Nexus 2014 Highlights Shift to Higher-Value, More Diverse Outsourcing

This year’s Nearshore Nexus 2014 event was especially interesting as it foreshadowed a distinct shift in the region’s outsourcing dynamic, with IT services taking a more pronounced place …

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This year’s Nearshore Nexus 2014 event was especially interesting as it foreshadowed a distinct shift in the region’s outsourcing dynamic, with IT services taking a more pronounced place than ever before. This goes against the heavy emphasis on front-office BPO delivery that has typified the Latin American region, and speaks to a greater level of maturity in many countries with regard to the level of sophistication of services they can take on. In addition, the addressable nearshore market itself is expanding, with countries beyond Latin America looking to be included in this growing regional outsourcing powerhouse.

The emphasis that delegates and organizers placed on the importance of IT services was one of the most pronounced differences between Nexus 2014 and other recent outsourcing conferences focused on the Caribbean and Latin America (CALA). Traditionally, the focus for most CALA outsourcing conferences has been on front-office BPO and contact center provision. However, Nexus 2014 was an indicator that contact center services will only be one part of the CALA outsourcing equation, with country investment boards promoting more technology (and more margin-friendly) functions, and vendors following closely to provide their clients with location diversification beyond traditional delivery centers (both onshore and in India).

Beyond Contact Centers

From an IT services perspective, Latin America can claim numerous home-grown IT service success stories, with notable examples being Softtek, Neoris, FinanceTech, and UnoSquare. In addition, some locations (such as Medellin, Colombia) are aggressively pushing their IT capabilities to outsourcers. Based on the enthusiasm at Nexus 2014, outsourcers should expect to see more such promotion over the coming months.

If the American nearshore is to continue to emerge as a serious option for technology service delivery, all stakeholders will need to take immediate action to ensure the required human infrastructure is in place. The need for skills development to satisfy the labor needs of outsourcers was pervasive at Nexus 2014. Admittedly, most countries courting outsourcing investment in the region are pushing technology instruction heavily among post-secondary institutions, and by all accounts vendors appear pleased with progress in this domain.

There must be equal emphasis on English-language training, which will be crucial in ensuring the long-term sustainability of IT service deployments. Anecdotal evidence suggests that English skills vary tremendously by country (and in certain cases, within the regions of different countries) and this is an area in which the vendor community, governments, and educational institutions must collaborate to ensure a fluid supply of tech-savvy English speakers.

Global stability in all regions is also an area of importance for outsourcers, with heightened awareness being driven most recently by the ongoing worries around tensions in the Crimea and unrest in Venezuela. The countries in CALA that are courting outsourcing investment are enjoying greater economic, political, and security stability than they were even a decade ago, but negative perceptions related to the region still linger among enterprise executives that are not familiar with the recent progress. Thus, vendors seeking to deliver more IT service-related business from the nearshore will need to emphasize the ability to provide delivery with minimal disruption.

BPO Growth in the Caribbean

A final but important point to make on Nexus 2014 is the significant Caribbean representation at the event. Investment promotion agencies from Trinidad & Tobago, Antigua, and Jamaica were among the Caribbean countries actively promoting outsourcing in their respective countries, with an emphasis placed on English-language skills, a strong history of contact center work, and back-office BPO (most notably finance and accounting).

This potentially signals a delineation of the two elements of the American nearshore, with Latin America operating as a contact center and IT services hub, and the Caribbean taking on more of the broad front- and back-office BPO work. This will inevitably lead to greater levels of specialization that will benefit enterprises by providing a clear idea of which function is best handled by which sub-region. Equally, the various countries in question (whether in Latin America or the Caribbean) will be in a better position to drive value by having more transparency in terms of what can be delivered from their jurisdictions, so as to tailor training and incentives appropriately.

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