Latin America

Latin America is third most popular destination

Capgemini – provider of consulting, technology and outsourcing services – announced the results of the second annual Capgemini Executive Outsourcing Survey, which found that Latin America is the third most popular outsourcing destination, with 25% of responding companies currently outsourcing to this region.

While still perceived by many respondents to be an “emerging” outsourcing destination, this survey revealed that Latin America is not far behind legacy outsourcing destination China, which is ranked second at 27%, while India leads with 60% of companies outsourcing to this country.

The survey, commissioned by Capgemini and conducted online by Harris Interactive, among 300 senior executives at Fortune 1000 companies also identified the top reasons for executives to select Latin America as part of their outsourcing strategy. More than two-thirds (69%) of surveyed executives cited cost of labour as the top reason why their company might outsource to Latin America, while other attributes reported included technology and infrastructure capabilities (49%), skilled labour (48%), and economic stability (44%). These attributes are aligned with the key reasons why companies choose to outsource in general suggesting that outsourcing to Latin America will continue to expand.

Other reasons cited as important for selecting Latin America for outsourcing include its proximity to the US, time zone alignment and accent neutrality. These attributes are all unique to this region when compared to other outsourcing locations such as China and India.

The Executive Outsourcing Survey findings also revealed that almost half (45%) of executives who do not currently outsource to Latin America say their company would be interested in considering the region as a resource for outsourcing in the future.

In addition to uncovering Latin America as a leading outsourcing destination, the survey highlighted the region’s increasing value to the global economy. An overwhelming majority of executives (89%) believe that Latin America is an emerging market that will become increasingly important to US businesses, and that there are advantages to doing business in Latin America (83%). Further, more than half (56%) of executives believe doing business in Latin America is becoming easier than doing business in other parts of the world.

Other survey highlights include:

•  The top five factors listed by executives in choosing an outsourcing destination are labour costs (79%), technology & infrastructure capabilities (62%), skilled labor (61%), language proficiency (49%) and economic stability (44%);

•  Less important factors listed by executives in choosing an outsourcing location are tax benefits (26%) and proximity to the US (3%);

•  Forty-one percent of executives outsourcing to Latin America cited language proficiency as a key reason;

•  Forty percent of executives cited the average education of the Latin American workforce as a key factor in their decision to outsource in Latin America.