Nearshore Americas

Argentina, Guatemala and Nicaragua Show Up as Top “Undiscovered” Sourcing Destinations


First of all, let’s be clear: India will remain part of your outsourcing strategy and that is despite increasing complaints about rising costs and diminishing work quality, said Stephanie Moore, former Forrester Outsourcing analyst and chief strategist for UST Global, a global IT outsourcer. The reason? No other nation has the massive skilled labor availability that India has and that is that. But the hunt is on for alternative sites and every outsourcer is trolling for new destinations. The surprise is there are so many new to the game. Where to go beyond India, China, the Philippines, and Brazil ― the obvious ABI locales? There are plenty of choices.

Kenya – “A location with outstanding promise,” said Rahul Singh, a principal of outsourcing advisory firm Pace Harmon. Three new fiber optic cables have gone into Kenya in the past year and, suddenly, there’s a nascent call center industry that’s winning customers in the US and UK. Nik Nesbitt, CEO of KenCall, said he has 550 employees, mainly college grads, and a customer roster that includes DIREC-TV and UK telecoms. Customers, he said, like the soft lilt of a Kenyan accent; his employee attrition is under 10% per year; and working with him costs 20% less than it would in the Philippines

Nicaragua – It’s not just a Clash album anymore. “It’s a great place to have call centers,” said Andrew Kokes, vice president of Marketing, the Americas at Sitel, a large operator of outsourced call centers around the world. In Nicaragua, Sitel operates two call centers, with around 1400 employees, mainly handling account inquiries and product support for wireless operators. One hundred percent of the incoming calls originate in the US and, importantly, about 75% of the staff working at Sitel’s two in-country facilities have either lived in the USor were educated there.

Argentina – “We’ve been outsourcing work there for three years, with great results,” said Peter Stroeve, managing partner of software development firm Velocity Partners. Stroeve said Argentina brings major cultural advantages to the table in that “They think like us, their approach to problem solving is similar to ours.” English language skills, he said, are better than you’d think. Costs are a bit higher than India, per Stroeve ($30 per hour vs $25 in India for a coder), but he insists you get what you pay for.

Northern Ireland – Violence is down, support from Invest in Northern Ireland, a government agency is strong as is the local technical education infrastructure. Microsoft, HP, Oracle, Seagate, Openwave, Fujitsu, and Daewoo are already on the ground drawn by employee salaries that INI said are 30% below similar EU locations (think Dublin, Edinburg). Zero language barrier, excellent US proximity and, of course, world-class whiskey.

Egypt – “Sizable graduate pool with good technical skills,” said the Everest Research Institute. Emerging as a base for serving other Arab locations perceived as higher risk. “Egypt is becoming a more attractive location for outsourcing because its costs are so low,” said Joel Kurtzman, a senior fellow at the Milken Institute who produces an annual report on the suitability of foreign locales for doing business called The Opacity Index. Egypt, he said, is “getting better, but from a very low base.”

Czech Republic – Scott Archibald, a consultant with Bender Consulting, points to this eastern European country as an emerging hotspot for software outsourcing. A huge plus: US executives want to fly to Prague (can you name anybody who is craving a trip to Mumbai?), and there’s a sizable pool of quality engineering graduates. German companies have been outsourcing here for a decade, now US companies are discovering the advantages.

Guatemala – “Emerging destination for bi-lingual English-Spanish talent,” said the Everest Research Institute and the back story is that wages are way up in neighboring Costa Rica and labor supplies are way down, so intrepid outsourcers on the hunt for the best bang for the quetzal are setting up shop in Guatemala City.

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Poland – Pretty much a big ditto as the Czech write-up. Good labor availability, good business climate and following in the footsteps of Germans who have shown Poland is a viable outsourcing market.

Uruguay – Another favorite of Velocity Partners, which said that where Uruguay differs from Argentina is that it’s much smaller (about 1/10th the size) and rapidly scaling a workforce would prove challenging but workers are good, amiable, and in sync with American brain waves.

Back in the USA – Maybe it is a recession dividend but for whatever reasons low-wage, low-cost US locations are winning fresh looks for locating some types of outsourced activities, especially contact centers and service centers, said Pace Harmon’s Singh, who adds: “This type of outsourcing is likely to happen in smaller towns with universities and reasonably skilled labor pools.” Fargo, ND, anyone? Or Taos, NM?

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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