Jet Blue Prepares to Offer More Flights to Latin America

Jet Blue may become the airline of choice for companies with nearshoring strategies...

JetBlue Airways Corp., with 65 daily trips to the Caribbean and Latin America, may fly to more distant international destinations as it adds fuel-saving winglets to planes and receives new Airbus SAS A320neo jets.

The changes, along with replacing smaller Embraer E190 jets with bigger planes on some routes, will allow the New York-based carrier to fly farther and carry more passengers. JetBlue announced a $2.5 billion order Tuesday for 40 A320neos. 

The plan will allow JetBlue to expand its strategy of focusing flying in New York, Boston and the Caribbean. The carrier said it also is likely to use Airbus A321 aircraft it will receive to boost service on high-demand cross-country routes between New York and San Francisco and Los Angeles.

Read it at Ashbury Park Press

Prosperity in Peru

LA Times reporter Tracy Wilkinson traveled to Peru's capital to cover the recent election, and claims that the country's economic growth is brightening up a once dismal city.  Until recently, the town of Lima has been a dreary mess, with evidence everywhere telling of the vast income gap between the tiny elite class and the rest of Lima's people.  Peru has the fastest-growing economy in Latin America, which is an impressive accolade in a region experiencing so much economic growth.


Dismal shantytowns full of cardboard homes once surrounded the city, but those pueblos jovenes have now transformed into functioning mini-cities with services and buying power.  Suburbs and commercial districts are emerging along with a middle class, bringing more business offices, government branches, and better education opportunities for the population. 


Read it here from the LA Times.

Cyberattack in Brazil

Just one week after Brazillian IT buff Mark Hillary posted an article on IT Decisions expressing concern over Brazil's lacking cyber security measures, the country experienced its largest cyber attack in history.  

The worst part of this attack occurred Friday, when hackers briefly posted an ominous message on the IBGE (Brazil's main statistical institution) website:

"This month, the Brazilian government will suffer the highest number of virtual attacks in its history.  These attacks are a protest by a nationalist group that desires to transform Brazil into a better country."  

Apparently, hackers from Fail Shell and the Brazilian arm of LulzSec took down the government site through use of robotic computers, using billions of access requests to bombard the site until it finally shut down.  The Brazilian government reported no evidence of data loss, but websites that have suffered attacks include the Brazilian Tax Authority, the IBGE, the Brazilian Senate, and the Ministry of Sports.  

Displayed below, LulzSec won a hacking competition and placed its mascot on the Black & Berg Cybersecurity Consulting homepage.

Brazil received below average marks from the Global Competitiveness Report in the Cyber Security and IP Protection category, ranking 89th out of the 139 scored countries. To date, all attacks have been directed towards governmental agencies, but such vulnerability in Brazil's cyberspace could mean trouble for the country's reputation for world-leading financial and banking software.  

Read more on the attacks from the Wall Street Journal.

Latin America's Cheapest Cities

Indian IT Firms Outsource Jobs to US?

Outsourcing has truly come full circle.


One of President Barack Obama’s most popular promises was his commitment to stop the outsourcing of American jobs to India. In a unique twist, some of the Indian companies he targeted are now hiring unemployed Americans by the thousands for BPO jobs, as the escalating unemployment rates have made US hires financially attainable for Indian providers.  However, it’s not cost savings but the “local knowledge, efficiency, and increased socialisation” provided by US workers that has Indian IT companies hiring from within the US.


For one, Aegis (the BPO branch of the Mumbia-based Essar Group) currently employs 5,000 US citizens with plans to hire 10,000 more by 2013.  According to an Aegis spokesperson, clients appreciate having local US agents attend to their calls, so Aegis plans to respond by increasing the number of local agents.  Other companies, including Infosys, India’s second largest IT company, Genpact, TCS, and Wipro either have large centers developed in the US or have plans to develop one within the year.  Many industry leaders including Ameet Nivsarkar, spokesperson for IT provider Nasscom, argue that this trend is a very logical step for the growing IT market in India.  ”Most of the multinational hire locally to strengthen their base.  As Indian IT companies look at larger markets and move up the value chain, it makes sense to include local people,” Nivsarkar said.


Read it at Business Today.

Everest Group Says Stop Looking for the "Next India"

Eric Simonson, managing partner of Everest Group Research, argues that the search for the “next India” should be redirected. Rather, outsourcing customers will benefit more from a portfolio-like approach, matching their own needs to unique strengths offered by different regions. For now, India remains a low-cost, low-risk option for clients, but companies can achieve real business value when they recognize and capitalize on different regional strengths, perhaps looking to Latin America for real-time communication with vendors, cultural compatibility, or Spanish Language skills.

Simonson’s belief that we won’t find a “next India” is based on India’s unique advantages like the sheer size of its workforce, maturity of its outsourcing industry, and low labor costs.  India has the second largest labor force in the world with 478,300,000 people. That’s about twice as many laborers as offered by all of the Latin American outsourcing players combined, totaling 244,005,000 people (figures provided by UN 2011 HDR). The paradigm switch from finding the next India to finding a customized portfolio of destinations will allow companies to meet their specific needs and lower risk with an alternate skill source in case, for example, Indian labor rates suddenly soar.

Read it at Global Delivery Report.

Mexico as a Nearshoring Technology Partner

Mexico offers the dual advantages of proximity and cultural affinity. Time zone alignment with your local team in USA or Canada while outsourcing to Mexico is an important benefit. With a growing pool of technologically talented employees and reduced delivery costs adding to an already highly attractive package, outsourcers are looking closer to home in Mexico.
 
This webinar will discuss key elements that can help enhance your team's efficiencies in an outsourcing engagement in Mexico. From government support initiatives to ease-of-trade agreements, we will break down cost factors as they apply to outsourcing in countries around the globe as compared to Mexico. You will discover why more delivery centers have opened in Mexico than any other country in Latin America.
 
This timely webinar is designed to help you to negotiate and succeed in Mexico. You will listen to Geetha Ram, Principal Director, Texas Instruments, Inc., Luis Saldaña, VP, Business Development, Dextra Technologies and Bob Hartmann, Global Outsourcing Consultant & OI Senior Advisor and learn from their vast experience as the following topics are covered:
 
The growth of IT and mathematics talent in Mexico What factors impact Total Cost of Engagement positively in Mexico? How does NAFTA encourage and improve your outsourcing engagements?
 

As the nearshoring environment develops, you can not afford to miss this important webinar! Register now to gain the insights you need to outsource effectively in Mexico.

Click Here to View the Webinar.

  

Nearshoring... The Movie

Indian Outsourcing Vendors are not Very Competitive in Brazil

David Shpilberg , co-founder and vicechairman of CPM Braxis Capgemini, talks with Shruti Sabharwal about the local market in Brazil and competition from Indian service providers. With Brazil's market for outsourcing and software services set to cross $10-billion mark this year, top India tech firms are looking for a piece of the industry. The country's biggest IT vendor , CPM Braxis, was a hot acquisition target for many Indian tech firms until European outsourcing vendor Capgemini picked up 55% stake last year.

Read it at The Economic Times.

Outsourcing in Latin America: What a Vendor Won't Tell You

The outsourcing market in Latin America has undoubtedly matured leaps and bounds in the past 5 years, but there are some potentially less obvious disadvantages to the region that should factor into your decision.  

Here is what potential provider won't tell you about the Latin American outsourcing industry:

1.The workforce lacks a sense of urgency: More follow-up may be needed with It or BPO providers.

2. The political situation could be a threat to your business: Anti-business and Anti-American governments are currently in power in Venezuela, Nicaragua, Ecuador, and Argentina

3. Prices are rising quickly: Labor arbitrage has faded, and inflation can dramatically affect your TCO.

4. Not all Latin American countries are equal: Closely examine the wide array of business, legal, and economic climates in each country.

5. They will say no: Unlike less direct cultures like China or India, Latinos are more likely to challenge customers if they feel something is wrong.

6. Don't expect perfect English: Even call center providers may not speak as clearly or accent-free as advertised.

7. Process is not their strength: India's strong IT services reputation is built on quality repeatable processes, but Latin American providers are less rigid.

8. Don't expect scale similar to India's: Populations in Latin America are smaller, and many inhabitants are already employed in the IT and BPO sectors.

9. Physical security is a risk: This doesn't speak for every country, but violence in Mexico and Guatemala could detrimentally affect the mindset and physical environment of IT or BPO sectors.

Read it at Network World.

Chile Invests in IT Future

IT spending was at $2 billion last year and is projected to increase to $3.4 billion by 2014.  Their IT growth of 5.7% makes them the LATAM leader, ahead of Argentina at 4.7% and Brazil at 4.5%.  Students are choosing tech careers over business careers, with majors in electric engineering, software studies, and computer science.

Read it at Nearshore Americas.

Colombian Free Trade Agreement

In the 2010 "Doing Business Report", Colombia was ranked as the most business-friendly country in Latin America.  One of the ways that Colombia's government promotes business is the establishment of free trade zones. 

The following are the most relevant Free Trade Zone Benefits:

1. A single 15% income tax rate

2. The declaration granting FTZ status is valid for maximum 30 years, renewable for another equal term.

3. Goods introduced from the rest of the world into a FTZ (i.e. capital goods) do not accrue VAT or custom duties.

4. Goods exported from a FTZ benefit from the Trade Agreements signed by Colombia.(Except Peru)

5. Raw materials, parts and inputs sold from a national customs territory to FTZ users will be VAT exempt.

6. Exports may be made from the FTZ to the rest of the national customs territory.

7. Possibility of partial processing outside the FTZ for a period of up to six months.

8. Quick and simplified customs procedures.

Read it at ProExport Colombia.

Will Costa Rica Stand the Test of Time?

Costa Rica has positioned itself as a key nearshoring destination and boasts solid track records with companies including Amway, Microsoft, and IBM.  This article examines Costa Rica’s success despite rising salaries and a miniscule labor force, questioning their ability to stay at the top amidst rising competition in Latin America. 

Read it at Global Services Media.

How Violence in Mexico Affects Nearshoring

As the buzz about drug cartels, tourist beheadings, and all sorts of political unrest rises, it threatens to undermine Mexico’s established credibility as a nearshoring destination. This article weighs the effects of rising violence against the country’s numerous benefits including a bilingual workforce, time zone alignment, and substantial cost advantages. You’ll also find advice that companies should take into consideration before investing in a nearshoring engagement in Mexico, or any other politically volatile region.

Read it at Forbes.

Chile Wants to Borrow US Entrepreneurs for $40,000

In an attempt to build a stronger infrastructure, Chile will offer grants to any entrepreneurs willing to work on a project within their borders.  While this project intends to make Chile “more than just an outsourcing hub”, their movement toward innovation will make Chile a recognizable competitor in the IT outsourcing market.

Read it at Forbes.

A.T. Kearney Global Services Location Index

Popular nearshoring destinations are gaining some ground according to AT Kearney’s Global Services Location Index.  After an 18% wage decrease in Mexico, the country made its way to the top of the Latin American countries and ranked 6^th overall.  Chile, dropping from number 8 in the 2009 index, ranked 10^th this year.  Why did Chile drop?  According to AT Kearney’s website, the rankings are assigned based on many factors including skilled labor, inflation, language capabilities, and infrastructure modernization.  In the case of Chile, their resilience in the wake of a global economic downturn allowed the price of wages to remain stable.  Relative to other outsourcing hubs, this made Chile’s cost of labor less competitive, but in the midst of global political instability, should the Global Services Index penalize a country for keeping their wages stable? 

The internet shut-down in Egypt had disastrous effects for BPO/ ITO centers reliant on a robust internet to succeed, and this turmoil occurred immediately after AT Kearney’s rankings placed Egypt 4^th in the Location Index.  Granted this type of problem is truly unpredictable, but how can companies account for political risk when choosing an outsourcing destination? In addition to consulting sources such as AT Kearney, invest in a political risk analysis of countries where critical business and IT processes are being supported. Compare the risks of occurrences, such as the Egypt situation, with the cost-savings and business benefits of using these locations.  Saving 30% from your bottom line won’t provide the same utility if you risk not running your business properly for long periods of time.

Read an analysis at PR Newswire.