Tuesday, July 27, 2010

Exports of Services: Can Argentina win the World Cup?

Memorize the little word because you will hear often. In English it says Business Process Outsourcing (BPO, by its acronym), and plain and pragmatic world of business is known as exports of business services, an "intangible industry that began to take off five years ago, and Argentina to invoice over U.S. $ 3,000 million annually.

These figures are difficult to estimate, agree to market sources, because the phenomenon is so new that not even he was put under the microscope of the experts. However, know that everything is the result of the phenomenal advance of telecommunications and informatics, allowing delegate many tasks (attention to consumers, financial management, personnel recruitment and maintenance of networks, among other things) in call centers, consulting and companies located thousands of miles away from those who hire them.

In that provide such services, Argentina competing in a league that moves, according to Gartner, more than U.S. $ 170,000 million in the world and involving China, India and several countries in Eastern and Central Europe East. Common sense would indicate that competition with these giants is hopeless. Assembled by iEco, senior executives of Accenture and PricewaterhouseCoopers, Teleperformance, Teletech, Globant and Hewlett-Packard, all leading companies in different niches in the export of business processes, agreed that the battle has just begun and that the country has a chance of break into the big leagues.

- They say that the BPO is a strategically important area for the country. Why?

* Jorge Bacher (Price): The first is the devaluation. Another is the issue of good communications and technological infrastructure: it was shown that Argentina could communicate with the world. The third leg is the quality of services: human resources are viewed with a good level in terms of comparison with other places. And there's a cost issue.

* Augustine Urtubey (HP): There are two factors that affect: a proactive and a reactive issue. The proactive is to provide the best conditions in human resources, time zones convenient, legal stability, good incentives, which define where companies want to bet. But the subject is reactive, ie, global companies that say we have to be where our customers are bound by signed contracts also globally.

* Agustin Grisanti (Teleperformance): I agree with that starts with a cost issue, at least for our industry (call centers). In 2005, 2006, spoke almost no other country than Argentina for off shore in Spanish, and what we observe in recent years is the emergence of strong competition from countries like Chile, Colombia and Peru.

* Daniel Hills (Accenture): We have a great tradition of exporting services, although the business will be called otherwise. But the devaluation was a door opening.

* Martin Migoya (Globant): Our company started to export and today 80% of our production goes to U.S. What we saw was the great need for a fresh contribution to an industry led by companies in India. Argentina has advantages: the cultural feed of our engineers, who know perfectly with the engineers there. Another element is the talent pool, which is almost intact throughout the region, and has a million workers technological potential.

- It is inevitable comparison with India, but that model is very challenged by the high absorption of human resources for its production of low added value.

* Hills: Imitate any low-cost model is not going to lead anywhere, is not sustainable over time because we have the massive human resource. We compete with very large economies such as China or India. We must look for quality niche where we can compete with the U.S. and Europe.

* Grisanti: In India, the English voice services have not been successful, and have migrated to the Philippines and other countries with less volume.

- Why not?

* Grisanti: It is partly a cultural issue, there was lack of affinity between companies and customers. As for costs, Argentina has to focus on higher value-added services, special niches.

* Bacher: India is a reality, Argentina is another. One is massive, the other is more boutique, more sophisticated, quality. But we must distinguish that there is a huge variety of services: architecture, engineering, medicine, finance, accounting, technology, that is what we call "Argentina boutique" are different types of business, the future is a strategic component to our economy.

* Martin Sucari (Teletech): In our case, besides the call center software developed, and the wide variety of services offered is quite enough. The problem is that many countries, especially with the latest crisis, have seen that these businesses are a great opportunity to generate jobs and have come up with proposals of very aggressive incentives. And Argentina, with the loss of competitiveness due to inflation, wage increases and the dollar still presents companies the question of `why I'm going to Argentina when I can do elsewhere." Until last year, we were defending the new business did not go to other countries, today just trying to retain what we have.

- I agree that call centers are living a particular reality with the rest of the business.

* Sucari: Software development, technology development and shared services are looking for that added value that I highlighted. It is true that the call center is a bit more exposed.

* Hills: Obviously there are a lot of technology to put up and plenty to do, but the call center seems to be a little more commodity than the rest.

* Migoya: I would say that competitiveness does not exist 2001 years ago, it was not over, yet the software industry continues to grow, then you have to think if everything was based solely on a cost issue. If you're now less expensive than India, or China, or even some places in the U.S., that means that growth is based on the added value of our offer.

* Urtubey: So here we are talking only about technology but a business exporting services is much broader: call center, back office, human resources, the development and maintenance of applications, and everything that has to do with IT (Information Technology). Then, the answers vary depending on who you ask. What is clear is that the market is huge, is growing and giving for all.

* Migoya: Just what is off shore of information technology moves U.S. $ 87,000 million and grew by 40% each year.

* Urtubey: And that's just the technology. Then there is what was said recently: architecture, medicine, finance, etc.. Because outsourcing allows companies to focus on their core business and delegate the rest. For a company to take stock, it does not matter who is an Indian, an Argentinian or Uruguayan, so for such services, they are looking for the least cost.

- What are the main competitors for Argentina? And what are our strengths?

* Urtubey: Each country has advantages in a different service. Of Argentina, the main one is European descent, because we are very capable people, with access to Spanish and several languages, including English, Italian, Portuguese, French. It is here, go find a person in Costa Rica to speak in French.

* Migoya: Latin America does not compete with us, the real competition is with China and India, and the big difference we have is creativity and innovation is in these areas where we can win, because we will never be able volume. It can be a big market, but this has to be niche, has to be focused on creativity. There goes the fight to win over customers.

* Sucari: When a customer has defined the problem, going to other countries. When you do not know, come to Argentina, because he knows that here it will resolve quickly, good and cheap. For call centers, the difficulties are others, because ours is a commodity, is another business scheme and have appeared many Latin American countries are raw competition.

- The main prize is Spain and the U.S.?

* Sucari: Basically, the bulk of the volume is there.

* Grisanti: In the call center industry also have value-added niches, but in the large volume we have very strong competition. For firms to hire the service is justified in Argentina pay 20 or 25% more, today we are 50% more expensive than the other countries competing with us.

- Why Argentines are costs so high?

* Grisanti: 80% of the costs of our operations is labor, and wage increases of between 30 and 40% per annum as agreed in the joint is difficult. In addition, the exchange rate does not follow, and on top is the fall of the euro, which has much more impact and pushing the costs.

* Hills: Go back to the top, look for the niches where the quality, the question is where are the points where we can provide differential advantages.

- And what are the points differential?

* Hills: Innovation, schedules, critical services, ie services that have to be available without interruption and have to be quality.

- Human resources are adequate taking into account the potential there for growth?

* Bacher: If we agree that this is strategic, we should see how to harness it. And there you have to see the level of education, career development and service-oriented universities. And the reality is that more is needed.

* Migoya: Human resources are inadequate, it is true, but in the last three years, the people who work in technology doubled by two. Still, the first thing you should do is to convince kids to study hard sciences, and should begin before the races, from the secondary. It is also necessary to create intermediate races.

- You praise the quality of university education and on the other hand, criticize the length of the races. Is not that a contradiction?

* Bacher: There is a critical, and there are several short courses. Is that the system is evolving and going to there.

* Sucari: In Colombia and Mexico already are racing-oriented call centers. The educational level is excellent, but the perfect is the enemy of the good.

* Hills: Do not forget that this is an industry, not the country. The excellence of human resources is one of the key points, while we can build trust, at a reasonable cost, this will keep growing.

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