Last week’s two-day Outsource2LAC event in Buenos Aires put Latin America and the Caribbean front and center in the globalized business debate, with an array of prominent guest speakers discussing the latest opportunities and trends in nearshoring.
In what many consider to be a reflection of Latin America’s further maturity, many speakers put emphasis on the need for the market to stress its ability to deliver quality instead of relying on the ‘closeness’ and cultural alignment benefits. “Proximity isn’t just convenience,” said Softtek President Blanca Treviño. “It is important that we translate that proximity to productivity. Proximity should translate into being more competitive, more productive. Being near isn’t the advantage, it’s translating that into productivity.”
It’s also worth noting that proximity isn’t just an advantage for U.S. companies looking to outsource work – it caters to businesses elsewhere as well. “Indian companies know they need a nearshore component,” Treviño said, adding that today, it’s more about “global sourcing.”
Another potential proximity-related game changer: immigration reform. As the wheels of change turn in U.S. regulations regarding how immigrants are dealt with, it’s impossible to ignore the implications of what would happen should legislation become more open.
Talent is among the most pressing – and complex – issues in business today, and Latin America is no exception. “It’s not about country’s marketing, it’s about talent,” affirmed Avinash Vashistha, chairman and geography managing director for Accenture in India.
Globant CEO Martín Migoya called for more attention to softer skills needed in creating a successful software business. “It’s not just engineering, it’s engineers who can mix feeling and connect the design and artistic parts into the equation,” he remarked. This is especially important in a scenario in which Latin America isn’t likely to be the cheapest option and in light of what Migoya referred to as a “user experience revolution,” where consumers expect a new level of product experience that go beyond what software engineers have historically produced.
Of course, hard skills can’t be ignored and are probably more pressing in the region given the advantage many Asian markets have in that arena. Latin American students often shy away from studying hard sciences like math, physics and engineering. Steering them in that direction will require the effort of universities, governments and businesses.
And once talent is present, it must be further developed – and retained. There is virtually no unemployment among developers and engineers, meaning they’ve got a lot of options. So how do smaller players keep them from going to the Googles and Facebooks of the world? By creating environments that these professionals want to work in and, in Treviño’s words, “creating Silicon Valleys” locally.
Regional Risks and Mitigation
One of the biggest obstacles for nearshore businesses is the uncertain politics to which Latin American countries are prone. The setting of this year’s Outsource2LAC in Argentina provided an especially interesting context in this sense, considering skyrocketing inflation rates, an impending currency crisis, and a number of new policies that are driving businesses away (although these issues were largely skirted because the Argentine government sponsored the event).
Latin America is sometimes seen as a risky place to do business, as policies often change from one government to another and stability, in currency or otherwise, is not always guaranteed.
Victor Grimblatt, CEO of Synopsis, discussed the case of Chile, where a number of long-standing business policies were changed four years ago following the election of President Sebastián Piñeda. Policy shifts from government to government deter foreign companies from looking to those markets. And while some countries, like Chile and Argentina, are prone to such swings, other locales, like Costa Rica, are more persistent. “Long-term policies need to be independent of the government in place,” Grimblatt said, though he clarified that “government is an easy scapegoat.”
Ramiro Hernández, manager at Grupo Assa, emphasized the importance of a regional footprint in mitigating a lack of stability. And Federico Flórez, chief information and innovation officer at Ferrovial, highlighted the role of local people in dealing with government issues. Flexibility, it seems, was the conclusion of the day – the fact that instability is very much a reality in many developing markets, including Latin America, and that businesses must simply plan and adjust.
Trends, Innovation and Startups
Perhaps Latin America’s biggest advantage is the entrepreneurial and innovative drive present throughout the region.
The tech industry has started to break into two parts, Migoya explained: traditional IT and outsourcing, and revolutionary software products. On the latter point, innovation is essential – and it is not always coming out of major players. In fact, it is often coming from smaller, more agile companies that eventually end up on the radar of the giants. “The Googles of the world need help to touch consumers’ lives,” he said.
A number of panelists tapped into the need to identify major trends in outsourcing and technology, including mobile, analytics, social media and cloud, while the question of how useful big data really is was also on the table.