BPO booming in Latin America and East Europe

The Times, June, 2007

It is often said that India is ‘overheating' and there are many locations around the world that will take on its mantle or, at least, happily take a share of its BPO success.

Whilst there are as many answers to which country or regions are best placed to be the proverbial ‘next India ' as there are BPO providers, a common theme emerging in the last couple of years has been South America .

For a BPO  provider such as PV Kannan, CEO of 24/7  Customer, South America makes perfect sense because the continent, to varying degrees across it many countries, has a wealth of young talent with the language skills needed in the United States and Europe. In fact, he has set up a facility in Guatemala because graduates are native Spanish speakers but have to pass an English exam before they are given their degree.

“It's estimated that something like one in five people in the USA speak Spanish as a first language,” he points out. “So that means  they share a language with most South Americans and many South Americans also speak English very well and so when someone from the United States gets them on the phone they just think they are speaking to someone in the United States with a Spanish accent.”

According to Kannan South America is set to prove a viable alternative for North American executives who want to outsource operations but do not want the hassle of flying to India . In a sense the region is to become America 's nearshoring centre, he maintains, with the added benefit of providing out of office hours voice and data services to Spain . Hence it will come as no surprise that Mexico is believed to hit 190,000 BPO jobs by the end of the year, up nearly four times in just five years.

Matthew Vallence Managing Director at Firstsource believes Buenos Aeries in Argentina is set to be an important hub, not just for Spanish services but also because it has a huge Italian population and a sizeable Japanese ex-pat community.

“It has sizeable communities from around the world to provide global services and also has the potential for taking  spanish evening calls,” says Vallence. “You generally find that call centres have  evening spikes in calls when people get home from work or school and these could obviously be passed on to Argentina when a Spanish centre is shut or has calls waiting.”

East Europe

Whilst South America is attracting a lot of attention for its proximity to North America, the same is happening in Europe , with East European countries providing a huge, cost-effective talent pool for West European brands. It is  c certainly a region that Michael Barrett, a senior lecturer at the Judge Business  school, University of Cambridge believes is going to prove hugely popular for nearshoring contracts.

“The latest figures from researchers at McKinsey show 40,000 new BPO jobs were created in East Europe last year alone,” he enthuses.

“The region produces so many top engineers and telecoms experts that we're finding that whilst some companies start out with a little outsourcing in the area, they're now starting to move in to co-development.

“A huge motivator is that a lot of clients are being put off the extensive travel and time commitments of  outsourcing in India and prefer to have a location that may not be as cost- effective up front but is on a similar time zone and is far more accessible.”

Commonwealth strong

Nonetheless, despite there being constant questioning of whether India is ‘overheating' Bill Payne, Vice President of Strategy and Development of IBM's managed Business Process Services division believes there is still much scope for expansion in India .

“Business processes are being outsourced all around the world and it's very exciting but you only have to go to India to realise it has the   capacity to expand further,” he says. “Sure, there may be some overheating in some of the big cities but you only have to look to the huge number of second and third tier cities that this can spread out in to and you can see how wage  inflation and rising costs in one city can be countered by a new up and coming city nearby.”

Payne reveals he often tells clients and interested parties at   conferences he believes there is an argument that the UK is best off looking to do business in and through its former empire, rather than the EU, and is often given “some very strange looks”. However he maintains that the country's former colonies obviously have very good English skills and highly educated populations which make them attractive to business. This is not just true of India and Canada , he suggests, but also the “million dollar question” of whether African countries can “do an India ”.

“The work will go where the skills are,” he suggests. “So it's a really intriguing question to look at various African countries and see where they'll be in 20 years. If they can be stable and provide the necessary skilled work force then they could be significant players. South Africa is well poised now, it just needs to produce more top calibre people from its universities, it needs to scale up. If it can, it will definitely be one to watch in a few years time.”