By Robert L. Scheier
By Robert L. Scheier
As Latin America delivery assurance head for Tata Consultancy Services, Sridhar Venkataraman has a good vantage point to see changing customer and economic trends in the Nearshore. We recently asked him about everything from the economic downturn to mobile application development and TCS’ Nearshore strategy.
Q: Are you seeing any slowdown in business as a result of the global downturn?
SV: The strength of the local economies is easing the impact of the slowdown and global uncertainty. For example, the downturn has had very little impact on Brazil, which has an unemployment rate of less than five percent. So Latin America is still a big market. And in the event of a downturn, budget cuts at large North American companies would increase the demand for services from less expensive Nearshore providers.
Q: In what areas does Latin America excel as an outsourcing destination?
SV: Two major advantages are the multiple language skills and the time zone proximity. The wide availability of bilingual English and Spanish-speakers makes Latin America a very cost-effective way to provide BPO services for Spanish-speaking customers in North America.
We have found the time zone proximity – being within an hour or two of the customer’s clock versus 12 hours – really helps our customers achieve the cost and time savings they want from agile development methodologies. This is just as true for more general business process outsourcing. Working in the same, or a very close, time zone tends to increase productivity because customers or co-workers can get faster, more immediate answers to their calls or emails.
The U.S. and Latin America also both have less formal cultures than in India, and this makes everyday communication easier. For example, is a person from India is speaking with someone from the U.S., and there is a dog barking in the background, they might be taken aback and asked what happened. Someone from the U.S. or Latin America will ask the other person on the call if they need to take a minute from the call to take care of the dog. This level of flexibility and understanding can ease professional interactions.
Finally, many business processes such as those for home loans, credit cards and even customer loyalty programs are much more familiar to Latin Americans than to Indians. This reduces the time, effort and cost required to bring staff up to speed on outsourced business processes.
Q: Is the Nearshore a good place to outsource mobile application development?
SV: Brazil has gotten more use of this technology than other Latin American countries, and is thus in a good position to lead in the development of mobile applications. For example, consumers there often use mobile apps to pay taxi bills and charging the fee to their mobile account.
Q: Does TCS focus its delivery centers in Uruguay, Chile, Mexico, Brazil and Colombia on different types of work?
SV: No. We have sufficient capability to deliver any project on a “location agnostic” basis, combining our knowledge of the local market with the global best practices we have developed for other customers.
Given that, however, we are focusing Brazil more on the domestic market rather than doing any Nearshore work because Brazil is a huge market. What’s more, current labor costs mean there’s no cost advantage for doing work for North America from Brazil. But cost is most important when deciding where to perform commodity services. For example, we have one North American customer who is choosing to have work done in Brazil not for cost reasons, but because TCS has staff there with extensive knowledge of capital markets. Even though it is more expensive than some other regions, for that type of engagement, you do have to have that sort of talent available.
Q: What other trends are you seeing?
SV: Cloud computing of course is one big area that can provide a lot of value to our customers. We’re involved in every aspect of this, using our deep understanding of customers’ application portfolios to help them decide which parts of their infrastructure to migrate to which type of cloud platform. Sometimes we help the customer define their strategy, sometimes we help them make the actual move to the cloud, and sometimes we do both.
We’re also seeing a general trend for customers to diversify the locations of their service providers. They are doing this both to utilize as broad a pool of talent as possible, and to mitigate the impact of natural or man-made disruptions on their business.