Brazil’s Contact Center Outsourcing Market Sees Growth Slowing

Brazil’s contact-center outsourcing services market earned $5.39 billion in revenue in 2012, but the sector is struggling to see growth due to high labor costs and a weak domestic economy, according to a new report from market research firm Frost and Sullivan.

There are several factors continuing to plague the market. The lack of a skilled workforce is affecting service quality and profit margins for the service providers; many call center operators are investing heavily in employee training and, as a result, seeing their profit margins shrinking dramatically.

The government appears to be looking for ways to review the current regulations in order to broaden the scope for service providers, says the report. The new opportunities can be explored by those service providers who are armed with a range of online solutions.

“Tax incentive policies have decreased the financial burden on the contact center industry, encouraging expansion,” said Frost & Sullivan analyst Daniela Pineiro. “For instance, the 2012 payroll tax exemption for the Brazilian contact center industry has reduced employers’ tax contribution from 20 percent on the payroll to two percent of the annual revenue.”

High labor costs and complex bureaucracy have continued to hinder foreign invest in the outsourcing sector. Nevertheless, the research firm predicts that foreign contact-center outsourcing companies will continue to launch and expand operations in Brazil due to “the overall solid economy and the upcoming boost of infrastructure enhancements.”

So far, an increased effort by Brazilian businesses to cut costs and streamline business operations has benefited the outsourcing industry, with the report predicting that “The number of workstations will reach 292,454 by 2019 at a CAGR of 6.4 percent.”

“Innovative contact center leaders in Brazil are looking to diversify their services to provide a more professional and up-to-date platform, changing the perception that the contact center industry is just a commodity provider, while widening margins,” commented ICT Industry Manager Juan Manuel Gonzalez. “In fact, in the long run, communications, marketing, IT and financial companies will tend to merge some of their businesses with contact center services.”