Editor's Blog
Measuring the value of outsourcing
Wednesday, December 15, 2010
Last month I hopped on a plane to the HRO Summit in Amsterdam, one of the largest annual gatherings of senior HR professionals in Europe and a handy opportunity to find out what they are expecting from the coming year. What I had confirmed for me was that the executive of leading organisations have put talent at the centre of their business strategies, which has meant HR functions have been thrust, somewhat unexpectedly, into the spotlight.
The problem is, however, that they have arrived at this position in the wake of a major economic downturn and in many cases find themselves under-resourced to accomplish their given objective – the alignment of talent management with general business strategy.
In the light of this, the presentation given by Dr Anthony Hesketh of Lancaster University Management School at the Summit attracted more than a little attention. Why? Because he is a passionate believer that HR now has the tools at its disposal to demonstrate a direct and quantifiable link between the effective management of talent and business performance.
For those organisations contemplating outsourcing elements of the talent management spectrum as a way of tackling a shortage of internal resources this may be vital. After all, providing corporate boards with figures that show a compelling business case for a major ‘people initiative’ like this may be the quickest and most effective way to gain their attention. And, as Hesketh points out, “There have been no major HR cuts since 2007 in those organisations that have already outsourced.”
The measurement tool that Hesketh has developed is called ‘Return on Invested Talent’ or ROIT for short and one of its most attractive features in an age of increasing complexity is its relatively simple and straightforward methodology. ROIT establishes how much money an organisation makes, how much it has to spend on people to achieve that and the ratio between the two. But Hesketh believes that expenditure on talent needs to go much further than the salary bill and direct recruitment costs. “What you pay your employees only forms part of the equation,” he says.
“You also have to provide people with the tools and equipment that enable them to carry out their work and that needs to be factored in.” Elements such as depreciation and amortization are therefore also added to the employee side of the scales. He argues that it’s important to use the tool on a continuous basis to show how talent management influences financial performance and to employ it to gain buy-in for major HR projects such as partnering with an outsourcer.
Used properly it can , he says “Reveal an accountable, evidence-based metric to initiate the conversation about how organisations can leverage their greatest intangible asset – talent.” However he also points out that numbers are not the end point of HR’s case, but its beginning. “ROIT shouldn’t dominate every conversation,” he says, “so don’t just blindly follow the numbers, use them to strategically enable what they tell you.”
Damien Stork is a director at recruitment outsourcing and talent management specialist, Ochre House – http://www.ochrehouse.com
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Rebuilding Rwanda with computer-aided design skills
Monday, June 28, 2010
It’s always interesting to know what books are on a business leader’s current reading list. When I recently visited Rwanda-based outsourcing company Gasabo 3D Design Limited, I spotted a copy of ‘Start-Up Nation: The Story of Israel’s Economic Miracle’ lying on the desk of CEO John Rugamba.
It seemed an entirely appropriate choice: the book tells the story of how Israel has defied regional boycotts and a relative lack of natural resources to become a major international business force and, more specifically, a widely recognised centre of excellence for information technology.
It could be argued that Rwanda faces even greater challenges in its struggle to build a prosperous knowledge economy. To much of the world, the name of this country is still synonymous with the tragic events of 1994, when some 800,000 people were slaughtered over the course of just 100 days, in one of the most brutally efficient genocides of the twentieth century.
Sixteen years on, I found that tiny Rwanda is looking to the future - and its success so far in achieving security, political stability and economic growth has made it a role model for other African nations. But if it is to be successful in forging a foothold for itself in the world of international business, much will depend on the ambitions and hard work of local entrepreneurs like John Rugamba.
He started Gasabo 3D back in 2007, as a spin-off from the Rwandan Information Technology Authority. Today, he employs 12 skilled engineers at the company’s offices in the Kigali ICT Park, recruited primarily from the Kigali Institute of Science and Technology and the Ecole Technique Officielle de Gitarama (ETO-Gitarama).
The company’s engineers work to convert two-dimensional (2D) drawings into three-dimensional (3D) computer-aided design (CAD) models using software technology from SolidWorks, on behalf of clients in the USA, Western Europe and India. One of the most impressive names on this tiny company’s customer rollcall is construction machinery giant, Caterpillar.
The Gasabo 3D team works in two shifts to meet international companies’ demands for quick turnaround times: these shifts run 0730h-1630h and 1400h-2100h.
It’s an interesting proposition. Other outsourcing companies offer this kind of service, mostly from India or China, but none can beat Gasabo 3D on price, Rugamba tells me. “At a charge of around $15 per hour to the client, and sometimes lower, we may even be half the price of competitors in other countries,” he says.
Setting up the company was easy - all the paperwork was completed in a single day. The Rwandan government, under President Paul Kagame, is very active in nurturing and supporting new technology companies.
But building a strong, profitable outsourcing company in Rwanda, however, has been a harder path, Rugamba concedes. There’s a lack of local managerial expertise on which he can draw and few international business leaders know much about Rwanda. Many would struggle to find it on a map. “One of our biggest challenges is helping overseas clients to have confidence in who we are, where we are and what we do,” he says.
International marketing, however, requires money - another major challenge for Gasabo 3D. To build awareness, Rugamba gets a lot of support from the team at SolidWorks, he says. In fact, the copy of ‘Start-Up Nation’ was sent to him by SolidWorks’ CEO Jeff Ray.
At the same time, Rugamba is also focussing on providing outsourcing services to local companies with architectural and engineering design needs, including telco MTN Rwanda.
Like many Rwandans I met on my trip, John Rugamba studied abroad (in his case, at the Tshwane University of Technology in South Africa), but returned to Rwanda determined to contribute to his country’s resurgence. “That’s important to me, so the challenges do not matter so much,” he says. “Already, Gasabo 3D is showing people in other parts of the world what Rwandans can achieve.”
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Optimistic, but not yet exuberant
Wednesday, June 23, 2010
Hello - it’s been a while since I last blogged, but I’ve been travelling a great deal and, in some cases, in regions where Internet access remains a big challenge. I recently got the opportunity to visit Rwanda, for example. While there, I visited a small but interesting new outsourcing business - but more about that in my next blog.
Last week, I was in London and had lunch with BG Srinivas, who heads up Infosys Technologies’ European operations. It was a while since I’d visited London and even longer since I last saw Mr Srinivas. Our last meeting was way back in 2007, at a dinner he hosted in Greenwich. Attending this dinner were 25 UK university graduates from 12 different universities, who were off the next day to the company’s Mysore campus for a six-month stint on the Infosys Global Talent Programme.
This time around, I was keen to get BG Srinivas’s perspective on how Infosys would navigate the tricky path of global economic recovery. “The good news is that customers are starting to make decisions again,” he told me. Across its global operations, Infosys has seen positive signs of recovery over the last three to five months, particularly in the US over the past two quarters.
But what about Europe? “We expected the European recovery to lag behind by around three to six months, and that has proved true, to some extent,” he says. But he has been pleased, he says, to see a robust response to the European debt crisis within the region. “I’m glad it’s being viewed as a collective problem, with all countries making sure that they are helping one another.”
That said, Infosys has little if any direct exposure to the countries in the most serious trouble - Greece, for example, or Spain. Its major territories here are strictly northern European: the UK, Germany, France, Switzerland, Benelux and the Nordics. Nor need Infosys worry about the effects of the UK’s Emergency Budget on its business - the company has “no real focus” on the public sector in this country.
But, says Srinivas, organisations in both the public and private sectors currently face the same challenge of “doing more with less”, and for him, that’s the guiding principle that is reshaping Infosys Technologies’ approach to pricing.
“As clients and prospects start to experience the recovery for themselves, they’re looking for ways to boost internal productivity while keep costs low - and not to get stuck with a whole lot of fixed cost, but to pay only for what they use,” he explains. “To some extent, cloud computing is driving that change and customers are beginning to expect the same approach from a whole range of service providers. So in future you’ll see Infosys moving more and more to pay-as-you-go and outcome-based pricing models.”
As for the UK, Srinivas is seeing “definite positive signals, but we’re still cautious. This certainly isn’t a time for exuberance.” Does he still host dinners for new graduate recruits and pack them off for a six-month Mysore training adventure, I wonder? UK students didn’t get that opportunity in 2009, he confesses, but Infosys is considering reinstating the programme in 2010. And with our lunch over, he makes the dash from restaurant to office, across a blustery Canary Wharf.
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Of volcanos and video conferencing
Monday, May 10, 2010
With that pesky Icelandic volcano once again dishing out clouds of ash and intermittent misery to travellers across Europe this past weekend, aviation regulators have warned of a “summer of disruption” for airline passengers.
From an outsourcing perspective, I wonder if this could be very good news for providers of managed video conferencing services?
Already, the video conferencing industry has been quick to jump on the marketing opportunity offered by ‘Volcano Chaos’, with leading providers quick to report a significant uptick in business during the initial April disruptions.
Some commentators have said that their eagerness to exploit the marketing opportunity of a natural disaster smacks of desperation. “To me, it suggests that most organisations are still not sold on the whole concept,” said one.
I’d be inclined to agree, if it weren’t for the fact that market analyst company IDC recently reported that, well before Eyjafjallajokull kicked off, sales of video conferencing equipment managed to achieve 16.7 percent growth over 2008 figures, in an otherwise sluggish year for the IT industry.
Where I DO agree is that video conferencing is still viewed as a prohibitively expensive technology by many business leaders. But if it’s true that businesses face months of disruption thanks to volcanic ash from Iceland, then it seems likely that some - especially those with significant overseas interests - may be looking for a managed services approach to video conferencing, where they simply hire the equipment and it’s managed for them by a third-party specialist.
It’s the old capex versus opex debate that so frequently arises in discussions of outsourcing today. Companies such as mvision, for example, are building healthy businesses around bringing visual collaboration for a fixed monthly cost to organisations that are unable or unwilling to make the substantial upfront investments required to buy, install and manage their own video conferencing systems.
Perhaps the threat of ongoing Volcano Chaos in Summer 2010 will be enough to convince others to take the same tech-savvy, cost-conscious approach to tackling business travel disruption?
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Beware of e-waste rogue traders
Wednesday, April 28, 2010
Most organisations today are pretty aware of the problem of ‘e-waste’. Dealing with it in a responsible manner is high on their list of corporate social responsibility (CSR) objectives. And for many organisations, the best way to do this is to outsource the process to professional, third-party specialists who will wipe any data held on equipment, prepare the kit for reuse elsewhere or strip it down for recycling.
But how do you know these companies will do what they promise with your old computer equipment? How do you know that they won’t just tip your unwanted PCs into a shipping container and sell it abroad to the highest bidder?
That may sound far-fetched - but according to Tony Roberts, CEO of Computer Aid International, a charity that provides quality, professionally refurbished computers to projects in developing countries, the problem of e-waste ‘rogue traders’ is real.
“UK companies are unwittingly handing over their unwanted IT equipment to unscrupulous illegal traders who are shipping untested and un-wiped e-waste, for profit, to developing countries,” he says. “These traders do not declare the contents of their shipments as hazardous e-waste, but falsely claim consignments consist entirely of electrical equipment destined for productive reuse in developing countries.”
It’s a scandal and most businesses will want no association with this toxic trade. But how can they be sure that their company’s reuse and recycling partner is legitimate?
Fortunately, Tony Roberts and his team are so concerned about they problem of e-waste cowboys that they’ve produced Your Guide to Choosing an IT Disposal Partner in order to help companies sort the good guys from the bad. This includes seven questions that companies must ask of prospective providers, examples of the kinds of documentation they need to ask to see, and further ways of checking prospective recyclers’ responses. It’s thoroughly recommended reading for any company that really cares about e-waste.
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Where are all the female high-fliers in outsourcing?
Wednesday, March 24, 2010
It’s Ada Lovelace Day - an international day of blogging to celebrate the achievements of women in technology and science.
It’s an annual event, held in honour of Augusta Ada King, Countess of Lovelace - the only child of Lord Byron and his wife Annabella and the author of the first computer programmes for Charles Babbage’s Analytical Engine. This year, the goal is to get 3,072 people to blog about their tech heroine - but when it came to identifying a high-profile female executive from the outsourcing industry to write about, I have to admit I drew a blank.
Perhaps I’m wrong (and I’d certainly like to be corrected if I am). Perhaps the world’s leading outsourcing companies are stuffed with impressive, high-flying women working at senior levels. But if they are, they’re keeping quiet about it. I meet with and interview countless senior outsourcing executives every year, but looking back through my email archive, I can’t find a single invitation to meet a female executive working at a worldwide level in the industry.
It’s certainly true that women make up a significant of portion of the rank-and-file of outsourcing employees. Take, for example, India: in 2008, a joint study by Nasscom and the Indian Institute of Management - Ahmedabad (IIM-A), entitled ‘Crossing the Digital Barrier: Leadership issues for women in the IT-BPO sector’, estimated that women employees make up 42% of entry level positions in the Indian IT sector.
But it seems that these women - for various reasons - do not progress through the ranks. That same study revealed that around 50 per cent of mid-level women employees surveyed felt felt that there were no programmes related to leadership development skills targeted for women.
More recently, a survey from India’s Associated Chamber of Commerce and Industry of India (Assocham) threw further, depressing light on the lack of progress, as reported in ‘The Hindu’ newspaper. Some 773 Indian women working across a wide range of sectors were asked to rate their job satisfaction on a scale of 1 to 10, where 10 was highly satisfied. Criteria included communication and information flow in their organisation; their degree of motivation from their current job; the career opportunities open to them; and job security.
While women in public-sector organisations reported a satisfaction rate of 7, women in the BPO/KPO sectors reported a satisfaction rate of just 4.
Commenting on the findings, Assocham president Dr Swati Piramal said that women in the BPO/KPO sector, “feel a lack of personal growth and development, since they perceive less room in the decision-making process and less flexibility in working hours, besides pressures to perform and deliver targets.”
The problem’s not confined to India. And it’s certainly not confined to the outsourcing industry. The technology business as a whole faces a major challenge. And - as Ada Lovelace Day seeks to highlight - far more needs to be done to inspire young women to embark on technology careers and to subsequently progress through the ranks.
So this is my challenge for Ada Lovelace Day 2011: To meet and interview the most inspiring, senior-level woman working for a global outsourcing company that I can identify over the course of the next 12 months. Any suggestions will be gratefully received!
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No Facebook page? Not necessarily a #fail.
Monday, March 08, 2010
Back in late January, an entry on the NASSCOM India Leadership Forum blog caused a bit of a brouhaha. In it, Vishal Gondal, CEO of mobile games company Indiagames, accused Indian IT companies of failing to adapt to the world of social networking.
“This is surely one ‘social’ cause [that] the Indian IT leaders should wake up to,” he wrote.
His posting attracted a stream of comments - some rather less measured, and more caustic, than others. On the whole, however, those who left comments appeared to agree with Vishal Gondal: there is still much work for such companies to do if they’re really going to reap the benefits of Web 2.0.
I broadly agree, but with certain caveats. First, I think it’s true of outsourcing companies everywhere in the world, not just India. Second, I think we need to recognise that the measures that Mr Gondal suggests for social networking success - a Facebook page, a Twitter account - don’t necessarily translate well to the world of IT services and outsourcing.
It’s a subject I thought I’d discuss with Raj Datta, chief knowledge officer at Indian IT and R&D services company MindTree. I first met Raj in London about three years ago and think he’s a great person to speak to about social networking. That’s because Raj’s work at MindTree is driven by the belief that humans are “wired to share” and because social networking takes centre stage in helping Mindtree’s workforce to share ideas and knowledge. In fact, the company has been using social software since 2003 and its overall philosophy has been “socio-technical” from the very beginning.
“I remember in 2006, I was chairing a panel at a conference in India, which featured Jimmy Wales of Wikipedia,” Raj recalls. “Following his presentation, I asked the audience a simple question: ‘Who here is working with wikis in the enterprise?’ Only about 5% of hands went up,” he says.
If he performed the same ad-hoc poll today, the story would be different, he believes. “The last two to three years has seen a tremendous hype around social software, social networks, Web 2.0 and Enterprise 2.0 as buzzwords, which has demanded attention from various departments.”
But have Indian companies been able to transform Web 2.0 hype into action, I wonder?
“Most Indian IT companies today are dabbling it. However, they are early in their discovery process and are grappling with typical issues, ranging from technology, to policy, to process,” Datta says. In general, he believes, companies are not easily making the shift to a more open, social, collaborative environment - but there is no way to avoid social software as it is fast becoming part of the “natural habitat” for many people who want to share ideas, whether they’re at home or at work.
Perhaps it’s just not realistic to judge a company’s enthusiasm for social networking by whether they’re experimenting with it publicly?
At MindTree, for example, internal corporate communications have provided an ideal platform for early experimentations with social networking. Instead of a one-way, ‘top-down’ approach - where the CEO or other top executive addresses the workforce in the same way that a general might dictate a battle plan to the troops - Web 2.0 creates conversations where communications can flow in multiple directions.
The systems and tools that Raj and his team have built have social features that also allow ‘bottom-up’ and ‘lateral’ communications, too, he says. “For example, our Neuron idea management system allows for ideas to percolate upwards in the organisation to the senior-most people, and in parallel, allow for peer-to-peer lateral communications where people can comment on an idea, rate it, build links between ideas and so on,” he says. But top-down communication still take place, because senior executives use the system to issue requests for ideas along a particular theme or to solve a specific challenge, he says. Now that’s really tapping into ‘the wisdom of the crowd’.
Social networking is also key to how MindTree communicates with its clients about the progress of projects. The company’s collaborative ProjectSpace portal allows for effective collaboration between project teams, clients and subject-matter experts so that they can track issues, build project-specific knowledge bases in wiki formats, and establish discussion forums for questions and clarifications.
Raj tells me that he and his team are now working on a next-generation system that will allow MindTree to tap into social networks outside of the company - but in a “planned and seamless” manner, of course.
So it seems to me that there’s probably a lot going on behind the scenes at outsourcing companies. Just because a provider doesn’t have a Facebook page or a Twitter account, that doesn’t mean it’s not interested in social networking or failing to explore Web 2.0 it in some part of their business.
IT companies - whether they’re in India or anywhere else in the world - are by their nature focussed on business-to-business (B2B) communications, not business-to-consumer (B2C). In other words, they’re not trying to sell a new chocolate bar, washing detergent or hatchback car to the general public.
For them, the true value of social networking lies in finding better ways to tackle client challenges and track project progress. These are the things that set them apart from their competitors. So internal social networking initiatives are the best way for outsourcing providers to experiment with new tools and approaches, long before they dip their toes into the dangerous waters of public forums.
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Cash windfalls for disgruntled IT services customers few and far between
Thursday, February 25, 2010
If you’ve got a question about outsourcing contract law, Mike Henley at PA Consulting is a good person to ask. Before joining PA’s sourcing practice seven months ago, he was a partner at commercial law firm Hammonds for over 20 years, most recently heading up its IT practice.
So when I got the chance to speak to Mike recently, I was interested to get his perspective on the recent BSkyB/EDS case, in which PA Consulting acted as an expert witness.
To quickly recap on this case, the court found that during the sales process, EDS “fraudulently misrepresented” the time it would take to design and build a customer relationship management (CRM) system for BSkyB. While EDS’s new parent company Hewlett-Packard intends to appeal, it has been ordered to pay BSkyB £200 million in interim damages. In total, BSkyB is claiming £700 million in damages from EDS. The original contract value? Around £48 million.
So what does this case say about how the law treats breach-of-contract in IT cases? In Mike’s opinion, the case creates nothing new in the way of legal precedent. While EDS built a clear liability cap of £30 million into the contract, this was deemed to be invalid, because EDS lied to get the contract.
Nor does he believe it will lead to more disgruntled customers of IT suppliers seeking legal redress, inspired by BSkyB’s claim for a sum twenty times greater than the original contract value. “Litigation was the answer for BSkyB in this case, but it won’t be the answer for many companies,” he says.
For a start, cases like these are lengthy, expensive and time-consuming to pursue. EDS pitched to BSkyB back in 2000. The CRM project was scheduled to finish in 2002. BSkyB sued EDS in 2004 and finally completed the project in-house in 2006. The trial began in 2007 and it took the judge a further 18 months to reach his judgement.
So is there anything that IT suppliers and their clients can learn from the case? The old rule - caveat emptor, or ‘let the buyer beware’ - still applies, Mike says.
“What we’re saying to our clients is that it’s a false economy to embark on one of these projects just because they really want to get started, without being totally sure what they want and communicating that clearly to the supplier,” he says. “If the specification isn’t stable, then sure as night follows day, the supplier will respond to their requests by telling them it’s not in the spec.”
That said, the ruling could drive large suppliers working on large deals to scrutinise more closely the governance they have in place around the sales process. At the same time, customers should be committed to performing more “hard-headed due diligence” when considering the pitches of prospective suppliers.
But what about the complaints, frequently raised by large IT suppliers and outsourcing companies, about the huge costs they devote to pitching for deals, many of which they won’t end up winning? Do these costs create an environment where there’s a temptation to cut corners or make careless promises?
“You’re right - it’s a very common refrain. I have some sympathy for suppliers in that respect, because procurement processes can be lengthy, labyrinthine and absorb a lot of resources, so the cost of making a sale can be very high,” he says. “But I don’t think for a minute that means that many suppliers are cutting corners to the extent of fraud.”
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Don’t pass the buck for IT security
Wednesday, February 17, 2010
It’s no secret that today’s cybercriminals are far more sophisticated than they were just a few years ago.
Instead of labouring away in loose affiliates of code-obsessed hackers, they’re key lynchpins in well-funded, highly organised crime gangs. They want to get their hands on your organsation’s customer data, not just deface its website. And their motivation? Well, it’s not just prestige and notoriety within the hacking fraternity that they’re after; it’s good, old-fashioned financial gain.
The name that Albert Gonzalez gave to his plan to steal data from the computers of major US retailers says it all: Operation Get Rich or Die Tryin’.
By the time the law finally caught up with Gonzalez, he and his co-conspirators had netted the details of some 170 million individual credit cards, lifting them off systems owned by a host of brand names well-known to US shoppers, including TJ Maxx, Barnes and Noble and OfficeMax.
So I was interested to see predictions from respected IT market research company Forrester Research last week that 2010 could be the year for IT security outsourcing.
But as the report, entitled Twelve Recommendations for your 2010 Information Security Strategy, points out, IT security is an area that few companies will be comfortable to outsource in its entirety. Instead, say Forrester analysts, they’ll be looking for a ‘co-sourcing’ approach.
There are clear reasons for that. “Some companies employ outsourcing vendors because they want to wipe their hands clean of regulatory compliance or hand over a messy environment in the hopes that the outsourcer will be able to fix it,” the report observes. “Those are obviously the wrong reasons to outsource.”
“First, even if you outsource security, you’re still accountable for the protection of that data,” it continues. “Second, if you have a messy environment, the outsourcer does not have any incentive to fix it—and the nightmare of managing that environment will be worse if a third party gets involved.”
And, when it comes to IT security, the price of failure is often too high a cost to pay. If my credit card details are stolen from a retailer’s servers, I’m going to blame the retailer, not its outsourcing partner. The brand damage will be theirs, whomsoever they choose to point the finger at. Organisations can’t pass the buck for IT security. Understanding and addressing any existing security issues is surely a pre-requisite for outsourcing IT.
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Is LATAM the place to be in 2010?
Monday, February 01, 2010
Hello and a belated Happy New Year. After a brief break from blogging, I’m back and ready to start posting again. So if there are stories, issues or trends you’d like to see covered here, please don’t hesitate to .(JavaScript must be enabled to view this email address) me.
One area I’ll be keeping a close eye on in 2010 is Latin America and the Caribbean. For a start, it’s a region that’s already benefiting from the willingness of US corporations to “nearshore” back-office operations.
And let’s not forget it’s census year in the US. According to a recent article in The Economist, America’s Hispanic population is this year expected to come in at almost 16% of the total, having overtaken the black population, likely to be put at around 2.5 percentage points less.
Spanish is already the second most-common language in the US and, according to 2007 figures from the US Census Bureau, Spanish is the primary language spoken at home by over 34 million Americans aged five or over. Increasingly, this audience has considerable consumer clout.
For many US companies, these demographic trends - along with the continued need for cost reduction - boost the attractions of Latin American business process outsourcing, and in particular, call centre operations.
There’s also been a flurry of mergers and acquisitions in the region, as this article from research company Zagada’s Nearshore Journal site outlines.
Last year’s bumper $6.4 billion acquisition of ACS by Xerox, for example, was preceded by ACS’s own takeovers of Argentina-based Grupo Multivoice in 2008 and e-Services group in Jamaica in 2009. These deals were not inconsequential buy-ups of tiny ‘boutique’ players, either: Multivoice had $40 million in revenue and 6,000 workers. The deal value was undisclosed. In the case of e-Services, the company had $65 million in annual revenues, 4,000 workers and was acquired for $85 million.
Three companies - Bancolombia’s Multienlace BPO subsidiary, Actionline Codoba of Argentina and a small Peruvian contact centre - all snapped up by a US-based private equity firm, Eton Park Capital Management.
Other notable targets in the region include Star Contact (Panama), bought by US-based NCO Group; Teledatos (Columbia), bought by French BPO company Teleperformance; and National Asset Recovery Services’ (NARS) centres in Panama and Jamaica, which were purchased by HIG Capital, another US-based private equity firm.
Meanwhile, homegrown Softtek of Mexico has expanded into other countries in the region in recent years, including Argentina and Paraguay, as well as elsewhere in the world. For example, in July 2009, the company opened a new global delivery centre in Wuxi, China.
As analyst Peter Ryan of Datamonitor recently commented. “Latin America will equally benefit from possible delivery engagements with companies based in Spain, Portugal and other parts of Western Europe that are interested in taking advantage of price point arbitrage, a large labor pool and ever-increasing language skills among university graduates.”
He adds that the increase in interest among Indian-based services organizations for possible roll-outs in Latin America has been strong over the past few years and is likely to grow as Indian labour becomes more expensive.
All of this points to a fast-growing and exciting market in 2010.
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