While the term ‘outsourcing’ can mean different things to different people, it is generally not a friendly word in the eyes and ears of U.S. companies.
To most, outsourcing means the removal of jobs and business. But in 2010, one region began to emerge, gaining increased exposure in the U.S. and started to help redefine what U.S. companies thought about outsourcing: Latin America.
Rise of Latin America and its Redefinition of Outsourcing
The consequences of outsourcing jobs or the risk of sub-par quality have made American companies hesitant about engaging in business with traditional hubs like India and China, especially as it relates to IT functions. As a result, many U.S. companies have begun to leverage foreign supplier relationships, specifically found in Latin America, for business support and to build new markets.
Latin America is changing the typical mindset around outsourcing as it plans to return partnerships and superior quality back to U.S. soil. The region is climbing the ranks as a major IT player with thriving economies and industries in Chile, Brazil, and Argentina.
According to a study issued by the Brookings Institute and the London School of Economics late last year, Santiago ranked #5 in the world’s 10 best economic performing cities, behind Lima and in front of Shanghai. Additionally, Latin America is ripe for the picking for partner companies by American firms with its cultural similarities, time-zone compatibility and tech-savvy demographic.
The notion of outsourcing is no longer about the removal of jobs and business, it’s about forming a global partnership in order to maximise performance and costs for U.S. companies. Outsourcing is a race to the bottom for both quality and value but internationalization is about leveraging and offering companies’ top quality resources.
There are organisations in Latin America who bring those resources to the U.S. soil and allow a trade among technology companies and businesses, building long-lasting partnerships. This is a model the U.S. business community will see more of in this coming year.
In February of last year, one of Latin America’s most thriving nations, Chile, was hit with one of the most devastating earthquakes of our time. Not only an 8.8 on the Richter scale, but one that took hundreds of lives, positioning Chile as one of the most destroyed countries in the world at the time. Almost a year later, Chile has recovered and is using its $3.3 billion dollar and 500+ IT companies-strong IT industry to show the world, the U.S. in particular, that the country is a trembling force in the global technology space. In order to do this, Chile’s IT industry is taking a concerted, government-backed effort in 2011 to help redefine outsourcing and what it means for U.S. companies.
Chile: The Latin American Nation Advancing the Notion of Outsourcing
Chilean IT companies work with a large network of companies throughout Latin America; therefore, they are able to leverage this partnership to work faster, more efficiently, and scale up and down as necessary. Small businesses especially benefit from the Chilean IT network because, unlike the large outsourcing ‘factories’ (as some may call them) that other countries offer, Chile possesses a smaller, more focused industry that provides high-value service and a personal touch and interaction that small businesses need.
Some of the top technology industries in Chile that are forthcoming in the U.S. and will be important global resources for U.S. companies in 2011 include: security (managed security systems), mobile banking, green technology, data centre and control room architecture and web design. Take internet and mobile banking for instance, a trend that has peaked interest in the U.S. in recent years and is still growing, has been around for more than 20 years in Latin America with companies like Excelsys, founded in 1988.
You’ve Got a Partner, Not Outsourcing Vendor
The emergence of Latin America as a critical player in IT and business on a global level has truly redefined how we think about outsourcing – It’s not about having providers abroad support a certain IT function or service in a cost-effective way anymore, it’s about the globalization of resources. The integration of national economies into international economies holds unprecedented longevity for companies that can capitalise on this transition. The idiom, “two heads are better than one” will hold true as countries realise the limitless possibilities of a fully global marketplace.