From Shadows to Limelight
For decades Colombia was synonymous with exports of a very unwelcome nature. Now, though, the country has big plans to establish itself as a truly compelling service-delivery location. We went to find out more…
It’s an understatement to say that recent decades haven’t been especially kind to Colombia. Good news stories – at least as far as the international press are concerned – have tended to be pretty thin on the ground compared with the welter of negative headlines coming out of the country. However, in the past few years, under the presidencies of Alvaro Uribe and his successor Juan Manuel Santos, a corner appears to have been turned, with increased success in countering the country’s insurgent groups mirrored in a significant upturn in the economy (Latin America’s fourth-largest). Once effectively a borderline failed state, Colombia is now making headway socio-economically while going all-out to convince international investors that the past is most definitely behind it – and although its social problems in particular remain pressing, the message appears to be getting through with increased vigour.
As a provider location of outsourced services Colombia has several significant advantages. With 45 million Spanish-speaking inhabitants (21 million of whom are in the labour force) able to draw on significant English-language capabilities, it can cater to the needs of much of the Americas (as well as Spain, the UK and other English-speaking locations); it enjoys time-zone parity with the USA’s Eastern Seaboard and its relatively central position with regards to the two American continents and the Caribbean gives it the potential – albeit thus far unexploited – to act as a regional transport and communications hub. It is also able to offer a compelling cost-proposition, with wages that are low by the standards of competing countries (its GDP per capita of $9,300 last year is competitive compared with other popular Latin American delivery locations such as Brazil and Costa Rica but real wages are considerably lower due to a severe disparity in income levels between top and bottom socio-economic echelons).
Moreover, Colombia’s increasingly liberal banking regime, the pro-business policies of the Uribe regime in particular (which also took large steps to counter a traditionally worryingly high budget deficit) and ongoing investment in its IT infrastructure have been rewarded by its nomination by the World Bank as Latin America’s most business-friendly country for 2010, and are sufficient “welcome” signs to have encouraged an influx of big-name players.
For example, in June this year HP announced that following a protracted region-wide assessment it was to set up an outsourcing hub in Medellin, the country’s second city and a major financial centre. Part of Medellin’s $30-million “Ruta N” project, the centre is forming strong links with the local business and academic community with an eye towards expanding HP’s footprint in the country in addition to the 1,000 IT and auxiliary jobs to result from the first stage of this initial investment.
“In Medellin, we have found the confidence, respect, passion for customers, teamwork, speed, achievements and contributions, a significant innovation and business in a holistic manner,” said HP VP Gerard Brossard.
HP’s arrival in Colombia adds to an impressive list of major organisations on both buy- and sell-side which have come into the country since the turn of the millennium. IBM, Citibank, SAP, Siemens, Motorola and many others have set up shop in Bogota, Medellin or another of Colombia’s urban centres. Global customer service provider Teleperformance acquired a local provider, Teledatos, at the beginning of this year to give it a ready-made extension to its existing American capabilities, while other big players including Genpact have expressed great interest in the area.
Much of the interest in Colombia has been either sparked or encouraged by a number of bodies – either state- or business-funded – who have been actively promoting the country as a viable outsourcing location. Significant efforts in this area have come from Proexport – the official body promoting Colombian exports – and ANDI, the National Association of Colombian Businesspeople, whose outreach work has included working with large organisations in established sourcing locations to learn from their experience.
“Last year,” enthuses Santiago Pinzon, the executive director of ANDI’s BPO/IT chamber, “we sent a delegation to NASSCOM which included the Minister of Foreign Trade and the head of ANDI. [Following this] we signed a Memorandum of Understanding with NASSCOM” which was, Pinzon explains, designed to strengthen the working relationship between the associations and facilitate best-practice exchange. “We’re also negotiating with BPA/P in the Philippines.”
“The BPO Chamber now represents companies with over 18,000 employees, with sales last year exceeding $250 million,” continues Pinzon – who was earlier this year appointed co-chair of the Latin American chapter of the International Association of Outsourcing Professionals (IAOP). “We are moving ahead very aggressively… We’re also working in-country to establish strategic partnerships with private university so they can establish within their syllabuses BPO courses, so people can start learning about BPO before they finish their schooling, so they’re already prepared when they go looking for work. We’re working to make sure there’s a good pipeline in terms of the talent-pool.”
“We need to move forward, to make sure people know we have a story to tell around BPO and IT – not just how we’re going to do it, but how we’re doing it – and changing the perception of Colombia internationally,” he concludes.
In truth, it may be that perception of Colombia which proves a bigger obstacle to the country’s grand plans than an actual deficiency in service capability. Regardless of the transformation which Colombia has undergone in recent years, and its aforementioned advantages over its regional competitors, serious social issues – most notably drug-related crime and the continued presence of the various battered, but not yet annihilated, paramilitary groups whose conflict with the government and with each other has done so much damage over the past decades. Selling the Colombian proposition to stake- and shareholders isn’t the simplest task – and even the presence of forerunners in the form of HP and other monoliths doesn’t make it an automatic “yes” from the board. Although, as noted, many big names have come into the country, it remains a trickle rather than a flood – despite extremely appetising incentives in the form of tax breaks and planning assistance.
However, this is where another element of the value of outsourcing plays into the country’s hands: global service providers offering services out of Colombia are absorbing that risk, in that buy-side companies looking for contact centre provision to the Americas can do so via a proxy in the form of their service provider. Little wonder then that the likes of ANDI and Proexport are so keen to trumpet their country’s capabilities to the major providers.
As Colombia continues to strengthen economically, however, it is hoped that such concerns will eventually become redundant. The government recently unveiled its new ‘Prosperity for All’ campaign, founded on the stated strategies of “good governance, environmental sustainability, international relevance and innovation”. This program, which will see a total investment of over $260 billion over the next decade, aims to yield GDP growth of 6.2 per cent by 2014 and a consolidation of Colombia’s unemployment rate below ten per cent. The “innovation” section of the plan promises to include ITES development at its very core, hoping to facilitate the kind of growth and knock-on benefits which have done so much for the economies of India and the Philippines in recent years.
Will it bear fruit? As with so many would-be emerging outsourcing powers, only time will tell if this will result in anything like the kind of benefits the Colombian authorities are hoping for. However, the important elements – state support and private-sector capability – are in place. At the very least, what was only a few years ago little more than a byword for corruption and fear is now stepping up to the outsourcing plate, and swinging…
“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams.”
– Gabriel García Márquez