Report: Mexico Leads Latin American Outsourcing Industry

The Latin American outsourcing industry has been growing steadily and Mexico leads the pack with the highest number of service providers and a superior business climate, according to a report from …

The Latin American outsourcing industry has been growing steadily and Mexico leads the pack with the highest number of service providers and a superior business climate, according to a report from outsourcing industry research firm Information Services Group (ISG).

Mexico was ranked 4th in ISG’s Outsourcing Viability Index, with India retaining the number one slot.

The index is based on business costs, availability of talent pool and service delivery maturity in the 25 countries that ISG assessed. Mexico scored well for infrastructure and business environment, while “maturity as a service delivery location” helped India to retain the top position.

China came second, despite some unfavorable cost factors, and was followed by Ireland and Russia.

Outsourcers are spreading across the Americas and in some countries, ISG noted, the governments are persuading BPO providers to choose second-tier cities where living costs are relatively low.

Corporate restructuring has continued to fuel outsourcing in North America, with major European countries, including Germany, the UK and Spain, viewing outsourcing as an option to reduce their costs amid challenging economic conditions.

Overall, the global outsourcing industry may continue to enjoy its robust growth, largely because companies in North America are turning to service providers for analytics, mobile, Internet of Things (IoT) and other innovation.

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“The global capacity to support outsourced services is also expanding. Clients have many viable options for service delivery, and many governments around the world continue to invest in skills development and infrastructure specifically to attract service delivery business,” said ISG Chief Research Officer Paul Reynolds.

It seems a large number of potential outsourcing buyers in the Asia Pacific region have remained off the market, despite the fact that the region is home to more than 700 Forbes’ Global 2000 (G2000) companies. Outsourcing penetration rate stands at 59% in North America, which is home to 620 G2000 companies.

Nearly 50% of the G2000 companies outsourced their back-office functions in 2014, spending an average of US$88 million annually, says the report, adding that service delivery patterns are also changing as more countries look to emulate India’s example.

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