Latin America To Challenge India’s Favored Outsourcing Destination Status

June 15, 2011

Although India and China have dominated the outsourcing landscape for some time, it looks like Latin America is about to take a huge leap forward, reports topix.com

Currently India leads the outsourcing market with s than 60 percent of the global outsourcing market share. China comes second with 27% percent while Latin America a ranks at 25%. Although India and China are favored offshoring destinations, often there are complaints of accents, which are an integral part of passing on information and addressing customer concerns.

Countries in Latin America include Mexico, Guatemala, Venezuela, Chile, Argentina and Brazil. Most Fortune 1000 companies do not normally outsource to Latin America, but they are considering the option in the near future. Some of the advantages of nearshoring to this region: Labor costs are inexpensive. Technology and infrastructure are rapidly growing in this part of the world and it is also making a larger contribution to the world economy. Familiarity with the English language is another plus. And business deals can be established with relative ease.

Latin America’s threat to China and India are real, say analysts. One of the biggest reasons why North American firms pick Latin America is its proximity to America. In addition, the free trade agreements such as the NAFTA trade agreement has added a new dimension to the outsourcing perspective in Latin America.

In fact, if forecasts for Latin American outsourcing become a reality, there could be significant improvement in the area’s infrastructure. More importantly, the trend can also be a way to reduce unemployment in these countries. The region is close to the U.S. time zone, most governments here are stable and there is a large pool of skilled labor.

Some discontentment with outsourcing giants in India have already emerged. With rising competition in the industry, efficiency has diminished while costs have soared, particularly in the wake of the recession. Some customers also complained of poor human resource and training issues. IT outsourcing no longer seems like a cutting edge solution in Bangalore, India, once a global hub for outsourcing.


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