Nearshore Americas

Mexico Climbs to Sixth Place in Global Outsourcing Ranking

Mexico recently rose five spots to become the sixth-ranked country worldwide in A.T. Kearney’s 2011 Global Services Location Index, boosted by depreciation in its currency and “increased nearshoring sentiment in the United States.” Now the highest-ranked Latin American country in the index, wages in Mexico fell 18 percent in dollar terms last year “as it was buffeted by economic headwinds from the United States,” according to A.T. Kearney’s summary of the index. Those lower wages, one of the highest concentrations of Capability Maturity Model Integration (CMMI) certified centers in the world, as well as improved management schools, will continue to draw customers despite “the difficult times related to escalating drug violence in the northern states,” the report said.

The country’s strong English-language skills make it a center of BPO and voice-based activities with a somewhat lower level of voice-based services. The report did cite, however, the Mexico First program that aims to certify 60,000 specialized workers in both technical and soft skills by 2013; the Mexico IT initiative to promote Mexico as a nearsourcing location, as well as ProSoft, which offers subsidies and tax incentives for firms investing in the IT sector.

A.T. Kearney also chose Mexico for the only city-by-city examination (see chart) “because not only is it a top performer in a large industry, it also presents a range of capabilities” across multiple locations. It cited Guadalajara’s history as a major electronics center, as well as the 16 ITO and BPO centers, 150 software companies and 35 design houses located there. It did note, however, “competition is fierce for the limited talent that speaks English.”

Monterrey is another major ITO and BPO center, the report said, which is home to Mexico’s most successful home grown IT firms as well as some of the country’s top technical talent through the Monterrey Technical Institute. The report did note, however, that “a general sense of unease” related to an upsurge in drug-related violence is stifling investment or expansion of operations.

Mexico City, the report said, has seen growing voice, BPO and KPO (knowledge process outsourcing) activity, with an increased focus on BPO on recent years. Queretaro’s skilled population and lower wage rates make it a viable alternative to more well-known locations, although its labor pool is “shallower” than other Mexican regions. Culiacan, another “tier two” location, is focused mainly on IT and contact centers. Yet another emerging alternative is Hermosillo, which has in the past been primarily devoted to manufacturing “but which is emerging as an IT destination in close proximity to clients on the U.S. West Coast.”

While Ciudad Juarez has long been a center for nearshore BPO services, it has been hit hard by drug-related violence, the report said.

Elsewhere in the Nearshore, Chile dropped from eighth place to tenth, largely because wages remained relatively stable as it escaped the worst of the economic contraction seen elsewhere in the world. Brazil kept its 12th place ranking despite a strengthening currency which hinders the growth of exports. Costa Rica moved up three spots to 19th place “thanks to infrastructure modernization, increased international bandwidth and improvements in electricity infrastructure.”

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At 43rd place, Colombia performed particularly well in “people skills and availability,” with A. T. Kearney citing Colombian Spanish as “a neutral accent that allows call centers in Colombia to serve people throughout the Spanish-speaking world with relative ease.” It noted the need for improved English skills to continue to draw customers as its low-cost lure fades with an expected appreciation of the currency.

This article was originally published on Global Delivery Report




1 comment

  • In the midst of economic recession in many regions of the globe, IT outsourcing is actually thriving. In reality, IT outsourcing is assisting businesses cope with the pressing issue. Next are the justifications of outsourcing IT.

    First is expense cutting. When the brainchild of outsourcing was being conceptualized, cost is not actually the infamous objective why businesses outsource their secondary performances. It is permitting an alternative party to fulfill the function that they (the client) usually are not competent at doing. However, it was around the 1990s that outsourcing to decrease expenditures was initially initiated. And the trending really persists in the world today.