Thread: South America speaking the language of outsourcing

South America speaking the language of outsourcing

U.S. companies looking to cut costs and to attract Latino customers are drawn to cheap labor and Spanish speakers

By Tom McGhee Denver Post Staff Writer

Article Last Updated: 07/07/2007 04:21:01 PM MDT


Cheap labor and a Spanish-speaking population are making Argentina and other Latin American countries rising stars among companies looking to save money by sending jobs overseas.

South America is an ideal base for services targeting the Latino population in the U.S., said Probir Ghosh, president of Denver-based Virtual Source Networking, a consulting company that helps companies outsource.

"Many countries like Colombia, Venezuela ... still depend mainly on language-related work. A good amount of business that goes to South America would have a direct or indirect connection to language," Ghosh said.

Douglas County-based outsourcing provider TeleTech Holdings, which has worked for Latin American companies in Argentina, Brazil and elsewhere for at least a decade, has seen demand from U.S. companies for services in those countries rise, said KC Higgins, a Teletech spokeswoman.

American companies, which rushed to India - a 600-pound gorilla among offshoring destinations - over the past 10 years, are looking elsewhere as wages have risen in that country, said Peter Ryan, senior analyst at market research company Datamonitor.

India and China still lead the pack as locations for offshore jobs, but other countries are emerging as alternatives. Health care and financial services are among a host of industries that are sending jobs to such far-flung locations as Brazil, Romania, Colombia, Ireland, Israel, Hungary, South Africa and Egypt.

U.S. unions cite job losses

The trend has roused the ire of the American labor movement. The Communications Workers of America, which has targeted the technology sector for organizing, estimates that American companies have sent offshore more than 500,000 jobs since 2000.

Argentina has been aggressive in seeking trade agreements that have enhanced its ability to win work from American companies, said Marcus Courtney, president of WashTech CWA, the Communications Workers of America's organizing arm for tech workers.

Industry "wants to develop a global supply chain of labor; they are equating offshoring to an assembly line. More and more workers are competing for fewer and fewer jobs, and this drives down wages," Courtney said.

The collapse of the peso in 2002 sent Argentine wages plummeting below the level paid in India and helped to attract U.S. business to the South American country.

TeleTech's Latin American revenue rose from $91.7 million in 2004 to $171.7 million in 2006. Much of the new work is in Argentina, Higgins said.

"In 1997, 100 percent of the work we did in Argentina was for Argentine companies, and that is no longer the case. We started with one site; now we have three, and we continue to expand," Higgins said.

Global expansion plans

TeleTech also is expanding into other emerging nations. The company recently opened its first Costa Rican "delivery center," where workers provide both front- and back-office functions, and expects to begin operating another in South Africa soon.

TeleTech has seen steady growth in India but nowhere near the expansion of its Latin American market.

It isn't only the call center and other customer-care jobs that TeleTech offers that are luring companies overseas. Modern infrastructure and a plentiful supply of cheap, skilled Internet technology professionals have resulted in U.S. firms sending information technology jobs offshore.

A recent study by The Brookings Institution found that demand for cheaper labor poses a threat to the information technology job base in places like Boulder, Denver and Colorado Springs.

The report predicted that Boulder, with its highly concentrated technology sector, would lose between 3.1 percent and 4 percent of its information technology jobs by 2015. Denver and Colorado Springs, which also have large numbers of tech jobs, could lose from 2.6 percent to 3 percent of those jobs, the study said.

Another point of view

The flow of information technology jobs to other shores isn't bad news for America, Mary Lacity, co-author of "Global Information Technology Outsourcing: In Search of Business Advantage," said of the job flight.

With baby boomers on the cusp of retirement and fewer students pursuing computer science and related subjects, there could be a shortage of American workers capable of doing the kinds of jobs that are going overseas, she said.

And more jobs will be created than lost as American industry concentrates on higher-value work.

But many companies that consider offshoring a way to cut costs do so without having a workable plan, said outsourcing consultant Ghosh. In some cases, they run into serious quality issues that can undermine the health of the company, he said.

"A lot of companies will outsource because they think that is the new wave. That doesn't really work; you need a strategy."

Ghosh sometimes tells companies that have outsourced only to find it isn't saving them money to stop and take a closer look at their business. "They have to understand the company's core strategy. If it is something they want to outsource, then we recommend which areas to look at."

An overseas operation isn't always the best strategy, he said.

Denver-based Qwest Communications International maintains all of its English-speaking call centers within its 14-state service region.

The telecom has a small number of Spanish-speaking customer-service representatives in Mexico and a repair service center for Spanish-speaking customers in Panama, said Qwest spokesman Vince Hancock. And many customer-service and other functions can be performed by people who work at home.

TeleTech has hired more than 700 people to fill the positions in 22 states since the end of 2006 and expects to have more than 1,000 by the end of this year, Higgins said.

"They get good people, stability and good service," Ghosh said of companies that use at-home labor.

Staff writer Tom McGhee can be reached at (303)954-1671 or tmcghee@denverpost.com.


http://www.denverpost.com/search/ci_6318754

My company outsources to India and now jobs are moving to El Paso Texas. The employees there have thick Mexican accents. We are figuring out that these Mexican workers probably live right across the border and go back and forth daily. They have to be paying them lower rages because of them really living in another country.
America's corporations are going to continue to ship our jobs out because of NAFTA. This is one area where we are losing ground. They are taking our technical jobs away, our call center jobs away and we are watching the Illegal's in our country take jobs that once paid well but because of them no longer have too. Our jobs, our nation, our way of life and our culture are being taken away by NAFTA, Globalization and Illegal Immigration. This is an all out assult on our lives.

Paige

This is an all out assult on our lives.

Got that right. Now where are Americans supposed to get jobs? Oh....that's right.....we're ALL living on easy street and don't need to survive.

Go for it,I say,if you want to outsource but if you plan to stay in the USA hire US citizens ! Not imported foreign workers !

Just me, but I always look for something behind the story.

President Bush, and I assume his bosses, want a Western Hemisphere Union. Could this sudden desire to outsource to SA, be to facilitate this or could the union be to facilitate their outsourcing.

I think Chavez, is the main reason the union is not in place already. Yes, he is a nutjob, but he may be the one that has kept us from it for this long. He is making friends and influencing other SA countries. Could that be the enmity between him and Pres. Bush?

I hate making calls and getting stuck with someone from India, or ANY other nationality, where you cannot understand what the heck they are saying, I get disgusted, hang up and make yet another call to corporate HQ's complaining.

I left a couple credit card companies because of this. Closed my BA acct, and now use only my DC from LOCAL bank.

I dropped AOL, years ago, because of this. Now, of course, almost everyone does it. When I first got my 'puter and used AOL, I got a letter that looked exactly like AOL's mail. The PO box was one number off from AOL's corporate office.

It asked for all kinds of personal information. At that time, I was a babe in the woods about the internet, but have always been a skeptical person, so I didn't fill it out. I did call AOL and they just dismissed it, and was not particularly nice about it.

So after thinking about it, I called to cancel and told them I wasn't comfortable with people in India having any information about me. Of course, I don't know if that had anything to do with the attempted scam, but I just thought I would try to cut back on any opportunities.

The lady was very nasty as asked, "Well, what if the people in India felt that way about Americans?"

I answered, "Then that would be their problem, wouldn't it? I'm fixing mine by dropping your services."