Sunday, July 31, 2005

Latin America: The Next India?

Forget about India.

The next outsourcing hub of the world may be Latin America, according to this month's Business 2.0

The phenomenon even has a catchy moniker -- "nearsourcing."

Nearsourcing -- or nearshore outsourcing -- refers to business activities that are relocated to cheaper, yet geographically close, locations.

Dell, one of the first companies to bring outsourcing to the mainstream after they sent all technical-related calls to Bangalore, is already sinking its teeth into Latin America's potential.

Citibank does its back office work in Brazil.

The number of call-center workstations in Latin America is growing at an alarming rate.

Business-friendly policies are the main reason these Fortune 500 companies are looking South instead of East.

As expected, the cost of labor down there is exponentially less than what it costs here.

Retirement benefits are getting easier to set up vis-a-vis a given country's social security system.

And public policy is playing a substantial role.

The fact that Costa Rica can accept North American business standards and subsequently masticate the sweet fruit of a stronger economy reifies a key economic principle -- if previously uncapitalistic polities change their tune, both sides win.

They get jobs; Americans reap the lower costs of everything from PC desktops to X-rays to tax preparations.

That's because at its core, outsourcing is about delegating services and product manufacturing processes to countries with comparative advantages.

Outsourcing is ultimately a story about mutual gain.

I'll recite the old song once more: for every US dollar outsourced, about $1.12 makes its way back to us.

And Latin America is cognizant of this.

They're doing the globalization shuffle for one simple reason -- they know that if they choose otherwise, they won't get crushed.

Worse, they'll be ignored.

While our friends to the South are not as rich in IT as India's workforce, a growing amount of foreign direct investment into Latin America will gradually begin to augment the latter's educational system, I think.

Just give the whole thing some time to pan out.

About Us | In the News | Management | Contact Us | Archive | Premium Membership | Terms of Use | Privacy Policy | Careers | FAQ

All quotes are 15 minutes delayed. Copyright © 2006 by Catablast! Media Group LLC, part of the SeekingAlpha network. Web Design by Synexio Systems. All Rights Reserved.