Nearshore Americas

Lower Tariffs and Delivery Diversification Fuel Peru’s Outsourcing Ascent

Having seen growth slow in Europe because of the ongoing economic crisis, Peruvian outsourcers have targeted the Latin American market to great effect in recent years. Offering an increasingly diverse range of services and more competitive costs than rivals in Chile, Colombia, Mexico and Uruguay, Peru is on course to double the value of its contact center sector from $225 million in 2010 to $550 million in 2015.

Even in Europe, Peru has managed to avoid a decline in exports, despite Spain – its principal market – being one of the worst-hit countries by the economic recession. “For years Spain and Chile have been our principal markets but with the international crisis and the current situation in Europe we thought we were going to have a drop in international exports. However, in the case of Europe, and principally Spain, we’ve gone from $84 million in exports in 2011 to $87 million in 2013,” David Edery, the head of export services at investment promotion agency PromPeru, told Nearshore Americas.

In the same timeframe, as Peru sought to refocus its attention on closer markets, its services exports to other Latin American countries have shot up from from $59 million to $80 million. Chile is the main destination for services exports in the region, followed by Ecuador, Argentina and Mexico, while Brazilian firms are also beginning to look to Peru for trilingual call center services and electronic factoring.

“The international crisis has led us to explore new opportunities in other markets that we weren’t focused on before but now they’re working out nicely,” Edery said, citing the United States as another market where Peru is seeing rapid growth. “In the case of the United States we went from $3 million the year before to about $10 million in 2013. So operations have tripled in a very short space of time. This continued growth in sales has prevented us from being too badly affected by the global crisis,” he added.

Business is Booming

Peru’s contact center industry was worth about $417 million in 2013, with exports accounting for $177 million of that figure, an 8% rise from 2012. “There is a very good chance that in 2015 the sector will be worth more than $550 million, of which we think exports could account for about $236 million,” Edery told Nearshore Americas.

By 2016 Peru aims to be exporting services to more than 400 businesses in 60 regions. Its main advantage over regional rivals is that tariffs for contact center work in Peru range from $7 to $9 per hour, less than in Colombia, Uruguay, the Dominican Republic, Jamaica, Chile and Mexico.

Among the other factors that are driving the growth in Peru’s outsourcing sector, Edery noted that “there is a very important law that has just been published, the Data Protection Law. This is generating a lot of opportunities and a lot of confidence in the international market.”

Edery also observed that a general rise in prosperity is fueling the sector. “Peru has an anticipated growth rate of around 5.1% to 5.5% for 2014,” he said. “We’ve increased the size of the middle class, which is generating growth in the consumer market. The number of micro-businesses is also growing, so the demand for services is going to become really important, not just in the government sector but also in the private sector. This should contribute to the demand for more smartphone apps for example, and more highly specialized BPO services.”

In order to attract more business, Peruvian outsourcers “are always developing more value-added services” and working to diversify their offerings, Edery said. In 2010 and 2011 Peru focused almost exclusively on customer service and sales, but since then outsourcers have begun offering other services such as billing (which now accounts for 12% of offerings), database administration (2%) and helpdesk services and technical support (2%). Other offerings include telephone surveys, loyalty campaigns and back-office services.

Fortifying Secondary Markets

Peru is also seeking to decentralize its outsourcing sector. “In PromPeru we’re working to fortify all 24 different regions in Peru. There are now contact centers and a few software companies setting up operations in other regions outside of Lima,” Edery said. “We have operations in the north of the country. We have two businesses installed in the Trujillo area, about a 45-minute flight from Lima. There’s also a data center being installed in the north of the country in the Piuria area, close to Ecuador, right where one of the main submarine cables brings communications infrastructure into the country.

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“Then in the southern Tacna zone, right on the border with Chile, we have a free trade area with all of its tributary benefits. One very small outsourcing firm has already entered there with 15 staff but a very potent profile, and the administrators in the free trade area are working in a project to give concessions for around 500 positions in the zone,” Edery added.

The costs in these regions are about 20% less than in Lima and there is no shortage of talent in these areas, according to Edery: “There are many universities in the north and the south – for example there are three good universities in Arequipa and two main universities in Tacna.

“Now there’s an interesting new program called “Jovenes a la Orden” in which we provide people with technical training to prepare them for work in services,” he added. “So for example if I needed 200 workers, I could apply to the program and within three months I’ll have people trained and ready to work for my contact center.”

Duncan Tucker

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