Q&A: New Arvato Executive Names Brazil as Hot Spot for F&A BPO

European outsourcing firm Arvato recently hired former Microsoft executive Edmund O’Brien to oversee the expansion of its operations in Latin America. The Gütersloh, Germany-based BPO provider, which already runs a few delivery centers in nearly half-a-dozen Latin American countries, has tasked O’Brien with bolstering the company’s operations throughout the Americas.

Arvato has long operated in Mexico, Argentina, Brazil and Peru, but its largest expansion came in 2012, when it launched a major call center in Bucaramanga in northeastern Colombia to provide customer care service to one of its telecom clients in Spain.

As part of its expansion strategy, Arvato is now preparing to set up an American headquarters in Silicon Valley, from where O’Brien will supervise the company’s operations in both North and South America.

In an interview with Nearshore Americas, O’Brien revealed plans to expand the company’s F&A service by capitalizing on Brazil’s large labor force. Below are excerpts from the interview:

Nearshore Americas: How is Arvato positioning itself in terms of offshore delivery centers in Latin America, both in terms of regions and numbers, and in terms of industry verticals?

Edmund O’Brien: Latin America has talent to support opportunities across industries, with both market dynamics and demand from existing customers guiding our growth plans targeting Mexico, Uruguay, Colombia, Brazil and Peru with our CRM and eCommerce services. Additionally we currently have four F&A BPO sites in LATAM, with further growth planned.

Currently within our eCommerce business we have developed a partnership with a local nearshore provider and under an exclusivity contract our IT services has established a software factory in Montevideo, Uruguay that counts 30+ developers specialized in java on the hybris platform.  Additionally, the software factory includes professionals working in the areas of QA and PM.

Our CRM location in Monterrey, Mexico supports our clients’ North and Latin America customer base, while our operations in Colombia and Peru predominately support Spanish customers. We are currently exploring other Latin American locations to create new software factories, evaluate partnerships within the regions and further expansion into areas that can support our client base.

Additionally we continue to explore how to expand our different solution groups in Brazil and Latin America where we maintain physical fulfillment centers for our eCommerce and financial solution services.

NSAM: What growth potential do you think the Latin American market offers to BPO providers whose service portfolio includes F&A and CRM?

Edmund O’Brien: eCommerce and related services have a huge growth potential in Latin America.Brazil is one of the most attractive markets for F&A BPO services in the world, with an annual growth rate of approximately 8%.

Access to a large pool of talent is benefitting BPO providers in the region. You can balance the availability of talent by leveraging between their language and written skills for non-voice activities. This balance of talent makes it mutually beneficial and cost effective.

In addition, given the significant risks and complexities of the financial infrastructure in Latin America, financial services, CRM and fraud prevention are essential for eCommerce and therefore are in great demand. Although there are established providers for these services, they remain local and competition remains low.

Arvato aims to position itself strongly in this market through integrating our offering of IT services (design, implementation and integration) with the “physical” services: CRM and F&A such as call centers, manual fraud prevention analysis, payment collections, and providing regional services.

NSAM: You have recently expanded into the Philippines, a country known for its growing call center industry.  Have you identified a LATAM country with similar potential to that of the Philippines?

O’Brien: The Philippines is a key delivery location for Arvato, particularly in terms of F&A BPO, where we have approximately 800 employees across two sites uniquely positioned due to the large English-speaking population; there are more than 56 million English speakers in the Philippines compared to 450,000 in Costa Rica.  Although we have not identified an exact parallel in LATAM, there are multiple countries that are attractive for us in terms of expansion.  Brazil for its labor force size and business market, Uruguay has excellent education & infrastructure and Columbia is equipped to offer talent and support.

We have identified Mexico as the market with the largest potential at 16 million English speakers. Although the region does not have the same cost efficiencies as the Philippines for large outsourcing opportunities, for clients at smaller scales, Mexico becomes an attractive nearshore option due to proximity, cultural affinity and potential cost savings. In line with this, Arvato has recently expanded our facility in Monterrey, Mexico to accommodate the growing needs of our clients.

NSAM:  In terms of your workforce in the Americas, how much growth are you expecting in the next few years?  How is this influencing your plans for employment training and developing talent?

O’Brien: The Americas is a core region for Arvato and we want it to keep growing. Arvato has a culture of developing talent from within, providing our employees opportunities to grow in a variety of ways. As we open new locations, our employees are given the opportunity to relocate and also provided opportunities to change roles across our various service portfolios. Within the organization, we are actively and continuously enhancing our training and development schemes for our employees to ensure that we are well positioned to manage growth in the future.

In addition to employee development, Arvato places a special emphasis on identifying partners that share our core values and culture such as technical and business excellence and the constant improvement of processes and methods. And as we develop partnerships we have recruited local talent to occupy key positions allowing us to maintain a direct relationship with clients inside the company while enriching the experience of the remote team.

NSAM: What is Arvato’s ratio of voice-based and non-voice-based BPO service in the America (including the United States)?

O’Brien: Within CRM, which represents 30% of our overall BPO service offerings, we operate approximately 50% voice and 50% non-voice for North America CRM.

NSAM: Arvato seems to be a strong competitor for Capgemini in the F&A BPO space.  Tell us a bit about your plans to expand F&A BPO in the Americas.

O’Brien: Arvato was recently positioned as a leader in the Gartner F&A BPO Magic Quadrant alongside Capgemini, Accenture and other major F&A BPO players. We have a strong value proposition in the F&A BPO space with over 7,000 delivery staff across 49 locations, including Ireland, Spain, Germany, Peru, the U.K., the Philippines, Singapore, Argentina, Monterrey, Mexico and the U.S.

Providing comprehensive F&A BPO solutions, and a market leader in Order-to-Cash, Arvato has an extensive client portfolio and a strong ability to deliver flexibility in standard processes particularly in the fast moving IT/high tech and e-commerce sectors.

Arvato has a long history of developing strong global partnerships with “Digital Elite” organizations such as Microsoft, providing vertical specific solutions and enabling rapid expansion. We plan to leverage this expertise further in the America’s focusing on integrated solutions that add value, as well as leveraging our strong global delivery network to both enable global right-shoring and act as a gateway to Europe for U.S. brand-name companies. In terms of emerging markets, Brazil will become a focus area for F&A BPO over the next three to five years due to the significant growth opportunities developing in this market.