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Heavy Competition Drives Bilingual Offshore Market
New research reveals increased competition among Latin American nations looking to provide customer service for America's rapidly expanding Hispanic markets.
Posted Feb 28, 2008
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When it comes to handling the bilingual needs of America's Hispanic population, Mexico has typically been the destination of choice for outsourced contact center services. But the ever-expanding size and breadth of the Hispanic market has recently led to an increase in competition for those services among several other Latin American countries, according to a outsourcing analyst preparing to speak at the IP & Contact Forum International Congress on March 4 in Mexico City.

Peter Ryan, head of contact center outsourcing analysis at Datamonitor, says that Mexico's position as the preferred option for U.S. contact center outsourcing has been due in large part to proximity, price, and demand from the American market for Spanish-speaking services -- but the country cannot rest on its laurels. Heavy competition is coming from firms based in other Latin American countries rapidly gearing up to compete for American contracts. "There is such a demand to satisfy the U.S. Hispanic market right now in terms of customer care and sales and marketing functions," Ryan explains. "We're not just looking at Mexico anymore like [we were] five years ago. What about Chile, Argentina, Costa Rica, and Panama?"

The exploration of offshoring options in other Latin American countries doesn't reflect any particular dissatisfaction with Mexico, Ryan says, but rather a desire to diversify and to better distribute agents across multiple regions. "I think what's happening now is Latin America is really becoming part of an overall global strategy many companies have," he explains. "It's not uncommon to hear now how companies [are] performing customer-care strategy with an American firm with agent positions in Canada, Panama, Mexico, and other parts of Latin America." Diversifying contact center portfolios will also prevent Latin America from becoming "the next India," he adds. "I really don't think we'll see another phenomenon like [we did in] India 15 years ago in the contact center space."

As competition heats up between Latin American countries in the contact center services realm, many factors remain potential stumbling blocks, including scalability, rising agent costs, and infrastructure, Ryan says. In addition, service providers attempting to woo American companies to outsource operations to certain Latin American countries are battling misperceptions that those nations remain war-torn and unstable. "It's a huge problem from the standpoint of a lot of different locations," Ryan says. "Due to the fact that [Nicaragua] was under civil war for number of years, people are worried the infrastructure isn't up to scratch. Another location -- and it's so sad the perceptions that are out there -- is Colombia: There are so many advantageous reasons [that companies looking to outsource their contact centers] want to look at Colombia, but the first thing someone not familiar with the country thinks is drug cartels, rebels, public-security issues, and kidnappings of western business people."

All is not lost, though. Ryan says Colombian outsourcers in particular work very hard to attend conferences and impress potential clients with their sophistication, westernization, and English-speaking skills. "[Colombia] also promotes itself from a contact center perspective regarding the sophistication of [its] agents, technology deployments, and the infrastructure it has to work with," he adds. "So it's really a case of [the] private sector and [the] government working together to try and promote the location."

Ryan is hesitant to crown potential winners and losers in the battle for U.S. bilingual offshore contact center services supremacy, and he notes that, for now, Mexico will still be a location of choice. But other countries are gaining ground quickly, he says. "I think that Mexico is going to remain a mainstay of U.S. nearshore outsourcing from [the] standpoint of Spanish and bilingual work," he predicts. "What Mexico also has going for it is that it has a rapidly growing domestic sector as well -- not only serving Americans on the telephone but Mexicans as well. Argentina and Chile are certainly ones to watch; they have a good degree of scalability."

Some U.S.-based outsourcers are hoping to stake a claim to the Spanish-speaking market, as well -- with bilingual home-based agents. "Many of our retail and technology clients serve customers around the globe, as well as a growing international population within the U.S.," Jared Fletcher, a vice president at Arise Virtual Solutions, a provider of outsourced virtual call center service solutions, said in a recent statement. "We want to ensure we can provide the most flexible customer-care solutions based on growing client demand for these language skills. At the same time, there are hundreds of potential agents across the nation that could be paid a premium for a skill that comes naturally to them."

Ryan, on the other hand, says that while Latin America is shaping up to be a worthy competitor to Mexico, the American-based home-agent force isn't yet at the same level. "[Home agents are] going to be a huge, huge thing in next few years, but we have to realize that there are limitations to the home-agent sector right now," he explains. "It's still a niche business model and hasn't gained mass-market acceptability. [Even] over the long term, the volume of agents that's going to be required [by U.S. companies] I think will necessitate still looking offshore."

It's too soon to know for certain which single country, if any, will take the lead in this space, but Ryan says there is one definitive conclusion that can be drawn: "[Businesses] need to concentrate on providing a good bilingual solution set for companies. You can't just go along the way you were by having 95 percent English-speaking [contact center agents] and a few who speak some Spanish."

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