Monday, July 09, 2007

Latin America turns into magnet for outsourcing-More outsourcing jobs going to Latin America

This is an article by Tom McGhee in The Denver Post. This would be of interest to Indian IT companies who are exploring Latin American markets.
Cheap labor and a Spanish-speaking population are making Argentina and other Latin American countries rising stars among companies looking to save money by sending jobs overseas. South America is an ideal base for services targeting the Latino population in the U.S., said Probir Ghosh, president of Denver-based Virtual Source Networking, a consulting company that helps companies outsource. ''Many countries like Colombia, Venezuela . . . still depend mainly on language-related work. A good amount of business that goes to South America would have a direct or indirect connection to language,'' Ghosh said. Colorado-based outsourcing provider TeleTech Holdings, which has worked for Latin American companies in Argentina, Brazil and elsewhere for at least a decade, has seen demand from U.S. companies for services in those countries rise, said KC Higgins, a Teletech spokeswoman. American companies, which rushed to India - a 600-pound gorilla among offshoring destinations - over the past 10 years, are looking elsewhere as wages have risen in that country, said Peter Ryan, senior analyst at market research company Datamonitor. India and China still lead the pack as locations for offshore jobs, but other countries are emerging as alternatives. Health care and financial services are among a host of industries that are sending jobs to such far-flung locations as Brazil,
Colombia, Ireland, Israel, Hungary, South Africa and Egypt.

Argentina has been aggressive in seeking trade agreements that have enhanced its ability to win work from American companies, said Marcus Courtney, president of WashTech CWA, the Communications Workers of America's organizing arm for tech workers. Industry ''wants to develop a global supply chain of labor; they are equating offshoring to an assembly line. More and more workers are competing for fewer and fewer jobs, and this drives down wages,'' Courtney said.

The collapse of the peso in 2002 sent Argentine wages plummeting below the level paid in India and helped to attract U.S. business to the South American country. TeleTech's Latin American revenue rose from $91.7 million in 2004 to $171.7 million in 2006. Much of the new work is in Argentina, Higgins said. ''In 1997, 100 percent of the work we did in Argentina was for Argentine companies, and that is no longer the case. We started with one site; now we have three, and we continue to expand,'' Higgins said. TeleTech also is expanding into other emerging nations. The company recently opened its first Costa Rican ''delivery center,'' where workers provide both front- and back-office functions, and expects to begin operating another in South Africa soon.


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5CA said...

Latin America is booming with call centers right now. Why? Same time zone, cheaper prices, easily integrated western culture, etc etc. In Buenos Aires, there is a huge amount of people from all over the world for many different reasons - but they all share one thing in common, they need a job! Call centers attract them because often they can speak to clients / customers in their own language. Companies like 5CA are owned by people from the netherlands but headquartered in Buenos Aires.

Julietta said...

Its not just call centers that are finding Latin America attractive. All sorts of outsourcing companies are setting up here. Another article which touches on similar reasons behind this latest change that is worth checking out is, . Please let me know if you come across some others.

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Juliet said...

It was only a matter of time before Latin America's potential as an outsourcing destination was realized. Argentina for example has a highly developed telecoms infrastructure, a well educated population, and in addition a large number of foreigners looking for work. A combination of all of this is, is what is behind the huge growth of the industry in recent years.