Earlier this summer, Capgemini signed a deal with Brazilian conglomerate Grupo Algar, to support its accounting, account receivables, account payables, tax, human resources administration, payroll and procurement services. Capgemini says the engagement, which includes standardization of processes and service levels across two Algar business units and nine of its companies, will increase productivity by over 45 percent in addition to improving quality and flexibility to keep up with the privately-held holding company?s expected growth.
Latin America is an increasingly important market for international BPO providers. Capgemini opened its Brazil BPO hub in 2008, joining such BPO powerhouses as Accenture and IBM, local leaders including Politec and Stefanini IT Solutions, and Indian competitors Tata Consultancy Services and Satyam. According to Capgemini?s global head of BPO sales Claude Hartridge, the country is one of the company?s top three growth markets. Last September, they made an even bigger bet on Brazil investing nearly $300 million in regional IT and BPO service provider CPM Braxis. ?Latin America is an increasingly important part of any global company?s portfolio,? Hartridge told the Outsourcing Center. ?We are starting to see a significant increase in opportunities in the region.?
Brazil serves as both a nearshore and onshore services hub. ?Currently, we have an interesting balance of international customers with strong central decision-making that want us to execute locally, a number of global companies where BPO decisions are made within the region or locally, and a number of local and regional companies that are first movers to BPO,? said Hartridge, noting that at least 40 percent of Capgemini?s BPO business in Brazil is local. For Brazilian-based providers, the number is even higher with as much as 90 percent domestic revenues, says Forrester?s Belissent.
More Than Cost Savings
Those local customers like Grupo Algar are in high-growth mode. They?re looking for BPO partners to deliver what Hartridge calls the five ?C?s? ? control, compliance, consistency, consolidation, and cost savings?to support sustained and profitable growth.
?The main driver is compliance,? said Grupo Algar?s shared services director Mauricio Llemos. The company was also looking for a BPO provider who could apply it best-in-class processes to the conglomerate?s transactional services so its companies can focus on their core business, in industries as varied as agriculture, technology and aviation.
?The key success factors [in Brazil] are not always cheaper prices or simple labor arbitrage,? Hartridge said. ?Clients want to have confidence that the service provider can help them get to the next level of managed growth.?
While Brasscom touts an average of only 4 percent turnover within BPO teams in Brazil, which can have a positive impact on productivity and costs, the region?s BPO market remains challenging for global players who must contend with such issues as rising costs and the potential for geopolitical instability. Out of the largest developing economies, Brazil has the second highest number of English speakers behind only India, according to Brasscom, but language skills remain an issue for customers requiring English fluency.
Such problems are par for the course in any emerging BPO market, Hartridge contends. ?Inflation is a global issue,? he said. As for geopolitical risk, ?we need not look any further than the riots last summer in France over retirement age or the recent riots in the U.K. to see that politics and the socio-economic environment can give rise to strong passions or irrational behavior,? Hartridge added. ?The countries where we primarily operate in Latin America?Brazil, Chile, Argentina, and Guatemala?have had years of stable political environments and crime rates have not impacted our operations or the safety of our staff or the clients.? Language requirements for BPO services are addressed early in discussions with clients, according to Hartridge, to determine how much interaction is voice-related in native tongue versus written documentation and which transactions may necessitate native speakers.
Strategies for Success
The outsourcing business processes that work in Brazil for the first time must not rely solely on their vendors to mitigate such potential risks. Potential BPO customers should:
- Keep an eye on costs. BPO customers looking for rock bottom prices should look elsewhere. Brazil has the highest salaries and taxes in Latin America today. Factor in currency and inflation risks when making a business case for Brazilian BPO.
- Don?t expect Brazil to be India. For better or for worse, Brazil is not a mini-India. On the upside, it?s much closer in distance and cultural perspective to U.S. customers, and its workforce is reported to be more creative. On the downside, some industry watchers report less of a sense of urgency in employees than their counterparts on the subcontinent, and local providers have less process experience.
- Plan for language issues. Many BPO customers may require only Portuguese or Spanish speakers, but those that require English fluency?for call center work for example?should insist on unannounced site visits and call listening sessions throughout the course of the deal.
- Consider scale. Brazil is the biggest provider of BPO services in Latin America, but it still pales in comparison to India. Make sure your provider can meet your capacity needs while maintaining quality.
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