More outsourcing jobs are now going to Latin America

More outsourcing jobs are now going to Latin America
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First Published: Sun, Jul 08 2007. 11 43 PM IST
Updated: Sun, Jul 08 2007. 11 43 PM IST
Cheap labour and a Spanish-speaking population are making Argentina and other Latin American countries rising stars among companies looking to save money by sending jobs overseas.
South America is an ideal base for services targeting the Latino population in the US, said Probir Ghosh, president of Denver-based Virtual Source Networking, a consulting company that helps firms outsource.
“Many countries such as Colombia, Venezuela... still depend mainly on language-related work," Ghosh said.
Colorado-based outsourcing provider TeleTech Holdings, which has worked for Latin American companies in Argentina, Brazil and elsewhere for at least a decade, has seen demand from US companies for services in those countries rise, said KC Higgins, a Teletech spokeswoman.
American companies, which rushed to India over the past 10 years, are looking elsewhere as wages have risen in that country, said Peter Ryan, senior analyst at market research company Datamonitor.
India and China still lead the pack as locations for offshore jobs, but other countries are emerging as alternatives. Health care and financial services are among the host of industries that are sending jobs to such far-flung locations as Brazil, Romania, Colombia, Ireland, Israel, Hungary, South Africa and Egypt.
The trend has roused the ire of the American labour movement. The Communications Workers of America estimates that American companies have sent more than 500,000 jobs to foreign countries since 2000.
Argentina has been aggressive in seeking trade agreements that have enhanced its ability to win work from American companies, said Marcus Courtney, president of WashTech CWA, the Communications Workers of America's organizing arm for tech workers.
Industry “wants to develop a global supply chain of labour; they are equating offshoring to an assembly line. More and more workers are competing for fewer and fewer jobs, and this drives down wages," Courtney said.
The collapse of the peso in 2002 sent Argentine wages plummeting below the level paid in India and helped to attract US business to the South American country.
TeleTech's Latin American revenue rose from $91.7 million (At current prices, Rs371.4 crore) in 2004 to $171.7 million in 2006. Much of the new work is in Argentina, Higgins said. “In 1997, 100% of the work we did in Argentina was for Argentine companies, and that is no longer the case. We started with one site; now we have three, and we continue to expand,” Higgins said.
TeleTech also is expanding into other emerging nations. The company recently opened its first Costa Rican “delivery centre,” where workers provide both front and back office functions, and expects to begin operating another in South Africa soon.
It isn't only the call centre and other customer-care jobs that TeleTech offers that are attracting companies overseas. Modern infrastructure and a plentiful supply of cheap, skilled Internet technology professionals have resulted in US firms sending information technology (IT) jobs offshore.
A recent study by The Brookings Institution found that demand for cheaper labour poses a threat to the IT job base in places like Boulder, Denver and Colorado Springs in Colorado. The report predicted that Boulder, with its highly concentrated technology sector, would lose 3.1-4% of its IT jobs by 2015. Denver and Colorado Springs, which also have large numbers of tech jobs, could lose 2.6-3% of those jobs, the study said.
The flow of IT jobs to other shores isn't bad news for America, says Mary Lacity, co-author of Global Information Technology Outsourcing: In Search of Business Advantage.
With baby boomers on the cusp of retirement and fewer students pursuing computer science and related subjects, there could be a shortage of American workers capable of doing the kinds of jobs that are going overseas, she said.
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First Published: Sun, Jul 08 2007. 11 43 PM IST
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