportunities on the island. But before outsourcing operations will be feasible, Cuba will need improved IT infrastructure. With this in mind, Palmieri revealed that last month, Ambassador Daniel Sepulveda, the U.S. Coordinator for Communications and Information Policy, led a delegation to Cuba to explore telecommunications and Internet issues. “While the U.S. government is not going to be building Cuba’s upgraded telecommunications infrastructure, we want to make sure that U.S. information and communications technology firms can bid on projects in and open and transparent manner,” Palmieri said.

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Narayan Ammachchi <![CDATA[Unisys Launches Global Innovation Center in Bogota]]> http://www.nearshoreamericas.com/?p=44981 2015-04-30T12:05:13Z 2015-04-30T12:05:13Z By Narayan Ammachchi Nearshore IT services provider Unisys Corp has announced that it is going to launch a global innovation center in the Colombian capital of Bogota. The facility will develop IT solutions for the company’s clients around the world. This will be the second innovation center run by Unisys, which has more than 4,000 employees across Latin America, with the other ...

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By Narayan Ammachchi

Nearshore IT services provider Unisys Corp has announced that it is going to launch a global innovation center in the Colombian capital of Bogota.

The facility will develop IT solutions for the company’s clients around the world. This will be the second innovation center run by Unisys, which has more than 4,000 employees across Latin America, with the other center located in India.

By the end of this year, Unisys will have recruited about 20 professionals for its center. The company says it will later expand the operation and hire several software professionals focused on security and data center solutions.

“Colombia is the perfect place to establish another center of innovation for new solutions that address our global clients’ most pressing technology requirements. Latin America has huge potential as a market for IT professionals,” said Dan Huberty, chief technology officer (CTO), Unisys Enterprise Solutions.

Unisys currently has two managed services centers in Colombia: in Rionegro (close to Medellin) and in Bogota. Those two managed services centers employ more than 700 professionals providing services in both English and Spanish.

The employees at the Bogota center will be allowed to access to the latest technologies and methodologies available in the market, stated the technology firm.

Colombia’s strong infrastructure and economic and political stability prompted the company to choose Bogota for its innovation center.  Unisys said it also considered factors such as economic growth, time zone difference compared to the United States, competitiveness and cultural affinity.

According to Huberty, Colombia boasts one of the highest rates in solution penetration due to its innovative and demanding clients seeking emerging technologies and services that can benefit their business.

“Establishing this innovation center in Colombia enables us to provide both the whole of Latin America and the world with more specialized resources and best-in-class solutions that deliver value-added services, and cultural communication and integration in an expanded range of countries,” stated Carlos Ferrer, vice president and general manager for Central, Andean and Southern Latin America at Unisys.

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Narayan Ammachchi <![CDATA[Redistribution of Wealth Helping LATAM Countries Reduce Inequality: ECLAC]]> http://www.nearshoreamericas.com/?p=44985 2015-04-30T12:04:32Z 2015-04-30T12:04:32Z By Narayan Ammachchi Latin American countries that aggressively redistributed wealth among their citizens have successfully reduced the gap between the haves and have-nots, according to a book published by the Economic Commission for Latin America and the Caribbean (ECLAC). Uruguay and the socialist country of Venezuela have seen a drastic decrease in inequality over the past years, says the book ...

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By Narayan Ammachchi

Latin American countries that aggressively redistributed wealth among their citizens have successfully reduced the gap between the haves and have-nots, according to a book published by the Economic Commission for Latin America and the Caribbean (ECLAC).

Uruguay and the socialist country of Venezuela have seen a drastic decrease in inequality over the past years, says the book titled “Inequality, Concentration of Income and Taxation of High Incomes in Latin America.”

The book, according to TelesurTV, examines the relationship between inequality and taxation policies, revealing that government intervention has succeeded in reducing inequality.

Latin America is still the most unequal region in the world, but the book says many countries in the region have adopted effective policies to deal with inequality.

Redistribution of wealth reduced inequality in 15 of the 17 countries that the book examined, says TelesurTV. During this period, Bolivia, Nicaragua, Argentina, and Venezuela registered the largest annual drops in the Gini coefficient.

The book primarily focuses on the impacts of taxation policies on higher-earners and wealth redistribution, and recommends a series of actions to deal with inequality.

Weak taxation systems are the main causes of inequality in the region, according to the book.  Tax avoidance in the region averages 51.4%, compared to 28.7% on average in 11 European countries.

According to ECLAC’s own assessment, tax-to-GDP ratio in Latin America rose from 19.5% to 21.2% over the 2009-12 period. It shows that tax revenues rose significantly across the region over the 1990-2013 period.

While this revenue boost has provided governments in the region increased capacity to improve spending on social programs and physical infrastructure, the tax to GDP ratio is still 13% below the OECD average of 34.1%.

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Bianca Wright <![CDATA[Q and A: Documentary Filmmaker Talks Mexico’s IT Industry, Time Travel and Being a Food Tourist]]> http://www.nearshoreamericas.com/?p=44966 2015-04-30T11:55:38Z 2015-04-30T11:01:22Z By Bianca Wright Mexico’s States of Innovation, an original 32-minute documentary produced by Nearshore Americas in conjunction with MexicoIT, Prosoft, Canieti, and the Secretaria de Economia, takes viewers into the vibrant IT sector in Mexico City, Guadalajara, Queretaro and Monterrey. Director J. Alejandro, based in Mexico City, talked to Nearshore Americas about the experience of making the film and what ...

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By Bianca Wright

Mexico’s States of Innovation, an original 32-minute documentary produced by Nearshore Americas in conjunction with MexicoIT, Prosoft, Canieti, and the Secretaria de Economia, takes viewers into the vibrant IT sector in Mexico City, Guadalajara, Queretaro and Monterrey.

Director J. Alejandro, based in Mexico City, talked to Nearshore Americas about the experience of making the film and what he hopes the documentary will reveal about Mexico and its place in the global IT market.

NSAM: How did you approach the making of this documentary? Did your vision change as the film evolved?

NSAM, MexicoIT and Canieti already had in mind exactly what they wanted; I wasn’t going to deviate from what their plan was. Within that frame, there was not a lot of wiggle room in terms of thematically what was going to happen in the movie.

Kirk [Laughlin, Managing Director of Next Coast Media] and I talked about injecting some flavor into the film, so that it was not just a long slog through hearing about IT businesses, so we made sure that there is at least one cultural segment to each city. That was part of the plan.

NSAM: What challenges did you face in making Mexico’s States of Innovation?

We had very little time to do this, so that was a major challenge. Luckily we had a pretty kick-ass team who powered through.

In terms of other challenges, it varied from city to city because in some cities we had more connections. So in Guadalajara and in Mexico City, due to the kind of connections Kirk has as a businessman, we were able to utilize those to put together the interviews and the plan was a lot easier.

Whereas in Queretaro and Monterrey, a lot more of it was just pounding the pavement and reaching out to dozens of businesses and seeing who was available to talk and seeing who kind of fit into our thematic frame. So that was difficult.

I think most businesses we talked to saw this for what this was, which was an opportunity for free publicity. They knew this would be screened primarily for international investors, and when they got a sense of who would see the video, they were very excited to be involved. Especially the smaller businesses that are just starting out and maybe don’t have as much international recognition.

NSAM: The documentary details not only the growing IT industry in Mexico, but also the vibrant culture and lifestyle of the different places profiled. What surprised you the most about what you discovered during your time in Mexico?

I do not have a business background at all and certainly not in the IT sector, and I was frankly amazed at seeing these thriving communities of IT businesses, these different IT ecosystems in these different cities around Mexico. As someone from the United States – I only moved to Mexico very recently, in the last half-year – I think the image of Mexico in the media is very different to what I saw up close in real life. It’s one where there is a lot of violence, everyone’s violent, everyone’s poor. There’s this idea of Mexico that it is a third world country. And seeing it up close, from this perspective from the IT industry, I think it is a very different reality – at least for some people and in some places in Mexico. It’s very different to what the international perspective of Mexico is.

NSAM: What was the highlight of the documentary filmmaking process for you?

I love food. I’m a food tourist, and so trying the different specialties in each area was great. It was easy to get all of my interviewees excited about. Prior to the interviews to put the interviewees at ease, I would always strike up a conversation about what they thought the best local food was and they were always very excited to give me their recommendations about what I should be eating while I was in town.

So being able to try burritos in Guadalajara or the seafood in Monterrey, that was really killer.

NSAM: Is there anything you would change about your experience of making this documentary?

There’s always that feeling when you are making something like this that if I had more time I could do a better job. There are things I would liked to have covered that I didn’t get to have on camera, people I would have liked to speak to that I didn’t get to, I would have liked more time, but that is not something I could have changed.

Monterrey is a very beautiful city and we only got to shoot there one day and it was raining very heavily that day. We intended to go into the mountains to shoot in the national park around there, but we couldn’t because it was raining so heavily. So I guess if I could change anything I would go back in time and rid the city of the rain that day, like a god. I suppose that’s what I would change.

NSAM: What would you like the audience to take away from the documentary? How do you think this will impact on the way Mexico’s IT sector is seen internationally?

The one thing that I was very impressed by and that I hope comes across in the film, that I hope someone seeing this internationally would see, is how different Mexico is to what we see in the media.

Like I said there is this image abroad that Mexico is this corrupt place that is run by narco traffickers and it very violent, and there are parts of Mexico where crime and violence is very bad, but what I would hope that someone would take away from this is that there is this other part of Mexico that’s a growing part of Mexico. That there are all these really wonderful Mexicans, who are doing great things and who are trying to make their country better and who are succeeding.

The IT industry is the face of a new Mexico, that is attempting to pull itself up by its own bootstraps and is doing so quite successfully, and creating a much brighter future for Mexico. These Mexicans are not just doing this for money, they are not just doing this for their own business interests, but they are also because they are passionate about making their own country a better place for themselves and for their kids. And they are succeeding, and that is beautiful and exciting; to talk to these people, to hear the excitement in their voices, it’s infectious and I hope some of that comes across.

Everyone was very sincere. Off camera they were equally as excited about what they were doing and about the places they were and the ecosystems they saw developing around them.

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Bianca Wright <![CDATA[Groundbreaking Documentary Probes Dynamism of Mexico’s Innovative Spirit]]> http://www.nearshoreamericas.com/?p=44959 2015-04-30T02:58:52Z 2015-04-29T18:59:52Z By Bianca Wright Today Nearshore Americas’ proudly publishes its first ever documentary – an original 32-minute film examining Mexico’s States of Innovation featuring Queretaro, Guadalajara, Monterrey and Mexico City. The culmination of five months of intense production work, the documentary is a collaboration between Nearshore Americas and MexicoIT, Prosoft, Canieti, and the Secretaria de Economia. The documentary is available online on ...

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By Bianca Wright

Today Nearshore Americas’ proudly publishes its first ever documentary – an original 32-minute film examining Mexico’s States of Innovation featuring Queretaro, Guadalajara, Monterrey and Mexico City. The culmination of five months of intense production work, the documentary is a collaboration between Nearshore Americas and MexicoIT, Prosoft, Canieti, and the Secretaria de Economia. The documentary is available online on the Nearshore Americas website.

“A key part of the original vision of Nearshore Americas was and remains the capacity to tell stories that expose the real situation on the ground. Therefore, this is probably the most meaningful and impactful project we have even done that truly lives up to this vision,” said Kirk Laughlin, Managing Director of Next Coast Media. “I want our audience to put aside their notions of Mexico and see for themselves, especially for people who’ve never been there.”

Laughlin hopes the documentary will change the way people see Mexico and its IT sector. “With the help of CANIETI, we are working hard to make sure the documentary is widely distributed; we think it will have great ‘shelf life’ and have real pratical value in understaning this emerging sector of Mexico,” he said.

The documentary, directed by J. Alejandro, features interviews with more than 20 industry and government experts, including John Howell of the U.S. Department of Commerce and Softtek CEO Blanca Trevino. The interviewees tackle everything from changing perceptions about Mexico to insight into specific examples of Mexico’s IT innovation. The types of IT companies featured range from those enabling small businesses to do credit scoring to sophisticated motion capture work for the film industry.

The project forms part of Nearshore Americas’ in-depth reporting on issues relevant to the nearshore community in Latin America and the Caribbean, and aims to offer insight into what is happening in IT in Mexico from an on-the-ground perspective. Next Coast Media is discussing similar projects of this scale with other countries in the region.

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Narayan Ammachchi <![CDATA[Belize to Establish its First IXP in Order to Offer Faster Internet]]> http://www.nearshoreamericas.com/?p=44975 2015-04-29T13:22:52Z 2015-04-29T13:22:52Z By Narayan Ammachchi With broadband service slow and unavailable in much of the country, Belize is gearing up to build its first Internet exchange point (IXP) in a bid to persuade more people to sign up for superior service.  According to the Trinidad Guardian, major telecom operators have reached an understanding to participate in the construction of the IXP, which eases ...

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By Narayan Ammachchi

With broadband service slow and unavailable in much of the country, Belize is gearing up to build its first Internet exchange point (IXP) in a bid to persuade more people to sign up for superior service. 

According to the Trinidad Guardian, major telecom operators have reached an understanding to participate in the construction of the IXP, which eases the movement of data on the network and will thus reduce the average per-bit delivery cost of the service.

An Internet exchange point is a physical infrastructure through which Internet service providers (ISPs) exchange traffic between their networks.

IXPs avoid the need for data to travel to other countries to get from one network to another, thus reducing latency. Today, many ISPs in the region need to pass the data through networks in the United States before rerouting to their consumers in island nations.

The companies that signed the deal include Alliance IP, Belize Telemedia, BroadBand Belize, Centaur Communications Corporation, Network Solutions and Speednet.

The World Bank has already lent a huge sum of money to fund IXPs across the region, with the Caribbean Telecommunications Union(CTU) teaming up with U.S.-based consultancy firm Packet Clearing House (PCH) to advise regional governments on bolstering the telecom infrastructure.

Over the past two years, dozens of IXPs have surfaced in several Caribbean countries including Barbados, Trinidad & Tobago, British Virgin Islands, Curacao, Dominica, Grenada, St Lucia and the Dominican Republic.

Analysts say the proliferation of IXPs could speed up the delivery of Internet-based services such as video conferencing, voice of IP, data backup and online gaming.

Although Belize is a relatively wealthy country, its telecoms service is poor by regional standards. According to telecom research firm Buddecomm, there is little or no demand for fixed-line service, with the majority of the population subscribing to mobile service. The mobile sector account for about 90% of all phone subscriptions in the country.

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Narayan Ammachchi <![CDATA[Brazil’s Economy is Creating Jobs but Fear of Recession Lingers]]> http://www.nearshoreamericas.com/?p=44961 2015-04-28T16:02:04Z 2015-04-28T16:02:04Z By Narayan Ammachchi Brazil created 19,282 new jobs last month, raising hopes that Latin America’s biggest economy is rebounding from the downturn caused largely by dwindling commodity prices. However, this was not enough to compensate for job losses that totaled 64,907 jobs in the first two months of the year, the worst performance since 2009. Despite the hint of progress, the jobless ...

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By Narayan Ammachchi

Brazil created 19,282 new jobs last month, raising hopes that Latin America’s biggest economy is rebounding from the downturn caused largely by dwindling commodity prices. However, this was not enough to compensate for job losses that totaled 64,907 jobs in the first two months of the year, the worst performance since 2009.

Despite the hint of progress, the jobless rate rose to 6.2% from 5.9% the previous month, according to data released by the national statistics agency (IBGE). Moreover, the 19,282 new jobs pale in comparison with figures from the last decade, when Brazil used to create over 100,000 new jobs almost every month.

Farms and service sector firms have created the most employment opportunities, while manufacturers, retailers and construction companies continued to shed jobs.

Low growth and high inflation are wreaking havoc in Latin America’s biggest economy, with corruption scandals and political chaos hindering President Dilma Rousseff’s plans to reverse the country’s economy fortunes.

The South American country is continuously raising interest rates in a desperate attempt to push down inflation (Brazil’s central bank has raised the benchmark interest rate at four straight meetings to 12.75), but the high interest rates seem to have prevented businesses from expanding.

Meanwhile, the government is pushing Congress to help cut costs by trimming unemployment and pension benefits as part of the fiscal adjustment to shore up accounts. But with the Petrobras scandal creating a lot of heat politically, the government’s capacity to fix the economic problems is weakened.

In a central bank survey, economists have predicted further contraction in GDP growth.

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Bianca Wright <![CDATA[Robotic Process Automation: LATAM Needs to Step it Up]]> http://www.nearshoreamericas.com/?p=44907 2015-04-28T13:40:49Z 2015-04-28T13:40:49Z By Bianca Wright With robotic process automation set to reach US$ 4.98 billion by 2020, according to a report by Transparency Market Research, Latin American firms would do well to investigate potential opportunities in this field. The report noted that the key drivers of the global IT robotic automation market “include cost benefits and improved efficiency of RPA over manual ...

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By Bianca Wright

With robotic process automation set to reach US$ 4.98 billion by 2020, according to a report by Transparency Market Research, Latin American firms would do well to investigate potential opportunities in this field. The report noted that the key drivers of the global IT robotic automation market “include cost benefits and improved efficiency of RPA over manual process handling, ability to leverage other application software without integration, increasing adoption in finance and accounting (F&A) sector and potential alternative to offshore outsourcing among others.”

Robotic process automation is the use of software to automate processes, usually repetitive in nature. In a Finance and Accounting Outsourcing scenario such processes could include account receivable and accounts payable, for example.

According to a report by CapGemini’s Lee Beardmore and Christopher Stancombe, “Mature BPO providers have, of course, been automating back office processes for some time. However the ever-increasing sophistication, and consequent application, of RPA in the BPO domain is now swelling a virtual workforce as never before.” The report went on to say that “the new wave of RPA can so dramatically increase the capacity to do work, in such a cost effective manner and with such a heightened level of accuracy, that labor intensive back office functions are being ‘picked up’ by rapidly advancing RPA technologies.

Growing Awareness

Derek Toone, Managing Director of Alsbridge RPA Service Line, said that all of the leading global ITO and BPO service providers – which would include their Latin American operations – are using some form of Robotic Process Automation, but the level of maturity varies dramatically between firms.  “Some are very advanced in their use of RPA in their ITO services, but lagging in BPO while others are in the reverse situation,” he said.

There is growing awareness of robotic process automation in Latin America, although concrete examples of the use of the technology are harder to find. References to the potential impact of RPA, though, have permeated discussions with a number of those familiar with BPO in the region over the past few months.

Jaime Miller, CEO of Zonamerica, which has an existing free trade zone in Uruguay and is expanding to Cali, Colombia, said: “We are seeing the issue about robotics in the BPO processes. We are not sure where that will lead but it will favor those countries where the labor pool is skilled enough not to be substituted by robotics. It is one of the tendencies we are starting to see. My gut feeling is that it will take volume out of the transactional part of BPO and it will drive growth to the high-end value services. It is too early to tell.”

He added that, in his opinion, once robotics is proven and consolidated as a form of document processing in the CSC, it will substitute the transactional work that is currently done in processes such as Procure-to-Pay. “This will impact on headcount of centers that handle transactional work in low cost locations. I believe high end work in the CSC will always require judgement and expertise of high skilled human workers,” Miller said.

Anupam Govil, Partner at Avasant, noted that he had only seen the Tier 1 vendors embrace it and did not have sufficient data points on Latin America’s experimentation with RPA. “Partially that’s because one has to have a very mature and scalable service delivery model for RPA to have a significant impact. Most LatAm providers are still comparatively small and less mature in their service portfolio – not a single LatAm-centric firm is a Billion dollar plus,” he said.

Govil added: “Even amongst the global tier one providers, RPA is still in early experimentation phase. RPA requires use of sophisticated technology, process topology and service delivery methodologies that have to be tested across large size projects for the efficiencies and performance to be mapped out. There is a significant upfront investment and that is another reason why the larger providers with their depth in client experience and R&D capabilities are ahead of the curve.”

Toone said that providers vary in how proactive they are in rolling out these services to their existing client base as opposed to using it solely as a means to unseat competitors to acquire new clients.  “A third key difference is whether the provider intends to develop their own proprietary RPA or license one or more of the off-the-shelf products from firms like Automation Anywhere, Blue Prism, Arago or IPsoft,” he said.

Wait and See

Latin American providers may not need to pursue automation as aggressively as their Indian competitors. Steve Hall, a Partner at ISG, noted that the Indian heritage firms have been pressed by the market to identify non-linear growth strategies for the last several years. “The continued need to add labor to continue to grow has been a major concern for some time. Indian heritage firms also moved into infrastructure support, application maintenance, and lower-end BPO markets, which are some of the first to be heavily automated,” he said.

Hall went on to explain that the combination of the need for non-linear revenue streams coupled with support for commoditized services are two of the biggest drivers for the Indian firms’ adoption of automation. “The LatAm providers do not currently face these same threats, though as the automation market matures, these suppliers will also be under pressure,” Hall said.

The nature of Latin American projects means that automation is not yet a requirement. “Many of the LATAM players specialize in support for Enterprise Resource Planning (ERP), complex development projects, agile deployments, or other projects that rely on time-zone proximity as their main competitive advantage. These projects still require deep subject matter expertise and client alignment,” Hall said.

He added: “At ISG we don’t see an immediate need for LatAm providers to adopt automation at the same rate, given their current advantages with the types of projects they are supporting.”

Tackling Challenges

Regardless of when Latin American companies tackle the issue of automation and in what form, there are challenges to overcome. According to Toone, the challenges for the ITO and BPO providers include deciding upon strategic direction, building or buying/integrating the operational solution and capability, managing the organizational change to their personnel and office space requirements, and optimizing the commercial impacts to their revenue and profit as the RPA-enabled solutions are rolled out to customers.

“Despite these challenges, no one doubts that RPA is the way of the future for ITO and BPO service provision. Firms that do not embrace RPA will begin to lose market share as they will soon be unable to compete on either the pricing or service quality fronts with those who do,” he warned.

He went on to explain that, for example, generally speaking an ITO provider using autonomics can reduce their price by as much as 30% without difficulty. “Further, RPA can be used to complete tasks more rapidly and with a higher degree of accuracy, which beyond the obvious benefits also frees up human workers to focus on higher value-add tasks for the business,” Toone said.

Mario Tucci, Founding Partner at MVD Consulting, explained that robotics would shift the focus to higher end functions and higher levels of skills in BPO and also motivate companies to offer employees better working conditions and quality of life as incentives.

It is clear that Latin American firms are following the global trends towards RPA, but greater emphasis on providing innovative solutions that leverage the benefits of automation within an outsourced context is needed.

The Need to Compete

Toone cautioned: “On the buy-side, we’re seeing global enterprises embrace RPA, so if LatAm providers want to compete long term they will need to step up their capabilities in this space. Those providers that lead the charge in RPA will solidify their existing client base, take market share from less innovative competitors and advance their capabilities in this emerging space helping them to retain their lead.  Those that lag now in the early stages of the game will be unable to compete in the years to come.”

Toone noted that, of particular interest to LatAm providers that have previously had to contend with competitors using lower cost labor, RPA dramatically erodes the advantage previously presented by labor arbitrage.  “Whereas before it was an advantage to use lower cost labor, when using a ‘virtual workforce’ the cost of the remaining labor component is no longer a key decision criteria,” he said. “Rather, buyers will tend to look more to factors like language, cultural fit, time zone, security and quality of solution.”

For some Latin American nearshore destinations, this could strengthen the value proposition because of the time zone advantage, cultural affinity with the United States and growing English language skills combined with a skilled labor pool.

Govil said: “Latin American companies should look towards RPA as it will likely become an industry standard in the next two to three years, much as having an offshore delivery center has been for the last two decades. LatAm providers should start experimenting with RPA and as the technology and market matures, they would be well positioned to compete with the global players.”

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Narayan Ammachchi <![CDATA[Confirmed: Campgemini to Acquire iGATE for $4 Billion]]> http://www.nearshoreamericas.com/?p=44942 2015-04-27T16:05:50Z 2015-04-27T16:05:50Z By Narayan Ammachchi Capgemini has confirmed that it has agreed to acquire Indian technology services firm iGATE for US$4 billion in a deal that will make the French company one of the biggest IT outsourcing service providers in North America. The merger will take Capgemini’s total headcount to 190,000, with analysts estimating the combined company’s revenue at $13.5 billion. The French ...

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By Narayan Ammachchi

Capgemini has confirmed that it has agreed to acquire Indian technology services firm iGATE for US$4 billion in a deal that will make the French company one of the biggest IT outsourcing service providers in North America.

The merger will take Capgemini’s total headcount to 190,000, with analysts estimating the combined company’s revenue at $13.5 billion.

The French company  claimed in a press release that the merger will strengthen its application and infrastructure services as well as BPO and engineering services. Moreover, the deal enriches Capgemini’s portfolio with new flagship clients such as General Electric and Royal Bank of Canada.

Founded by Sunil Wadhwani and Ashok Trivedi, iGATE has employed more than 33,000 people.

North America is iGATE’s largest market, representing 79% of revenue in 2014, followed by Europe (14%) and Asia-Pacific (7%). The merger increases the group’s revenue by 33% in North America alone, with the company planning to earmark 50,000 of its employees to service North American clients.

iGATE’s North American operation includes its $2 million delivery center in Guadalajara, Mexicom as well as an office in Queretaro, which came into its fold following its acquisition of Patni Computers in 2011.

iGATE has large clients in North America’s financial services sector, which accounts for 42% of the company’s revenue. Analysts say the merger will also reinforce Capgemini’s position in the retail, manufacturing and healthcare sectors, besides adding some important cloud platforms to its offerings.

“The combination of iGATE and Capgemini provides cross selling revenue synergies of $100-150 million and annual efficiency gains estimated at $75-105 million to be achieved within 3 years,” Capgemini said, adding that it will leverage iGATE’s technology solutions to accelerate the “people supply chain” transformation.

“We are pleased to have found a great partner for the business and are confident that our employees and customers will benefit from the enhanced service offerings and resources available to them at Capgemini,” said Ashok Trivedi, Co-Founder of iGATE.

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Narayan Ammachchi <![CDATA[Report: 27 Million Youths Work in Latin America’s Informal Economy]]> http://www.nearshoreamericas.com/?p=44945 2015-04-27T16:04:02Z 2015-04-27T16:04:02Z By Narayan Ammachchi The International Labour Organization (ILO) has expressed concern at Latin America’s huge informal labor force, urging the region’s governments to act quickly to move workers into the formal economy. According to the ILO’s estimation, nearly 27 million of Latin America’s youths work in the informal economy. “Youth unemployment is very high in the region, but it’s just the ...

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By Narayan Ammachchi

The International Labour Organization (ILO) has expressed concern at Latin America’s huge informal labor force, urging the region’s governments to act quickly to move workers into the formal economy.

According to the ILO’s estimation, nearly 27 million of Latin America’s youths work in the informal economy.

“Youth unemployment is very high in the region, but it’s just the tip of the iceberg that hides the wider problem of a lack of opportunities for those who are just starting their productive lives,” said Elizabeth Tinoco, ILO Regional Director for Latin America and the Caribbean.

The ILO warned in its report that six out of ten jobs available to young people are in the informal economy. In general, these jobs are of poor quality, low productivity and offer low wages. This means that youths are lacking stability and career prospects, social protection and access to basic labor rights.

“We face a major political challenge, as high unemployment and informality create a scenario which leads to high levels of discouragement and frustration generated by the lack of opportunities,” Tinoco said. She added that when young people can only access poor quality jobs, it jeopardizes their future career path.

Nearly 56 million of the region’s 108 million young people, aged 15 to 24, are either holding a job or actively seeking one.

Among these youths, 13% are unemployed, three times the rate of adults. It is estimated that over 7 million young people fail to find a job – a number that is equivalent to 40% of total unemployment in the region.

Most jobs for youths are generated in the informal economy, very often in small and micro informal enterprises. But informal conditions also affect 32% of young workers employed by formal enterprises.

According to the report, more than 20 million young people in the region are not in education, employment, or training.

The informal economy, according to ILO, is the byproduct of laws that discourage compliance because they are inappropriate, burdensome or impose excessive costs.

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