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According to a report from the Wall Street Journal, Indian outsourcers are expanding into the Latin American market, in search of market share in the nearshoring segment.
India has dominated the outsourcing scene for the last ten to twenty years, and the offshoring market may be saturated. This is particularly true in light of the global downturn in the economy where companies have reduced spending.
In an attempt to revive their outsourcing strategy, Indian outsourcers like Tech Mahindra and Satyam Computers are on the move to Latin America. This is partly because U.S. firms are more comfortable with nearshoring since they can keep an eye on their vendors.
The old strategy of outsourcing to top outsourcing countries is being replaced with more outsourcing opportunities in Europe and Latin America. Firms like Infosys have already set up centers in Europe, while Mahindra and Satyam are pursuing the nearshoring option.
One of the primary reasons for the popularity of outsourcing to Latin America is that it is a cheap alternative to outsourcing to India and the Philippines. Brazil is one of the top contenders for outsourcing bids in Latin America, while Mexico is an ideal location due to its proximity to the U.S.
The new strategy comes as U.S. firms are spending less on outsourcing and amid a slow recovery. Most outsourcing firms are now looking to Europe to replace their clients in the U.S. Analysts say that it will take some time before the global economy mends itself. Latin America, Eastern Europe, Vietnam, China is all players in the outsourcing landscape searching for their share of the lucrative outsourcing market.
The outsourcing industry was one of the few industries that maintained its growth during the recession and it is expected to grow in the next five to ten years as well.