Duncan TuckerWhen it comes to deciding where in Latin America to outsource to, finding a low-risk environment and a sizeable talent pool continue to be two of the biggest concerns for nearshore buyers.
The availability of real estate and the existence of immigration treaties with the United States were also cited as key considerations in the panel on location strategy at Nexus 2015, but security – both personal safety and data security compliance – and workforce capacity/attrition rates remain the biggest issues in industry decision makers’ minds.
Fili Ledezma, the Corporate Vice President for Banking Services at Canadian outsourcer Minacs believes that “the whole world, and particularly Latin America, has been below capacity in the last ten years. Almost every country has a lot of idle capacity.” Rather than simply focusing on finding locations with ample workforces, he believes the challenge that companies should be focused on is “finding the expertise within the partner that understands the particular processes (that you need) and that can integrate with the client and assign the right tasks and the right processes in the right geographies.”
However, other panelists were quick to disagree. Luis Derechin, a partner at Nearshore Delivery Solutions, argued that “the easy availability of talent is something of a fallacy because it depends how complex the processes required are. If you want something BPO-wise that’s very simple to do then sure you can find the talent, but if you want something more complex for high-value customers or IT services you need to go to countries that have more than just a capacity availability. A lot of attention has to be turned to countries like Brazil, Colombia and Argentina that have a high availability of human resources in order to fill that higher value capacity.”
Michael Moore, the Vice President for Call Center and Sales Operations at Sirius XM, interjected that ultimately, it depends on what you’re looking for. “If you’re looking for a very specialized small group of people who you’re going to be in touch with and give a lot of feedback, I think any country in the region can do it. But when it comes to grater scale and complexity, exchanging people back and forth, that’s when it starts getting a little more complicated.” Moore recommended that, “If you’ve established a really solid relationship with your vendor… I try to challenge them by asking ‘what line of business is going to be best in this geography or this location? Or what’s the hiring profile going to be? How many people can they fill? Is it going to be all tech or all service?’ Making sure that they’re contributing to those conversations can be incredibly helpful.”
As for retention, the entire region outperforms the United States but attrition can become a problem when local markets get saturated. “Every non-U.S. site that we have outperforms all of our U.S. sites from an attrition standpoint,” Moore said. “I think that the jobs are valued in the countries that we operate in. I think people see call center work as a good job and a good career opportunity and I think that drives that low attrition rate.” Derechin added, “I completely agree until capacity is limited and then you have people fighting for each other’s employees. So attrition is low and linear until the point where a site doesn’t have enough engineers or call center staff. And all of a sudden you need to start poaching people. That’s when attrition starts going up.”
This may become more of an issue in the future as Latin America and the Caribbean is becoming an increasingly popular delivery destination not only for U.S. firms but also for Russian, Belarusian and French firms and even Indian service providers that are moving into the region. Competition for talent will only rise as more service providers from other regions realize that they will lose business if they do not introduce nearshore delivery capabilities, Derechin predicted.
Assuaging Security Concerns
With media coverage of Latin America often focusing on violent crime, personal safety is one concern that’s not leaving the nearshore region any time soon. Sandy MacLeod, the COO of Print at the Star Media Group in Toronto, explained that personal safety considerations played a significant role in his company’s decision to outsource to Jamaica. “When we picked Jamaica proximity came up as a key issue but the security issue was also very near the top of the list,” he said. “We have our staff in Jamaica for about 12 weeks a year and some of them are single moms so security really matters. It wasn’t the determining factor but it was a consideration for us. I had my research team consider the security situation in each of the countries and at the end of the day it was a significant factor for us. I don’t think it’s paranoia (to take it seriously).”
Service providers must play a proactive role in reassuring prospective clients, the panelists agreed. Moderator Stephen Loynd, the Global Program Director for Customer Contact at Frost & Sullivan, noted that some BPO firms are very attentive, making sure that they meet visitors the minute they land at the airport and carefully handle all of the logistics in order to reassure them throughout their stay. However, not all service providers are as smart and organized, he noted: “There are some others that I’ve seen and it’s amazing that they don’t have everything in place, the little details that often make people wonder.”
Moore agreed that providers should thoroughly research security issues in order to allay the fears of new or potential customers. “When you have a good partnership or you’re working on developing a relationship then the BPO side of the house should pick that up as well,” he said. “The question has to be answered and the folks that are addressing it well are really approaching it head on and making sure that you don’t have to dig through (all the information that’s out there).”
Changing the Narrative
“Another important consideration is how the government transmits a feeling of security to investors looking to establish new businesses in their country,” added Rodrigo Baz, Commercial Director for Mexico and Central America at Cushman & Wakefield. “We have a very good example in Costa Rica,” he said, pointing to the establishment of CINDE, a one-stop-shop aimed at facilitating foreign investment. “You arrive in Costa Rica and you get in contact with this office and they provide you with all the important information for the company, they put you in contact with lawyers, workforce providers and developers,” Baz explained. “They have a very brief and easy to understand summary of how the tax system works there. Now El Salvador has copied the same model and I’m sure that once they put it into practice it will be easier to do business there.
Ledezma suggested that countries that are struggling with image problems take inspiration from the way that Colombia has reinvented itself in recent years. “I think most Latin American countries are looking at this success story and developing programs to develop positive PR regarding security in their countries. And they are directly engaging security firms in the U.S. that provide services to the largest corporations,” he noted.
Derechin agreed that Colombia has set a excellent example, but warned that again, private enterprises must share the state’s burden when it comes to confronting this challenge. “If you think about Colombia’s image 20 years ago you used to think Pablo Escobar and now it’s (Colombian coffee producer Juan) Valdez. It’s incredible. It’s certainly the government’s job but it’s also private industry’s job as well,” he said. “It’s important for us to go out and show that the image most people have of Latin America is wrong. We have to go out and do this ourselves. I was just at a panel in Nasscom in India six weeks ago and if you think Americans don’t know about Latin America then South-East Asians have even less idea and they’re just as scared. So it’s important for companies to partner with government.”
Data Security Compliance
Data security compliance is also becoming an increasingly important consideration, Moore noted. “I think that as we’re looking at new places we have to take into account any of the potential risks from a data security standpoint that may exist in those regions. It’s not that one area may be inherently worse than another – although there are areas that may be a little more susceptible to some of the things that are going on,” he said. “I think it’s become a very different environment today than what it was even a year and a half ago and regions do play into that.”
Discussing compliance with potential service providers for making any agreement is crucial, Moore added: “We’ve started at contraction level. We’ve said ‘here are our table stakes for security compliance and people have to be able to sign up for that.’ It’s caused a bit of pain for some of the smaller partners because going to get specific certifications is not cheap and particularly for some of the smaller BPOs that we deal with it’s a burden for them, but it’s now a requirement just to be able to come in and evaluate the company.”
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