Outsourcing Outlook: Latin America

CIO — With an estimated population of 559 million, a growing percentage of which is multi-lingual and well-educated, Latin America has become increasingly attractive for all types of business. Its IT services sector has grown rapidly—nearly doubling in the past five years. In Brazil alone, IT has become a more than $9 billion per year market. While such growth rates may not be sustainable during the current global economic crisis, Latin America is a logical place for IT to flourish, especially as the services industry scrambles to recover and regroup following the disastrous terrorist attacks and financial scandals in India.

A former boss used to describe how, as a business school student in the early 1990s, he participated in an international program where he was teamed with other MBA students from Europe, the United States and Latin America. As they worked together on cases, he found that the main area of concern varied, usually depending on the students' origins. North Americans tended to focus on such aspects as pricing, marketing, and benchmarking; whereas Europeans concentrated on sustainability, environmental and social impacts, and unions. Latin Americans' main concern was survival ability.

Last year, I found a significant change in the mindset of Latin American MBA students at two Latin American conferences of the Harvard Business School and the London Business School. At both events, the primary topics were innovation, globalization, and vast possibilities for growth. Countries such as Colombia and Peru had experienced unprecedented growth and were seen as offering great potential—much like Brazil, which had achieved a more elevated status as the first (at least in the acronym) of the fast-growing developing BRIC economies, Brazil, Russia, India and China.

Speakers, who included successful entrepreneurs, private equity investors, investment bankers, and former heads of state, concluded that, despite the economic slowdown of the United States, growth opportunities seemed unlimited for most Latin American countries. This optimism was driven in part by high oil prices and a huge demand for commodities, which seemed endless way back then in the first quarter of 2008.

Forum experts said the notable exclusions to continue with this economic expansion bonanza were: Venezuela, for obvious reasons; Mexico, for its strong dependency on the already-struggling U.S. economy; and Argentina, for its erratic economic policies and high risk of defaulting on its foreign debt obligations. (Also read The 25 Most Dangerous Cities for Offshore Outsourcing.)

Last September, a few days before the Lehman Brothers' collapse, a colleague in Buenos Aires said their operation would survive the pending financial meltdown, because "facing crisis is like a modus vivendi for us, our status quo."

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