In order to survive in Latin America, outsourcers need to capture a portion of outsourcing from the United States and Europe. But the fear of job losses from the US to Latin America is much ado about nothing.
Just 10,600 customer service positions are outsourced from the United States and Europe into Latin America. To put this into perspective, there are 2.86 million call center agent positions (APs) in the United States, meaning that just 0.4% are outsourced from the US to Latin America.
By 2008, around 25,100 APs – still just 0.9% of the US AP total – are likely to be outsourced from the United States to Latin America.
Latin American market growing strongly
The Latin American call center market is the fastest growing in the world, spearheaded by Brazil, Mexico and Argentina. Currently the region has over 336,000 agent positions in 5,100 call centers.
Call centers and APs in Latin America are expected to grow at a compound annual growth rate (CAGR) of 18.4% and 16.8% respectively to a total of 11,900 call centers and 730,000 APs by 2008. By comparison, over the same period, APs are likely to grow at a CAGR of 15.1% in Asia Pacific (APAC), and 7.1% in Europe, the Middle East and Africa (EMEA), compared to less than 1% in the US.
Targeting growing Latino buying power
The growing purchasing power of the Latino population in the US has not escaped the attention of corporate firms. Improved levels of customer service and the labor arbitrage fuels both outsourcing and expansion of US-based customer service operations to Latin America. The 2002 US census reported that the US Latino population is now not only the largest minority in the United States but also possesses an estimated $454 billion of buying power.
US corporations have just begun to tap into the buying power that their Latino customers already possess by offering Spanish-language customer service. Not only are Latinos fueling offshore call center investment in Mexico, but as companies add capacity to serve Latinos they could be a more powerful consumer than previously expected.
Outsourcing from US and Europe
A total of 23,000 offshore call center APs are expected to be outsourced from the US and Europe to Mexico and Argentina by 2008. Both destinations are proving to be popular nearshore and offshore components to an outsourcing strategy for clients with significant amounts of bilingual English and Spanish calling.
Most calling from Europe originates in Spain and Portugal although there is a small fraction from Germany and Italy. The lion’s share of offshore calling in Mexico is from the US – primarily press 2 for Spanish service. Argentina’s location 3 hours ahead of the US Eastern seaboard makes it an ideal destination for outsourcing from the US. In fact, some outsourcers prefer to route English-language calls to Argentina instead of India.
English-language calling from the US to Latin American outsourced call centers can be as high as 60%, with 40% devoted to Spanish-language callers from the US. Latin American call center attrition rates range between 30% in Chile and Mexico to 15% in Argentina and Brazil compared to 90% in the US. The hourly wage for a bilingual agent can be as low as $2.00 an hour. Those outsourcers that can handle English and Spanish calling have begun to leverage labor arbitrage found throughout Latin American – especially Mexico and Argentina – into a comprehensive nearshore and offshore outsourcing strategy.
