Roundtable – Shared Services & Outsourcing in Latin America

It may not but have the identical profile as South Asia or Eastern Europe, however Latin America is turning into an increasingly famous vacation spot for corporations trying to set up shared carrier facilities, both serving home markets or as a part of regional or even worldwide shared stamford ct services strategies. Furthermore, together with this growth within the captive area Latin America has turn out to be the focus of growing interest at the part of primary outsourcing vendors whose entry into the marketplace has had knock-on outcomes across the board. Throw into this already-unstable mix the current economic instability and it is clean to peer why the location’s interest is making waves across and past the shared services and outsourcing area in 2009.

We convened a panel representing practitioners, carriers and advisors to take a look at the contemporary degree of maturity of the Latin American marketplace and to take a look at how – and if – the monetary malaise affecting much of the rest of the global economy is impacting upon operations inside the place.

Attending were:

Laura Bao Castro
CR FSSC Controller
Intel Corporation

Esteban Carril
Director, Latin America Finance Operations
EMC Corporation

Mauro Mezzano
Partner
Vantaz Group Consulting

Ricardo Neves
PwC Global Sourcing Leader for South America
PricewaterhouseCoopers

Q: I assume the primary query we have to have a look at is: is it proper to talk of “Latin American shared services” at all? Latin America is a completely large location geographically and in terms of populace; it’s were given a smaller linguistic diversity than, for example, Europe, however there are still very big variations between, say, Brazil and Costa Rica. To what quantity is it honestly viable for businesses – captive or BPO – to take a absolutely local approach in Latin America? Is it impossible to avoid having significant assets in character nations?

Ricardo Neves: This is a location one-of-a-kind from other areas within the world. If you communicate approximately intra-location offerings, you are speaking about two predominant languages which can be, in some approaches, close to every different; you’ve got also a closeness of typical way of life; and normally what you notice with multinational or nearby operations here is that the bigger countries like Brazil, Argentina, Mexico, Chile correspond to a sizeable length of the operations. Usually if you take a look at most of the global or multinational organizations inside the location, they have 50% or maybe 75% of their operations accomplished in two or three international locations at maximum – and then 10, 12 different countries in which they do have operations but which make up only 25% or much less of their enterprise.

This offers a assignment whilst setting up a regional middle, because there is a scale for the larger countries which isn’t always gift in the smaller ones – and what I’ve seen here is a mix between definitely centrally run shared services and a lesser neighborhood presence in smaller international locations to ensure the right scale is completed and the right support is achieved at the local stage. There are organizations based in Brazil that I’ve seen who have local shared offerings – just like the brewer AmBev, now linked with InBev and AnhauserBusch, which has a completely huge regional shared offerings primarily based in Sao Paulo serving no longer just operations within the area, however also the firm’s operations in Canada for the Labatt operations. Unilever has additionally set up an HR shared offerings – and has simply bought its finance shared services to Capgemini in the location.

In sum, from those huge operations that I’ve seen, as I stated I’ve seen a mix of some centralised services and some small international locations with nearby services mixed.

Esteban Carril: We’re serving Argentina, Chile, Peru, Mexico, Colombia, Venezuela, and Brazil. My crew is divided into three useful areas, in two nations. One crew is working in Sao Paulo, Brazil; the alternative practical teams are working here in Argentina. We run debts payable, accounts receivable, credit and collections, billing, cash packages, payroll, commissions and bonuses. It’s in reality no longer divided linguistically: we found we already had some exact abilities in Brazil to expand the credit score and collections department there, so we determined to go away the existing institution presenting offerings there in Brazil, to offer offerings for the rest of the Latin American nations. We desired to have three purposeful businesses, but we wanted to try to maintain the identical skilled people working and we didn’t want to need to flow them from one united states to every other.

Laura Bao Castro: We’re a part of a worldwide strategy. We have presently quite large economic shared services centers in Intel. One is placed in Malaysia and the alternative one is positioned here in Costa Rica; the markets which might be supported from Costa Rica are Canada, the United States, Costa Rica, and Mexico, Colombia, Venezuela, Chile, Argentina and Brazil.

Q: Laura and Esteban, you both come from massive global groups with good sized worldwide presence. Do you suspect it’s nonetheless the biggest companies who’re putting in place shared offerings in Latin America or are the smaller, or perhaps mid-market, corporations also getting involved?

Laura Bao Castro: I assume the mid-marketplace is coming up. I become capable of go to [a Latin AMerican shared services event in] Chile ultimate 12 months, and also participated in [a] convention in Mexico City, and I was very amazed via the number of Latin American multinationals that have already moved into this adventure, or are inside the system of doing so – in particular in Mexico wherein I suppose loads of organizations are searching into it, even having shared offerings within Mexico itself. The concept is proper there; they recognize they can lessen expenses and convey greater best with shared services, and even within Mexico itself corporations are growing shared carrier facilities.

Mauro Mezzano: Actually we’ve got been seeing this shift considering that or 3 years ago. At the start of the last decade many multinationals started organising shared services inside the place, however after I went to conferences in Miami and Orlando there were not many Latin American-owned businesses present. Then in 2004, 2005, bigger local groups and organizations started with the concept. Now smaller and smaller agencies are doing it; some of them don’t genuinely put in force what we would name shared offerings however they do centralize and that they do take some principles from shared provider centers, and perhaps remodel a manner. The affect of shared offerings is spreading out via many greater organizations than earlier than.

Ricardo Neves: I’ve seen an increase in hobby: among mid-market groups it is much less local. What I’ve seen is amongst massive organizations, they have accomplished plenty of explanation in each of their countries of operation, and lots of debate about local shared offerings. What I’ve seen inside the mid-market, mainly in Brazil, are nevertheless questions about “in-u . S .” shared services in case you know what I mean. It’s greater making sure that they leverage their local operations, after which as a second step – specifically with a number of the structures paintings achieved – it’s something of a completed deal to installation some thing local: if you have a regional structures platform, as an instance.

Q: Let’s shift cognizance slightly and check the outsourcing marketplace in Latin America. Over the beyond couple of years we have visible the entry into the vicinity of some of the big worldwide gamers – especially a number of the big Indian providers. What impact has that had available on the market – and on companies that are walking shared services?

Esteban Carril: In my experience in main a shared service centre I have been trying to find exclusive ways to do things, and locating vendors who can offer offerings in a greater green and reasonable manner than us doing it ourselves. When it involves the outsourcing area, I locate that during Latin America things are still in development. When it comes to outsourcing it is crucial to peer how well-prepared companies are, and how well they provide offerings in a couple of countries – and I see the challenge for a number of the large corporations is that they’re nevertheless working as unbiased agencies in every country, and no longer really locally organized as a way to provide services to multi-usa shared service facilities.

I think that’s one of the key factors that I’ve been locating. Another key factor is that a few organizations are regionalized but alas they may not have presence in all markets, so that turns into a trouble in terms of finding a unmarried regional outsourcing answer to satisfy our needs.

Laura Bao Castro: About 5 years in the past agencies supplying outsource carrier arrived to Costa Rica. Since then, these companies have grown , for example HP has now near 8,000 employees. While I cannot be specific approximately their services or regions they serve, those organizations look for humans speakme Spanish, English, Portuguese, French, Italian – even Chinese. We do not work particularly with an outsource dealer at this second – however periodically we reconsider our present day method.

Ricardo Neves: One of the capabilities that I’ve noticed, one of the movements inside the outsourcing space in Latin America, is that there’s been loads of forex fluctuation between the dollar and the actual, and the dollar and different currencies, and I’ve visible a few discussions on agreement evaluate – mainly for provider vendors – from each facets: if the clients need to take advantage of that, or maybe speak relocation of some paintings; or if the providers are saying that an growing price is related to forex fluctuation putting brought pressure on their margins. Definitely currency fluctuations have been considered one of the biggest topics of dialogue inside the place.

Q: OK, let’s move on and deal with the massive issue of the instant and, possibly, of many moments to return: the financial disaster and international financial downturn, and their impact upon shared services and the sourcing region inside the area. Ricardo, what do you see as having been the principle adjustments in the space considering that the start of the primary segment of the crisis in October?

Ricardo Neves: What I’ve visible is basically a larger hobby in discussing measures to reduce costs. Some of the plans that had been coated up to be rolled out inside the destiny have now end up extra exciting for dialogue now; in particular, if they are able to help reduce expenses. The mood, the willingness to do some thing now has accelerated. Organizations nowadays need to do some thing bolder than they had been inclined to do even six months ago. We used to listen matters from the enterprise like “do not disrupt my boom”, “don’t rock the boat”; now executives are coming and saying “howdy, wherein are we able to make this boat more nimble? How are we able to rock the boat but at the same time make us leaner and more organized?”

I’ve visible this happening in multiple methods. One is, clients coming to us looking for an normal evaluation of cost reduction – which normally consists of the subject matter of shared services. Secondly, we are additionally having numerous discussions on reviewing outsourcing contracts – or maybe making the ones contracts broader, with a purpose to make certain they are capturing all of the cost they may based on the connection. So normal what I’m seeing is an expanded willingness to take bold measures to make sure value discount.

Q: Do companies nonetheless have cash to spend on huge implementations, or is it about making changes as cheap as viable?

Ricardo Neves: I assume quite a few it is, as you are saying, to make matters as reasonably-priced as viable, as fast as possible. But I’ve visible some room to mention “if I need to spend that to get that lower back, then let me hear what you have got to mention”. Again, I suppose firms are extra willing to do things than they have been earlier than – but no-one’s saying they have got a huge pile of cash to lessen their fees. What they want to do is aid the investment thru the cost reduction itself.

Q: Moving over to the practitioners: Laura and Esteban, how have you been responding to the crisis? Has it had a large impact on your commercial enterprise and are you searching at operations in a one-of-a-kind way?

Laura Bao Castro: Intel Corporation has been, over the last 2.5 years, on a restructuring and efficiency program that has ended in run-rate savings of more than 3 billion dollars, CapEx avoidance in excess of one billion greenbacks, and a discount of twenty thousand personnel from our height in 2006. We as part of the Corporation are taking moves to contribute on this system. We are doing a large effort to reduce discretionary spending and one instance is tour. We also are increasing the wide variety of conferences over the phone and are that specialize in productiveness and efficiencies so we are able to do greater with the same.

Esteban Carril: Laura mentions the journey and entertainment reduction, and that is actually a place wherein we have tried to pay close interest – however as a be counted of reality I think that there may be absolute confidence that the financial disaster will deliver new opportunities for shared offerings right here in Latin America. I think this could now be a extraordinary time to illustrate that Latin America is a reliable area, particularly for international shared services. As we communicate my organization is looking for new possibilities in rising markets. Right now we’re seeking out a shared carrier center for income operations here in Latin America; this might be a great possibility for consolidation and value efficiency.

Like Laura we’ve increased procedure upgrades and efficiencies, and tightened our controls over costs; we are also now enforcing new tools to present us higher visibility of client usage styles and those’s performance, a good way to pressure customers to greater green offerings. Those offerings that may be high-cost and are not being used by our clients are the ones that we would love to either outsource or stop. We have also diagnosed other possibilities to enlarge our scope of services by way of leveraging our shared offerings to serve new inner clients, and redirecting our services to regions wherein they could upload greater value… [Regarding discretionary spending] As Laura stated, we ought to do more with the same; in my case I’m trying to engage humans from my shared services to steer a number of those projects. On other cases we can prioritize the ones initiatives where we see there is a clear gain in expenses in the quick time period.

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