Former Colombia President: Why Latin American Outsourcing Is Limited
Source: The Outsource Blog View: 503 Date: 2012-04-23

IT outsourcing is growing in Colombia, but the country’s schools don’t produce enough tech-savvy students to fill the jobs, said the nation’s former president Álvaro Uribe, at a New York conference on outsourcing in Latin America.

In Uribe’s home city of Medellin, once best-known for drug-lord Pablo Escobar, Hewlett Packard has opened an outsourcing center, which will handle back office work from Latin American and American businesses. “They need 1000 engineers…But our schools in the city can only train 400 per year,” said Uribe. “We need to advance–this is not a paradise.”

Uribe’s comments at the Nearshore Nexus conference Thursday come as multinationals are beginning to outsource jobs like IT support and sales processing to Latin America. The growth in the region’s outsourcing services are both from Western-based companies that want to deal with vendors in the same time zone, and multinationals with Latin American branches that need Spanish-speaking support. And big strides over the last decade in both safety and rule-of-law in some nations, like Colombia, have made the region a stronger draw. “We have improved security and we have created institutions so you don’t need to have friends in the government,” he said.

But Uribe says a legacy of political instability–and perceptions of criminality in some countries, like Venezuela–are still stunting the region’s development.

Across Latin America, outsourcing is expected to rise to more than $35 billion by 2014, from around $22 billion in 2009, according to HfS Research, a sourcing research firm.

“I would say it’s growing, but it’s not exploding. When you talk to an IT guy about Medellin, “he still thinks of drug lords,” said KPMG director Stan Lepeak, who helps companies set up outsourcing operations.

As Lepeak spoke, he glanced down at a sponsorship logo on the conference badge he wore round his neck. The sponsor, Softtek, provides outsourced services around Latin America, including several offices in Mexico, a country still in the grip of a brutal drug war. “They are in Monterrey. People are getting hung from bridges there.”

“We haven’t seen issues with our clients. The problems in Mexico are isolated. They’re something we are dealing with in Mexico, like a lot of companies are struggling with. But there is a contrast between perception in the U.S. and the reality there,” said Karen Schupp, a spokeswoman for Softtek.

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