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Where are the Techies
If Che Guevara were to journey up Latin America on his motorcycle today, he would likely not be drawn to revolution by seeing lack of education, poverty and poor infrastructure around him. Instead, the trained doctor would have probably resigned himself to practicing medicine, given the prosperity that the industry, especially services, is bringing to the continent.
The big change in the continent since Che’s time is the its improved educational infrastructure. Mexico, for instance, today graduates 58,000 engineers (17 percent of the total grads per year) and 37,000 science students (11 percent) per year, though it needs to develop its educational infrastructure further to compete with majors like India and China.
In Chile, while the number of employees in the offshore IT-services space is quite small, the country has an excellent educational infrastructure with 63 Universities, 47 professional institutes and 111 technical centers. Interestingly, in the IT-services arena, the country has better quality of employees than other destinations such as the Czech Republic, Malaysia and Hungary, says a McKinsey research report. But collaboration between the government, companies and universities is required for more practical and flexible curricula.
| ARGENTINA |
| Tech grads: 17,000 |
| Lang.s supported (call centers): English, Italian, Spanish |
| *Emerging outsourcing cities: Buenos Aires |
| IT providers: Accenture, Atos Origin, Capgemini, EDS, HP, IBM, Oracle, SAP, Sun Microsystems, TCS |
| Call centers in 2008: 854 |
| Call-center agents in 2008: 45,000 |
In Brazil you can hire 13 out of 100 local engineers with appropriate degrees; this is higher than China’s average, where you can expect to hire only 10 out of 100 grads with relevant degrees, according to McKinsey.
Taking this trend forward, many companies have announced to set up their centers in the region. GlobalLogic, a U.S.-headquartered outsourced product development company, for instance, is planning to set up a delivery center in Latin America in the next 12 to 16 months. The reason stated by the company is, “We will go to places where the talent is. We will hire 1,000 employees in Southern America by the end of 2010,” says Sanjay Singh, President, GlobalLogic.
What About Wages and Attrition
One of the main attractions of Latin American countries as ITO destinations is that they are not plagued by two key problems that leading destinations like India are suffering from: Rising wages and attrition rates. An advanced IT programmer in Argentina, for example, gets around $16,000 to $19,000 per annum while advanced technology employees in Brazil, Chile and Mexico earn between $25,000 and $27,000 annually, and in Uruguay these rates can be as low as $15,000 and $18,000 annually. Brazil’s hourly wages are around 40 percent of U.S. standards.
Also, the attrition rate in the region is less than 5 percent. “Retention of employees is not so difficult here. Today, there is a lot of competition from big companies like Accenture, CSC, Infosys and Infosys. So at this point of time, we want to make sure that our workforce is secure,” says Jeff Johnson, U.S. MD, SVP, Neoris, an ITO company that has offices in Argentina, Brazil, Chile, Colombia and Mexico.
Companies like Neoris, Softtek, Globant, Politec, DBA, CPM and Dextra are now not only competing with each other but also with Indian IT service providers like Infosys, Genpact, Satyam and TCS, and international biggies such as IBM, HP, EDS and Perot Systems.
| MEXICO |
| Grads: 240,000 |
| Tech grads: 58,000 |
| Lang.s supported (call centers): English, French, German, Spanish |
| *Emerging outsourcing cities: Juarez, Monterrey |
| IT providers: Accenture, ACS, Atos Origin, Capgemini, EDS, HP, IBM, Logica CMG, Microsoft, Neoris, Oracle, Softtek, TCS |
| Call centers in 2008: 3,780 |
| Call-center agents in 2008: 183,800 |
| Brazil and Chile Vs. the Rest |
Country
|
Shared-services exports |
Size of ITO and BPO markets |
Employees in IT services |
| Brazil |
3 |
3 |
3.5 |
| Chile |
4 |
5 |
4.5 |
| China |
4 |
2.5 |
3 |
| Czech Republic |
4 |
5 |
5 |
| Hungary |
3 |
4.5 |
5 |
| India |
1 |
3 |
2 |
| Malaysia |
4 |
4 |
5 |
| Mexico |
5 |
4.5 |
4 |
| Philippines |
5 |
5 |
3.5 |
| Poland |
4 |
4 |
4 |
| * Strengths and weaknesses (on a scale of 1 to5, where 1 is attractive and 5 is unattractive for offshoring) Source: McKinsey |
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