Kirk LaughlinNumbers don’t lie – or do they? According to Philip Peters (#48 on the Nearshore Americas’ Power 50 Ranking), the CEO at Zagada Research, the numbers being used to promote certain Nearshore country destinations are being “inflated”. This probably doesn’t come as a shock to many people who have learned through trial and error to “triangulate” sources of information provided by economic development agencies and governments in Latin America and the Caribbean. Using multiple sources of data helps reduce the risk of relying on bad information, which obviously can greatly influence site selection, hiring and deployment strategies and making strategic business plans based on assumptions about the cost-of-doing business.
Peters, in a recent post, noted he was distressed to find that – in a recent study he performed for a Fortune 500 client – “economic data points shared with us by some economic development agencies (EDAs) were consistently outdated and inaccurate… We have also discovered that several economic development agencies have provided us with inflated data on their location’s densities.”
The Nearshore outsourcing industry has entered into a vitally important growth phase. Investors, business people, influencers – they’re all paying attention to the Nearshore opportunity and naturally asking tougher questions about the viability of setting up operations or partnering with local players.
When we followed up with Peters by phone and also by email he was reluctant to go into much detail, so we were not able to ascertain how often he has run into these issues in the the past nor which countries were found to be pushing out the phony data.
From the perspective of Nearshore Americas, we’ve been told in many conversations to be cautious about relying too much on specific country data sources. While it’s one thing to adapt one’s method of analysis based on source information, it’s another issue entirely to start to demand more accountability from those who provide the data.
The Nearshore outsourcing industry has entered into a vitally important growth phase. Investors, business people, influencers – they’re all paying attention to the Nearshore opportunity and naturally asking tougher questions about the viability of setting up operations or partnering with local players.
The Zagada incident is likely to be repeated if unnamed agencies don’t take the sanctity of data seriously enough. Eventually someone will catch on – whether it is an analyst, an investor, or worse case – Nearshore Americas which is in the business of practicing responsible reporting for its core readership base of US buyers and investors. (Shameless plug: Over 15,000 buyers and influencers visit our site every month.)
How widespread is faulty data reporting in the Nearshore? According to Brad Dement (#29 Power Rankings) , of consultancy firm Scott Madden, most of the data is usually reliable. “It’s not like we never see anything questionable,” said DeMent. ” I do see strange data points from time to time, but I can’t say it’s been pervasive.”
DeMent works with buy-side clients to analyze labor costs, inflation rates, real estate costs, tax rates, tax incentives, labor supply, bilingual capability, natural disaster frequency and geopolitical factors like stability. “There is usually a variety of indexes that we rely on country by country. We triangulate on multiple sources. Not to say something couldn’t slip by us, but if there are big differences, that would catch our attention,” says DeMent.
And, finally if you’re a buyer and the numbers don’t add up – tell us about it. We’ll be keeping track.
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