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The upcoming Argentine elections have many contact center outsourcing industry-watchers assuming that a change in commercial direction will mean a more attractive environment for CRM services vendors to deliver into North America and Europe. However, Ovum believes that regardless of the outcome of the election, it will be difficult for Argentina to re-establish itself among the nearshore or offshore locations of choice. This will be due to a number of factors, including cost, regional competition, and the extent to which Argentina has evolved in term of commercial sophistication.

Argentina's outsourcing competitiveness needs a reboot

There can be little doubt that over the past decade, Argentina has lost a great deal of prominence as a location of choice for offshore or nearshore contact center work. Much of blame has been placed on the economic policies of the past Kirchner presidencies (which will come to an end on November 22, following the run-off between the top two placing candidates), and to some degree this is justified. The pro-inflation approach of the outgoing administration, coupled with labor laws that did not favor private business, were not helpful to the contact center services sector. In fact, according to Ovum's latest pricing and cost analysis, at roughly $26/agent/hour for inbound customer care (a jump of nearly 15% between 2013 and 2015), Argentina is now the single most expensive major offshore contact center delivery location in the world, and in line with the prices charged in the US. This will not bode well for contact center vendors selling offshore services from Argentina, who face significantly cheaper competition from Latin American locations of choice, which include (but are not limited to) Colombia, Mexico, and Honduras, where the equivalent work can be done for less than $16/agent/hour. Regardless of who wins the presidency later this year, restructuring the labor laws and economic policy to the extent that operating costs fall enough for Argentina to compete effectively against other countries in Central and South America over the near-to-medium term will be an extremely challenging task. The commercial sophistication of Argentinians also needs to be considered, in that as one of the most sophisticated economies in the region, it is difficult to recruit educated, multilingual agents (especially in the Buenos Aries region).

However, all may not be lost for contact center outsourcers seeking to conduct business in Argentina. Even though Argentina has lost some degree of favorability over the past several years among prospective investors, Ovum's latest CRM Outsourcing Business Trends Survey shows that enterprise contact center managers still retain a great deal of interest in that country as an offshore location. This points to a historically strong reputation for Argentina's contact center value proposition. There is an established CRM culture that has existed in the country for many years, and some of the most well-known local and global vendors operate within Argentina, including Teleperformance, Atento, Clienting Group, and Allus. In addition, the plethora of secondary cities within the country are a likely source of less expensive labor and real estate and will be key in Argentina's efforts to remain a competitive force in the region.



Peter Ryan, Principal Analyst, IT Services

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