Global Delivery Locations for BPO - Focus on Latin America (Strategic Focus)

Introduction
A detailed analysis of Latin America’s capabilities as a sourcing location for IT outsourcing and BPO services.

Report Highlights
Highlights
Latin America is becoming an increasingly popular destination for IT services and BPO vendors who are looking to provide low-cost services to clients.

This report contains opinions generated from briefings with leading IT services and BPO players.

It also provides in-depth analysis of Latin America as a global sourcing hub.
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TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Key Messages 2
Latin America is becoming increasingly popular as a global sourcing location 2
Latin America has a competitive advantage due to proximity and linguistics 2
US outsourcing giants dominate the Latin American market 2
Many vendors are using Latin America as part of a multi-shore delivery model 2
Skill shortages and concerns over stability will hinder the region's growth 2
Table of Contents 2
Table of figures 3
Table of tables 3
Market Opportunity 4
Investment in Latin America by foreign IT/BPO companies has increased in recent years 4
Investment has been concentrated on the region's more developed economies 4
A number of factors are driving the growth of Latin America's IT/BPO sector 5
Geographical Proximity 5
Client Demand 5
Language Skills 6
Economic Growth 6
Cost of Labor 7
Political Stability 8
A broad range of services are being offered from Latin American centers 8
Challenges remain for vendors investing in Latin America 9
The Size of the Labor Pool 9
Language as a Barrier 10
Outsourcing Industry in Early Stages of Development 10
Cultural Differences 10
Customer Impact 12
Benefits to the customer of having services delivered from Latin America 12
Nearshore Delivery 12
Language Capabilities 13
Risk Diversification 13
Negative factors must also be considered 13
Security Concerns 13
Choice of Locations 14
Lack of Appropriate Workforce 15
Inter-Vertical Competition 15
Concerns Over Economic Stability 16
Competitive Landscape 17
Latin America's indigenous players are scaling up their global sourcing capabilities 17
Mexico 17
Brazil 18
The US outsourcing giants continue to dominate the Latin American market 19
European outsourcers are tapping Latin America's language capabilities 20
India's leading players are starting to make a major impact in Latin America 20
Go to Market 22
For vendors looking to set up in Latin America, there are several possible approaches 22
Latin America as a Nearshore Location 22
Using Latin America as Part of a Multi-Shoring Model 22
Tapping into Latin American Expertise in Key Vertical Markets 23
Mining 23
Life Sciences 24
Air Transportation 24
The recent activity in Latin America is set to continue 24
Increase in Activity is a Relatively Recent Trend 24
Opportunities Remain Outside Tier One Countries 24
Recommendations 25
Identify the main objectives 25
Recognize that Latin America is not a homogenous region 25
Determine the level of client demand 26
APPENDIX 27
Additional Economic Information 27
Methodology 27
Further reading 27
Ask the analyst 28
Datamonitor consulting 28
Disclaimer 28
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LIST OF TABLES
Table 1: The three tiers of Latin America's IT outsourcing sector 5
Table 2: Time Zone Differences Between the US and Major Sourcing Centers 12
Table 3: 10 Most Populous Latin American Cities 15
Table 4: Economies in Latin America 27
LIST OF FIGURES
Figure 1: GDP Growth in Latin America's Leading Global Sourcing Locations (%) 6
Figure 2: Value of Argentinean Peso, January 2002 to May 2003 (US$) 7
Figure 3: Population of India vs. the biggest Latin American countries (2007), in millions 9
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