Latin America is not far behind legacy outsourcing destination China, which is ranked second at 27 percent, while India leads with 60 percent of companies outsourcing to this country. This is revealed by a survey from Capgemini, a leading provider of consulting, technology and outsourcing services.
Today (Sept. 14), it announced the results of the second annual Capgemini Executive Outsourcing Survey, which found that Latin America is the third most popular outsourcing destination, with 25 percent of responding companies currently outsourcing to this region.
Latin America refers to the countries of Mexico, Brazil, Argentina, Chile and Guatemala.
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The survey, commissioned by Capgemini and conducted online by Harris Interactive, among 300 senior executives at Fortune 1000 companies also identified the top reasons for executives to select Latin America as part of their outsourcing strategy.
More than two-thirds (69 percent) of surveyed executives cited cost of labor as the top reason why their company might outsource to Latin America, while other attributes reported included technology and infrastructure capabilities (49 percent), skilled labor (48 percent), and economic stability (44 percent).
These attributes are aligned with the key reasons why companies choose to outsource in general suggesting that outsourcing to Latin America will continue to expand.
Other reasons cited as important for selecting Latin America for outsourcing include its proximity to the U.S., time zone alignment and accent neutrality. These attributes are all unique to this region when compared to other outsourcing locations such as China and India.
The Executive Outsourcing Survey findings also revealed that almost half (45 percent) of executives who do not currently outsource to Latin America say their company would be interested in considering the region as a resource for outsourcing in the future.
In addition to uncovering Latin America as a leading outsourcing destination, the survey highlighted the region’s increasing value to the global economy.
An overwhelming majority of executives (89 percent) believe that Latin America is an emerging market that will become increasingly important to U.S. businesses, and that there are advantages to doing business in Latin America (83 percent).
Further, more than half (56 percent) of executives believe doing business in Latin America is becoming easier than doing business in other parts of the world.
“As the economy rebounds, companies are looking to use outsourcing more strategically as a tool to increase efficiency, yield significant cost savings and drive growth; this includes considering locations beyond India,” said David Poole, VP and Head of Americas Business Process Outsourcing, Capgemini.
Other survey highlights include:
- The top five factors listed by executives in choosing an outsourcing destination are labor costs (79 percent), technology & infrastructure capabilities (62 percent), skilled labor (61 percent), language proficiency (49 percent) and economic stability (44 percent);
- Less important factors listed by executives in choosing an outsourcing location are tax benefits (26 percent) and proximity to the U.S. (3 percent);
- Forty-one percent of executives outsourcing to Latin America cited language proficiency as a key reason;
- Forty percent of executives cited the average education of the Latin American workforce as a key factor in their decision to outsource in Latin America.
This Executive Outsourcing Survey was conducted online within the United States by Harris Interactive on behalf of Capgemini between April 6 and April 16, 2010, among 300 senior executives at Fortune 1000 companies.
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