For those US companies who want to know more about the advantages of partnering with Guatemala outsourcing providers, a good place to learn more is to attend the upcoming Services Summit, running from Sept. 10-12 in Guatemala City.

The event will be organized under a corporate matchmaking format, allowing buyers and sellers to spend quality, one-on-one time together. This is a second annual event, sponsored by the Guatemala Exporters Association. Sessions will be organized around these key topic areas:

• Sustainable Tourism
• Health & Wellness Tourism
• Laboratory Services
• Software Development Solutions
• Contact Centers & BPO´s

To register, just visit this site.

I’m excited to announce the launch of Nearshore Americas in September. The site will the first truly independent news and commentary online resource for the emerging nearshore community. (This is the first public viewing of our new logo by the way – the three sweeping elements are meant to reflect North, Central and South America working as one.)

We are launching the media brand to meet a strong hunger for relevant and deep analysis of how to develop profitable, long-lasting partnerships in Latin America and the Caribbean. We will have much more to tell you in September, including launch of a regular newsletter, contributions from outsourcing experts, buyer case studies, live blogging and much more! Response to our current brand – Caribbean CRM Central – has been overwhelmingly positive. We expect to play a part in helping the Nearshore community establish itself more visibly on the world BPO stage.

The North American Shared Services and Outsourcing Summit is coming to Chicago, from Sept. 28-Oct. 1 and I’ll be there blogging live (for our new brand Nearshore Americas) and talking to customers of Nearshore outsourced services. Event organizers have done a great job landing high quality customer speakers – including executives from Wal-Mart, Cigna, Kraft Foods and Hyatt. I will be tuning in specifically to sessions relevant to companies who continue to try to navigate in the outsourcing universe, including:

- Innovative pricing models and contracting

- Building a world class HR shared services function

- Getting your organization ready for BPO

There will also be a session specifically dedicated to emerging outsourcing regions, particularly Latin America.

If you’re going to be in Chicago for the event, let me know -  let’s connect: kirk@nextcoastmedia.com

Forrester Research came out with a research piece this week, titled “Will your Offshore Provider Survive The Recession? that asks BPO clients to take a cold, hard look at the health of India-based providers.

The Forrester researcher, Sudin Apte, paints a pretty grim picture of the India BPO sector citing that major providers are ill-equipped to handle a perfect storm of diminished demand, picky clients wanting better deals and anti-outsourcing rhetoric from President Barack Obama.

The researcher says: “Indian providers’ limited preparedness to fight the recession poses a risk for clients. While in the short term sourcing professionals will find it attractive to obtain lower rates, vendor viability is challenged in the  long run — putting project delivery and overall client work at risk.”

These are pretty strong words and have major implications for Nearshore providers and US customers. What can providers learn?

Lesson 1: Differentiate yourself and your brand. Part of the problem for many India providers is they are doing too much and have lost sight of their core specializations.

Lesson 2: Build credibility through service excellence. The outsourcing business is very much a long-term gain proposition. It remains essential that providers consider their delivery value through continuous engagement and committing to invest in competency areas.

Lesson 3: Be honest. Say No. Part of the advantage of working in the Nearshore region, is the sharing of similar cultures. For that reason, the Western Hemisphere is probably better known for its ability to be “professionally blunt” when necessary to get the point across. This is an advantage for providers who are working with clients who are used to receiving “push back.” Being tactfully frank when necessary is something that customers will respect you for.

Lesson 4: Offer new methods of engagement. This point – courtesy of Forrester – is important since providers need to demonstrate that they are innovating in the right areas and looking at ways to improve the delivery of service, through human capital efficiencies, technology improvements or other creative models.

Is the India outsource industry about to collapse? Absolutely not.

But when major research firms like Forrester talk about anticipating bankruptcies – it’s a wake up call I would pay attention to.

Forrester advice to US clients working in India: “Rather than wait for a provider to go bankrupt or be acquired and face work disruption, identifying early symptoms of risk can save a lot of pain.”

The more I talk to those connected to the Honduras outsourcing sector, the more I realize that – frankly – the country might just be a lot better off if former President Manuel Zelaya never comes back to the capital of Tegucigalpa. Even US Secretary of State Hillary Clinton says an attempt by Zelaya to return to Honduras would be “reckless” and would damage attempts for constitutional order.

No hard feeling Mel, but if you and the rest of the political leadership want to truly serve your country then walk away from the righteous arguments and let stability – and commercial growth and opportunity – prevail.

Of course, the political situation in Honduras is not that simple. But what is encouraging is that despite the past several weeks of negotiations and high-level wrangling, the country’s emerging BPO industry is holding itself together nicely.

First, it is critically important to note that the cooler heads in such situations are often business people and investors who see well beyond the political rhetoric, knowing that this too shall pass. Companies preparing to establish or expand operations in Honduras include the giant food and agricultural corporation Cargill, the globally renowned marketing and ad agency McCann Ericsson, and Netsol, a global provider of  business services with branches around the world.  This encouraging news was relayed to me by Ruben Sorto, Corporate Marketing and New Projects Director at Grupo Karims, which is establishing several world-class office centers, including the Altia Business Park project near San Pedro Sula. (Check out the virtual tour here.) “The project is right on track and within the scheduled program,” says Sorto. “We will finish the first tower by December and we expect to have everything up and running in the first quarter of 2010.”Sorto says that his firm has rented about 70% of the first tower (14 floors, each floor with 11,000 sq. feet) to corporate tenants.  

Ruben Sorto, left, of Grupo Karims joins Carolina Pascua (far right) from FIDE (the Honduran Investment Agency) and an unidentified executive during a recent meeting in Honduras.

Honduran-based business leaders are continuing to come out publicly in support of Zelaya’s ouster: “We’re here to support the brave actions of the new government, said Santiago Ruiz, president of the Agriculture Association of Honduras.

While some might argue that Zelaya’s strength was in promoting Honduras as a public relations pitch man, the reality is – upon reflection – that he appeared to quite keen to establish his own home made brand of continuismo, where he would defy the constitution and hold on to power as long as possible.

As we’ve said in this blog before, Honduras has a great upside in terms of outsourced services. We just hope that same sense of patience and focus that helps create sound businesses begins to form the foundational approach of the national government level.

Costa Rica has been blessed with assets that virtually any country in the world would envy: stable government, twenty-some different micro-climates, low unemployment and an educated class that knows how to get the job done.

Yet, there are persistent questions about a saturation point in Costa Rica, where all the best labor is soaked up – especially in technical fields. For a country of just 4.1 million people, there is an impressive list of foreign companies with operations in Costa Rica. Oracle, HP, Intel and Cisco all have offices in Costa Rica and there are countless software development firms providing services to clients all over the world.

According a study just released by Manpower, nearly half of Costa Rica firms cannot meet their needs for skilled labor, particulary in technical fields. The  survey found Peru (56%) and Mexico (44%), are also having a tough time.  On the other hand,  employers in the U.S. (19%), Guatemala (20%) and Canada (24%) reported the least problems.

On my recent visit to Costa Rica – for the June Services Summit sponsored by promotion agencies CAMTIC and PROCOMER – it was clear companies are adapting to the skilled labor challenges by looking beyond borders throughout South and Central America to funnel business to other providers. This is an encouraging trend as the regionalization of service relationships is another shot in the arm to help drive BPO activites – and economies -  in such places as Colombia, Panama and Nicargua.

Invest in Guatemala (IIG), the economic development agency based in Guatemala City, recently lost 12 of 15 staff members in a sweeping layoff that has many in the local outsourcing industry wondering: What is the government thinking?

The agency is a key catalyst in promoting the BPO/outsourcing sector in Guatemala, and also helps attract investment into other industries such as agriculture, tourism, energy and manufacturing.

The news is a big shock to many who have come to recognize the Guatemala government as having an enlightened approach to attracting foreign investment.  IIG staff are charged with facilitating discussions between local service providers in the BPO sector and foreign clients. Most of the clients are from the US, and those formative relationships – cultivated by IIG – are built oftentimes on trust and continuity.

There is nothing more alarming for an foreign investor to learn about sudden shifts in strategy. We will try to find out more about the issues that triggered this sudden change – but will also invite readers to offer their own opinions.

The Guatemala economy is not enduring the same pain as some neighboring countries – which makes the cut even harder to understand. Just announced figures from the United Nations Latin American and Caribbean Economic Commission indicate the Guatemala economy will shrink by just 1% in 2009.  (Costa Rica, by comparision is enduring a 3% decline).  The overall Latin American region will slow by 1.7%, with Mexico facing a sizable 7% contraction.

The region is expected to get back on a growth track in 2010 – with economies expanding by 3% next year on average.

How much will the losses at IIG impact the outlook for the local BPO economy?

By Karina E. Cuevas

Bogota employs over 30,000 people in the contact center industry

Plenty of heads shook with dismay across Latin America, and particularly in Colombia, when Bogota was labeled as the riskiest outsourcing destination in the world for 2009, according to publishers of the Black Book on Outsourcing.

Lots of rankings come out annually about outsourcing providers, specialty areas, regions and cities – but this particular announcement seemed to be so at odds with reality that it triggered a slew of condemnations across the Internet and raised serious questions about the methods used by authors Scott Wilson and Doug Brown. (For further opinion, see Nearshore Americas’ reaction here.)

Modern City on the Rise

A city that generates over $250 million annually in the call center/outsourcing industry can hardly be called a dangerous investment option.  “It [Bogota] has a big and modern economy with over 500,000 college students, a major international airport and the advantage of moving more cargo in Latin America [than any other country],” says Vladimir Ramirez, Managing Director of International Development Group, a management consulting firm with operations in Colombia, New York and Chicago.  “It was number one in foreign investments last year (in LATAM) making it the first port of entry in Latin America and having both Colombian and international Spanish call centers located in Bogota.”

With facts like these, it’s hard to believe the negative comments on Bogota, but Black Book of Outsourcing doesn’t stop there. It places Bogota under the radar as a dirty and polluted city with an immature legal system.  When contact about the report, authors Scott Wilson and Doug Brown did not respond to questions.

“Many people know very little about Latin America and nothing about Colombia, so I don’t know if those people have ever been here or where they get their data,” says Ramirez. “Colombia, within its political context, has never had a coup d’état, it has only entered in a recession once at the end of the last century and from a public order point of view it is no more corrupt than India, Indonesia and other countries in Latin America.”

Teleaccion: Training Plays a Key Role

Colombia counts on the expertise of a consulting and training company, unique to Latin America, called Teleaccion.

• It’s a 21-employee institution specialized in improving technology and BPO management within the country and nine other nations around Latin America.
  
• It has focused on three primary countries of growth for the call center market, including Colombia, Peru and Venezuela.
• “We have trained around 23,000 people within 157 contact centers in Latin America,” says Patricia Alzate, General Manager of Teleaccion. “We work for Latin American reality, not for American or European cultures. Our method is a practical and simple one that has showed great results.”

According to Ramirez, Colombia is a market waiting to be discovered by the international community.  Currently there are around 120,000 employees within the call center industry.  The largest call centers are located in Bogota which employs around 30,000 people. The country, with seven distinct regions, offers over 12 cities in which to base a company.  In five years, the call center/outsourcing industry is expected to generate $2.5 billion in revenue for the country.

Colombia has over 20 contact centers around the country all with different levels of success. Teledatos, located in Bogota, ranked number two in 2008 accounting for 13 percent of the market revenue.  With 15 years of history, Teledatos has become a leader in domestic services and has an open door policy for international business. They focus on the health care sector, air and land transportation with their services delivered mainly in Spanish, but also in Portuguese, English and Papiamento (the official language spoken in the Caribbean islands of Aruba, Bonaire and Curacao).  It has a consistent portfolio of loyal clients, one that has maintained a 14 year long business relationship and others that see their quality in customer service and have stayed for over four years and counting.

Over 55 Clients Served

“Teledatos is born in Medellin and then in Bogota, being it the capital it went on to be part of the growth strategy,” says Mauricio Velasquez, Commercial and New Business Vice President. “We employ around 6,200 people and service 55 companies from Europe, the United States and Latin America.”

Profile: Mauricio Velásquez M.

Commercial and New Business Vice President of Teledatos

Systems Engineer of EAFIT, Specialized studies in Management in Universidad Pontificia Bolivariana and in Direct Development in INALDE.

He is a professional and numbered member of the International Association of Outsourcing Professionals – IAOP, USA.

He was Manager of Business Development with an emphasis on Outsourcing for HP in their region MCA (Multicounty Area), Director of Sales for business lines of Telecommunications for Unisys in Puerto Rico, Project Leader of IBM, among other related positions within outsourcing in technology.

Since 2009, he is the Commercial and New Business Vice President of Teledatos S.A. company that thanks to the strategic vision of its management team, it has leader the transformation of the Contact Centers in Colombia, transforming them in to one of the most strategic sectors of development in the country.

In the national market they place as number one when it comes to number of employees and annual capital.“Latin American culture is very easy and it’s not the same as in Pacific Asia because they have a barrier which is the English language,” says Vasquez. In Latin America we speak English and we weren’t born with it as a main language, so for companies like Samsung or LG that cater to the Hispanic population it would be easy for us to take care of their needs in our language, but for Indians to learn Spanish would be a very difficult process.”

The Colombian government is taking English language training seriously and is developing incentives to bring more qualified workers into call centers and outsourcing.

Government Steps Up its Role

“For this sector and with the help of the Department of Economic Development and the local government of Bogota we created a program called Talk to the World that is currently training 575 future employees in English and we expect to train 10,000 more in the next four years,” says Monica Ramirez Hartmann, Investment Officer of Invest in Bogota, a nonprofit investment promotion agency created by the Alcaldia Mayor de Bogota and the Bogota Chamber of Commerce.

According to Hartmann, Invest in Bogota together with other government institutions such as Servicio Nacional de Aprendizaje (SENA) is training and helping employ as many people as they can within the contact center industry regardless of their career choice. They want to attract as many foreign investors as possible by offering them the best customer service at a low price and therefore making Bogota grow from its 60 percent annual revenue within the industry.

“Colombia is a country that for 20 years has had a bad image, but today’s situation is not the same, it’s a problem on how you perceive things and reality,” says Ramirez Hartmann. “This is the least expensive country in Latin America when it comes to payroll, infrastructure and telecommunications and it’s all very effective, they don’t offer any problems to companies. We are also in a great geographic position compared to India and the Philippines, since it’s a city where all the major airlines arrive making it therefore a convenient destination.”

Karina E. Cuevas is a contributing writer to Caribbean CRM Central. She is based in the Dominican Republic and can be reached at: kecuevas@gmail.com

The hit on Bogota as the “Riskiest Place on Earth for Outsourcing” is a huge reminder of the vast amount of ignorance that exists both within the outsourcing industry and beyond about doing business in Latin America. I personally contacted “Black Book” author Scott Wilson two weeks ago to pursue details on his research methods and he initially was responsive. Karina Cuevas, our reporter on the story, followed up by sending specific questions, like:

-          Have you ever been Bogota?

-          What documentation and data did you base your analysis on?

-          Did you make contact with any institutions in Colombia to validate your claims?

Unfortunately for all of us, Wilson failed to respond to our questions. That leaves us all wondering about the validity of the findings, how certain Brown and Wilson are of their research, and what level of influence they may have been under from underwriters, clients or sponsors. We may never know the answer to these questions and Brown and Wilson certainly are not the first to distribute opinion parading as research.

The Bogota issue has raised eyebrows across the Internet, including a sharply written objection from well-regarded IT editor Bob Evans at Information Week. Others like Steve Mezak, the CEO at outsourcing consultancy Accelerance, point out that the ranking is largely a joke considering the improvements going on in Bogota.

What have we learned?

We at Caribbean CRM Central and parent publisher Nearshore Americas believe this is an important rallying cry for the region as a whole to recognize that random and erroneous claims such as this one should not go unchallenged.  One of our primary roles at this media organization is to bring to light the reality of doing business in Nearshore countries that is accurate and provides a voice for both customers and providers of outsourcing services. As a Brazilian friend – who works in the outsourcing services industry and grew up in Brazil – recently told me: Sao Paulo is a whole lot more dangerous than Bogota. Yet, where did the Black Book authors place Sao Paulo? The city placed 31^st on the list of risky outsourcing destinations.  We’re not picking on Brazil either – the point is that the people who really know what’s going on are the people you want to talk to when you do “research.” The Internet can be a powerful tool in spreading the truth and portraying reality. That’s what we’re here for…. – Kirk

I met Steve Rudderham in Guatemala City a few months ago at the IAOP chapter meeting and was immediately struck by his vision for driving higher performing outsourcing relationships and how Nearshore providers have a huge opportunity to capture a bigger share of the global exported services marketplace. We recently checked in with Steve who just recently joined Capgemini as vice president of  client engagement for the Americas. In the interview we talk about critical issues facing the sector including Life Beyond Call Centers, Governments’ Role in Driving BPO activities, the Key Advantages of the Nearshore Customer Relationship, Safety and Risk issues, Building an Active Community of Nearshore Professionals and Capgemini’s Leadership Role in the Region.

Question: Steve, at the recent IAOP Central America meeting in Guatemala you called on Central America outsourcing service providers to think more about higher value services and that “there is more to life than call centers.” What risk do these providers face and where should they be headed?

Steve Rudderham recently left his position at Genpact and is now a vice president at Capgemini's Americas operations.

I wanted to encourage local providers to look beyond the capabilities of Call Centers – that is what India, Europe and now China have done well. It becomes an iterative process where people see career growth in a company beyond answering the telephone, and stay with that provider, and in turn that allows the providers to demonstrate a stable workforce which then allows them to market more services, and hence more career growth for individuals and the community. Without these value added services, the outsourcing economy for a particular will quickly flatten out in terms of growth and development.

Capgemini Latin America vitals:

Total employees in Latin America  – Approximately 1,000

Locations: Guatemala, Santiago, Buenos Aires, Sao Paulo (San Salvador and Xela)

Services: F&A – O2C, R2R, P2P, Customer Care & Intelligence

Languages: Spanish, English and Portuguese

Question: In looking beyond call centers, what higher-value services can Nearshore services providers move toward and what human capital capabilities will they require?
There has been an increase in demand within the F&A Services sector for Nearshore alternatives – particularly in Accounts Payable and Accounts receivable processes. Once the clients are comfortable with these processes staying Nearshore, it opens up the opportunity for more complex work like General Accounting, General Ledger and FP&A work, so long as the country can support this demand with the resources. Supply Chain and procurement is another growing vertical that Latin America countries should look to take advantage.

Question: Tell us about your new role at Capgemini.

I have recently moved from Business Leader of Genpact’s Latin America operations to Capgemini as a Vice President for Client Engagement in the Americas. In this role, I will be leading the engagement for several key clients in the Americas and ensuring that service delivery is exceeding customer expectations.  I am looking forward to the challenge and excited about working within Capgemini as they expand their Americas footprint.

Question: What has the economic crisis done to impact the way Capgemini supports US clients seeking support in Nearshore markets?

Within the outsourcing industry, we continue to observe a lot of activity, both in new proposals and also existing clients growing their offshore footprint. In the current economical climate, we are committed to helping clients improve their efficiencies and reduce their overall costs as they experience pressures in their respective market places. This is not achieved by only focusing on offshoring roles, but by working with the client in their processes and understand where we can work together on productivity projects to reduce costs.

Question: The well-known benefits of Nearshore outsourcing  include time zone alignment, physical proximity and cultural familiarity. Are there other technology/ infrastructure features, governmental roles or human capital issues that are less understood but still an important part of the value proposition of working in these markets?

Providers are always looking to leverage the Global Talent Pool and I think that this progression up the value chain of services offered by Nearshore countries are now adding to the benefits you outline.  Government agencies are becoming more pro-active in attracting providers as well with incentives to come to their countries. If I look at the recent IAOP regional meeting in Guatemala, we saw representation from Nicaragua, Honduras, Guatemala, Costa Rica and Columbia as they look to learn how the BPO market is evolving in their region.

Question: From a global perspective, many large, multi-national BPO providers are forecasting significant growth in their Latin American operations. What is the outlook for Capgemini in these markets? Will there be more centers opening or perhaps acquisitions?

Capgemini currently services clients from Chile, Brazil, Argentina and Guatemala and that allows us to cover English, Spanish and Portuguese language requirements. As a business, we will continue to assess where the right place is to be, against the clients’ needs in terms of language and product services. With the emergence of talent in new countries, it is important that we keep abreast of these developments. We have seen considerable growth in our current centers in the last 12 months and will be transitioning further processes in the coming months.

Question: Because of your close proximity, do you end up seeing your clients more on a face-to-face basis? How important are these encounters both for the client as well as your teams?

Where we have facilities within a 3 hour flight from the USA, like Guatemala, then clients are more visible through the year. They are able to fly in, work for 1-2 days and fly back to their offices and still be able to go back into their own facilities. The close time zone is another important factor as client visits to offshore destinations like India, usually take up at least a week, and a lot more expense.  Our operations are basically an extension of our clients operations, so it is important that they are visible as much as possible.  It is a great motivator to the teams to see their clients on site and we try to encourage this as much as possible.

Question: One of the realities of working in the Nearshore is there is an image that some countries are not exactly the safest places to do business. When clients address this issue, what is your response?

There are different situations of social, geographical, and political environments around the world – I do not believe that this is just a Nearshore issue. Clients are concerned about the continuity of operations and the safety of the employees supporting their operations. Within the Nearshore arena, we ensure that the client has up to date information from independent resources like OSAC and the local government embassies. Within the facilities, the safety of our employees is our highest priority and we continually work and review to ensure that we keep a safe working environment for them. When choosing new countries to establish a present, there is a very detailed due diligence that is undertaken that involves all of the factors that a customer would be concerned about, and the location choices are made for those areas that provide the least risk for our clients.

Question: The IAOP has been instrumental in building a sense of community among Nearshore providers and clients, and you have been a central contributor to this development. What more would you like to see in terms of cross-region collaboration and community building?

I would definitely like to see the inputs and commitment from the government agencies a lot more. We generally get to interact with the various ministries but it is for a short period of time and I believe that they would get a lot more value for their countries if they participated in more detail and understood the true challenges that prevent growth within the outsourcing industry. They are competing with very mature markets like India and Europe and need to understand the challenges that they have overcome. Also, further best practice sharing is important in other emerging markets like the Philippines and also South America as well as Central America.