CIO View: Straight Talk on Latin America Telecom Reliability

What happens when your  Latin America delivery center phone lines go down? A few markets in the region are still not fully privatized while others have only begun to make networks redundant.

We sat down with Bob Lyons, who has managed ICT strategies and operations for Stream Global Services (as CIO), Avaya and Convergys, and has in-depth experience of the telecom market in Latin America. He tells us what the pain points are in LatAm ICT, and how firms can still maintain a reliable network. Read on for more.

How should a company manage and oversee a globally resilient telecom network? What are some key points to look out for?

Lyons: A lot of the time what people do is go after the cheapest labor market, and only then figure out their telecom situation. But not all markets have the redundancy that BPO or ITO firms need, especially in Latin America. Make sure you can get that redundancy. The problem is that a lot of these countries subcontract out their circuits to the same submarine cable. So even if you think you have redundancy, you may be surprised when something goes wrong. A few years ago when the earthquake in the Korean ocean happened and damaged a few undersea cables, I didn’t think much of it at first. But then I realized that both our primary and secondary communications went down at the same time, because our carriers were all subcontracting out to that same cable. One carrier subcontracts out to another carrier, and so on, and we didn’t know that both our lines were on the same cable.

In South America, some countries only have one submarine cable coming in.

When you’re building a call center, you’re looking for cheap labor and good communications, which is not necessarily what the tech parks offer

What are your candid views on telecom performance in Latin America and the Caribbean? Is the Nearshore delivering the capability that call centers need?

Lyons: It’s spotty. It’s also difficult to talk about the region as a whole. In Brazil for example we had no problems at all, but in El Salvador and Costa Rica we had some issues with the infrastructure and connectivity. In countries like Dominican Republic and Nicaragua, sometimes their ‘redundancy’ is through WiMAX, which is not a good option.

What I’ve seen is that many of these countries make a lot of investment in incentives like tech parks. But when you’re building a call center, you’re looking for cheap labor and good communications, which is not necessarily what the tech parks offer. Usually the parks are in areas that are off the beaten path, and they’ll give you incentives for training and education, and often cheaper real estate – but in terms of telecom, they don’t always deliver. So you have to ask yourself what’s more important. The places where you get access to strong reliable infrastructure will not be as cheap as some of the other locations, but they may be your best option. You really have to weigh the two out.

How should a company deal with the reliability of networks in emerging markets? What proactive steps can it take?

Lyons: You really have to remember not to take certain things for granted. We put together an Availability and Instant Management team, whose focus was primarily to monitor accessibility of the networks and systems in these countries. In North America for example if you get AT&T to put a circuit up, you don’t have to worry about reliability. But in these other countries, you yourself have to do many things you normally expect to get from a carrier like AT&T – architectural design, making sure you understand where the cables are, etc – essentially you’re managing your own FLAs.

The other thing is you have to build and coordinate local relationships in order to get things done in Latin America. Infrastructure that would be expected in the US or other developed markets are just not present in many emerging markets.

In terms of provider selection, how should a US buy side company go about choosing a telecom carrier?

Lyons: One thing is clear – having a single carrier strategy is really not the best option if you’re going into multiple countries. Typically in LatAm countries there will be one main provider of telecom services – in some locations it will be Verizon, in other countries it’s AT&T. You want to be able to leverage both of them, because their capabilities in each country depend on the kind of local relationships they have there. So first find out what the level of carrier investment is in the country you’re going into.

If you’re only considering going into one or two countries, then this may not be such a big issue. Also, if you build good relationships with those large carriers, in many cases they’ll actually take over and manage the local carriers for you.

We just went through a carrier renegotiation ourselves. My advice to companies would be, don’t just discuss it from a price negotiation standpoint. Really incorporate your architectural design with the carrier and make your discussions about that as well. Many carriers are coming up with new services that can allow you save money, but to do it you have to take a different approach that goes beyond just cost per circuit. I would say be the one to negotiate what the provider can do for you architecturally, not just in terms of managing local providers but also in variable capacity offerings. You’ll find that you can actually drive your total cost of ownership way down.