Indian IT companies expanding in Latin America
Companies like TCS, Infosys and Patni have already opened their centers in Queretaro, Mexico. This would also help them explore the emerging markets in the region, the Business Line reports.
TCS opened its seventh Latam delivery centre at Queretaro, Mexico, last week, where Patni also opened its first centre.
"We are seeing increased demand from our client base for near-shore resources. Our investment in Mexico allows us to deliver on these demands," said Jeya Kumar, CEO, Patni Computers.
TCS will hire around 500 people this year at Queretaro, for providing advanced IT services, consultancy, testing factory, BPO and IT infrastructure solutions. This will also help to serve near-shore customers in Brazil, Argentina, Uruguay and Mexico. It has around 30 local clients in sectors such as telecom, banking, finance, manufacturing and retail.
Infosys, has employed 250 people at its Mexican subsidiary in Monterrey, plans to set up a centre in Belo Horizonte in Brazil in next three-four months.
Other than a facility in Mexico, Wipro has a BPO facility in Curitiba, Brazil, serving clients like AmBev.
"The main objective of locating delivery capabilities in the Latam would be to act as near-shore centers for North American customers. However, the smaller focus would be to get local business," said Vinu Kartha, Principal at Tholons, which helps customers in outsourcing strategies.
"It will help the customers to visit and review the progress on the projects, as the U.S. customers are keener on near shore outsourcing," said Kartha, as the costs here are marginally higher than India.
"The average cost per employee for IT services in the U.S. is $150,000-175,000 a year, varying with the skills, there is a clear 50-60 percent cost arbitrage when a customer near-shores," said Praveen Bhadada, Engagement Manager, Zinnov Consulting.
One of the key disadvantages for offshore locations such as India and China is the management and communications overhead.
Bhadada said that the customers are looking to reduce their overheads, which is one of the key disadvantages for offshore locations like India and China, by having a presence in near-shore locations, which can be reached in four to six hours.
IT spending in the Latam is expected to grow at 4.4 percent in 2009, stimulated by continued IT expansion in key countries such as Brazil, Mexico, Peru and Chile among others, while the worldwide spending is expected to remain flat, according to Gartner.
Infosys was interested in firms that own intellectual property relevant to these markets, or in firms having large clients headquartered in Brazil or Mexico.
Dheeshjith V.G., Head, New Markets and Services said, "We are looking for targeted acquisition with specific criteria in Mexico." He informed that capabilities in Spanish, which is spoken in Mexico, and Portuguese, which is spoken in Brazil, are one of the key considerations as well.