The long and narrow country of Chile in South America is looking at the global services industry as the next growth frontier for its economy. Both the government and the private sector want to accelerate the 5 percent odd annual growth rate the country has been enjoying for the past 25 years. Hence, targeting the $280 B services offshoring market looked like an attractive option.
Chile intensified its efforts in this direction only in the last four years and the progress has been noticeable. In 2008,the global services revenue was over $840 million and employed about 20,000 people, according to IDC. There are obvious advantages that the country enjoys, but there are limitations to growth as well. For one, Chile’s efforts in growing in the global services industry are met with competition from other countries such as Mexico, Argentina, and Brazil in its regional neighborhood. While its differentiators from these countries are unique, the limitations are unique too.
Currently, nearly a third of its services business is in the form of engineering services (primarily plant design), one-fifth is from horizontal BPO services, and one-sixth from IT outsourcing, according to IDC. The entities setting up facilities in Chile most often include: US and Indian service providers adding Chile as a global delivery destination, US corporations setting up captive/ shared services centers to service US or Latin America, and service providers looking at serving the larger Latin American market.
Some of the positive aspects of Chile are: average salary of $ 2500 (gross monthly) for an experienced knowledge worker which is attractive compared to Mexico, Argentina, and Brazil; entry-level salary of $1500; stable political and economic environment; favorable tax rates of 17% for corporate and up to 35 % for personal income tax; 2.5 % of the population conversant with English; favorable immigration policies that allow up to 30% of the workforce to be foreign origin; and free-trade agreements with 58 countries which include US, China and India.
Some of the softer aspects that work in the country’s favor include better quality of manpower, cultural factors that make Chile more European than the rest of Latin America, favorable climate and availability of various recreational avenues. Chile is becoming increasingly attractive for people from the US, Europe, and India.
The Chilean government has enacted policies that are encourage the setting up of new businesses. Specifically, it’s investment promotion agency, Invest Chile/ CORFO is active in the global services industry. Invest Chile manages a program of grants for investment projects related to high technology and international services sectors. To be eligible, projects must involve over US$500,000 of investment in time. (See Fig.1) Equally, private entities like Foro Innovacion are directing their efforts in spurring innovation and entrepreneurship in Chile.
With a total population of 16 million, the working population is about 6 million. This presents a limitation in pursuing large-scale services opportunities ( such as strategic outsourcing, call center, large IT development projects, etc.) which help in growing the size of the industry . Chile will have to be therefore content with high-end, non-transaction, and low footprint kind of work. There are various niches of this type and Chile will have to prioritize and pick the right services to focus on. Many of the companies operating out of Chile are already focused on such niches (see Fig. 2) but it is tempting to chase higher stakes in the volume segment. The country should realize that such strategies do not play well to its strengths.
List of Services Companies
|
Company
|
Services
|
Employees
|
Type of center
|
|
ABB
|
real-time monitoring, diagnostic services and technical assistance for equipment and other critical assets and processes in mining
|
10
|
Captive
|
|
ACCENTURE
|
consultancy, and outsourcing services
|
500
|
Service Providers
|
|
AIR FRANCE
|
Latinamerica reservation center
|
70
|
Captive
|
|
Airpac
|
Airpac LatinAmerica
|
45
|
|
|
Airsage
|
provider of location, movement and real-time traffic information based on cellular signalling data
|
16
|
Captive
|
|
ALTEC
|
Latinamerican technological center
|
589
|
Service Providers
|
|
ATENTO
|
call center
|
6,000
|
Service Providers
|
|
BBVA
|
IT center for Latinamerica
|
180
|
Captive
|
|
BHP Billiton
|
Financial Shared Service Center
|
76
|
Captive
|
|
CAPGEMINI
|
Shared Service Center
|
200
|
Service Providers
|
|
CellStar
|
Cell phone repair center
|
53
|
Captive
|
|
CITI (Chile Technology Services Center)
|
Chile development center and technological support
|
130
|
Captive
|
|
CSC
|
IT, BPO
|
186
|
Service Providers
|
|
DELTA Airlines
|
call center
|
200
|
Captive
|
|
Diagramma
|
research of probiotics and in the commercialization of its products for milk and other related industries.
|
|
Captive
|
|
EMERGIA
|
call center
|
900
|
Service Providers
|
|
EQUIFAX
|
finance analysis
|
30
|
Captive
|
|
EVALUESERVE
|
Latinamerican center, finance
|
170
|
Service Providers
|
|
EVERIS
|
Business and technology consultancy
|
700
|
Service Providers
|
|
Ewos
|
R & D Center
|
30
|
Captive
|
|
EXPERIAN
|
IT and software development
|
550
|
Service Providers
|
|
Fidelity
|
Credit card transaction processing
|
98
|
Service Providers
|
|
Freeport-McMoran Copper & Gold
|
Shared Service Center
|
80
|
Captive
|
|
GE (General Electric)
|
Confection of technical manuals for airplanes
|
70
|
Captive
|
|
Genshare
|
Software development and support
|
250
|
Service Providers
|
|
Goyaique
|
Semen center for livestock cloning
|
16
|
Captive
|
|
HyC TV
|
HyC Americas
|
22
|
|
|
Intersystems
|
Software development center for Latinamerica
|
5
|
|
|
Jigsaw Technologies
|
Integration and Solution Centre, Real time controller for mining processes
|
30
|
Service Providers
|
|
JP MORGAN
|
IT Service Center for Latin
|
100
|
Captive
|
|
KONECTA
|
call center
|
1,400
|
Service Providers
|
|
Monsanto
|
Greenhouse and score support for Arica
|
105 (projected)
|
Captive
|
|
MSD
|
Back-Office Operations Center
|
21
|
Captive
|
|
ORACLE
|
Global support center
|
300
|
Service Providers
|
|
ORION SYSTEMS
|
Development Center
|
75
|
Captive
|
|
Packard Bell
|
PC and notebook assembly plant
|
130
|
Captive
|
|
Pioneer
|
Arica agro research station
|
96 (projected)
|
Captive
|
|
POLARIS
|
TI / software, BPO and solutions Business Consulting
|
20
|
Service Providers
|
|
ReadSoft
|
Latin American Headquarters & IT Development Center
|
15
|
Service Providers
|
|
Rede Brasileira de Entretenimiento Digital (RAIN)
|
Distribution platform for a latinamerican digital cinema net
|
26
|
Service Providers
|
|
REUTERS
|
Center for In-Spanish News and Services
|
25
|
Service Providers
|
|
Ripley
|
call center for Peru and Chile. Billing management and marketing campaigns
|
1000
|
Captive
|
|
Sandvik
|
Operation and Service Center Latin America
|
100
|
Captive
|
|
SGS
|
Back-Office Operations Center
|
80
|
Captive
|
|
SHELL
|
call center
|
60
|
Captive
|
|
SITEL
|
call center
|
1,300
|
Service Providers
|
|
Sodexo
|
SAP Support
|
4
|
Captive
|
|
Software AG
|
Software Development Center
|
50
|
Service Providers
|
|
SOLUZIONA
|
Software Development Center
|
350
|
Service Providers
|
|
Syngenta
|
Technological platform. Development of transgenic and maize germplasm atributes
|
7 full time/ 60-70 part time (projected)
|
Captive
|
|
Synopsys
|
R&D Center for US market
|
100
|
Captive
|
|
TATA
|
IT and BPO Center for Latin America
|
1,500
|
Service Providers
|
|
TELEPERFORMANCE
|
call center
|
1,500
|
Service Providers
|
|
Tenbisur
|
Software Factory
|
15
|
|
|
Terraremote
|
Technological application center for airborne sensors
|
22
|
|
|
Transcom
|
call center
|
550
|
Service Providers
|
|
Unisono
|
call center
|
1000
|
Service Providers
|
|
UNISYS
|
Help desk for Latinamerica
|
200
|
Service Providers
|
|
YAHOO
|
Research center
|
10
|
Captive
|
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