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A new report by market analyst Datamonitor, indicates Mexico will remain an offshore contact center location of choice for US investors.
The report, Mexico: A Solution for the US Hispanic Market?, says Mexico's future in the offshore outsourcing of customer care services is secure, not just due to a growing Hispanic population in the US but also the rise of household incomes among Spanish-speakers.
This is driving levels of demands from US-based firms who wish to service their Hispanic American clients. However, the report also alludes to the growth of other players in Latin America that will be a competitive threat to Mexico for US Spanish-speaking work in the future.
Two years ago call centers were described as "quickly becoming a springboard for economic growth in the Latin American/Caribbean region" by the industry journal Latin Trade. Today, two years later, that still seems to be the case.
Much of the growth is from the strong demand for Spanish-speaking call center agents, and "the trend for American and European companies to outsource workers in developing countries, the Latin American/Caribbean call center market is expected to be the fastest growing in the world from 2001 to 2007," according to a Datamonitor report issued a few years ago.
The region's number of agent positions is expected to rise from 177,000 to nearly 700,000 by the end of 2007, and by the end of 2008, that number is expected to exceed 730,000, according to Latin Trade.
While Brazil, the largest economy in the region, will get the lion's share of the jobs, Datamonitor "expects Mexico to be the fastest growing market for outsourced agent positions through 2007, driven in large part by the efforts of outsourcers attempting to service the growing Spanish-speaking population in the U.S.," with the number of agent positions "expected to rise in Mexico from almost 51,000 in 2002 to more than 190,000 in 2007."
According to the report just released, Argentina and Chile among others are aggressively targeting the North American market, as are smaller countries including Costa Rica, Dominican Republic and Panama.
From an estimated 33,500 today, Datamonitor expects call center agent positions in Mexico, both offshore and domestically outsourced, to rise to nearly 80,000 by 2010, equating to 18 percent compounded annual growth through this period. Principal growth drivers include an ever-growing domestic market, as well as demand from the United States for multi-lingual, commercially sophisticated agents.
Datamonitor outsourcing and offshoring analyst Peter Ryan says "Mexico is one of the most mature offshore locations in the contact center outsourcing world, yet is still posting high levels of annual growth. This has largely to do with the high levels of demand coming from US-based firms that wish to service their Hispanic-American customers."
In addition, Ryan says, Mexico's move to market liberalization has increased that country's consumer class, "thereby necessitating more agents to serve domestic demand."
When addressing the US Hispanic market, Ryan points out that Mexico is advantageous to American investors given recent population trends, indicating a huge increase in the Hispanic population in the US has not been ignored by American companies: "Nor has the rise in household incomes among these Spanish-speakers."
Ryan also says that not only does the huge pool of Spanish-speaking talent benefit US companies looking for these language skills to accommodate US Latino customers, but "the location cannot be beat from the perspective of distance." While locations in South America can be up to 15 hours travel time, accessing major centers in Mexico can be done in less than half the time.
Then there's the low-cost factor: In both labor and commercial property, Mexico comes in significantly less expensive than overheads in the US, or even Canada. Investors continue to realize that if they can source customer care with all these positive attributes from a location in close proximity, they will do so with enthusiasm, Ryan thinks.
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