Talent Access Drives Nearshore Site Location

Location remains at the core of Nearshore operations. Nevertheless, in their search for the best points of delivery in a region, outsourcing companies are showing more and more interest in people over places.

IT and BPO firms are keeping a closer eye on the availability and needs of potential employees in Latin America and the Caribbean, a region that has grown attractive for companies in search of capable talent at lower costs. Geo-location is still important, but attracting talent has become the number one priority.

“The more important thing right now, given the shortage, is to attract talent,” said Sakshi Garg, VP at research firm Everest Group, during the Nexus 2022 panel A Matter of Site: Finding Value Across a Shifting Geo-Location Landscape. “We’re seeing a lot of interest to make sure that the workforce strategy and the location strategy go hand in hand.”

“The more important thing right now, given the shortage, is to attract talent”– Sakshi Garg

Talent shortages have become the scourge of the industry. Although actors within the Nearshore BPO/IT ecosystem see it easing by the end of 2022, firms report having an exceptionally hard time finding employees over the last three to four months. With worldwide demand for IT services expected to go up, wage inflation will become more of a real threat as firms fight over the available talent.

Governments in the region are doing their best to keep their talent pools attractive. Some –such as Barbados and other Caribbean nations– are going as far as luring prospects into their territory to call the attention of potential employers.

“We’re tiny; we’re only about 300,000 people. But when we’re talking about a talent pool, it doesn’t have to stop there,” said Kaye-Anne Greenidge, CEO at investment promotion agency Invest Barbados, during the panel. “Because of programs, you can take anybody from any country and say ‘Hey, I’m going to send you to Barbados. You can stay there for 12 months’. And now you have an extended reach into talent from across the world.”

Your Speech, Not Your Cost

Cost-cutting is one of the typical reasons behind a company’s decisions to take its operations Nearshore. Firms keep lower capital expenses in mind when they go site-hunting, and that has turned the Latin America/Caribbean region into one of the most attractive destinations for investment.

Nevertheless, lower costs are taking a backseat to a talent-adjacent factor: language skills.

“Cost is important, but I think one of the most important parts you are seeing now, since all these costs are the same, are language skills,” commented Jeff Pappas, Managing Director at real estate advisor Mohr Partners. “You’ve got to find markets that have good English, and those are few and far between. So, you look at smaller markets, but then you have smaller centers.”

Some Latin American governments have made tremendous efforts to increase the number of English-speakers among their population. Colombia and Costa Rica launched English-teaching programs at a national level in an attempt to increase job opportunities for young citizens and to attract foreign investment.

“One of the most important parts you are seeing now, since all these costs are the same, are language skills”– Jeff Pappas

In spite of that, Argentina’s population was the only one classified as highly proficient in English skills in EF’s latest English Proficiency Index. Most Latin American countries remain in the moderately proficient part of the scale, or below. Brazil and Mexico, the region’s biggest countries in terms of population and GDP, scored in the low and very low ends of the scale, respectively.

The Caribbean has the edge on this point. English is the official language of several of its countries, like Jamaica, Guyana and Barbados, which has made them strong candidates for BPO investment. Nevertheless, their workforces are considerably small when compared to some of the giants of the continent, like Colombia, Mexico and Argentina, and even smaller nations like Uruguay and Costa Rica.

What About Hybrid?

Remote work didn’t kill the office space entirely, but it did change how employers and employees think of it. The path for hybrid work models is open and being built on the go, and with the new models come questions about the actual relevance of dedicated facilities for BPO/IT firms.

A hybrid work model is not easily definable. The form it takes depends entirely on the organization and the nature of the work done, pointed Sakshi Garg. We can speak of multiple hybrid models, each defined by the amount of work done at home and in the office. What can be said with certainty, though, is that hybrid offices have allowed firms to experiment more with geo-location.

“Service providers across the world are going to cities where they’ve never been before,” said Garg. “Talent is also moving to different locations, and they [companies] are creating setups where people are coming once a month, twice a month, to really collaborate.”

Though firms are experimenting with sites, the trend tilts strongly towards talent acquisition. That’s why companies are making the extra effort to align their location strategy with their workforce strategy.

“Facilities? Last point on the list. It’s all about talent: what can I attract, how quickly can I attract it; even how much can I scale,” added Garg.