Roundtable – Shared Services & Outsourcing in Latin America

It won’t but have the identical profile as South Asia or Jap Europe, however Latin America is changing into an more and more in style vacation spot for organizations seeking to set up shared service facilities, both serving home markets or as a part of regional and even international shared companies methods. Moreover, together with this development within the captive sector Latin America has turn into the main target of rising curiosity on the a part of main outsourcing suppliers whose entry into the market has had knock-on penalties throughout the board. Throw into this already-volatile combine the present financial instability and it is simple to see why the area’s exercise is making waves throughout and past the shared companies and outsourcing area in 2009.

We convened a panel representing practitioners, suppliers and advisors to check out the present stage of maturity of the Latin American market and to look at how – and if – the financial malaise affecting a lot of the remainder of the worldwide economic system is impacting upon operations within the area.

Attending had been:

Laura Bao Castro
CR FSSC Controller
Intel Company

Esteban Carril
Director, Latin America Finance Operations
EMC Company

Mauro Mezzano
Vantaz Group Consulting

Ricardo Neves
PwC World Sourcing Chief for South America

Q: I believe the primary query we must always have a look at is: is it proper to speak of “Latin American shared companies” in any respect? Latin America is a really large area geographically and by way of inhabitants; it is received a smaller linguistic variety than, for instance, Europe, however there are nonetheless very large variations between, say, Brazil and Costa Rica. To what extent is it truly potential for organizations – captive or BPO – to take a very regional method in Latin America? Is it not possible to keep away from having important assets in particular person nations?

Ricardo Neves: It is a area completely different from different areas on this planet. If you happen to speak about intra-region companies, you are speaking about two main languages that are, in some methods, shut to one another; you might have additionally a closeness of general tradition; and often what you see with multinational or regional operations right here is that the bigger nations like Brazil, Argentina, Mexico, Chile correspond to a major measurement of the operations. Often in case you have a look at many of the international or multinational corporations within the area, they’ve 50% and even 75% of their operations carried out in two or three nations at most – after which 10, 12 different nations the place they do have operations however which make up solely 25% or much less of their enterprise.

This offers a problem when establishing a regional middle, as a result of there’s a scale for the bigger nations which isn’t current within the smaller ones – and what I’ve seen here’s a combine between completely centrally run shared companies and a lesser native presence in smaller nations to verify the precise scale is achieved and the precise assist is finished on the regional stage. There are corporations primarily based in Brazil that I’ve seen who’ve regional shared companies – just like the brewer AmBev, now linked with InBev and AnhauserBusch, which has a really giant regional shared companies primarily based in Sao Paulo serving not simply operations within the area, but in addition the agency’s operations in Canada for the Labatt operations. Unilever has additionally arrange an HR shared companies – and has simply bought its finance shared companies to Capgemini within the area.

In sum, from these giant operations that I’ve seen, as I mentioned I’ve seen a mixture of some centralised companies and a few small nations with native companies mixed.

Esteban Carril: We’re serving Argentina, Chile, Peru, Mexico, Colombia, Venezuela, and Brazil. My crew is split into three practical areas, in two nations. One crew is working in Sao Paulo, Brazil; the opposite two practical groups are working right here in Argentina. We run accounts payable, accounts receivable, credit score and collections, billing, money functions, payroll, commissions and bonuses. It is truly not divided linguistically: we discovered we already had some good abilities in Brazil to develop the credit score and collections division there, so we determined to depart the present group offering companies there in Brazil, to supply companies for the remainder of the Latin American nations. We needed to have three practical teams, however we needed to attempt to hold the identical expert individuals working and we did not wish to have to maneuver them from one nation to a different.

Laura Bao Castro: We’re a part of a world technique. We now have at the moment two fairly giant monetary shared companies facilities in Intel. One is situated in Malaysia and the opposite one is situated right here in Costa Rica; the markets which might be supported from Costa Rica are Canada, the US, Costa Rica, and Mexico, Colombia, Venezuela, Chile, Argentina and Brazil.

Q: Laura and Esteban, you each come from large international organizations with important worldwide presence. Do you assume it is nonetheless the most important corporations who’re establishing shared companies in Latin America or are the smaller, or perhaps mid-market, organizations additionally getting concerned?

Laura Bao Castro: I believe the mid-market is developing. I used to be capable of go to [a Latin AMerican shared services event in] Chile final yr, and likewise participated in [a] convention in Mexico Metropolis, and I used to be very shocked by the variety of Latin American multinationals which have already moved into this journey, or are within the means of doing so – particularly in Mexico the place I believe a whole lot of corporations are wanting into it, even having shared companies inside Mexico itself. The idea is true there; they know they will cut back prices and produce extra high quality with shared companies, and even inside Mexico itself corporations are creating shared service facilities.

Mauro Mezzano: Truly we have been seeing this shift since two or three years in the past. At first of the last decade many multinationals started establishing shared companies within the area, however after I went to conferences in Miami and Orlando there weren’t many Latin American-owned corporations current. Then in 2004, 2005, greater native corporations and teams began with the idea. Now smaller and smaller corporations are doing it; a few of them do not actually implement what we’d name shared companies however they do centralize and so they do take a couple of ideas from shared service facilities, and maybe redesign a course of. The affect of shared companies is spreading out by means of many extra corporations than earlier than.

Ricardo Neves: I’ve seen a rise in curiosity: amongst mid-market corporations it is much less regional. What I’ve seen is amongst giant corporations, they’ve achieved a whole lot of rationalization in every of their nations of operation, and a whole lot of dialogue about regional shared companies. What I’ve seen within the mid-market, particularly in Brazil, are nonetheless questions on “in-country” shared companies if what I imply. It is extra ensuring that they leverage their native operations, after which as a second step – particularly with a few of the methods work achieved – it is one thing of a achieved deal to arrange one thing regional: when you might have a regional methods platform, for instance.

Q: Let’s shift focus barely and check out the outsourcing market in Latin America. Over the previous couple of years we have seen the entry into the area of a few of the large international gamers – specifically a few of the large Indian suppliers. What influence has that had in the marketplace – and on corporations which might be working shared companies?

Esteban Carril: In my expertise in main a shared IT services in Bedford NH centre I’ve been looking for other ways to do issues, and discovering distributors who can present companies in a extra environment friendly and economical means than us doing it ourselves. On the subject of the outsourcing sector, I discover that in Latin America issues are nonetheless in improvement. On the subject of outsourcing it is necessary to see how well-organized corporations are, and the way effectively they supply companies in a number of nations – and I see the problem for most of the large corporations is that they’re nonetheless working as unbiased corporations in every nation, and not likely regionally organized to be able to present companies to multi-country shared service facilities.

I believe that is one of many key factors that I have been discovering. One other key level is that some corporations are regionalized however sadly they may not have presence in all markets, in order that turns into an issue by way of discovering a single regional outsourcing resolution to fulfill our wants.

Laura Bao Castro: About 5 years in the past corporations offering outsource service arrived to Costa Rica. Since then, these corporations have grown , for instance HP has now shut to eight,000 workers. Whereas I am unable to be particular about their companies or areas they serve, these corporations search for individuals talking Spanish, English, Portuguese, French, Italian – even Chinese language. We don’t work particularly with an outsource vendor at this second – however periodically we reassess our present technique.

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