Don’t Write Off Monterrey: Outsourcing Prospects Remain Strong Despite Violence

During the past few months Monterrey, Mexico has taken a battering in the business and general media around concerns of escalating drug-related violence, which many fear have eroded the ability of outsourcers and their clients to take advantage of the city’s tangible benefits. But all those benefits that made the city into Mexico’s outsourcing hub are all still very present, and firms can continue to capitalize on them.

Monterrey’s advantages include a savvy workforce with solid language skills, good accessibility to the US, and a blue-chip roster of global outsourcers. However, Ovum feels that while investors are wise to conduct due diligence before deploying operations in any emerging location, it would be unwise to write off Monterrey, a city that to a large extent has been the pioneering hub of Mexico’s Nearshore value proposition.

Monterrey: the news is not all bad

There is no question that Mexico is facing clear challenges in combating drug-related violence, and few locations in the northern portion of the country have not been touched in some way since President Felipe Calderon was elected in 2006. However, although Monterrey is experiencing more of this violence than before, in truth it is not nearly as affected as many cities located along the US border, such as Tijuana and Ciudad Juarez, where business and citizens have been under virtual lockdown for some time. Rather, upon a recent visit to Monterrey, while Ovum analysts witnessed a heightened degree of public security, commercial activities for the most part appeared to be conducted normally.

Further, we feel that there are still valid reasons why Monterrey developed into Mexico’s effective nearshore CRM outsourcing hub. For one, the city continues to boast one of the most multilingual workforces in Mexico. It supports US consumers in English and Spanish and some targeted deployments of a multilingual nature for Western European callers, in addition to providing local businesses with support for their clients’ Mexican end users.

Prospective outsourcing investors and their clients can take confidence in Monterrey’s value from the list of blue-chip firms that have chosen to situate operations there.

Another positive factor is Monterrey’s location close to the US border. From a Nearshore perspective, this has provided agents in contact centers with a great deal of cultural awareness of US end users. This is in addition to heightened commercial understanding of American goods and services, given that many are also used by Mexican contact center agents themselves and that many agents have also spent time in the US.

Remain vigilant to operational issues beyond security

Prospective outsourcing investors and their clients can take confidence in Monterrey’s value from the list of blue-chip firms that have chosen to situate operations there. Among global firms that continue to operate from Monterrey are Teleperformance and Arvato, along with Latin Americabased operators including SofTek and Unifica Teleservices. Based on anecdotal evidence gleaned by Ovum during recent visits, outsourcers on the ground in Monterrey are pleased with their deployments and the scalable, educated workforce that they have been able to tap.

Ovum feels that while any prospective outsourcing investor (as well as those already on the ground in Monterrey) should be realistic about the city’s ongoing public security issues, they also need to be aware of other factors that could impact their business, including the above-mentioned heavy deployments of third-party operations that could potentially increase attrition and raise input costs. In the past, this has been the principal concern of vendors with Monterrey operations. While increased security protection for operations and staff may very well factor into vendors’ near-term strategies for their Monterey operations as Mexico continues its war on narcotics trafficking, outsourcers also need to remain focused on agent tenure in order to ensure high end-user satisfaction and low client churn.

Peter Ryan is a leading analyst with Ovum/Data Monitor and contributes regularly to Nearshore Americas, including this piece on Cuba’s Potential as a Call Center/BPO Hub. This article is reprinted upon permission of the author.