Politics, Business & Culture in the Americas

Telecommunications: The Region’s Growing Customer Service Industry

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Latin America has a new competitive edge: call centers. The growing Spanish-speaking population north of the Rio Grande, combined with increased English proficiency, has made the region a highly desirable near-shore customer care destination for U.S. and Canadian companies.

Argentina, Brazil, Chile, Colombia, Costa Rica, and Mexico are the industry’s top investment destinations. In each, business expansion is driven by a young, bilingual, educated, and articulate labor force; increasingly solid technological infrastructure; lower operating facility and labor costs; and time zones that allow access to a large market.

Latin American call centers—or contact centers, as some are termed—have represented a bright spot in the outsourcing business, which hit difficult times in 2008–2009 because of the global economic slowdown. Through 2012, the regional market is expected to grow, though at a slower pace than before the crisis.

The April 2011 merger of two leading business process outsourcing firms—the Argentine–Colombian firm Allus and Canada’s Contax—shows the dynamism of the market. Contax was drawn into the merger because of the region’s favorable regulatory framework, which includes governmental efforts to control inflation and ease red tape and tariffs. The combined operation employs 120,000 people (85,000 from Contax) with operations in Argentina, Colombia, Peru, Spain, the U.S., and Brazil.

The merger shows how growth is not limited to foreign companies seeking to outsource their customer care operations. Local businesses are also benefiting. “There’s an increasing appetite to go after Latin America from Latin America and not just offshore,” explains Jose Romero, CEO of the new Allus/Contax conglomerate. This locally driven growth stems from the success of regional companies such as Mexico-based Softtek, which provides outsourcing services.

However, future growth will require tapping into a maturing workforce pool while keeping costs in check. On the labor front, the International Customer Management Institute has found part- and full-time call center work to be an attractive opportunity for students, the elderly and the disabled, who can earn between $7,500 and $12,000 per year. These jobs offer an outlet for workers to use their bi- and multilingual skills, and to enter a business on the ground floor. At American Express, for example, the vice president of customer service for United Kingdom operations, Jose Vazquez-Mendez, began his career at the Mexico City call center.

But how do individual countries at the forefront of the region’s call center industry stack up?

Mexico is the regional leader, according to the A.T. Kearney Global Services Location Index (GSLI), which ranks outsourcing and call center competitiveness. In the 2011 survey of 50 countries worldwide, Mexico ranked number six (up from 11th place in 2009). Reasons include its proximity to the U.S., the number of dual-language call centers and an 18 percent drop in Mexican wage earnings. It is taking advantage of the so-called Latin American trifecta: “privileged location, abundant talent and competitive spirit.”

Chile is another powerhouse. Political and economic stability, excellent telecommunications infrastructure, skilled labor and a commitment to clear investment rules all contributed to another year on the GSLI top 10 list.

Colombia is a newcomer to the call-center industry. But Colombians’ accents—allowing workers to serve a wide number of other Spanish-speaking countries—and improvements in English-speaking skills make it increasingly well positioned. Government programs that require all schoolchildren to receive English-language training also help provide the skills demanded by the industry.

Since the rise of global call centers in the 1970s, the greatest challenge remains how to balance high costs with pledges to serve customers 24 hours per day, seven days per week. That has not changed with the expansion in Latin America. As anyone who has ever tried to find help for a glitch-ridden computer can attest, the region’s call center boom may be welcome news to job-seekers, but the final judge of quality and efficiency will be the consumer.

Tags: Call Centers, Policy update, Telecommunications
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