I recall six years ago when Tata Consultancy Services was expanding from India to open Global Delivery Centers around the World. Latin America and China began almost at the same time. The latter was promising great opportunities, large amount of people, fantastic costs. Now fast forward to 2010. TCS has around 8500 people in Latin America, but only 1500 in China. It has gained new customers within Latin America and shows an accelerated growth rate as this region is being “discovered” by large US and European countries. So, how come you grow faster in a region with so many different countries, much less people and more distance to your main location? Investors know that the obvious is not always the best deal.
Welcome to cheap Latin America. Or should I say Right Latin America.
Do you need to lower your risks? Even with higher wages than India or China or some parts of Africa and Eastern Europe, incorporating Latin America in your portfolio will significantly lower your risks. If you are a US or European company, just imagine calling your vendor or team during regular hours. Imagine talking about cultural issues that are much similar. Think in flying over there in less than 5 hours average.
And what if you need to speed things up? Agile development is much easier to execute from similar time zones, as well as functional testing and descriptions. In general, Latin American people live in environments that are very similar to those of the US or Europe. Americans drink Corona. They fly Embraer´s jets. They give Colombian flowers. They drink Chilean wine. They travel to Uruguay. That means, Latin American people understand US business, culture and preferences. And in IT projects that means less conflicts, accurate functional aspects and better testing. Please also consider the ‘Follow The Sun’ approach in which projects move from Latin America to Europe to Asia in a round-the-clock, non-stop environment.
But is Latin America ready and available? Firstly, let’s think people. Yes, there are some issues (shortages, attrition, language abilities, strong local currencies) in some countries. But in exchange, most Latin America IT people have a lot of working experience as they are graduates from universities. That means they can and will provide precious feedback that will bring innovation to your processes, balancing the costs with better and faster outcomes. Also, we have welcoming governments. Almost all Latin American countries are luring IT companies (regional and global) to establish centers there. You will come upon Free Trade Zone regimes, investment promotion activities, tax vacations, research benefits and probably a special perk if you ask for it. You will also find improving abilities with regards to infrastructure (internet, airports, security, electricity).
So, if you combine lower risks, a better cultural fit and an appetite for investments, you will recognize a pattern for a BUY market. But move fast. More and more people are discovering Latin America’s hidden treasures.