Latin America: Service Providers at crossroads

Latin America has enjoyed the last couple of years with significant growth in the outsourcing sector. However with this growth in the market and the changing sourcing dynamics, are the Latin American service providers geared up to enough to enjoy a sustainable growth?

The last couple of years have been good for Latin America, with unprecedented growth in the outsourcing sector and significant M&A activity resulting in entry of several large global IT and BPO companies. Most US customer surveys rank Latin America as the third most desirable destination for outsourcing (after India and China) and global rankings of countries in the region have been improving consistently. The latest 2011 AT Kearney Global Service Location index ranks four South American countries i.e. Mexico, Chile, Brazil and Costa Rica among the top twenty. While Costa Rica is a new entrant to the top 20 others have held on to their positions and Mexico has leapfrogged five spots to be within striking distance of perennial leaders India, China and Malaysia. This is a clear indicator of Latin America’s rise as a prominent player in the global sourcing arena. On the M&A front, big ticket deals like Apax Partners‟ USD 950 million investment in Brazil’s TIVIT and Capgemini’s USD 560 million purchase of 55% stake in CPM Braxis are helping the region rapidly achieve critical scale.

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