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Location OptimizationFebruary 2008 – Preview Deck
Topic: Perspectives on Delivery Center Locations for BPO – Latin America
Copyright © 2008, Everest Global, Inc.ERI-2008-2-PD-0177
2Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest and Location Optimization overview
Research report overview
Table of contents
3Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest supports Global 2000 organizations through three lines of business
Sourcing information repository
Comprehensive consulting services
Sourcingindustry research
Unique portfolio of services across sourcing life cycleDeep sourcing functional expertise and the advisor of choice for complex, sourcing transformational programs
Combination of quantitative and qualitative, proprietary sourcing research dataFacts on market maturitySize/type of opportunitiesUnderstanding of economic and non-economic factors
Supports overall education of the industry through an informative Web site, which posts white papers, articles, and surveys on current industry topics and trends
4Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Location Optimization is a key service offering of the Everest Research Institute
Syndicated research DescriptionHROFAOPOGS (Global Sourcing)ITO
Annual ReportMarket updatesStrategy dayAnalyst accessWebinar presentations
Service offerings DescriptionTransaction Intelligence Tracking of key transaction-based analyses: process, industry,
geography, supplier, buyer
Supplier Intelligence Functional and vertical capability assessment, geographic locations, profiling, function specific
Location Optimization Develop function-specific location strategies (cost, benchmark different locations, sustainability/maturity of different offerings)
Risk Assessment Multi-dimension risk profiling by city to allow for optimal decision-making; risk-reward trade-off analyses
Custom Research Customer-specific research to obtain specific insight
5Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
We currently track over 125 cities globally across multiple functions
Source: Everest Research Institute (2008)
Experience includes serving global majors across industry verticals – energy, pharmaceuticals, banking and financial services, technology, and outsourcing suppliers
Over 40+ projects
completed
6Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Our ability to deliver insight on locations is based on extensive and continuing market research…
Team of eight analysts
focused on Location
Optimization
Proprietary & Confidential. © 2006 Everest Partners, L.P.1
125+ cities currently host offshore delivery centers
1 Based on analysis of delivery center locations for 42 suppliersNote: Map not to scale
Source: Everest Research Institute
8
27
8 105
169 9
3 3 1
10
2 1 2 2 0
12
North America Latin America W. Europe E. Europe Middle East & Africa Asia
>5 suppliers2-5 suppliers1 supplier
Number of cities with supplier presence1
Supplier location databaseCity databaseCity profile: Bangalore - Call centre
Salary costs (US$ p.a.)
Base salary-call center agent 3,043Gross salary-call center agent 3,408Base salary-call center supervisor 5,180Gross salary-call center supervisor 5,802Base salary-call center manager 21,725Gross salary-call center manager 24,332Base salary-call center COO 73,021Gross salary-call center COO 81,783
Education
Number of university graduates pa 71,335Number of high-school graduates pa -
Captive location databaseNo. Company name
Parent industry vertical (primary)
Time since inception
IT (ADM and Infra) BPO KPO CC
Engineering, R&D
Comments on services offered
FTE estimates (date variable)
1 3Com Telecom and hi-tech <3 yrs Software development
100
2 ABB Manufacturing 3-5 yrs Software development &
500
3 ABN Amro BFSI 3-5 yrs Banking transaction
2000
4 Adobe Telecom and hi-tech >5 yrs R&D 600
5 Agilent technologies Telecom and hi-tech <3 yrs Application and SOC Chip design,
1000
6 Airwide solutions Telecom and hi-tech <3 yrs 100
7 Akzo Nobel Car Finishes
Others 3-5 yrs Develop products and color NA
8 Allianz Cornhill BFSI 3-5 yrs IT application development and 500
9 Alsthom Manufacturing <3 yrs Engineering and design services, 1,000
10 Amazon Telecom and hi-tech <3 yrs Software Development,
NA
11 AMD Telecom and hi-tech <3 yrs Design 120
12 American Express BFSI >5 yrs F&A back-office HR processing,
3,000
13 AOL Telecom and hi-tech 3-5 yrs Contact center , software
1,650
7Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
…and a wide network of relationships
Brazil
Costa Rica
EL Salvador
Northern Ireland
Malaysia
Jamaica
Philippines
Poland
Romania
South AfricaUruguay
India ChinaCzech Republic
Denmark
FinlandSweden
Scotland Estonia
Slovakia
Thailand
Singapore
Argentina
Mexico
Russia
Turkey
Chile
8Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest engages with clients in multiple ways to assist with location-selection decisions
Increasing specificity/sophistication
City profiles
ObjectiveCity overview for specific functions
Illustrative deliverablesDemographics Functional skillsCostsMarket landscapeLabor
Location prioritization
ObjectiveRelative attractiveness and prioritization of cities across functions
Illustrative deliverablesComparison of cities on costs, labor pool, language/functional skills, market activity, and risks Short-list most attractive options and highlight cost-risk trade-offs in making location choices
Location strategy
ObjectiveDevelopment/review of company-specific delivery center strategy and/or location selection
Illustrative deliverablesEvaluate best-fit location based upon alignment with company strategy and business plansEvaluate alternate delivery modelsDue diligence
This report is a standard location prioritization analysis that has not been customized to a specific organization’s objectives or needs
9Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest and Location Optimization overview
Research report overview
Table of contents
10Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Table of contents (page 1 of 2)
Section I: Executive summary 7
Section II: Latin America market overview 12Size and growth of the Latin American market 13Examples of supplier and captive presence 14Location/city options for delivery centers 15Key factors driving complexity in decision-making 16
Section III: Drivers and approach to location selection 17Everest risk-reward framework 18Approach/methodology used for location prioritization 22
Section IV: Relative attractiveness of Latin American cities for BPO 24How to read this document 25Assessment on environment- and infrastructure-related factors 28
Environment-related factors: stability, security, risk of natural hazards 29Infrastructure-related factors: connectivity, infrastructure support 34
Labor pool analysis 40Tertiary educated labor pool 43Level of language skills 45
Topic Page no.
Report contains over 90 pages of detailed analysis and information
11Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Table of contents (page 2 of 2)
Section IV: Relative attractiveness of Latin American cities for BPO (continued)Cost-risk analysis 51
Total operating costs per FTE 53Risk analysis: environment risk, time-to-market risk, labor-availability risk 54Trade-off analysis: cost-risk trade-offs in selection of cities for BPO 57
Summary of assessment and prioritization of cities 58
Section V: Additional considerations for location selection 59
Section VI: City snapshots of prioritized cities 64
Appendix 79Overview of Everest Location Optimization capabilities 80Details of assessment of cities across environment-and infrastructure-related factors 86Details of availability of language skills by country/city 97Other reports in this series 103
Topic Page no.
Report contains over 90 pages of detailed analysis and information
12Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Background and objective of the research
Background
Objective
The economic growth of Latin America has attracted a number of outsourcing suppliers to the region to serve the growing domestic demandIn addition to this, suppliers are also using the region to serve U.S. customers, especially in light of the growing Hispanic population in the United StatesLower costs, physical proximity, and cultural affinity are other factors driving the growth of outsourcing market in the regionAs a result, the location landscape in Latin America is rapidly expanding to new countries/cities. Leading global suppliers/captives have set up delivery centers in numerous cities in the region However, these locations have different leverage points across multiple factors relevant for location selection (e.g., costs, labor pool, functional, language skills). The presence of multiple city options with significantly different characteristics drives complexity in location-selection decisions in Latin AmericaThis research provides perspectives on the relative attractiveness of Latin American locations for Business Process Outsourcing (BPO)
Provide perspectives on the relative attractiveness of Latin American locations for a BPO centerPrioritize 8-15 locations from multiple city options based on their relative attractivenessThe focus of this report is on prioritizing a set of potential location options. However, the report is not aimed at selecting the best-fit location for a company-specific situation. In order to further make location choices, additional company-specific requirements and factors need to be evaluated
13Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Scope of the research – cities covered
Brasilia
Campinas
Curitiba
Porto Alegre
Rio de Janeiro
Salvador
Sao Paulo
UberlândiaVitória
Belo Horizonte
Buenos AiresRosario
San Miguel de Tucumán
Mendoza
Puebla
Monterrey
TolucaMexico City
QuerétaroGuadalajara
Santiago
Leon
Cordoba
Aguascalientes
San José
ChihuahuaJuárez
Culiacán
Mexicali
Panama City
Parana
Saltillo
Santa Fe
Tijuana
Mexico
ArgentinaChile
Brazil
Panama
Costa Rica
Recife
Countries considered are Mexico, Costa Rica, Panama, Brazil, Chile, and Argentina; 35 cities across these countries are covered in this research
14Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Analysis Data presented/analyzed
Summary of key analyses and data presented in the research
Analysis Data presented/analyzed
Latin American market overview
BPO overviewSupplier and captive landscapeLocation options for delivery center
Labor pool Tertiary educated labor pool Assessment of language skills
Includes Spanish, Portuguese, and English
Costs Total operating costs per FTE based on Everest’s proprietary cost model capturing 40+ data elements. Examples:
Salaries & benefitsManagementAdministrationOverheadReal estate TrainingAttritionTelecomEquipmentUtilities
Risks Labor availabilitySize of labor poolLanguage skillsCompetition for talent
StabilityPolitical, economic stabilitySecurity
Connectivity Infrastructure supportEvolution of ancillary servicesRegulatory environment
Trade-offs Assessment of cost-risk trade-offs Classification of city clusters
City snapshots City facts (e.g., population)Business environmentOutsourcing activitySupplier and captive presence
15Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest’s location selection methodology/approach
1
Activities
Filtering2 3 4 5 6
Overall objectives and requirements
Risk
Cos
t
Labor pool analysis
Cost-risk analysis
Customized analysis
Due diligence
De-prioritize cities that do not meet basic minimum requirements a) Environment-
related factors – stability, security, risk of natural hazard
b) Infrastructure- related factors – connectivity, infrastructure support
De-prioritize cities that do not have minimum labor pool to meet requirements using a two-step processa) Overall tertiary
educated labor pool
b) Language skills
Cost analysisRisk analysisCost-risk trade-offs
Evaluate alternate delivery models
Fit with business plans and existing delivery footprint
Due diligence on prioritized cities to validate findings and identify potential company-specific incentives
16Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
The report has more than 80 pages of data, insights on relative attractiveness of Latin American locations for BPO
Language skills across countries in Latin AmericaShare of total population
Supplier/captive centers across Latin America
Annual tertiary education pool 2006; ‘000s
Cost-risk comparison for prioritized cities for BPO delivery center
First-principle filtering – stability, security risk ratings
Total annual operating cost per FTE for BPO delivery center2006; US$ ‘000s per FTE
Sao Paulo (IBM, Accenture,etc.)
Santiago(Shell, IBM, TCS etc.)
Monterrey (IBM, CSC, etc.)Mexico City (EDS, Capgemini, etc.)
Argentina
Chile
Brazil
Mexico
Rio de Janeiro (Teleperformance, KPMG)
Curitiba (Accenture, HSBC, etc.)
Buenos Aires (EDS, IBM, TCS, etc.)
Costa RicaSan José (IMB, P& etc.)
Panama City (Sitel, Dell etc.)
Panama
Peru (Atento, Siemens)
Guatemala (ACS, Capgemini, etc.)El Salvador(Dell, Atento, etc,)
Sao Paulo (IBM, Accenture,etc.)
Santiago(Shell, IBM, TCS etc.)
Monterrey (IBM, CSC, etc.)Mexico City (EDS, Capgemini, etc.)
Argentina
Chile
Brazil
Mexico
Rio de Janeiro (Teleperformance, KPMG)
Curitiba (Accenture, HSBC, etc.)
Buenos Aires (EDS, IBM, TCS, etc.)
Costa RicaSan José (IMB, P& etc.)
Panama City (Sitel, Dell etc.)
Panama
Peru (Atento, Siemens)
Guatemala (ACS, Capgemini, etc.)El Salvador(Dell, Atento, etc,)
Stability1City Security2
Salvador
Sao Paulo
Uberlândia
Vitória
Belo Horizonte
Brasilia
Campinas
Curitiba
Porto Alegre
Rio de Janeiro
Recife
Stability1City Security2
SalvadorSalvador
Sao PauloSao Paulo
UberlândiaUberlândia
VitóriaVitória
Belo HorizonteBelo Horizonte
BrasiliaBrasilia
CampinasCampinas
CuritibaCuritiba
Porto AlegrePorto Alegre
Rio de JaneiroRio de Janeiro
RecifeRecife
Low riskMedium riskHigh risk
Low riskMedium riskHigh risk
English Spanish Portuguese
Panama
Argentina
Brazil
Chile
Costa Rica
Mexico
Low availabilityHigh availability
English Spanish Portuguese
PanamaPanama
ArgentinaArgentina
BrazilBrazil
ChileChile
Costa RicaCosta Rica
MexicoMexico
Low availabilityHigh availabilityLow availabilityHigh availability
Buenos Aires
Sao Paulo
Mexico City
Santiago
Rio de Janeiro
Belo Horizonte
Brasilia
Curitiba
Puebla
Salvador
Cordoba
Monterrey
Recife
Rosario
Porto Alegre
Cor
doba
Bue
nos
Aire
s
Cur
itiba
Por
to A
legr
e
Bra
silia
Bel
o H
oriz
onte
Cam
pina
s
Rio
de
Jane
rio
Pue
bla
San
tiago
Sao
Pau
lo
Mex
ico
City
San
Jos
e
Mon
terr
ey
Cor
doba
Bue
nos
Aire
s
Cur
itiba
Por
to A
legr
e
Bra
silia
Bel
o H
oriz
onte
Cam
pina
s
Rio
de
Jane
rio
Pue
bla
San
tiago
Sao
Pau
lo
Mex
ico
City
San
Jos
e
Mon
terr
ey
Monterrey
Puebla SantiagoSan JoseSao Paulo
Buenos Aires
Mexico City
Curitiba Campinas
Cordoba
Rio de Janeiro
Belo Horizonte
Porto AlegreBrasilia
Monterrey
Puebla SantiagoSan JoseSao Paulo
Buenos Aires
Mexico City
Curitiba Campinas
Cordoba
Rio de Janeiro
Belo Horizonte
Porto AlegreBrasilia
Mature locations
Emerging locations
Cost
High
Low
RiskHigh Low
Monterrey
Puebla SantiagoSan JoseSao Paulo
Buenos Aires
Mexico City
Curitiba Campinas
Cordoba
Rio de Janeiro
Belo Horizonte
Porto AlegreBrasilia
Monterrey
Puebla SantiagoSan JoseSao Paulo
Buenos Aires
Mexico City
Curitiba Campinas
Cordoba
Rio de Janeiro
Belo Horizonte
Porto AlegreBrasilia
Mature locations
Emerging locations
Cost
High
Low
RiskHigh Low
17Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest Research Institute reports in this series
Geography coveredType of report Number of cities
coveredBPO ITOCentral & Eastern Europe 25
Asia (China, India, Philippines, Singapore, Malaysia, etc.) 40
India 23
Latin America (Argentina, Brazil, Mexico, Costa Rica, etc.) 35
Eight different reports covering BPO or ITO for four geographies are available
18Copyright © 2008, Everest Global, Inc.
ERI-2008-2-PD-0177
Everest Research Institute has the resources, experience, and capabilities to provide companies with the strategic intelligence, analysis, and insight that are crucial to making the right decisions in today’s outsourcing marketplace.
With the vision of our leadership team, the personal commitment, and indeed, the passion of our professionals to deliver real value to our clients, our organization is unsurpassed in its ability to guide your company’s future success.
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