At Panama Summit, A Second Look at Buy vs. Build

By Luke BujarskiAt last week’s IQPC’s Shared Service and Outsourcing Summit in Panama City, Panama,  the most popular people at the conference  were the corporate buyers weighing in on BPO vs. owned centers and whether to take established captives and merge them with third-party providers.
The big question we came away with: who is closing whom?

The path walked by these decision makers seemed to evoke the central question of buy vs. build tackled in this interview with KPMG’s David Kane last year. The challenge we saw in Panama and detailed in the article remains focused on what buyers are ultimately looking to achieve.

Helping to guide buyers through this maze of operational excellence in Panama were multinational vendors with integrated consulting and services. However, there was a palpable sense that the homegrown shared-service centers also want in on the action.

Colombia’s Carvajal Technology & Services, born from Grupo Carvajal shared services division, has broken through to the profit center side of the equation by officially sponsoring the summit.  But apparently they are not the only locals jockeying for position to service external clients.  Speaking with companies like TACA airlines with two SSCs, one in El Salvador and one in Costa Rica, they are also toying with the possibility of hanging out a shingle later down the road.  In discussions recently at ProNicaragua’s Investment Forum, representatives from British American Tobacco with service centers in Costa Rica have also begun looking at a client-aligned model.

Whether this activity will ignite another wave of captive spin-offs following suit with TCS, Wipro, and Infosys is yet to be seen.  Speaking with Capgemini’s VP of business development Felix Massun, it’s obvious that the BPO market here is moving at a frantic pace.  According to Massun, Bimbo and Telefonica also have very mature shared service operations in Latin America, and could be ready to throw in their hats within the next three to five years.  While there was no explicit confirmation from Massun on Bimbo and Telefonica, it’s not out of the question.

But the overall vibe here is that of collaboration and not competition.  From location analysis summarized by Chazey Partners, business parks with CIT Sinaloa and Zona Franca Bogota , to process automation  software from Readsoft, Latam’s shared services have plenty  of work ahead of them.

Massun from Capgemini, also a native Argentine, mentioned that “the markets we see here today will be unrecognizable 10 years from now.  Things are changing very rapidly.” This makes it difficult for all parties involved to plan ahead.  He also expressed doubts about a homegrown BPO market coming out of Latin America. “Everyone these days is focusing on their core business, which doesn’t leave much time for branching out.”

The fate of LatAm’s homegrown BPO sector is as much in the hands of SSC managers, as it is with corporate HQ.  Communicating strategy with leadership and building support for expanded shared services has been a huge topic of conversation at the summit.