Published on March 11, 2014
Locations InsiderTM Market Report: December 2013 – Preview Deck Topic: Finance & Accounting in Latin America (LATAM) Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009
2 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 Our research offerings for global services Subscription information The full report is included in the following subscription(s) – Locations InsiderTM In addition to published research, a subscription may include analyst inquiry, data cuts, and other services If you want to learn whether your organization has a subscription agreement or request information on pricing and subscription options, please contact us: Corporate Headquarters Office: +1-214-451-3000 firstname.lastname@example.org European Headquarters Office: +44-207-129-1318 email@example.com 1 Banking, financial services, and insurance Custom research capabilities Benchmarking | Pricing, delivery model, skill portfolio Peer analysis | Scope, sourcing models, locations Locations | Cost, skills, sustainability, portfolio – plus a tracking tool Tracking services | Service providers, locations, risk Other | Market intelligence, service provider capabilities, technologies, contract assessment Finance & accounting Procurement Human resources Recruitment process PricePointTM Global sourcing Locations InsiderTM Contact center Transaction Intelligence Healthcare information technology Information technology Cloud VistaTM BFSI1 business process BFSI1 information technology Market VistaTM Global services tracking across functions, sourcing models, locations, and service providers – industry tracking reports also available
3 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 Background and scope of the research Background of the research Latin America (LATAM) is witnessing growing interest as a delivery destination for BPO global services, especially Finance and Accounting Outsourcing (FAO). With its sizable graduate pool, low cost of operations, language advantage, and time-zone proximity with the United States, LATAM offers an attractive value proposition for organizations looking for destinations for nearshore/offshore FAO services, especially to the U.S.. Latin America accounted for about 9% share of the BPO global services industry in 2012. Within BPO services, almost half of the market is dominated by FAO and the market continues to grow. In this research, we analyze Latin America as a destination for delivery of nearshore/offshore FAO services for global service providers and buyers, across various dimensions: Market characteristics Labor pool across entry and employed talent Operating cost Risk assessment Implications for stakeholders The scope of the analysis includes: Nearshore/offshore Finance and Accounting (F&A) services in English language Includes services sectors across Global In-house Centers (GICs) and third-party service providers Analysis on key cities in Latin America: Bogota, Buenos Aires, Guadalajara, Montevideo, Panama City, San Jose, Santiago, and Sao Paulo
4 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 Table of contents (page 1 of 2) Background and methodology 5 Executive summary 7 Summary of key messages 7 Implications for key stakeholders 9 Section I: Market overview 11 Key messages 12 Market size and growth 13 Players landscape 15 Key delivery locations 17 Section II: Assessment of talent pool 18 Key messages 19 Talent pool 20 Attrition rates and competitive intensity 22 Availability of niche skills 23 Section III: Assessment of operating costs 25 Key messages 26 Operating costs 29 Wage inflation 30 Forward-looking view on costs and sustainability of arbitrage 33 Topic Page no.
5 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 Table of contents (page 2 of 2) Section IV: Assessment of risk 34 Key messages 35 Labor pool risk 38 Operating environment risk 39 Relative attractiveness of cities and associated trade-offs 42 Appendix 43 Glossary of key terms 44 GS research calendar 45 References 46 Topic Page no.
6 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 This report examines the English-delivery market for FAO services from the LATAM region. It focuses on market characteristics, labor pool analysis across entry and employed talent, operating cost, and risk assessment across eight LATAM locations including Bogota, Buenos Aires, Guadalajara, Montevideo, Panama City, San Jose, Santiago, and Sao Paulo. Overview and abbreviated summary of key messages Talent assessment Leading locations, such as Bogota, Buenos Aires, Guadalajara, and Sao Paulo, offer sizable entry-level graduate pool with English language skills Some locations in LATAM offer bi-lingual (Spanish + English) pool across entry and experienced level Some of the findings in this report, among others, are: Market overview LATAM BPO market is large accounts for ~9% of the BPO global services market FAO accounts for almost half of the LATAM offshore/nearshore BPO market The FAO market in LATAM is driven by GICs and global service providers with local/regional players having limited presence (except in Brazil and Argentina) Cost assessment Annual operating cost for F&A varies significantly among locations in LATAM, with Sao Paulo being the costliest Most low-cost LATAM locations offer significant cost arbitrage (45-70%) over the United States, and that is likely to continue over the next five years Risk assessment Bogota, Guadalajara, and San Jose are relatively low-risk locations in LATAM Some concerns on scalability due to small talent pool, especially in Montevideo and Panama City
7 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 This report assesses key aspects of FAO global services in Latin America Overview of global services in FAO in Latin America Assessment of cities Assessment of operating environment Relative attractiveness of cities and associated trade-offs Cost-risk trade-offs Low High High LowRisk Cost City 1 City 4 City 7 City 2 City 5 City 6 City 8 City 3 Guadalajara Santiago San Jose Buenos Aires Montevideo Panama City Bogota Sao Pauolo Maturity level Locations Established Bogota Buenos Aires Guadalajara Montevideo Panama City San Jose Santiago Sao Paulo Emerging Caracas Georgetown Lima Monterrey Medellin Nascent Belize City Cordoba Rosario Tegucigalpa Willemstad Labor pool risk Risk Entry-level pool Experienced pool Operating environment risk Competitive intensity Infrastructure availability Safety and security Business environment risk Macro-economic Regulations and ease of doing business Geo-political Government support Employable entry-level labor pool for F&A Experienced pool employed in F&A across leading service providers and GICs Evidence of scale achieved for F&A Number and nature of competition Attrition rates for F&A services Network readiness, power supply infrastructure, transportation infrastructure, and international air connectivity A B C Security, crime and violence, and threat of natural disasters GDP growth, currency trends, inflation, and credit rating IP protection, ease of doing business, legal and regulatory policy, tax policy, and corruption perception Political stability Business incentives provided by the government India Philippines Canada LATAM CEE Ireland China Others Finance & accounting outsourcing Others Distribution by global service offerings in LATAM 2012; US$ billion Country-wise distribution of BPO global services market 2012; US$ billion 100% = 100% =
8 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 LI research calendar Topic Release date Published Current November-2013Next-wave Location Profile – Guatemala November-2013Next-wave Location Profile – Cebu, Philippines Q1-2014"Next-wave" location profiles 3: Bulgaria Q1-2014Global Locations Annual Report Q1-2014Emerging Locations Trends report 1: Delivery of IT services from the U.S. Q1-2014"Next-wave" location profiles – Latvia Q1-2014"Next-wave" location profiles – Peru Q2-2014Function Focus 1: Tier-2/3 locations in India for IT ADM delivery Q2-2014Emerging Locations Trends report 2: Emerging opportunities in tier-2/3 cities in the Philippines Q2-2014"Next-wave" location profiles – Kenya Q2-2014"Next-wave" location profiles – Sri Lanka December-2013Finance & Accounting in Latin America (LATAM)
9 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-1009 Additional research references The following documents are recommended for additional insight on the topic covered in this report. The recommended documents either provide additional details on the topic, or complementary content, that may be of interest: 1. Next-wave Location Profile – Cebu, Philippines (EGR-2013-2-LP-0999); 2013. Everest Group’s Next Wave Location Profiles provide crisp, yet insightful assessment of emerging / “next-wave” countries or cities for services delivery. This report on Cebu offers perspectives on global sourcing profile of Cebu, key opportunities, drivers, and challenges, along with an overview of talent availability, operating costs, and environment risks. 2. Next-wave Location Profile – Guatemala (EGR-2013-2-LP-0998); 2013. Everest Group’s Next Wave Location Profiles provide crisp, yet insightful assessment of emerging / “next-wave” countries or cities for services delivery. This report on Guatemala offers perspectives on global sourcing profile of Guatemala, key opportunities, drivers, and challenges, along with an overview of talent availability, operating costs, and environment risks. 3. Global Location Insights: November 2013 – Baltic States – Scandinavian “Backyard” or Emerging Opportunities to Service Western Europe (EGR-2013-8-R-0996); 2013. This report evaluates the current global service delivery landscape and suitability of Baltic States for supporting Western Europe and other regions for IT and BP services. Additionally, it offers perspectives on the drivers and challenges for the global services industry in the Baltic States and their future outlook as global delivery locations. For more information on this and other researches published by Everest Group, please contact us: Aditya Verma, Senior Analyst – Global Sourcing Manu Mehndiratta, Analyst – Global Sourcing: firstname.lastname@example.org email@example.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240 Phone: +1-214-451-3110 E-mail: firstname.lastname@example.org
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This research report analyzes LATAM as a destination for nearshore/offshore FAO services in English language and the region’s unique value proposition.
Background of the research Latin America (LATAM) is witnessing growing interest as a delivery destination for BPO global services, especially
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