Travel and Hospitality Lights Another Fire For Latin America BPO

A recent report in the Economic Times noted that India’s business process outsourcing (BPO) sector had been given a boost through the emergence of interest from new sectors such as …

Peter Vogel of Gardere Wynne Sewell says growing Internet penetration Latin America is also a major driver of growth.

A recent report in the Economic Times noted that India’s business process outsourcing (BPO) sector had been given a boost through the emergence of interest from new sectors such as travel and hospitality, and e-commerce. The report indicated that India’s BPO industry had been dependent on telecommunications providers, but the new sectors had boosted BPO demand, with the Economic Times reporting a predicted 16 to 20 percent growth in the domestic market. With the need for diversification in the shared services and the BPO sector increasing, the question becomes can Latin America benefit from similar new customer sectors moving into the space?

Varsha Bhagchandani wrote on the Go4Customer blog that “the role of outsourcing in the global travel and hospitality sector is witnessing continuous growth as the industry operators are thriving to offer best-in-class services to lure more customers. The business process outsourcing services units help car rental agencies and tour operators to deliver services at economical prices to retain their customers for [the] long run as well as gain competitiveness in the marketplace.”

Many BPO operators and corporate shared services units, which have a presence in Latin America, are already servicing the travel and hospitality sector. Peter Vogel of Gardere Wynne Sewell LLP said that BPO around the world has increased, and with the now mature adoption of the Internet in Latin America it seems likely that these sectors will grow very quickly.

He pointed to the economic appeal of shared services and BPO in Latin America as a driving factor. “With increased investments in hospitality and e-commerce in Latin America, the significantly lower costs of operating should allow consulting businesses to operate BPO with great profits,” he said.

Alexandre Colcher, Accenture operations BPO lead for Latin America, said that e-commerce and next generation travel and hospitality services could be considered what is called Digital BPO services.

“These are new and growing fast in Latin America. E-commerce, analytics and mobility are emerging as key capabilities for BPO deals. We believe digital operations and a focus on the use of technology will be a critical area of growth in the region and a clear differentiator for Accenture,” he said.

Colcher emphasized that travel and hospitality is “going digital” very fast in the region, and E-commerce is already a reality in the region with global and local players. “Digital BPO, including campaign management, marketing and customer analytics, social media monitoring and content management are real needs,” he said.

While the emerging sectors hold promise, there are pitfalls to look out for. “In the past few years, we’ve seen BPO moving away from transaction processing and moving toward a driver of business value.  BPO buyers are beginning to move beyond the ‘lift and shift’ labor arbitrage model, where services are charged purely on headcount,” Colcher said. “Today, companies want specialization and transformative change, not just keeping the lights on. That type of wide-scale change requires new innovations in automation, analytics, and collaboration tools.”

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He added that shared services units andBPO providers that will succeed in the region will need to bring industry knowledge, and advanced technology capabilities to provide a unique service.  “Very few companies will be able to fulfill these needs,” he warned.

A report by IBM  highlighted the key trends in the travel and transportation sector, which includes shipping as well as airlines, cruise companies and online travel services among others. The five trends identified included the importance of the online channel, the need for global integration and the use of big data to drive service excellence and increase competitive advantage. It is then vital for those wanting to leverage increased interest in BPO and shared services from the sector to ensure they are able to deliver in these areas.

The emerging sectors do offer opportunities for shared services operations and BPO providers in the Latin American region to diversify and to build new client bases, provided they recognize the needs of the sectors and avoid the pitfalls highlighted by Colcher.

 This story was originally published by NSAM sister publication Global Delivery Report.