AVANCESAVANCESAVANCESAVANCES

GUATEMALA’S RISE IN THE

GLOBAL BPO SECTOR: OUTSIDE

PERSPECTIVES

Discussion Moderated by: Luke Bujarski, Research Analyst

Nearshore Americas

OBJECTIVES FOR THIS MORNING

�HAVE A GOOD DISCUSSION ABOUT

GUATEMALA’S CURRENT AND FUTURE BPO

MARKET LANDSCAPE

�TALK ABOUT GUATEMALA’S

COMPETITIVENESS IN THE CONTEXT OF

OTHER LATAM MARKETS

�OFFER INSIGHTS ON LATAM MARKETS FROM

U.S. PERSPECTIVE

Gabriel Rozman Blanca Trevino Marco Stefanini TCS Softtek Stefanini

MEDIA PLATFORM FOR LATAM BPO

CONNECTING

BuyersTo

Markets

INFORMING

Providers

On

Trends

DRIVING

Nearshore Market

MOMENTUM

2009

GLOBAL OUTSOURCING OVERVIEW

Cost Savings

Focus on Core

Business

Access to

Talent

Expansion into

new markets

Software development &

testing

Data infrastructure

(cloud)

Web & Apps development

Applications management

(SAP)

Gaming

Software development &

testing

Data infrastructure

(cloud)

Web & Apps development

Applications management

(SAP)

Gaming

Finance & Accounting

Human Resources

Travel Expenses

Finance & Accounting

Human Resources

Travel Expenses

Customer Support

Inbound/Outbound Sales

Accounts Receivable

Claims Processing

Customer Support

Inbound/Outbound Sales

Accounts Receivable

Claims Processing

Data Analytics

Market Research Services

Legal Process outsourcing

R&D

Data Analytics

Market Research Services

Legal Process outsourcing

R&D

GEOGRAPHY OF OUTSOURCING

ONSHORE

OUTSOURCING

OFFSHORE

OUTSOURCING

NEARSHORE

OUTSOURCING

Audience question:

What factors do enterprises consider when deciding on a sourcing destination?

GEOGRAPHIC CONSIDERATIONSNEARSHORE or OFFSHORE?

ATTRIBUTE LATAM INDIA

Labor Costs Strong savings potential 10%-15% better than LATAM

Service MaturityStrong local demand

Recent exports

Less local demand

Mature Exporter

Attrition Low attrition & turnover Extremely high turn over

ProximityReal-time services

Short travel time

Off-hours processing

Long Commute

Skills

Large, capable, growing pool

Spanish 1st , English 2nd

Very large, capable, growing

pool

English, limited/ no Spanish

Cultural Affinity

Strong relations with US

Latino Population

Required cultural training and

accent reduction

�financial incentives

�business environment

�labor force

�cultural affinity

�time zone alignment

�technological readiness

�language capabilities

Nearshoring Destinations Index

Released by ThinkSolutions

WHAT OUR READERS NEED TO KNOW

Now that nearshore advantages are

understood…

�Time Zone

�Cultural Affinity

�Proximity

…what else do investors need to know to

make the right decision?

RECENT HEADLINES

IBM Commits to Another 1,000 Hires in Costa Rica,

Dismissing Talk of a Labor Shortage

-The new $300 million IT center, expected to start offering services by Q1 2012, will focus on infrastructure management, servers, networks, database administration, security and cloud computing.

“Pro-Business” Ortega Makes Surprise Appearance at

Nicaragua Conference

“President Ortega has shattered previous perceptions, and I am very encouraged by the pro business and pro commerce message coming out of the cabinet and the President” – Peter Ryan, Ovum

Analyst

RECENT HEADLINES

Chile’s Service Sector is on Fire: A Classic Success

Building a Knowledge Economy

-As of now, the main markets for technology developed in Chile are Peru,

Colombia and Central America.- The Chilean services sector accounted for $13 billion during 2009-2010.

Honduras Starts to Make Real Headway as a BPO Player- A watchful eye on ongoing political and economic reforms will be needed to ensure that existing and prospective investments do not run afoul.

- Confidence in Honduras from a commercial standpoint received a shot in the arm with the publication of the World Bank’s Global Competitiveness

Report, which increased the country’s ranking from 91 to 86.

RECENT HEADLINESGuatemala Ramps Up BPO Services, But Can it Meet Skilled

Labor Demands? (2010)-The perception in following years was of a saturated labor market and a country that had missed its peak.

- Recently however, Guatemala is pulling off an impressive comeback in BPO

and contact center services.

Site Selection: Getting Good Labor Data-With the absence of census data and other reliable statistics, there is significant difficulty in finding quantifiable information that is critical for

making location decisions.

-population, unemployment rates, underemployment rates and education factors, while occasionally available are most often not reliable. Labor

Studies are becoming increasingly more important .

WHAT INFLUENCES LOCATION CHOICE?

Data source: “Outsourcing Strategies”, Author: Ilan Oshri

CENTRAL AMERICA MARKET OVERVIEW

VARIABLES Costa Rica Nicaragua Honduras Guatemala

Costs

Government

Policy

Country Risk

Infrastructure

Access to talent

Audience Question: What are your

experiences across these different markets?

LABOR POOL ANALYSIS

Source: CIA World Factbook

LABOR POOL ANALYSIS

Source: CIA World Factbook

LITERACY AND INTERNET USAGE

Source: CIA World Factbook

MARKET LANDSCAPE - NICARAGUASTRENGTHS

- Relatively cheap labor force

- Market still new

- Dual currency economy

- Strong investment agency

- Crime rates low

WEAKENESSESS

- Physical infrastructure under developed

- Costs of electricity high

- Questionable political structure

OPPORTUNITIES

- Market open to small to mid sized firms

- Continued foreign investment

THREATS

- Deterioration of personal safety conditions

- Continued lack of infrastructure

MARKET LANDSCAPE – COSTA RICASTRENGTHS

- Strong mix of ITO and BPO

- Proactive government

- Positive perception from Tourism industry

WEAKENESSESS

- Expensive labor force and property

- Competition between industries

- Small population and workforce

OPPORTUNITIES

- Continued promotion as center of excellence

- Attention from big IT firms IBM (proven market)

THREATS

- Fiscal pressure to impose taxes on free trade zones

- Underfunded security resources

Amway - Astra Zeneca SS – APL – Auxis - Baxter Americas - British American Tobacco

Chiquita Brands - Citi Business Services - Curtiss Wright – DHL - Dole SS - Emerson SS

LAND OF THE CAPTIVES

MARKET LANDSCAPE - HONDURASSTRENGTHS

- New Market – untapped labor pool

- Low costs

WEAKENESSESS

- Underdeveloped building infrastructure

- Unproven market

OPPORTUNITIES

- Expand into Tegucigalpa

- Room to accommodate bigger player with

right level of investment

THREATS

- Political and economic instability

- Further deterioration of personal safety situation

- Economic vulnerability

San Pedro Sula

Population 1.5 million

San Pedro Sula

Population 1.5 million

Tegucigalpa

Population 1.3

million

Tegucigalpa

Population 1.3

million

GUATEMALA’S BPO CLUSTER

TOTAL POPULATION: 13.8 Million

TOTAL WORKFORCE: 4.1 Million

BPO Employment: Voice: 12,000 BPO: 5,000

MARKET LANDSCAPE - GUATEMALA

STRENGTHS

Largest labor pool in Central America

Big economy more resistant to wage inflation

Proven cluster with big name players in BPO

Costs 25-30 percent cheaper than Chile & Poland

WEAKENESSESS

K-12 education system needs improvement

Bilingual education needs improvement

Mixed signals from the government

OPPORTUNITIES

Desire to expand by incumbent firms

Great potential in labor pool

Increased interested in Guatemala for Latin America clients

THREATS

Concerns of personal safety

Concerns of recent elections

Concerns of labor rights disputes

Guatemala Has a Good Answer When

Stability Questions Arise

Rolando Yon, CFO at Capgemini Guatemala

http://nearshoreamericas.com/category/video/?video-id=3836

QUESTIONS

15,000 unique visitors /

month30,000 page views /

month

1,000 Followers

SPONSORS & BANDWIDTH

Figure Thirteen: Overall perceptions on safety in GDL

(number of responses)

�Cost Inflation

�Currency Fluctuation

�Intellectual Property

?Personal Safety

?Geopolitical risk

?Labor Uprisings

CASE STUDY ON GUADALAJARA