Posted by Charles Green on January 17, 2013
While not the top priority, more than a quarter of respondents to Forrester’s Forrsights Services Survey, Q2 2012, stated they were looking to implement or expand their use of offshore resources. Motivation for new offshore geographies is driven by a range of factors, from seeking new sources of talent to risk mitigation, cost savings, innovation, and local market knowledge and access.
My recently published report analyzes the attractiveness of the three largest economies in Latin America as outsourcing locations: Brazil, Argentina, and Mexico. Latin America presents an attractive location, particularly for US and Canadian companies. However there is wide variation in the suitability between different countries. Some of the high-level findings of the research include:
Brazil has clear strengths with its size, scale, wealth of IT skills, and array of local service providers such as BRQ, Ci&T, and Stefanini. Most service providers are focused on the domestic market, however, and don’t have the same export focus as providers in other countries. In addition, overly complex legislative and bureaucratic hurdles, as well as, to some extent, language issues, continue to prevent it from reaching its potential. Ci&T however is one exception, providing a model for Agile development and entrepreneurship.
Mexico’s geographic proximity to the US, membership of NAFTA, a strong and improving economy, plus a greater export orientation among service providers makes it a prime nearshore location for US companies. Neoris and Softtek for instance are two providers offering strong choices in SAP services. Unfortunately though, corruption and violent crime continue to shape the country's image abroad.
Argentina is an interesting case — in the 1920s it was the seventh richest country in the world, but has witnessed a number of economic upheavals. There currently remains concern over the policies of the Argentine government as well as its economic stability. Globant though is one company that has received significant publicity, is growing rapidly, and offers innovative services to clients.
This analysis is the start of a series of reports looking into the suitability of leading offshore locations. I am currently taking a fresh look at Eastern Europe — this report can be expected in April. I look forward to any comments or feedback.