Central America – The latest entrant to the Global Sourcing bandwagon

Latin America has figured prominently in the global sourcing radar in recent years. Cities in Mexico, Brazil, Chile, and Argentina have seen a large number of offshore centers being set up, which serve customers in high-cost locations like the United States or serve to consolidate pan-Latin American operations. Yet, with the single exception of Costa Rica, countries in Central America (Guatemala, Costa Rica, Honduras, Belize, Nicaragua, El Salvador, and Panama) have remained largely untapped from an offshoring perspective.

In recent years, the region has started witnessing a lot of interest from an offshoring perspective. For example, Dell, Sykes, and Teleperformance in El Salvador; Sitel in Nicaragua; HP and Caterpillar in Panama; and ExxonMobil, Capgemini, and 24/7 Customer in Guatemala. In Q3 2008 alone, multiple global companies announced their intent to service global customers from Central America, including Genpact (Guatemala), eTelecare (Nicaragua), and Amazon (Costa Rica).

Exhibit: Central American countries such as Guatemala and El Salvador are aiming to improve their nearshore and offshore competitiveness

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Key location developments

Market activity

• Asian countries continue to experience significant offshoring activity
• Singapore was selected as a regional operations hub by Applied Materials, Numonyx, and Avaya
• Accenture opened its 13^th delivery center in India, taking its India headcount to more than 35,000 employees across six cities
• Ericsson launched a HR and Finance & Accounting Shared Services facility in Taguig, Philippines, while Citibank plans to expand existing facilities in the country
• Central America and the Caribbean have generated much interest from an offshoring perspective
• Genpact has acquired GE Money’s BPO delivery center in Guatemala and will provide services to GE Money from the center
• ACS has expanded its presence in Jamaica with the opening of a new contact center in Montego Bay, Jamaica, employing about 200 people
• Eastern Europe also witnessed moderate offshore activity in recent months
• Franklin Templeton has announced the opening of a new service center in Poznan, Poland

Location promotion initiatives

Countries continue to refine their investment strategy to attract investors and address the challenges of the growing IT/BPO industry

• CORFO, the investment promotion agency of Chile, has initiated training programs and a national register to provide local talent to foreign companies
• The National Register for English speakers now has 37,000 people registered nationwide
• During 2008, CORFO will sponsor ~1,000 IT engineers to improve English capabilities
• Several partnerships were forged between suppliers and universities for skill development in India
• Infosys and Wipro have started initiatives to train faculty in engineering colleges across India

Global Sourcing Market Vista provides a comprehensive, quarterly analysis of outsourcing and offshoring trends including key location developments. For more details on Market Vista, click here.

Overview of Location Optimization

Everest Research Institute provides actionable insight and visionary research on a wide range of offshoring issues through its Location Optimization practice (LO). Our Location Optimization research covers multiple regions and issues relating to offshoring locations, with a focus on helping companies assess the trade-offs of choosing between alternative locations. Our Location Optimization team combines deep subject matter expertise with broad analytical skills and insight into the global sourcing market, all of which are based on years of experience working in the offshoring industry.

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