Three Reasons Why LatAm Sourcing Providers Don’t Own the U.S. Market

Three things stand in the way of Latin America-based sourcing providers from taking majority claim of the U.S. outsourcing market, and snatching market share from India-based providers. Think …

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Three things stand in the way of Latin America-based sourcing providers from taking majority claim of the U.S. outsourcing market, and snatching market share from India-based providers.

Think it’s possible? What on earth could catapult Americas-based providers to suddenly land in the driver’s seat – dictating the future course of the next generation of service delivery. Here are the details.

We sat down recently with David Tapper,  Vice President for IDC’s outsourcing  group, who has good historical perspective on the ingredients that make up the ‘right stuff’ for countries or regions to become sourcing leaders. Tapper was candid about Latin America and its failings to become a more commanding player in the U.S.  market. Of course, that’s slowly beginning to change, but when you really step back, Tapper argues that LatAm has fallen short in three key areas:

1. India Inc. is Now in the Neighborhood

“The players in Latam are realizing that they haven’t succeeded the way they wanted and over time they have witnessed the rise of the India providers who now are in their own backyards,” says Tapper.

As a result, Latam providers need to ask, “What do we need to do differently?” The longstanding argument that Latin America-based players have a time zone advantage and cultural compatibility loses a lot of its fire when India sponsored providers can make the same argument with facilities  in Guadalajara, Curitiba, or Santiago.

Without telling more that a few people about successes, how in the world are potential U.S. companies going to notice?

2. Where’s the Aggressiveness?

Tapper’s most astute point, and maybe one that is deceptively simple, is that Latin America providers have frankly not gone after the market in a laser-like, hyper-aggressive way as have their Indian counterparts. Tapper points to the seminal moment when India Inc. seized on Y2K as the premium opportunity to relieve anxieties and deliver value to U.S. customers who had no previous understanding of what could be done by these providers. “Among Latam players, there is still not an ability to focus on a specific space,” says Tapper. “You have to be aggressive.”

Maybe it’s cultural, but there is no question there is less of a tradition of boasting about success in Latin America the way it might be done elsewhere. In fact, a senior executive from a Chile-based sourcing promotion agency told me last week that Chileans just aren’t that comfortable talking about their achievements.

Without telling more that a few people about successes, how in the world are potential U.S. companies going to notice?

3. Academic Rigor

Tapper argues that India has institutions on par with MIT. But what about in Latin America? “I’m not hearing that kind of academic success in LatAm. You need the academic rigor and when you have it,  then you can command  the technical advantage,” says Tapper.

To be fair – and in opposition of Tapper’s position – many institutions in Latin America are turning the corner and doing some amazing work producing highly trained technical graduates. Universities in Mexico and Argentina come to mind, but there are others.

Final point:

Tapper says the field is wide open for either existing or start-up sourcing providers to capitalize on cloud computing by leveraging the platform-as-a-service model. “The next major software services company is going to come from people who are using Amazon [cloud services],” says Tapper.

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