Fort Lauderdale, Fla. – October 8, 2024 – Latin America (LATAM) is rapidly emerging as a formidable alternative to outsourcing services in Asia and the Philippines, according to a new report, “2024 State of the GBS & Outsourcing Industry in Latin America,” released by Shared Services & Outsourcing Network (SSON) Research & Analytics and Auxis, a Latin America outsourcing pioneer. The shared services industry in Latin America has evolved rapidly from purely transactional activities to a broad range of higher value-add services that include performing judgment-intensive processes and accelerating digital strategies.
Yet despite rising interest in nearshoring, detailed information on the Latin American shared services market has been scarce. This report was developed to fill the information gap, updating Auxis’ 2016 study on the region with new and important insights into its strengths, challenges, and opportunities.
North America emerged as the top market served by LATAM global business services (GBS), with 84% of the region’s organizations supporting North American businesses. Still, 33% of these shared services operations also support European markets, and 16% serve Asian markets, reflecting the growing recognition of the region’s global potential to support more distant business customers, likely facilitated by increased digitization of operations and multilingual capabilities.
Enterprises are also significantly more likely to be satisfied with Latin American shared services organizations (SSOs) compared to other regions, the survey found. At 87%, satisfaction levels in Latin America exceeded Asia (53% satisfaction), Europe (64%), and even North America (69%).
“Real-time communication and high talent quality are major factors driving the shift toward outsourcing more complex activities to Latin America. This report substantiates our experience as pioneers in the region, as more companies are realizing the ability of LATAM shared services to facilitate greater scale of operations, customer satisfaction with nearshore talent, and the ability to successfully collaborate across activities due to time zone and geographic proximity.”
– Raul Vega, Founder and CEO
Ninety percent of enterprise and shared services respondents said they either already operate in Latin America or plan to establish captive or outsourced operations within the next three years. For organizations not yet leveraging nearshore delivery, the primary barrier for nearly half (48%) is a lack of knowledge about Latin America’s capabilities, particularly for supporting North America. Despite the growth of the nearshore market over the past five to 10 years, many North American executives are still unaware of the value LATAM has to offer as a potential alternative to traditional Asia destinations such as India and the Philippines.
What’s more, for organizations planning to set up operations in Latin America, concerns about the region don’t measure up to the true experience. For example, while 78% of organizations evaluating Latin America cite talent availability as a top concern, only 45% of those already operating there share this worry. Similarly, data security is a concern for 89% of potential entrants, yet only 29% of those operating in the region consider it an issue.
“Nearshoring from Latin America is gaining popularity as a viable alternative to the cost-driven offshoring of the past, particularly for North America. While traditionally most North American shared services have been based in the US itself, cost escalation, talent challenges, and the need for a more customer-centric solution have nearshore alternatives coming into vogue.”
– Barbara Hodge, Global Editor for SSON Research & Analytics
More key takeaways from the report supporting Latin America’s emergence as a leading shared services and outsourcing destination include:
- Tech adoption averages 9% higher in LATAM than other regions across critical technology, including analytics, robotic process automation (RPA), and Intelligent Document Processing (IDP).
- Over 60% of organizations indicate time zone, talent, innovation, the ability to support more complex processes, cultural affinity with the North American market, and lower turnover to be critical factors in choosing LATAM over Europe and Asia.
- Half of organizations operating in LATAM report labor savings of 20-40% – and nearly 20% report savings surpassing 40%.
- 69% report productivity gains from automation of more than 10% at their LATAM GBS, and 42% report more than 20%.
Colombia, Mexico, and Costa Rica are the top GBS and outsourcing locations in the region, all of which are served by Auxis, one of the first companies to offer outsourced business and IT services from Latin America.
Further, the survey indicated that confidence in the region is high, with Latin America GBS performing the same processes as their global counterparts, but on a greater scale: 94% (LATAM) vs. 71% (Global) for Procure-to-Pay, for example. LATAM SSOs also show deep experience with complex processes that are not as common in other markets, such as 80% (LATAM) vs. 43% (Global) for HR Services, and 64% (LATAM) vs. 32% for IT services.
This greater scale underscores customer satisfaction with nearshore talent, collaboration, and service delivery, the survey states.
Organizations’ reasons for targeting LATAM are also expanding. While 57% of organizations with current LATAM operations moved processes outside the US for the first time, 65% of companies evaluating the region are looking to complement existing offshore delivery centers. About one quarter plan to reduce Asia-based operations by shifting work to Latin America.
“While cost savings remains a key driver for nearshoring, the study proves that the value of Latin America goes beyond cost reduction and time zone, and factors like cultural affinity, innovation mindset, and ability to perform more complex work are all key reasons for selecting nearshore over offshore. We partnered with SSON on this report to help companies new to nearshoring, or in the process of expanding, gain actionable insights to help them determine their best path forward.”
– Fabiana Corredor, Auxis VP of Marketing and Growth
Survey results emphasize that nearshoring to Latin America, whether leveraged as an extension to offshore or as a primary source of scaling operations, will continue to present advantages over Asia and Europe over and above cost savings and shared culture. With 52% of shared services organizations overall planning to expand their use of outsourcing, and nearly all current LATAM GBS (96%) planning to maintain or expand their level of service, the interest in Latin America as a shared services destination to be reckoned with is not likely to wane.
Download the full report to learn more about the challenges and opportunities of nearshoring to Latin America.
About Auxis
Auxis is a leading management consulting and Latin America outsourcing pioneer that helps organizations modernize and scale their business operations through innovative processes, technologies, and organizational structures. Its core solutions include Nearshore Finance, IT, and Business Operations Outsourcing; Intelligent Automation; Cloud; and Analytics. Fortune 1000 organizations across industries have relied on Auxis for more than a quarter-century to obtain real benefits and ROI from every engagement. To learn more about Auxis and its services, visit www.auxis.com.
About SSON Research & Analytics
SSON Research & Analytics is the global data analytics center of the Shared Services & Outsourcing Network (SSON), the world’s largest community of shared services, outsourcing and transformation professionals. SSON Research & Analytics offers visual data insights that are simple, accurate, and digestible to the global shared services and outsourcing community. Thousands of global business services and outsourcing professionals use its data to understand the shared services landscape in their region through a variety of interactive data tools, analytics reports, and customized data insights. To learn more, visit www.sson-analytics.com.
