Indian BPO firms see growth in Latin Americanoperations

here is the story from Times of India of 19 November

After making a splash in US, European and Japanese markets, Indian ITeS companies are now ready to do Samba in Latin America.

The past two years have seen many of them set up shop in countries like Chile, Brazil, Argentina, Uruguay and Mexico. From TCS to Satyam, Evalueserve to 24/7, Indian companies have now opened development centres or acquired companies all across Latin America.

And what's driving them is the fact that the continent is one of the fastest-growing region for contact centres. Experts say, expansion to Latin America is a logical step for Indian companies looking to globalise their operations. Two main reasons are driving the growth, says Ameet Nivsarkar, V-P, Nasscom. "It helps Indian ITeS companies to service the larger Spanish speaking population in the US. They find it easier to attract Spanish speaking talent in Latin America compared to India. Also, even though Latin America does not have the depth of talent like India, it has sufficient expertise to complement the India story."

In fact, research done by ValueNotes reveals, the number of call centre agents working for outsourcers in Mexico will grow to 85,000 by 2010, and in Brazil it will increase to 12,000 in the same period. Already, Indian companies working there are scaling up operations. Evalueserve's Chilean delivery centre which started with approximately 15 employees, is expected to employ a few hundreds in the next two to three years. Subsequently, they will add around 60 professionals every year. The company believes the country could represent 10% of global revenues by 2008, and also add business for the India and China operations, said Robert Daigle, V-P at Evalueserve.

Nearness to US is a major attraction for Indians. "For us Chilean centre helps in dealing with workload for it is in the same time zone. Besides, Chile is a part of the global delivery platform for our clients," says Ashish Gupta, COO, Evalueserve. While costs (especially salary costs) in the region are higher compared to India, they are still lower than those in the US. Besides, bandwidth costs in Latin America are lower than in even India because of its proximity to the US. "Although the market may not be as big as the US or Europe, it's still big enough to keep Indian companies engaged," says Nivsarkar. Also, lower valuations of Latin American companies make the entry of Indian vendors relatively easier. Since economies there are 'yet to arrive,' it creates good acquisition opportunities for cash-rich Indian vendors.

OECD report on Latn America - 7 November 2007

This is the first time OECD has brought out a report "Latin American Economic Outlook". From now on, they plan to bring out an annual report. Mexico is a member of OECD since 1994 and Chile is in the process of joining.

Highlights of the report:
- Latin America is showing the world a face with new attractive features: more stability in its macroeconomic fundamentals and greater pragmatism in policy and instituitional reform.
-Consistently positive growth rates and democratic stability are now the norms in the region, rather than the exception. Pragmatism has replaced as the guide for governments for sustained economic development instead of dogma.
- Latin America leads the developing world in pension reforms. Of course, Chile was the pioneer and role model for the reforms in the region.

What struck me in the report ( in the introduction itself) is the new link between China-India and Latin America. In fact, they have one separate chapter with the title " Latin America's Asian opportunity." They have concluded that the two Asian giants represent trade opportunities rather than competition for majority of the Latin American countries. Secondly, they show India-China as examples to follow by the Latin Americans in terms of growth, innovation and global competitivity.

It has now become a standard feature of any report on latin america to talk about the linkage to India and and China.

The report has the views of Javier Santiso, the chief development economist of OECD,who wrote the book "The political economy of the emerging markets". I agree with his analysis and optimism. My blog review of his book:

http://latinamericanaffairs.blogspot.com/search?q=the+political+economy+of+the+possible )

TCS wins $200million dollar deal in Mexico

Tata Consultancy Services (TCS) has won a four- year contract of over $200 million from Social Security Institute of Mexico (IMSS), which is the largest organisation of its kind in Latin America. TCS won the contract following a public bid process based on technology and financial parameters over three other leading global and local technology companies.

In its role as the strategic IT services partner for IMSS, TCS will provide end-to-end IT services including application maintenance and support, custom software development, business analysis services, management of strategic IT programs and value added initiatives for the organisation’s affiliates.

This is the largest deal for TCS in Latin America. TCS had earlier secured a 200 million dollar deal with ABN Amro of Brazil and a 170 million dollar contract with Banco Pichincha of Ecuador.

TCS employs over 5000 young Latin Americans in Brazil, mexico, Uruguay, Argentina, Ecuador and Chile. TCS has a regional training centre in Montevideo.

IMF report of 9 November on Latin America

In the semiannual report of 9 Nov 2007, IMF says "Latin America is poised for its fifth consecutive year of strong economic growth in 2008."
Highlights of the report:
- growth in the region will be about 5 percent in 2007, moderating to about 4¼ percent in 2008. This will be the fifth consequent year of growth over 4 percent since 2003.
-average inflation in 2007 is 5.4% and projected to be 5.7% in 2008.
-The region has weathered the recent market turbulence. The solid fiscal and monetary policies have made the region more resilient than it was in the past to changes in the external environment. Instituitional reforms and stronger policy frameworks have made the region better prepared to face times of global turbulence.
-poverty, unemployment and inequality have declined since 2003.
-While the growth of the region has been partly due to the favourable external environment such as increase in demand and prices of commodities, the internal reforms and policy framework of the governments of the region are the most important.

International Monetary Fund Director for the Western Hemisphere Mr Anoop Singh said in a conference in Brazil on 9 Nov "I think Latin America has moved into a new era without the traditional cycle of boom and bust". This confirms my own assessment based on my study of the changes in the markets of the region and the mindset of the Latin Americans.

On Argentina, Mr Anoop Singh said that President-elect Cristina Fernandez had what he called "a strong electoral mandate from the people of Argentina to continue existing economic policies." He said that, through such policies, Argentina was progressing toward more stable economic fundamentals.

Speech in Spanish at the Argentine Chamber of Importers 7 November

video of the speech can be seen in

http://www.youtube.com/watch?v=yJYHdS2gaEw

I was invited by the Argentine Chamber of Importers, a hundred year old instituition to speak on " how to do business with India". This was my second speech in Spanish in Argentina.

I gave an overview of the new market of India and mindset of the new generation of Indians who are not afraid of globalisation. On the contrary, they want to take advantage of the opportunities arising from globalisation and even seek to Indianise the globe. Indira Nooyi's ascent as CEO of Pepsicola company is the symbol of the new paradigm. This new market and mindset are keen to do business with Argentina and latin america.

I expressed optimism for the future of Argentina which has natural, mineral and energy as well as human resources( which won the Singapore and US Open golf, ATP tennis title, Rugby and Polo). Just as the 1991 foreign exchange crisis was a turning point for India, the 2001-2 crisis of Argentina has created a new mindset. The Argentines are now determined that they would never allow a repetition of the crisis. This is reflected in the monetary and fiscal discipline in the last five years. The Argentine economy has been growing at a high rate of over 8 percent in the last five years and is poised to continue the growth in the coming years.

The emerging new Argentina and India are discovering the complimentaries of their industry and business and are moving towards a long term partnership. I was stuck by the enthusiasm and seriousness shown by Argentine importers for India. This is matched by the interest being shown by Indian businessmen for Argentina.

Indian BPO of First Source in Buenos Aires

Raul Martinez, Tarak Ghosh and Myriam Cunningham with me

I visited the Indian BPO of First Source (ICICI group) in Buenos Aires. It is the largest among the Indian IT/BPO/KPO units in Argentina employing 400 young Argentines. They do the backend work for the American telecom giant Verizon and recently they have got a financial job from the Citi Bank.

The BPO is in the heart of Buenos Aires city, amidst elegant cafes, bars, restaurants and shopping.

Raul Martinez is the country manager of the BPO. Tarak Ghosh from India has been taking care from the Indian side. Both are upbeat about more business opportunities and expansion of the BPO.

All the Argentines work in English language. The Indian company is happy with the skills and talents and quality and output of the Argentine staff.

Argentina offers competitive advantages for IT/BPO/ KPO business with its high literacy rate and relatively low salaries in dollar terms. Argentina is a lower cost location than Chile, Mexico, Brazil and Mexico.

The entry of Indian IT, BPO and KPOs contribute to the human resource development of Argentine society and enrich the evolving partnership between the two countries.

Peru - the next rising star in Latin America

My friend Andres Oppenheimer, who writes 'oppenheimer report" in Miami Herald has concluded that Peru is the emerging new star in Latin America. He has come to this conclusion, based this on his interview with a World Bank economist and his own analysis. Following are points he has cited:

• Peru's economy has been growing at about 6 percent a year for the past six years, a longer period of steady growth than most countries in the region. The United Nations Economic Commission for Latin America is projecting a 7.3 percent growth for 2007, and a 6 percent increase for 2008.
• Poverty has fallen from 54 percent of the population in 2001 to about 44 percent, according to official figures.
• Inflation is at about 2.8 percent, one of the lowest rates in the region.
• Exports have risen at an average annual rate of 24 percent since 2001, including an 18 percent annual rise in nontraditional exports, mostly agricultural goods and textiles.
• Foreign direct investment has soared from $810 million in 2000 to $3.5 billion last year.

His write up in
http://thecolourofhope.blogspot.com/2007/11/oppenheimer-report-peru-may-be-next.html