Leonardo Mongillo (Latin America) - Growth of Outsourcing/BPO to Latin America

The practice of business process outsourcing (BPO) is about to come into its third decade. Its remote back-office capability is now reaching into growing markets full of skilled graduate and entrepreneurial workforces. The scope business process outsourcing is rapidly evolving and the markets of focus are changing too.

Location choice is key when deciding the models behind outsourcing. BPO service providers have to work collaboratively with their client companies rather than supporting or managing them, and the location chosen, whether that's nearshore, offshore or onshore needs to be chosen to be relevant to client needs. The chosen delivery model is integral to making the most of resources.

Having watched the industry evolve since its inception BPO key locations have changed. Anglo-American businesses led the first wave and were soon followed by organizations from Scandinavia and continental Europe. The sector became increasingly adventurous and the second wave saw UK and European operations travel to India, while the US looked to the Philippines.

We are now currently looking at the third wave - the rise of Latin America as a fast-growing outsourcing destination, with proximity to the US and free trade agreements rapidly broadening its appeal. We're witnessing the growth of near-shore Latin and Central American outsource centres for US-based companies and Chinese centres for Chinese and Asian corporates, especially the larger Hong Kong and Singapore-based companies.

Unilever and Coca Cola are just two examples of major global brands that have worked with us at Capgemini to move the outsourcing of key business processes to Latin America, an important location for due to its proximity to the U.S., and time zone alignment. These attributes are unique when compared to other outsourcing locations such as China and India.

Our annual Executive Outsourcing Survey also found that 41% of executives outsourcing to Latin America cited language proficiency. Just under half reported other attributes including technology and infrastructure capabilities, skilled labor (48%), and economic stability (44%).

But while uncovering Latin America as a leading outsourcing destination, we're also witnessing the region's increasing value to the global economy. Our study showed an overwhelming majority of executives (89%) believe that Latin America will become increasingly important to U.S. businesses, and that there are advantages of doing business in Latin America (83%). In particular, Brazil is an increasingly important source of growth for BPO.

However this trend is not unique to North America. Increasingly, organizations in Europe are starting to look beyond China and India: the 'traditional destinations' and many are attracted to Latin America owing to its impressive technology and infrastructure capabilities, its pool of skilled labor and its economic stability as a region.

As companies look to outsource more strategically in order to increase efficiencies, yield cost savings and drive growth, Latin America is offering a new approach. And this is set to grow. While a quarter of executives are currently outsourcing to this region, almost half say they would be interested in considering the region as a resource for outsourcing in the future.

Leonardo Mongillo is Head of Operations, Capgemini BPO Latin America



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