Uruguay's Role in the Nearshoring Industry

Uruguay's early entrance to the Latin American nearshoring industry has allowed the country to develop a strong sourcing market.  While the high cost of labor and taxes keeps Uruguay out of the top of our Nearshoring Destinations Index, Uruguay offers an experienced and educated workforce to potential buyers. The Global Delivery Report interviewed Mario Tucci, formerly the head of operations for Tata Consultancy Services in Latin America, about how Uruguay's role in the IT Outsourcing Sector.

Read the interview from Global Delivery Report below:

Q: How did Uruguay gets its start in the IT industry?

A: We started very early (educating) IT engineers in Uruguay and Argentina. That ignited the IT software development (sector). Since we’re far away (from other major markets) we had to learn a lot. You couldn’t call an 800-number in the 1980s for help. You had to develop something locally. As a result, for example, Uruguay is now home to two vendors of core banking software, with customers in Mexico, Costa Rica, Peru, Ecuador, Chile and Argentina among others.

Q: Has this been supported by government investment in training?

A: (In the 1970s) there was a university across the river in Argentina, the La Plata University where some people from Uruguay, some from Argentina, created the first Latin American IT engineering institute. It was a very well known and prestigious institute. All this builds on a very high cultural appreciation for education, as in Uruguay all education is free and public, from K-12 through the university level.

Q: What are some of the key areas where Uruguayan software developers are active?

A: Beyond banking, there is logistics. A logistics software solution developed for PepsiCo in Uruguay was taken by PepsiCo and adopted throughout the entire Asia Pacific region. Another is Artech, developer of the GeneXus Technologies cross-platform development and maintenance framework.

Q: When did the shift to also offering BPO begin?

A: It began when TCS came and put a stake in the ground in 2002. When TCS came here, nobody ever thought this operation could reach 1,000 people. In 2008 TCS senior management came to us, based on our ITO experience, and said “We know you don’t have any BPO experience, but you do have the people and attitude we need.” This operation has now grown to 400 people, and is the largest BPO operation of a service provider in the country and employs half the TCS employee base here. It was a very nice demonstration that if you have the right team, which is willing to grow, and to (take on) an ambitious task you can do wonders.

Q: How about other BPO operations besides TCS?

A: After ten years, this country, via the free trade zone and other (efforts) we have seen growth in BPO and IT services, not only for Uruguayan companies, but also many international companies. For example, MercadoLibre, which is the eBay of Latin America, is doing all their back office work from Montevideo. You can also see, a lot of smaller Uruguayan firms providing agile development and technology services and consulting services to companies in the U.S. and around the world. There are several companies here working with Africa, and several working with as far as Japan.

Q: How would you compare Uruguay with other Latin American countries as a source of BPO and IT services?

A: We’re a country of foreigners. Everyone here is the grandson of either a Spaniard, an Italian, a German or a Frenchman. As a result, the country is very cosmopolitan. A lot of people here speak different languages, which is good for this industry. Also, since we’re far away (from other markets) we had to create our own environment.

Finally, historically it’s very rare that Uruguay has fought or had a problem with any other Latin American country. It’s seen as a friendly country by the rest of Latin America. That helps to compete also.

"Random Hacks of Kindness" in Latin America

Random Hacks of Kindness,  a global community of computer experts that develop practial open technology for social good, is now partnering with Fundación Ciudadano Inteligente  (The Smart Citizen Foundation) to support their efforts in Latin America.  

Based in Santiago, Chile, Fundación Ciudadano Inteligente was founded with the goal to promote transparency.  FCI encourages citizens to utilize information and communication technologies to join the organization's cause and networks with organizations that work in themes of transparency, technology, and social good throughout Latin America.

Random Hacks of Kindness has been responsible for sharing open-source technologies mostly related to water management: flood warning systems,  supply-demand water planning, maximized utilization of non-potable water for crop irrigation systems, ect.  In one particular project, these technological tools are meeting the tangible needs of the citizens of Peru.

In Peru, water resources management is a major issue.  Over 98% of the country's annual renewable water resources is available east of the Andes Mountains, in the Amazon region.  This leaves the coastal area of Peru, home to most of the major Peruvian economic activity and half of the country's population, with less than 1.8% of the national freshwater renewable resources.  RHoK is working to create a crowdsourced bank of hydrology maps online that will enable more efficient water usage and planning, thus stopping the increasing toll that economic and population growth take on the inaccessible water resources.  

The Developing Latin America event will bring together developers, designers, and members of civil society from 6 Latin American countries to find innovative technological solutions for the social good of their country and region. All 6 event locations will participate in the upcoming RHoK Global December 2011 event where they will have an opportunity to collaborate with peers around the world.

Solutions in Latin America: 

Buenos Aires, Argentina

Lima, Perú

Mexico City, México

Montevideo, Uruguay

Rio de Janiero, Brasil

Santiago, Chile

The sharing of open source technologies like the ones being utilized by RHoK and FCI offer the promise of rapid development in these areas for the true benefit of society, allowing people's needs for water to be met more efficiently.

2011 Nearshore Destinations Ranking

Nearshoring has become a popular and intelligent option for US companies that are not only looking to lower costs, but also want that cultural affinity and technological innovation that lend themselves to increased productivity and expertise.  Latin America as a whole is gaining credibility, but it is important to delve deeper than the regional level to find the place where a company can attain the most value.  With this in mind, ThinkSolutions took 19 countries in Central and South America to determine their overall appeal as nearshoring service locations and ranked them according to their financial incentives, business environment, and labor force.  We placed emphasis on factors that would bring out the unique characteristics of the region, such as cultural affinity, time zone alignment, technological readiness, and language capabilities.  These rankings will be updated quarterly or as major events occur that alter the outsourcing landscape. Click here to request a white paper. 

Brazil Industry Losing Out to Lower-Cost Mercosur Members

Brazilian industry leaders are complaining that the strong growth of the Brazilian economy and the Super Real are acting as a disincentive to Brazilian investment.  Brazilian companies are turning instead to less expensive options like Argentina, Paraguay, and Uruguay.

With the Super Real, manufacturing in Brazil has become very expensive and Mercosur partners offer comparative advantages: Paraguay, cheap energy; Argentina, natural gas at competitive prices and Uruguay qualified labor.  On top of this, the total cost of taxes is significantly higher in Brazil compared to other Mercosur members.

Read it at MercoPress.

Ankur Prakash Discusses TCS Latin America

As part of the Thought Leaders in Cloud Computing Series, Ankur Prakash, VP and COO of Tata Consulting Services Latin America, gives insight into the Latin American outsourcing market. To give a background on TCS Latin America, they began operations in Mexico City in 2003, and have since expanded into Ecuador, Colombia, Peru, Chile, Argentina. Brazil, and Uruguay.


Prakash gives his take on the talent in Latin America, the strategy behind seeking first tier cities, and recruiting from the Latin American labor pool.  When asked about the cost advantage of the region, he replied, "As for the Latin American cost advantage, cost arbitrage, I don’t think that any company that works just on cost arbitrage in Latin America can provide any kind of value additional and advantage to local customers."  He also explains that because of the vastly different economies that exist in the region, it is difficult to generalize on cost savings.  Indeed, companies will find most regional generalizations unhelpful when examining Latin America.


Read the full interview here.

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

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.