Q&A: Wells Fargo Looks Favorably on the “Free Markets” of LATAM

The fourth largest bank in the United States, Wells Fargo has a number of outsourcing operations in Latin America and has just opened a new contact center in Colombia run by Teleperformance to provide bilingual support.

Globally, Wells Fargo counts Genpact and another major outsourcer among its biggest providers. The former provides more back-office operations, while the latter – whose identity the company prefers not to disclose – provides more knowledge-based services, including marketing, analytics and research. In Latin America, Wells Fargo has sourced knowledge services from Chile for about five year and around two years ago it contracted Crystal to provide knowledge services from Argentina, as well as setting up an IT support center run by Intertec International in Costa Rica.

The opening of the new contact center in Colombia shows that Wells Fargo will continue to outsource in the region when it makes business sense. In an exclusive interview with Nearshore Americas, Marc Pauls, Wells Fargo’s Strategy Manager and Senior Vice President of Enterprise Global Services, discussed the region’s biggest challenges and explained why he believes BPO has a bright future in Latin America.

Nearshore Americas: What led Wells Fargo to outsource certain operations to Latin America?

Marc Pauls: Obviously the time-zone proximity to the U.S. was a big factor and ultimately access to the talent pool was another big factor. In Bogota you have really good Spanish- and English-speaking call center agents and that was something we wanted to leverage and probably want of the best markets for that. Further south you’ve got fairly decent – not big numbers, it’s a small talent pool – but within reason of numbers you’ve got a good analytics and research talent pool that we can leverage down there. In Costa Rica … there’s a talent pool gap or shortage, but we have a good relationship with the IT provider down there and they’ve been pretty successful, and again that’s based on a combination of time zone, cost and talent.

NSAM: How does the level of service in Latin America compare to Asia?

MP: It’s every bit as good. If you ask a lot of people in the business they’ll say it’s a lot better but a lot of that is driven by factors that are not related to the service delivery, but related to the geography. The fact that you can call someone up in Chile at 3 p.m. makes people feel like it’s better. I don’t think the individuals are any better in Latin America but they’re no worse.

It’s a pretty effective way to deliver work that has either special skills or requirements, like in Colombia where they have bilingual agents, or when you need a working relationship based on a nearby time zone. It’s very effective in that regard. And some of that higher end work, you can’t really support that in Asia from a U.S. time zone point of view.

NSAM: How significant are the differences in cost between Latin America and Asia?

MP: Costs in Latin America are higher than in Asia and I think that’s fairly obvious but you’re not doing it to save absolute dollars; you’re doing it to leverage effectiveness. And the effectiveness of a role or a specific body of work is worth more than a US$20,000 or US$50,000 difference in costs. That’s the kind of work you need to be focusing on. One of the things we don’t do in Latin America is core operations where your price per widget is a big focus. That work is much easier to support in an overnight environment from India or the Philippines and your cost per widget is one of your major driving factors. And if that is one of your major driving factors then you’re probably going to look to Asia. So Latin America doesn’t compare on a price basis but it can compare on an effectiveness perspective.

NSAM: What do you consider Latin America’s biggest weakness when it comes to BPO services?

MP: The talent pool is smaller in Latin America, especially when you have a requirement for English-language services. If you require a high degree of proficiency like a B2 or C2 or even a C1 you’re going to have a much, much smaller talent pool to draw from. But the advantage is that turnover is lower, although that might change over time.

NSAM: Have you seen much evidence of improvement in this respect to create a larger English-speaking talent pool?

MP: Certain countries are improving. Colombia’s doing quite a bit, they’re promoting English proficiency as part of their degree program and that applies in the more expensive private institutions and the public institutions, although the private institutions are further along and they have more money to hire staff with quality backgrounds. But they’re doing a lot of work on that front, in contrast to Chile where it’s a pretty successful country in its own right but it’s not a major focus there. That’s not to say there’s no English-speaking talent there but it’s not a big focus and it doesn’t really need to be.

NSAM: And what are the other mains challenges in the region?

MP: I would be very cautious about investing in Brazil, even though they have a really robust domestic economy, and Argentina, which has other business challenges. Other challenges depend on the scale that you need. A contact of mine just set up a small contact center in Belize. There aren’t many of those there but he doesn’t need 2,000 people, he needs 200 people and he’s probably going to be pretty successful there. At Wells Fargo we’re a big institution and 200 people doesn’t really get us anywhere from an economy-of-scale point of view so we need to focus on places with larger potential and there aren’t many of those in Latin America.

NSAM: Do you envisage Wells Fargo sourcing more and more services from Latin America in the future?

MP: Yes I do. It’s not going to grow like our Asian operations are growing but it is going to grow. If we can see a continued focus on this industry of offshore support and global delivery support, whether it’s in-house or third party, and continued focus on attracting foreign investment and dedication to this space I think that’s going to continue to help us feel comfortable with some of the places where we’re located. There’s always the question of ‘does the talent pool run out at some point and then you have cost run-ups or is there a pretty long tail to that?’ and that’s an open-ended question that our strategy team monitors fairly closely.

We’re going to stay focused on countries that have a fairly good business background and focus and I see the work that we’re doing in Argentina for example probably staying focused on the scope that we have. We’re going to grow within that scope but probably not increase that scope a whole lot because of the challenging climate there. And more free-market orientated places like Colombia and Chile are probably going to see more growth.

I think BPO in Latin America has a real future. It’s not going to be a couple-of-hundred-thousand person industry like India is for very obvious reasons. However, if done right and if you target the right kind of work then you can be very effective there. There is a good talent pool, somewhat spread out admittedly, but if you find the right place to go and find the right kind of work to put there and do it for the right reasons then it can be a pretty effective place. So I’m reasonably bullish on our mid-to-long-term leverage of the region.