Get Insights from our experts delivered right to your inbox!
Subscribe to the Softtek Blog
As we’ve discussed, the question that Latin American governments need to answer is, ‘Why should I invest in your country….and not his country?’ That second part is important – Companies don’t just need to know why one country is beneficial; they want to know why it’s better than the others surrounding it. If you’re a national investment agency or vendor, unless you can give a convincing answer, chances are you won’t be attracting many large contracts.
We have also talked about why, due to competition for limited business and the lack of a single message, Latin American countries will find it impossible and even detrimental to market themselves under a ‘one size fits all’ Nearshore banner. That being said, a certain amount of Nearshore identity and unity is a good thing. Here’s my proposed alternative:
Regions within regions
In other words, regional branding on a smaller scale – between countries in a specific geographic region in Latin America, or countries with very similar characteristics or value propositions for US buyers.
For example Central America is quickly establishing itself as a call center destination of choice. Its untapped labor pools, close proximity to the US and relatively high English proficiency make it an attractive market for voice and customer service. Similarly, Southern Cone countries Argentina and Chile are trying to establish themselves as niche IT service centers (Chile with considerably more success). Brazil and Mexico have large IT workforces and can handle contracts that can be quickly scaled up (Mexico has the added NAFTA advantage). And how about an alliance of Caribbean countries?
I realize this may be an oversimplification, but to a certain extent these initiatives are already happening. In September of last year, Central American countries serious about outsourcing tentatively created a regional investment promotion cluster. They met in Managua and even established a charter – the ‘Managua Declaration’. The agreement promotes technical cooperation between the national investment promotion agencies, sharing of information, and cross-border collaboration on marketing campaigns and similar initiatives. The new organization is called the Network of Investment Promotion Agencies of Central America.
A similar alliance is also taking shape further south as Brazil, Argentina, Chile and Uruguay try to pool their resources and create an investment bloc. This group is focusing on sharing education and technical training, infrastructure, and presenting a unified front to buyers.
As the above articles say, “Imagine US buy-side clients being able to go to a single group to access valid information on country incentives, educations systems, and the myriad other qualifiers that go into pursuing a new sourcing opportunity.” – it would be a huge value add. And the pooled resources of these alliances would allow them to get in front a larger buying pool, which of course means a bigger payoff in terms of outsourcing contracts and job creation.
Now let’s not be naïve. As I said in previous posts, at a certain point the cooperation will break down, and competition even between these countries will replace it. But at a high level, these kinds of regional alliances are very valuable. As Eric Hochstein says in his article ‘LatAm Nations: Be Different to Be Heard’, “There are great differences amongst the countries of Latin America, and although there needs to be some macro positioning of Latin America against other offshoring options, only clear and meaningful micro positioning will help individual countries and outsourcers.”