Violence in Mexico City

"On a sunny afternoon this month, a group of gunmen drove into a slum in the north of Mexico City, the streets packed with shoppers and children leaving school. In plain sight, the killers lined three crack cocaine dealers against a wall and shot them in the head with AK-47 assault rifles. They then forced another two men into a black van and drove away past terrified onlookers." -Reuters

This striking picture is unexpected in Mexico City, which has successfully remained a peaceful place to live and conduct business even in the midst of highly publicized and violent turf wars between drug cartels in Mexico. Along the country's northern border, Ciudad Juarez holds the title of the most murderous city in the world in 2010 with a homicide rate of 133 per 100,000.  According to Reuters, the Federal District has avoided cartel violence because cartels have collectively agreed to a truce in the city.  But if the recent violent acts between La Familia and Las Zetas are the beginning of the end of this truce, this could have catastrophic consequences for the Federal District and Mexico's image as a whole.


Earlier this year, ThinkSolutions conducted an analysis of homicide rates in Brazil, Colombia, the U.S., and Mexico.  We found that while perceptions of violence in Mexico are high, many of the most populated cities have lower homicide rates than cities in the United States.  As you can see below, Mexico appears to be much safer than Brazil or Colombia, countries that receive significantly less negative publicity for violence.  

State/Department #	USA	Mexico	Brazil	Colombia
1	Massachusetts	Tabasco	Santa Catarina	Bolívar
2	Wisconsin	Coahuila	Piauí	Boyacá
3	Washington	Nuevo Leon	São Paulo	Cundinamarca
4	New York	Veracruz	Maranhão	Sucre
5	New Jersey	Hidalgo	Rio Grande do Norte	Bogotá
6	Virgina	Jalisco	Rio Grande do Sul	Atlántico
7	Ohio	Guanajuato	Minas Gerais	Santander
8	Texas	San Luis Potosi	Amazonas	Córdoba
9	Michigan	Federal District	Ceará	Tolima
10	Indiana	Mexico	Paraíba	Huila
11	California	Puebla	Goiás	Cesar
12	Pennsylvania	Tamaulipas	Bahia	Magdalena
13	Florida	Michoacan	Paraná	Caldas
14	Tennessee	Chiapas	Pará	Cauca
15	North Carolina	Chihuahua	Mato Grosso	Nariño
16	Arizona	Baja California	Distrito Federal	Norte de Santander
17	Georgia	Sonora	Rio de Janeiro	Risaralda
18	Missouri	Sinaloa	Pernambuco	Meta
19	Maryland	Oaxaca	Espírito Santo	Valle del Cauca
20	Illinois	Guerrero	Alagoas	Antioquia

Looking Forward: Top Nearshoring Trends for 2012

When Patrick Haller from Nearshore Americas asked ThinkSolutions for insight into how the nearshoring space will evolve in the next year, here's what we had to say:

Nearshoring Trends for 2012

1. India’s total cost of outsourcing (TCO) continues to increase and the advantage gap over Nearshoring continues to close especially due to inflation and attrition differences. 

2. Remote sourcing from LatAm, such as remote monitoring, will increase as technology continues to support it and India TCO rises.

3. There will be an added impact of the recent Free Trade Agreements (FTA) that improve upon the WTO’s General Agreement for Trade in Services, especially in Colombia.

4. Brazil will struggle to increase export of services due to internal demand from domestic growth as well as attention in preparation for the Olympics and other events.

5. Colombia will have an increased profile, a growing economy, free trade, improving security and stability.

6. Crime in Mexico will stabilize due to increased government pressure and US attention but will remain problematic in localized areas.

7. Small and mid-size US companies will exploit the advantages of Nearshoring.

8. There will be a trend towards consolidation of smaller LatAm IT firms into medium and larger firms to meet the needs of US based clients.

9. More firms will seek out LatAm for shared service centers as an alternative to offshore locations.

10. Indian firms will continue to expand into the LatAm region as global IT delivery strategies more frequently include Latin America.

Read the full article here at Nearshore Americas.

Mexico vs. Brazil

The conventional U.S. wisdom today is that Mexico is a problem, and Brazil is an opportunity.  The reality is that Mexico is less of the bloody, drug ridden mess that the media would lead the US to believe, and Brazil faces some serious issues that shouldn't be dismissed.   For Brazil, underlying economic weaknesses like its huge income gap, high inflation, and a higher crime rate than Mexico (25 per 1000,000 homicide rate to Mexico's 14 to 100,000) threaten to undermine the country's recent economic boom. And too much negative attention surrounding Mexico's crime rates draws attention away from the country's positive economic growth and political reforms.  Shannon O'Neil, Latin American Studies Fellow, gives a fair take on these two popular nearshore destinations.   

Read it here from CFR.

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.

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.