Santiago, Chile, is an emerging nearshore outsourcing destination for the U.S-based companies. It is the financial center of the nation as well as for the Latin American region.

Financial Attractiveness: Santiago has a competitive business cost and wages compared to the U.S. Labor costs are similar to Brazil for both IT and BPO, though more expensive that Mexico for IT. Corporate tax rate of 17 percent is the lowest in the Latin American region. Excellent government incentives are provided equally to local and foreign firms, which are investing more than $1 million.

Service Maturity: The domestic vendor base is small and fragmented. There are more than 130 IT and BPO companies in the city, however amongst the local players, less than 15 percent have a headcount greater than 50 employees. Santiago’s IT & BPO exports in 2008 were $300 to 350 million.

Captive Companies: Some of the major captive that have set up their operations in the city include – Citigroup (160 people) for software development and IT services, JP Morgan (50) for IT services, DuPont for financial shared services, Equifax (20) for developing algorithms to analyze financial data on corporations and consumers for lending and borrowing activities, Oracle (100) and Yahoo for research & development. Other firms who have their captive center in the city include--Delta Airlines for call center services, BHP Billiton for back office financial services, Experian for customer support and software development, and Unisys (200) for help desk.

Services Providers: Recently Polaris set up its operations for financial services to serve Latin Amrerica; the Brazilian IT company, Politec for SAP solutions; Evalueserve has over 100 persons to provide market research, equity and IT analysis; TCS has over 1,000 employees for back office functions and software application development; Accenture (150) for IT consulting; Capgemini (200) for financial services.

Key services from the city include IT, systems integration, R&D, and financial services KPO.

Infrastructure: Santiago’s telecom infrastructure is the best in Latin America with high speed connectivity. The international airport at Santiago has good connectivity with major cities in the U.S. and Europe. However, there is shortage of Grade A office space in the city, with vacancy rate less than 2 percent. In order to solve this issue, the government is currently, constructing 360,000 sq.m of office A class which will be available in the market by 2010.

Also, there is shortage of power supply in Santiago, but the cost of electricity is the lowest compared to most cities in Latin America. The construction of Liquefied Natural Gas (LNG) terminal and hydroelectric dam projected to be complete by 2012 will improve the power situation in the city.

Business Environment: Chile has a wide business network of free trade agreements with countries in Asia, Latin America, the European Union and the United States which provides Santiago with a great opportunity as an outsourcing destination in the global market place. Santiago’s quality of life, lowest levels of corruption in Latin America and limited bureaucratic hurdles make the city attractive for investors to do business in. Santiago has been rated as the best place to do business in Latin America and on indices such as ease of doing business by the World Bank, levels match advanced economies such as the United States and countries in Western Europe.