I recently read an article called “LatAm Nations: Be Different to be Heard”. That titled grabbed me – mainly because we hear so much these days about how the Nearshore region needs to band together under a single image and marketing campaign to the rest of the world. That, proponents of this theory argue, will ensure a big enough presence in international sourcing to compete with powerhouses like India and China.
What they forget however, is that LatAm countries are already competing – and competing effectively.
Admittedly no one can match the numbers and scale of India or China, but the Nearshore now forms a core part of what sourcing advisors call a ‘diversified services portfolio’. Homegrown companies in Brazil, Mexico, Chile and Colombia are taking their services not just to the US, but also to buy-side clients in Europe. In terms of global outsourcing market share, no one is ever fully sure of the numbers – but the last I heard, Latin America was estimated to be at 8 or 9%. There’s a lot more ground that can be gained compared to India’s whopping 45-55%, and in recent years the Nearshore has been continually eating away at that.
But in spite of the growth of the region as a whole, this article by Eric Hochstein, Managing Director of Highstone Associates (an economic development consulting firm), makes it clear that LatAm nations would be best served by not clumping themselves together. Their individual and diversified strengths are what give them the advantage.
Why it wouldn’t work
To put it simply, the problem is this: There is no one message that encompasses all Latin American countries that the region can unite under. As Hoschtein says, “A region that includes Brazil and Barbados, and Colombia and Costa Rica, has a real marketing problem because no single compelling message extends across all constituent countries. The ‘we-can-be-whatever-you-need’ message doesn’t go over very well commercially.....and very few organizations and governments would be willing to throw money down the ‘everything and anything’ pit.”
Companies these days, especially in the IT industry but also increasingly in BPO, are looking for specialized and customized services that make their pain points go away, while targeting their strengths. A country like Brazil can handle large high value contracts with ease, because the workforce numbers are there. A country like Chile on the other hand, has nowhere near the same scale, but a very technically skilled labor pool – and so its businesses focus on niche IT and R&D services.
Clearly, it’s not smart for buyers to think of Latin America as one big country, or for Nearshore organizations to market themselves in that way. We continually hear analysts saying that Latin America needs a consistent message in order to survive. In my opinion, that’s only partly accurate. Advantages like proximity, time zone, cultural affinity – these are the only consistent messages possible, because they’re true for the region as a whole. And they are important to broadcast as differentiators from India and China. But beyond those basics, a single consistent message is very very hard to find.
In my next post we’ll discuss why Latin American competition means the Nearshore cannot be united in investment promotion.