Latin America Gains Outsourcing Ground

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Latin America Raises Outsourcing Profile

A survey by the IT services firm Capgemini finds that Latin America is gaining ground.

While it may come as little to no surprise that India, followed by China, is a primary outsourcing destination for many Fortune 1000 companies, what may be a surprise is how strong Latin America is becoming. A new survey of 300 Fortune 1000 executives conducted by the IT services firm Capgemini finds that Latin America is running neck and neck with China as a place to which corporations are willing to outsource operations.


According to Steve Rudderham, Capgemini Vice President and Senior Delivery Executive for major accounts in Latin and North America, Latin American countries have made significant strides in recent years in creating a skilled workforce and modernizing their IT infrastructure. And as the cost of skilled talent continues to rise in India and China, Latin America can now compete more favorably.


Interest in Latin America, Rudderham says, appears to have little to do with proximity to the U.S., even though a flight there only takes a few hours from most major U.S. cities. Instead, Latin American counties find themselves able to compete favorably against India, China, Russia and the Ukraine in outsourcing. How long that will continue is anybody's guess. For example, China is in the process of training 300 million people to speak English, many of whom will wind up competing for jobs in what is now a global economy. Rudderham says he recommends that executives take some time to embed themselves in the local culture of any country before deciding to outsource operations there. He says many executives will be surprised by the general level of sophistication in most of the major metropolitan areas in Latin America.


There's a lot of angst over the amount of outsourcing that takes place in India. But India is facing increased completion from around the globe, so the day may not be far off when jobs that were formerly in the U.S. wind up in places like San Jose, Costa Rica, alongside jobs that were formerly in Bangalore.


In the meantime, Rudderham says executives should be open and honest about outsourcing initiatives. Employees might not like what is happening to their current job, but Rudderham says they tend to be more supportive of the company's business goals when they are officially informed versus hearing it at the water cooler.