Nearshore Americas

Argentina Outsourcing: How Far Can the Country Go Without a Real Plan?

After the US economic crisis, Argentina was one of the countries that was supposed to be located in the “safe zone”. This was partially true because, even though unemployment was not widespread, the IT outsourcing sector was in a kind of stand-by situation stopping the growth and waiting for the main economies to recover their balance.

I noticed and experienced on my own how some US outsourcing contracts that were ready to run or even running in an offshore mode through the Philippines and Argentina, were suddenly reversed. After this “stand-by” period, year 2010 presents a different opportunity and signs indicate that a reactivation of the market is on the horizon. But a central question remains: How hard is Argentina going to work to maintain growth in the outsourcing industry?

In Argentina the recruitment sector is in action again. Evidence of this is that company hiring teams and HR consultants are reinforcing recruitment now using Facebook and Twitter for hunting generation-Y talents. Luckily it seems we are experience an outsourcing revival in Argentina:

 

Outsourcing Attractions

  1. Advantaged Currency:Since Argentina 2001 crisis, the local peso was devaluated and the currency is much more favorable for investment:
    1. 1 USD = 3.87 ARS
    2. 1 EUR = 5.18 ARS
    3. Time Zone: It is GMT -3. We can serve US with a maximum of four hours of difference downward and Europe main countries with maximum five hours upwards.
    4. High value professional skills: Universities and global companies give a permanent train to the people to develop or strengthen their skills.
    5. Similar culture: We are highly and permanently influenced by US and Europe cultures and this make interactions easier.
    6. Good English: There are many bilingual schools and colleges.
    7. Self Pride: A distinctive part of the Argentinian culture is competitiveness and outsourcing services is not an exception to this rule. We love achieving “impossible goals”.

 

Outsourcing Roadblocks

  1. Very high Inflation: This point is crucial and has to be taken into account. If this trends persists, salaries will grow to match economic growth and the professionals in Argentina will be on a similar salary range as in the U.S. and Europe, and for sure, more expensive than other emerging economies like Brasil, Uruguay or Chile. This will limit or even stop Argentina  from becoming an outsourcing leader for the region or in the world.
  2. Individualism: I observed less team cooperation and more individualism in comparison with other cultures which tend to work together.
  3. Low humility: Due to the above mentioned, Argentinians often have difficulty accepting errors and learning from them.
  4. Routine jobs less desired: We are not good friends with routine. We always need changes and challenges. This point could be an advantage or a disadvantage, depending on the perspective you have. Countries like India or Philippines are sometimes better for providing this kind of services.

Testimonial

“My experience of working with Argentina folks was very interesting. There are some cultural differences like the way of living, thinking and working, but I think we complement each other, and there are some culture integration training courses in most of companies that help. Another barrier I can mention is the time zone, which sometimes makes the virtual team interaction a bit difficult” – Ruel Peter Cayari, Computer Science Engineer, Manila, Philippines

Decentralize Services

One way to keep salaries low would be to decentralize services. Some steps have been made in this direction, but it was focused on a small portion of the industry. So I can suggest that services like call centers, infrastructure outsourcing and application outsourcing can be delivered from provinces instead of the highly populated and crazy Buenos Aires. Some service delivery centers are in place in cities like Córdoba, Rosario, Tucumán and Mendoza but a higher percentage of the industry can be based in these locations with appropriate support from government and universities.  The cost of life in the provinces is significantly lower than in the main city.

Summary

This is a critical time for Argentina to become a true market leader in outsourced services. The question is – will Argentina build and follow a plan to take advantage of this growth?

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What is required is a thoughtful, unified plan to distribute services, reduce inflation, learn how to work as a team among Argentinians and also with foreigners from different parts of the world and keep an open and flexible mind to “own” errors and learn from them.

If Argentina designs and develop a solid, well defined plan it has a great chance of becoming a major outsourcing power.  If  not, there is a very good chance that the country will be always be considered as a nation that couldn’t rise to the occasion in step into a leadership role in outsourced services.

Armando Moretti is a Computer Science Engineer based Buenos Aires, Argentina

Kirk Laughlin

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

1 comment

  • An Argentina outsourcing article as confusing as Maradona's team selection process for the World Cup.

    1. The currency advantage is offset by severe inflation and the last 5 years of +20% mandated salary increases by the Commercial Union have placed the country severely out of pricing range for future competitiveness. Compound the US protectionism push and what is the true ROI for Argentina makes the decision to award a contract very difficult to pencil for 2011, compared to 2005.

    2. Decentralization already started 5 years ago and quality bilingual contracts operating in Cordoba and Rosario during the peak growth period have been lost to other global regions providing more stable economies. I know of 5 Fortune 500's that have already pulled out. Tucuman does not have the English depth to compete, nor does Mendoza, due to the tourism industry competition for bilinguals.

    3. Similar culture and self-pride "can do" attitude are offset by individualism, low humility and the lack of ability to accept routine jobs. (??) As a US ex-pat building outsourcing operations to +5000 staff in Argentina for the past 7 years I did not experience any of the cultural "roadblocks" listed with our teams. I did witness a competitive urge so strong other regions, including Mexico, India and the Philippines always lagging behind. However, we do not operate in Buenos Aires so maybe this is the general Porteno attitude but this biased subjectivity is dangerous and I predict will make any US client prospect run away as fast as possible after reading this article.

    4. Positive time zone being offset by the Philippine testimonial stating it's an issue makes no sense in US outsourcing applications. E.g. "Pot calling the kettle black."

    Argentina absolutely has it's place in the outsourcing world but it's more boutique and custom today. At 40+ million citizens Argentina does not have a deep enough labor pool to compete globally so they must push/train/recruit their educated workforce deeper into KPO and ITO fields, which is stating the obvious in the technology fueled global economy of today.

    Unfortunately, Argentina's time to become an industry leader has come and gone and now they are fighting for survival unless a plan to subsidize foreign investment driving long-term sustainable contracts is developed. However, I have serious doubts as when was the last time the Argentine Government stepped in to create a long-term plan for anything pro-business related? Hopefully Kristina surprises us all.