Thursday, July 28

Why Latin America Is the New India

Business 2.0 has a great story on how Central and South America are becoming the next India for American corporations. This is great news. This should spur the Latin communities to improve their undergraduate and graduate education, specially in technology and sciences.

economically, it will have a great impact, as is evident in India. What I look forward to is Latinos being on the cutting edge of innovation in their home countries.
With its beaches, golf courses, cuba libres, and rock-solid social-security system, it's no wonder that Costa Rica is luring American executives who want an alternative to Indian outsourcing. After sending thousands of technology and call-center jobs to India and the Philippines, major U.S. companies including Dell (DELL) and Procter & Gamble (PG) are now looking to Latin America to meet their outsourcing -- or rather, "nearsourcing" -- needs. Like India before them, Brazil, Nicaragua, Panama, and especially Costa Rica are embracing the trend with business-friendly policies and aggressive marketing. "Costa Rica is moving up very fast," says Ram Mohan, IT manager for P&G, which operates a 1,000-employee center in San José, Costa Rica, to handle financial and infrastructure systems support.

Currently, 24,500 Costa Ricans work in call-center and IT jobs, doing everything from fielding complaints about shampoo to answering questions about insurance. The number of call-center positions alone is expected to double in the next two years, says Federico Cartín, executive director of the nonprofit Costa Rican Chamber of Information and Communication Technology. In Latin America as a whole, the number of call-center workstations will hit 730,000 in 2008, up from 336,000 in 2004, according to market-research firm Datamonitor. Brazil is expected to get a big slice of that business, thanks to some of the lowest labor costs in South America. Business promotion agency ProNicaragua expects its homeland to create 3,000 new jobs in the next few years, while Dell already employs 2,000 workers at its Panama call center.

It helps that the scenic shores of Central America are just a five-hour flight from the East Coast, but that's not the only appeal. The region also shares two time zones with the United States -- the better for handling phone calls -- and Costa Rica, in particular, is full of well-educated workers, having abolished its army more than 50 years ago and rechanneled the funds into education, including mandatory English training. Though its progressive labor codes translate into relatively high wages, the "Switzerland of Central America" also boasts an extensive social-security system that makes it easy to perform background checks.