Indian IT dances to Latin American tunes

Written by Debojyoti Ghosh | Debojyoti Ghosh | P P Thimmaya | Bangalore | Updated: Mar 18 2013, 06:40am hrs
A good bit of Latin American flavour is spreading across Indias $100-billion IT/BPO sector, with an increasing number of companies expanding into this region to serve their key North America clients better, given this geographys proximity and cultural affinity to the US market.

Starting from Mexico all the way up to Argentina, Indian IT companies like Tata Consultancy Services (TCS), Infosys, Wipro and Mahindra Satyam have been adding more muscle to their presence in these regions with even a mid-tier firm like Hexaware Technologies joining this list to start a near-shore destination.

If India has become the dominant offshore destination for the global IT industry, the Latin America region with a sizeable qualified talent pool provides that extra sense of comfort for US companies that outsource their technology requirements. The current spend on IT by companies in the region is estimated at $70 billion.

Infosys, Indias second-largest IT services exporter, recently announced the opening up of a business process outsourcing (BPO) centre in San Jose, Costa Rica, with over 100 employees initially. It will provide key services in the strategic sourcing and procurement area for Procter & Gamble, the worlds leading FMCG company.

Infosys also plans to expand the BPO offerings in Costa Rica for its global clients in areas such as finance and accounting, human resources management, analytics, legal processes, customer relationship services, marketing and supply chain management. Besides this, the IT major already has a presence in Mexico and Brazil.

Similarly, Hexaware has also announced the opening of its third global delivery centre in Saltillo, Mexico, and it currently serves over 30 customers delivering over 100 active projects.

Raghavendra K, vice-president and head, HR, Infosys BPO, said, We look at areas which are strategic for our clients. Through the Latin America centres we are not only serving global clients but large Spanish and Portuguese-speaking markets. The region has a ready-made workforce with language skills. Latin America has a good education system so the quality of people is good who understands the local nuances as well as the business requirements.

Pradeep Mukherji, president & managing partner, Avasant, an outsourcing advisory firm, said, US customers are demanding from their IT service providers to have their centres in Latin America as this region falls in the same time zone and (the centres) are able to provide certain niche IT & BPO requirements.

The predominance of Spanish in this region is an added advantage for Indian companies as they are able to provide BPO services to the Hispanic population in the US.

Added to this, a conducive ecosystem is also helping Indian companies expand into Latin America. Mukherji felt that this region has got its act together. Governments are now keen on attracting foreign investments and are making a whole bunch of efforts to incentivise IT companies to come into their countries, he said.

At the same time, there are other Indian IT companies that have taken the inorganic path to foray into Latin America. Mahindra Satyam acquired Complex IT, a Brazil-based SAP consulting provider in last month in an all-cash deal. The acquired company has about 500 employees and focuses largely on the enterprise resource planning (ERP) market in the Brazil.

During the announcement, Mahindra Satyam pointed out that the market dynamics are different in Latin America compared with Europe and US and with IT services growing rapidly in emerging markets, the acquisition was apt.

Though the primary focus for Indian companies operating out of Latin America is to serve the US market, there are also certain long-term plans in serving the domestic markets of the region. According to experts, Brazil is the second-fastest-growing geography globally for SAP. Software revenue for SAP grew 20% last year.

However, the pioneer in the foray into this region has been TCS, starting its operations a decade ago. It currently has over 8,000 employees spread across Mexico, Ecuador, Colombia, Peru, Chile, Argentina, Brazil and Uruguay. Similarly, Wipro has been present in Latin America for more than six years with presence in eight major cities across Brazil, Mexico, Colombia, Chile and Argentina. It has development centres in Brazil, Argentina and Mexico.

TK Kurien, CEO, IT business, Wipro, in an earlier interaction with FE said that the company is optimistic on Latin America. I am bullish about Brazil because with the World Cup coming in, there will be significant spending. Secondly, given the fact that large oil and gas fields have been discovered outside of Brazil, you are going to see significant oil and gas production in Latin America.