Two Trends to Watch During Latin America’s Recovery

It goes without saying that 2020 has been rough for Latin America, with many countries beginning the year with sluggish growth rates, only for the Covid-19 pandemic to hammer the region’s economies hard. Yet the “new normal” of remote working and the relative underdevelopment that made Latin America so vulnerable to the pandemic could present opportunities to the region as it looks to bounce back in 2021.

Many developments can be anticipated in the region as Latin America seeks a way back from the economic turmoil of 2020. Two that are worth considering are the coming boom in outsourcing, and the adoption of “cybersecurity mesh.”

However, before looking at what they may mean for the region in 2021, it is worth considering the situation facing Latin America as it enters the new year.

A Tough Year for Latin America

Throughout much of the region, the gross domestic product (GDP) growth rate was on a downward trajectory at the beginning of 2020. Only Colombia, Guatemala, and Guyana entered the year on a significantly positive trend towards higher growth among mainland Latin American countries.

The previous years had seen many countries display some of the lowest levels of growth in the past two decades, save during the global economic crisis of 2009. In the case of Brazil, recent years saw growth actually sink much lower than during that tumultuous moment.

While growth was expected to recover in 2020, much of the region was already feeling a financial pinch when the novel coronavirus appeared and drove a wrecking ball through the global economy.

By late-May, the region had been declared the new epicenter of the Covid-19 pandemic by the World Health Organization (WHO), and predictions were bleak about the region’s recovery prospects.

That has since changed, with analysts cautiously predicting the region to rebound in the coming year, as the first vaccines begin to be distributed elsewhere in the world and some Latin American countries prepare to distribute the vaccine in the first three months of 2021. In every country in the region apart from Venezuela, moderate to strong growth is expected in 2021.

A Coming Outsourcing Boom

While the trend for increased outsourcing to Latin America was already well in march before the pandemic, the “new normal” of increased homeworking is only likely to see that trend multiply. Many companies have already declared their intention to continue with increased homeworking deep into 2021, and even beyond the pandemic.

As businesses adapt to a professional landscape in which maintaining a team in an office-based environment is increasingly unnecessary, they are also going to realise the cost-benefits of greater outsourcing.

Coming on top of an increased trend for “Nearshoring,” whereby companies in the United States and Canada shift their overseas operations closer to home, many of the countries in Latin America that were already seeing the benefits of the outsourcing trend can expect to see a boom.

Call center outsourcing to Latin America has already seen considerable growth in recent years and should be expected to ramp up, especially as the region’s English proficiency continues to improve. But it is in software development and other tech-related industries where the greater uptick should be expected.

Among the many benefits of outsourcing tech jobs to Latin America, beyond the obvious lower labour costs, are the ready supply of educated workers, increasingly impressive infrastructure, high employee retention rates, and — in the case of US or Canadian companies outsourcing southwards – the similar time zones allowing for easier collaboration than alternative outsourcing destinations such as Asia.

Cybersecurity Mesh

Cybersecurity mesh refers to a shift towards a more “horizontal” node-based approach to cybersecurity, as opposed to the traditional “bottom-down” system that has dominated IT over the past three decades.

Put another way, that means pivoting away from relying on perimeters and firewalls built around entire networks, within which users generally have broad access. Instead, cybersecurity mesh sees a series of smaller perimeters constructed around nodes within networks.

The effect is to significantly increase protection levels across the network by maintaining the integrity of the rest of the nodes in the event one is compromised, as well as providing greater scope for limiting user access to the broader network.

Such innovation has emerged and come to take on prominence in the context of the growing importance of the Internet of Things (IoT) – whereby increasing numbers of objects are fitted with technology that allows them to be communicated with and controlled over the internet.

At the same time, Latin America has seen a major increase in internet access over recent years, which has spiked during the pandemic and is only going to increase amid inclusive government policy and efforts among interested stakeholders to provide internet access to harder to reach populations in the region.

The region has also seen considerable technological innovation, with financial technology (fintech) evolving rapidly, and the related regulation technology (regtech) showing promising developments.

With cybersecurity firm Kaspersky highlighting a number of vulnerabilities in the region that are likely to draw increasing cyber attacks in 2021 – including the shift towards remote working and growing popularity of mobile-based payment apps – the coming greater demand for online security can be met with the newest approaches, namely cybersecurity mesh.

Nothing can diminish the unthinkable social and economic distress that the Covid-19 pandemic has caused Latin America. But as it looks to the future, the coming outsourcing boom promises to contribute significantly to its economic recovery, while the region has an opportunity to implement state-of-the-art cybersecurity approaches just as internet usage takes a big leap.