Wage Wars: Mexico vs. LATAM Neighbors

By Susan Arledge, President/CEO, Arledge Partners Real Estate Group
On the way to the recent IMT Contact Forum entitled “Mexico – Your Best Option,” a couple of important questions where on my mind:  Is Mexico safe and is there enough available bilingual labor?
During one of the sessions at the Forum, someone cited a recent article in a Texas paper noting that Ciudad Juárez has become the murder capital of Mexico in recent months. More than 200 people have been killed in Juárez in the first 16 days of September vying for lucrative distribution routes into Texas.
“We’d like to think this will soon be over, but this area is too important of a transit point, so it’s likely the killings will continue for a while,” said Alfredo Quijano, editor of Norte de Ciudad Juárez newspaper.
Seeking Reassurance
Over the weekend, a banner purportedly signed by the Sinaloa cartel was found near Juárez, warning residents to remain inside and issuing an ultimatum to rival cartel members to leave the area.  Within 24 hours, 30 people were killed. This week, at least seven more “narco” banners went up throughout the state of Chihuahua, promising retaliation in the hours to come from La Linea, hitmen associated with the Juárez cartel.
We read these articles daily in our papers and therefore, the US attendees at the conference wanted to have some reassurances that Mexico would be a safe place to establish their call centers.  Unfortunately, many of the EDC teams provided vague answers, feeling that avoidance of the issue might be the best way to deal with it.  Many stated that the crime rate in Mexico’s cities was no greater than in other major US cities, which is not the right approach in addressing the safety issues.
As much as I love Mexico and their opportunity that is ripe there, they need to be better prepared to deal with the crime issue and how the local community is working together to make the cities safer for employees. I can assure you, these economic development officers do not enjoy discussing crime rates and more than once the answer to the group when asked about crime issues was “it’s just not a problem here”.  The clients that I work with would be quite reluctant to accept that statement as reassurance from me.
Can Mexico Compete in LATAM in the Wage Race and for Bilingual Talent?
The real question here is not whether Mexico can successfully compete with India and the Philippines, but whether Mexico can compete with other Latin American countries such as Nicaragua, Guatemala, Panama, Costa Rica or Honduras (although not so much Honduras with the political strife there).
Does Mexico really have a better supply of bilingual agents, as well as offering less expensive wage rates?   The answer may be surprising, as the number of English speaker students graduating from high schools in other LATAM countries is on the rise.
I admit to having a bias that Mexico still has a long to go to convince end users and third party outsourcers that it is a viable location in which to find large quantities of affordable bilingual labor.
I was quite surprised to hear that there are many locations within Mexico, when compared on a “fully loaded” wage basis, are equally competitive.
Weary of long flights to India and the Philippines, I am being asked to identify alternatives where low cost English can be provided with easier accessibility.  The global recession has forced third party outsourcers to reduce their hourly rates in order to retain or acquire business, so the pressure falls on us to find locations where this can be done without sacrificing quality. Not an easy task, as many of the quality locations such as Costa Rica and Panama have already become saturated.
Our ever-popular and always-entertaining moderator, Keith Fiveson of ITESA, was quick to remind the group that our perceptions about particular countries are often not in sync with reality.  Keith reinforced that the countries winning the outsourcing race right now are India, Philippines and quite surprisingly, Mexico, as evidenced by the number of seats each country had in 2008:

India:        383,000 seats
Philippines:    140,000 seats
Mexico        162,500 seats


 

So, I wanted to ask the hard questions of each state within Mexico that made presentations – Nuevo Leon, Jalisco, Chihuahua, Coahuila, Baja – about wages, availability of bilingual labor, number of bilingual high school and college graduates, as well as realistic crime statistics. Here’s what I found:

Nicaragua,Managua
Sitel – 600 seats supports heavy US based clients in two centers
ETelecare/Stream – 1000 seats serving US based customers.
Over the last six (6) months, these two major 3rd party outsourcers have expanded for “bilingual” capabilities to service English speaking markets
Tegucigalpa, Honduras
Myron: 50 full bilingual,
Mercury: 30 full bilingual,
Sab Miller: 100 Spanish. Approximately 20 banks, cell phone companies, telephone companies and insurance companies, have call centers, but solely to support the domestic market.
Puebla, Mexico
Altitude Software: 100 fully bilingual agents supporting a pharmaceutical client,
Intermex: 200 fully bilingual agents supporting US money transfers and multiple other smaller centers supporting both domestic and international work.
 
Guatemala City, Guatemala
Gap Gemini – 1,000 seats,
Atento – 1,500 seats, 24/7 – 500 seats
Transactel – bilingual agents
GE Money – data entry (100% Spanish)
24-7 – both bilingual and Spanish agents
ACS – data entry (100% Spanish)
Of the 9,000 agents currently employed in the call center industry in Guatemala, only 2,500 to 3,000 are supporting bilingual work.
San Salvador, El Savador
Competitors include Sykes, Stream, and Teleperformance. All provide English bilingual, but are now said to be reducing English bilingual and focusing on Spanish labor
Bogata, Columbia
Atento, SAP, Sitel all provide voice services, ACS provides non-voice services.
Unisys, Allus/Multienlace and HP provide both voice and non voice services.
San Jose, Costa Rica
TeleTech, ICT Group, AEGIS Communication, Sykes, Hewlett Packard (ITO), Stream and Bank of America and a multitude of  other end users offer customer service, customer care, technical support, telemarketing, billing & collections, IT support networks help desk, product tracking, trouble shooting, market research, after care, sales, help desk, IT engineering support, network support, infrastructure support, and recovery planning.
Susan G. Arledge, SIOR, is president and CEO of Arledge Partners Real Estate Group, located in Dallas, Texas.