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5 reasons why Latin America could be the next big thing in IT outsourcing

Fiscal policies and market barriers have long deterred outsourcing buyers and providers from investing in Latin America. But creative sourcing solutions and a shift in corporate culture are helping to change that. The economic opportunities in the region are on the rise.

A friend recently told me an old joke about Latin America in the context of outsourcing: “Latin America is the next frontier in outsourcing and it always will be.

I have long promoted Latin America as an immense outsourcing opportunity, on both the demand and the supply side. But the obstacles are many and real. With a population of almost 600 million people across 26 nations, Latin America suffers from fragmentation of markets, languages and legal systems. Add cantankerous and protective government fiscal policies that lag behind the progress of globalization and either real or imagined political instability, and you have a formula that scares investors and multinational corporations from setting up shop. In essence, buyers and providers have found it challenging to successfully execute a regional strategy.

Many of these barriers still exist, but outsourcing activity has recently surged throughout the region. Here are five reasons why:

1. Some of the most creative and progressive outsourcing solutions are being implemented in Latin America. Without the

benefit of labor arbitrage, the solutions themselves have had to achieve either a significant decrease in cost or a significant increase in performance. Therefore, outsourcing in Latin America is much closer to the bottom line than it is in other regions.

2. Corporate cultures are changing. Large, family owned conglomerates are rapidly being turned over to professional management. Moreover, the executive teams in Latin America tend to be younger people from a more global generation ready and willing to work across borders. As increased demand has shown, outsourcing is neither taboo nor strange anymore.

3. Providers are investing. For a long time, HP and IBM were pretty much the only games in town, with Accenture following and
aggressive but country specific strategy focused on the major markets. This is no longer the case. Capgemini, Cognizant, HCL,
Infosys, TCS, UST Global, and Wipro, to name a few, have all made significant investments in the region.

(This article was written by Esteban Herrera and was published in www.cio.com on July 10, 2015)

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