Our recent research on Latin America's emerging sourcing presence has generated a lot of buzz - not to mention a huge number of downloads. Today's piece in CIO - "IT Outsourcing in Latin America: 9 Things Your Vendor Won't Tell You" - sparked some further thinking from HfS analyst Esteban Herrera, who has lived and breathed the LatAm experience. Over to you, Esteban...
The truth about Latin American outsourcing
Market activity and our recent research have created quite a bit of buzz around Latin America. In my view, it’s about time we have the debate and expose the pros and cons of nearshore destinations. Today’s CIO.com piece, for which I was interviewed, is a good example and accurately portrays some of the challenges of outsourcing in Latin America. However, I find myself, for the first time ever, empathizing with politicians and celebrities who claim to be “quoted out of context.”
The article does reflect some of my statements, but not all of them, and I find myself in disagreement with some of the headlines and conclusions. So allow me to clarify a couple of thoughts, lest people think I woke up yesterday and changed my mind about the vast services potential of the Latin American region.
- While more follow-up is often required (by American standards) I’ve always found the total time-to-deliverable in LatAm to actually be shorter than with India, because the wheels of productivity are greased by cultural understanding and proximity, and the fact that when people talk neither party is half asleep.
- I don’t know that prices have risen fast. If anything, our research indicates they rose far slower than in India. But small populations of desirable talent invariably lead to wage pressure. The good news is that in those places (like Chile and Costa Rica) we’ve seen pretty much the top of the market.
- Saying no is a good thing! For my 10 years as an advisor, my catch phrase to clients was “pick the provider that says no.” Saying “no, we can’t do that,” is an indication of honesty, transparency, and true partnership.
- I don’t buy the physical security argument. Baltimore is a more dangerous city than Sao Paulo. Detroit has more murders per capita than any Central American capital. I don’t see anyone refusing to visit GM’s headquarters based on security concerns.
Like any destination, Latin America has its challenges. But at HfS, we’ve come to see the region as a highly desirable component of a global services portfolio, whether you are a buyer or seller.
Stephanie Overby and CIO.com did us all a favor by increasing awareness and highlighting the challenges of the region, which are real. I am seizing the opportunity to highlight that the advantages are real too!