• February 2013


    “Uruguay has a huge potential; it’s not about the cost’. Outsourcing.

    Strategy. They identify segments that must be “attacked” in order to boost the development of Global Export Services. They urge Uruguay to “sell itself” better and to compete globally.

    Some $ 115 billion were the turnover of the Business Process Outsourcing (BPO) global market in 2011, an outsourcing sub-sector. Only 8% of that market belongs to Latin America. But there’s a lot of potential that can be developed. This is how experts Martín Bouza and Manuel Ravago, linked to the prestigious firm Tholons, visualize it. Towards the end of last year they delivered a series of recommendations for developing this type of export services in the country to Uruguay XXI.

    Bouza, Uruguayan, and Ravago, from The Philippines, think that by 2020 Uruguay may employ some 20.000 people in BPO and KPO services (services that contribute in value and intellectual development), when nowadays it generates only about 10.000 jobs.

    According to the consultancy, the sub segments to be targeted would be contact centers, financial services, low and high value accounting services and other “niche” services, such as legal ones and those related to architecture and creativity, particularly audiovisual postproduction and graphic design.

    All these recommendations are part of an effort undertaken by Uruguay XXI in order to strengthen its investment attraction strategy, comments the Global Export Services Support Program general coordinator, Alejandro Ferrari. Uruguay XXI executes this program, which is financed by the Inter-American Development Bank (IDB) since March last year.

    “It’s about increasing the number of players and operations, and it is crucial for a country to stand out by the quality of its people and services,” indicates Ferrari.

    In order to promote the market, the program focuses on four components: international promotion (“Although Uruguay is relatively well positioned in some international indicators, there is still a lot to be improved,” Ferrari points out), skill generation support in Human Resources,review and improvement of the regulatory framework and coordination of logistics chains(the latter being defined together with INALOG).

    Firstly, the promotion aspect was considered and worked on, and consulting services were hired based on three broadly defined segments: Process-associated services and Professional Services (this is where Bouza and Ravago come in), Information Technology and Health and Pharmaceutics related.

    The goal was to obtain a good segmentation, identifying the evolution of international demand; knowing what is being bought and the potential in terms of offer.

    “We are generating these strategies so we can define the path to follow. Simultaneously in Uruguay XXI sector coordinators are being incorporated, to work on the execution of these strategies along with the staff, in investment attraction, export promotion and competitive intelligence. Participation is expected in international events -to obtain further knowledge on these sectors, to generate contacts and to promote the country- as well as in commercial missions. The importance of attracting potential investors was detected, as well their awareness of the country, since this will have a positive impact when it comes to taking decisions,” Ferrari pointed out.

    Global Competition

    Outsourcing gains importance when dealing with the concept of companies that must concentrate on the “core” of their business and outsource towards anywhere in the world that makes sense regarding costs and talents.These convoked experts assure that the question used to be who could make this process cheaper, whereas today it leans towards who can do it better.

    Bouza argues that, with the crisis present in developed countries, USA and Europe’s outsourcing tendency is strengthened.

    “This is an opportunity because they need to further reduce costs. There is also opportunity in the local market to develop outsourcing. Uruguayans tend to believe that they can do better by themselves; the local development engine is not working,” he explained. If local companies could understand that there are certain things that a third party can do better, we would have a more dynamic market, according to experts.

    Both Bouza and Ravago understand that Uruguay “has a huge potential because this is not solely about costs anymore, but about delivery and skills.” Experts agree that Uruguay should “sell itself better” and be further recognized as a destination for export services.

    Ravago pointed out that the problem is that nowadays, competition is global. “Competition is not regional, it is not between neighboring countries or countries of similar size; now it’s between every destination, be it large or small. Both big and little fish swim in the same tank,” he said.

    Ravago stressed the importance of the US Hispanic market for Uruguay –where there is less competition- and considered it the ultimate challenge for South American countries.

    The consultant gave the example of Philippine companies that sell their services to U.S. companies, but do not cover the Spanish work yet. He noted that, especially for BPO, they are looking towards South America and will probably be interested in buying or merging with their regional counterparts.

    What’s necessary?

    In order for this industry to develop, Bouza reiterated the need for a “local outsourcing mentality” along with the need of attracting more global companies because, in addition to employment, the bring their practices with them.

    “And this spills to the ecosystem. We’re talking about a progression industry, that learns and creates best practices; but we need to start in some way. The most disruptive means of doing this is by inviting foreign companies to invest in money, best practices and knowledge, allowing locals to capitalize this for export,” he noted. He also pointed out that this is a language-intensive industry, and therefore an “aggressive” training is key, especially in English.

    On his part, Ravago emphasized that the size of the country is not a relevant issue.

    “For small countries in South America, focus is the issue. You can’t offer services to everyone, everywhere. It is important to identify the specific sectors that are most valuable for the country. Even small destinations can be successful in the global market,” he commented when setting Managua and some localities in the Philippines as an example.

    The consultant explained that in order to make this work, there cannot be a gap between what companies need and what the academy offers. Bouza added that often, companies do not seek the knowledge that graduates offer but their tertiary formation, even if they have not culminated their careers.

    “Between all tertiary careers, skills that would be useful for this industry exist, as they are formed in the years prior to graduation. The number of people is greater than what can be promoted in the country today. We should show investors that although we do not have 300 lawyer graduates each year, we do have 3000 people per year that are capable of doing that job. That is an important difference when it comes to fighting against that small-country sensation,” he developed.

    Nevertheless, another aspect that Bouza finds relevant is that talent must continue to be cultivated because we are talking about an intensive industry and volumes of HR. On that point, he congratulated the work of Finishing Schools, which aim to close the gap between academy and industry (see box on previous page).

    Bouza also aimed to demystify this as a low-wage sector. “Industry has matured; what is currently offered to people is much more than what was previously believed,” he commented, noting more specialized services for which he assured there is talent enough in Uruguay.

    Finally, Ravago highlighted what a great opportunity the program run by Uruguay XXI is for Uruguay, as it is the first IDB loan in the region for this purpose. Being a pioneer, according to the consultant, can be very beneficial; so as to later export this know-how.