Nearshore Americas

Capgemini is Bullish on LATAM and Sees Brazil and Guatemala as Key Engines

An Interview with David Poole,  VP and Head of LATAM BPO Services, Capgemini

By Dennis Barker

When Capgemini decided to venture into Latin America, it was like the beginning of any serious relationship: Exciting, promising, but not without reason for a few jitters.

“Latin America is one of the fastest growing regions in the world, and will continue to be. We’ll see huge growth, particularly in Brazil” – David Poole

“All our clients had been asking about Latin America,” said David Poole, vice president and head of American Business Process Outsourcing at Capgemini. “But it had always been an area where we were nervous to tread. It was in the early days a different economic environment, with unpredictable currency and different tax structures. It was a complicated place to do business.”

The biggest concerns revolved not around what might seem like the usual outsourcing challenges — finding capable workers, dealing with cultural differences, meeting clients’ cost objectives — but business issues.

“Our group had found it was not the easiest place to grow a business portfolio,” Poole said. “The big thing was creating enough scale to operate in an efficient way. Most of our clients are some of the largest companies in the world. They are not Latin American entities but multinationals. To meet their needs, it can be difficult unless you have the scale to do that.”

Unilever Turning Point

Capgemini’s agreement in 2008 to acquire and manage Unilever’s financial shared service centers in Sao Paulo and in Santiago, Chile, helped provide that scale. As part of the deal, Capgemini would provide BPO services for Unilever’s businesses in Latin America. “The Unilever acquisition gave us coverage in all the Latin American countries,” Poole said. “We can create scale to provide services even where we don’t have a physical presence.”

While Chile and Argentina are prominent in Capgemini’s LATAM plan, Brazil “has been quite amazing for us,” Poole said. “There are a lot of large Brazilian multinational companies, but Brazil is a huge market in its own right, especially for BPO services. Clients are seeking rigorous process, rigorous control. We’ve seen a great deal of interest from domestic companies, looking for lower-cost locations within Brazil.” Regional differences in operational and employment costs can range from 15 to 20 percent, he said.

The Coke Connection

A little further north, in Guatemala, Capgemini runs a call center for Coca-Cola. (Capgemini has been in this Central American country since 1999.) While “call center” might suggest a cubicle farm of phone-bound workers handling queries and complaints, the Guatemala City operation is not a “commodity call center” — it’s responsible for North American cash collection for the beverage maker, as well as “other interactions” like site maintenance, Poole said.

“Our preference is to use nearshore for this type of center. In Guatemala, we’re able to hire people with accent-neutral English, which is not easy to find in other outsourcing destinations. Guatemala City is about a two-hour flight from Dallas, and there’s also the time-zone advantage, which makes it more attractive than many offshore locations. The city has a very good education system. The country has a ways to go still, but as a nearshore location, we’ve found it extremely successful.”

What about other Central American countries? “They’re certainly worth looking at,” Poole said. But it doesn’t sound like the giant of the region will be getting a serious look. “We have managers and staff from Mexico, but events in recent years have made the country itself unattractive and dangerous, to be honest. We will not have a delivery operation in Mexico unless there’s significant improvement in terms of safety.”

Our goal is to standardize the way companies do business across the region and avoid processes that are not the same. We strive for standardization of the control framework, the processes, the ways of working. Data security is a good example. In a diverse region especially, you need to provide a consistent way of doing that..

Unique Geographies

Asked about the heaviest challenges he faces in his job, Poole said “what’s relevant are the challenges our clients face. Latin America is obviously a huge geographic area, and each country has its own way of doing things, its own regulations and currency and its own culture. And so our goal is to standardize the way companies do business across the region and avoid processes that are not the same. What we strive for really is a standardization of the control framework, the processes, the ways of working. Data security is a good example. In a diverse region especially, you need to provide a consistent way of doing that.”

Geographically consolidating the workforce helps accomplish consistency. “There’s not a large labor cost savings in moving work from one Latin America country to another,” Poole said. “It’s better to have 100 people in one place rather than 10 people in 10 places.”

Robust Talent Pool

Finding qualified people to fill those 100 or so slots in one place has “not really been a big problem” for Capgemini’s nearshore operations, Poole said. “We are generally able to recruit college graduates or graduate equivalents.” An educated worker is often looking for more than a paycheck, though; opportunity to advance and develop new skills is key. That’s where scale is an advantage for an outsourcing firm.

“We’re able to provide these workers with a real career path, from starting out as an entry-level clerk to managing teams of tens or even a hundred people,” Poole said. “We believe that’s one of the advantages we bring to workers in the region.” There’s also advantage for Capgemini and its clients. “When more experienced workers are able to advance, you can bring in younger, less expensive staff every year, which counteracts the annual salary increases and other rising expenses.”

Poole sees a bright forecast for outsourcing in Latin America. Part of that optimism is due to the types of financial and accounting services his group provides. “BPO is reasonably anticyclical,” he says. “At times like this, companies are looking to make things cheaper, to lower costs, so they have an enhanced interest in BPO. During the last two years, we’ve signed two of the biggest BPO deals in history, including our Guatemala arrangement with Coca-Cola.”

“Latin America is one of the fastest growing regions in the world, and will continue to be. We’ll see huge growth, particularly in Brazil. The world’s largest companies will focus on countries in South America. In terms of Guatemala and Central America, we see lots of potential there as well. The marketplace has decided that for many outsourcing providers, India is not always the most attractive.”

LATAM Upside

“I’m very optimistic for the region overall,” Poole said. “Clearly we need the support of the enterprise agencies and government to help us continue to invest, and to insure that the education system is there, but the potential for success and growth is higher than just about anywhere else in the world. I believe we are well-positioned.”

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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