Don’t let a rocky US economy or the shock and awfulness of a global pandemic fool you, 2020 is turning out to be the year when global contact center organizations brought the concept of Nearshore expansion to a whole new level, generating – at last count – at least 26,000 new agent positions over the last nine months.
Just this week it was revealed that Alorica is landing in Cali, Concentrix is expanding in Costa Rica and IBEX is opening another site in Jamaica, this time in the North Shore town of Ocho Rios. In recent weeks, we have learned of Teleperformance and Sitel growing again in Colombia, Itel-BPO making a major landing in Saint Lucia, Spain-headquartered GSS creating thousands of new positions throughout Colombia and Peru and CommSense adding more staff in Aguadilla, Puerto Rico. In just these announcements alone, we are counting at least 15,000 new hires in Nearshore BPO.
De-Risking and Digital Demand
Many forces are behind this wave. For starters, despite heavy demand, the value offered through the Nearshore model remains resilient. An active marketplace of investors demonstrates that the product, in this case exported knowledge services, is performing at a reliably high level.
The upside to a menacing year of buzz-killing, anti-social restrictions and epic political ineptitude, has been the realization that in unstable times, the forces of globalization tend to shake out and reveal underappreciated regions and partners.
The digital-first mandate of customers, and requisite omnichannel proficiency, is a worldwide phenomenon of course. Virtually all global destinations are taking part in the digital blitz, but it is the Nearshore that is making an especially convincing case that it is the region best positioned to service the complex tastes of the world’s largest consumer market. The process of location ‘de-risking’ is likely to unfold over multiple years as many BPOs confront the crucial strategic question around how much of their workforce should remain in the Philippines. Many operators we have spoken to are projecting seat recalibrations well into the year 2022.
Meanwhile, for 2020, the upside to a menacing year of buzz-killing, anti-social restrictions and epic political ineptitude, has been the realization that in unstable times, the forces of globalization tend to shake out and reveal underappreciated regions and partners. Latin America and the Caribbean have shone through. The record of performance by hundreds of thousands of professionals working diligently in the Nearshore market over the last number of years surely has something to do with this rising confidence. Take a moment and take note: the work of the first-generation of Nearshore professionals has been a remarkably important element in the current surge in investment interest!
Past performance is not a certain indicator of future outcomes, nonetheless. That’s why expansionist BPOs we have spoken to are looking to hedge their bets. These strange times contribute to a new calculus, where the appetite for risk is trending lower and BPOs unfamiliar with the Nearshore region are finding themselves operating at a distinct disadvantage.
The Rewards of Market Familiarity
The benefits of first-hand operational familiarity matter more now because of the accelerating pace of market development. Where do incumbents have the strongest hand?
Brand name recognition: Success in recruiting the “top talent” in any market is heavily influenced by that operator’s savviness in brandishing the company logo in all corners of the local society. In-market public relations management is an important tool in shaping perceptions among the political and policy-maker class, domestic media organizations, peer businesses that rely on cross-border trade and of course the local talent pool – which includes mid-to-senior level professional candidates that are often especially hard to place. (Keep in mind that we continue to see some Spanish-language centric operators make the mistake of using Spanish to ‘reach’ their English-speaking prospect community through marketing pitches, website thought leadership and social media posts. In those cases, buy-side decision makers in the United States naturally conclude that those players excel in Spanish, but not bilingual).
Confidence in messaging: Market familiarity not only breeds trust among local stakeholders, it also tends to provide tribal-knowledge guidance for leaders as they manage any number of public messaging challenges, including how to respond to the major work-life disruptions caused by the Covid-19 crisis. Most experienced contact center groups in the Nearshore managed the message to their communities – often channeled through local media – with calm confidence. Others put forth unprepared spokespeople who wilted under public scrutiny. Not surprisingly, some contact center groups are spending little to no time training their people on the fine points of interacting with the press. During the height of the crisis, those vulnerabilities were laid bare in specific instances.
Landing at the right wage level: Think of the series of uncomfortable conversation site directors have had with agents in order to deliver the news that current wages – upon further reflection – where deemed too high and that management is going to reduce their paychecks. This has actually happened in the Nearshore market! Nothing spells incompetence more than a newcomer entering a Latin American market, possessing an attitude of ‘gung-ho’ overconfidence, and making errors in judgement that are obvious to the locals.
Newcomers Gaining the Upper Hand
Still, it would be a mistake to assume the game is over and that existing operators have the Nearshore BPO market locked up. Newcomers do have the capacity to outperform the incumbents in several key areas. They include:
Exhibiting imaginative design sensibility: Newcomers have the opportunity to be disruptive and challenge conventional design concepts inside the delivery center, which by the way, is symbolic of the organization’s attitude toward the workplace – regardless of whether or not a pandemic is forcing agents to work from home.
Culture, culture, culture: Virtually every BPO worker across the Nearshore region is told they are loved and adored by their employer. For newcomer investors, the challenge rests around how that adoration is expressed. What specific actions and responsibilities does the employer take to build a culture of mutual trust, loyalty and high-powered performance?
Accessibility to top brass: At some point, boutique BPOs grow out of their diminutive profile. They become mid-tier, into the band of 15,000 – 30,000 staffers, and that growth all-too-often distances top-level executives from the new hires on the floor. What channels of vertical connection can be maintained and hardened in an increasingly stratified organization? It’s a real dilemma and one that newcomers, having the advantage of sitting on the “outside,” can exploit if they are able to deploy truly innovative schemes to sustain that personalized connection.
The expansion explosion taking place in the Nearshore is, in our estimation, going to continue but not quite at the same torrid pace. Local markets will need time to digest the expansions, and within that space will be many opportunities to observe just how well organizations are performing under what is now a much brighter spotlight.