Carvajal President Convinced Colombia’s Outsourcing Market is on the Right Track

Carlos Manuel Perez, the president of Carvajal Tecnología y Servicios, believes Colombia’s outsourcing sector is prospering thanks to free trade agreements and government-backed English language programs. The financial services market is more mature than the IT services side, Perez told Nearshore Americas in an exclusive interview. But, by focusing on five key elements, he explained how Carvajal plans to capitalize on “an extraordinary opportunity for Latin America”.

Nearshore Americas:  How would you describe the growth Carvajal Tecnología y Servicios has experienced within Latin American?

Carlos Manuel Perez:  In Latin America we have seen over 20% growth over the last three or four years.  The business has really taken off and is now one of the leading businesses in the region.  This is especially noteworthy considering we started out as a conglomerate group, unrecognized by the technology and services industry outside Colombia.

In Colombia, where we currently run our largest operation, we have experienced just under double digit growth, around 9%, while in Mexico growth has been over 25% from one year to the next.  This is down to the fact that Colombia is operating on a much larger scale than Mexico.

In all, we are considerably over the double digit mark and we hope to maintain and even improve upon this in the future. Under our current strategy we expect the company to, at the very least, double billing over the next three years and it is hoped that within five years we will have business units bringing in somewhere in the region of US$1 billion.

NSAM:  What are the main obstacles and opportunities you encounter when doing business in this region?

CMP:  The biggest challenge we are experiencing outside Colombia is making a name for ourselves.  Carvajal T&S, (part of the Grupo Carvajal), is a conglomerate of companies, and, setting up a specialist, independent business, with its own board of directors and government is proving to be both fascinating and challenging at the same time.

We are convinced that Colombia is going to become a significant outsourcing centre within the region. Mexico, certain Central American countries, Argentina and Uruguay have already successfully broken into the North American and European markets and we are convinced that Colombia is heading down the same route.

The increasing number of free trade agreements that are being signed with other countries are providing great opportunities. Not to mention the English language programs we have in place; although these still need some work.  There are governmental programs to teach English, and businesses such as ours are fully supporting these programs, enrolling our staff right from the start. Colombia has 47 million inhabitants, of which, almost half have studied a profession.

NSAM:  Recently, EXL Services took over 51% of the Carvajal Services shares, from the BPO Back Office division.  How is this expected to impact plans to break into the United States market?

CMP:  We have entered an alliance, or joint venture, with EXL Services in which we agree to attend to their Hispanic market within the United States; from our delivery center located in Colombia. We believe that this will be the first step towards breaking into the American market; just one aspect of the services we currently offer.

What do we hope to achieve?  Over the next two to three years, we hope to continue strengthening growth as we make our mark on the Latin American market; placing ourselves firmly in the spotlight.  Over the next three to five years, we hope to start attending to the American ITO applications and BPO clients that are not currently included in the alliance; doing so in their native language.

NSAM:  What other synergies are in the pipeline and what are you hoping to gain from this alliance?

CMP:  On one hand, we provide EXL with access to the Latin American market – they already have a delivery center offering several services in the Spanish language.  And on the other hand, we are given access to the American market, under the guiding hand of a strong business partner.  We also hope to speed up the learning process, benefiting from the practices EXL Services already have in place in their delivery centers located in India and the Philippines.  This will help us to evolve at a much faster rate; eventually becoming recognized as a world class business offering BPO Back Office and other services.

I believe that this alliance will be mutually beneficial for both parties; each benefiting from the other’s business practices and knowledge of their respective markets.

NSAM:  How would you describe the maturity of the Latin American outsourcing market?

CMP:  I couldn’t go as far as to speak of percentages, but I can speak in terms of categories – low, medium, high or very high.  I believe that our clients are, depending on the sector, somewhere between the medium and high category.  In some countries, depending on the service offered, it could even reach the very high category.  For example, in Mexico, the financial sector is used to outsourcing its IT service solutions but not its processes.

In Colombia, the opposite is true.  Their financial sector is more used to outsourcing processes rather than IT services.

I believe that certain businesses have done an outstanding job, above all when it comes to providing nearshore services to the United States; showing clear signs of growth and an excellent quality of service.  They are just as competitive, if not more so, than similar businesses in India or the Philippines.

I can see an extraordinary opportunity for Latin America.  I am even of the opinion that the time has come for Latin America to make a name for itself, as one of the leading outsourcing service entities.  This is thanks to the talent it possesses and the variety of local businesses it has spread out over the different countries. These countries have all played their part in making this a viable, competitive, rapidly expanding business. There is no longer any valid reason why Latin Americans cannot be said to be equal to any of their international competitors; in terms of quality, sustainability and the opportunities they offer.

NSAM:  You apply an integrated focus, comprising five key elements: technology, procedures, staff, strategy and physical infrastructure.  What does this specific combination achieve?

CMP:  We call this focus ‘BPU’ or ‘service integration’.  What does this mean?  If, for example, a client is looking to improve the consumer services department of its warehouse administration – which will invariably involve changes such as implementing a new information system, redesigning current procedures and reassigning staff – the most important thing for us is to try to understand the client’s individual strategy.

You have to try to understand what they are hoping to achieve.  You also have to realize that it involves much more than just a technological orientation.  It involves focusing on areas such as productivity, efficiency, how to boost sales and how to reduce costs.

Once we understand their individual business needs, we can use this knowledge to implement procedures that meet their requirements; using the appropriate technology, assigning qualified staff to operate it and even providing the physical infrastructure to support it.

This is what we call ‘integral orientation,’ where we integrate BPO services and single service applications.  This is our main orientation, allowing us to offer more than the standard three elements offered by our competitors: procedures, technology and staff.  We compliment these with the other two; namely infrastructure and strategy.