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The Latin America Opportunity

The landscape of potential outsourcing suppliers has exploded over the last decade due to the emergence of BPO and the disruptive stimulus of offshore delivery. India-based suppliers (Cognizant, HCL, Infosys, Satyam, TCS, Wipro) have joined the traditionally recognized players (Accenture, ACS, Capgemini, CSC, EDS, IBM, etc.) to create a broad landscape of well-qualified options. We have also seen new players enter the market that originate from within an onshore country but have quickly developed robust offshore delivery (HP, Steria formerly Xansa, Convergys, etc.).

With the maturation of offshore delivery from India and other countries, a question we frequently hear from companies looking to continue their outsourcing journey is "Who are the offshore suppliers I don't know but should know?" This question is motivated by the realization that many companies were too slow to recognize the emergence of the Indian players. Additionally, there is a desire to consider alternatives beyond India-centric delivery or to service languages and time zones not suitable for an India-oriented delivery model.

First, it is important to note that the India-based players are considerably larger than any offshore players from other countries. Offshore suppliers with greater than US$1 billion in revenue is a short list.

Second, it is equally important to note that the suppliers mentioned above are already significantly represented in many offshore destination counties (the Philippines, China, Brazil, Argentina, Czech Republic, Poland, etc.) -- and often larger than the players originating from those countries. Those that we list below are suppliers with the predominant share of their offshore delivery based in a country other than India.

With these two considerations in mind, here are five offshore players we believe you should know but may not.

CPM Braxis, Brazil (www.cpmbraxis.com)

Formed through the merger of two Brazilian IT companies, CPM and Braxis, in March 2007, CPM Braxis is the largest IT services company in Brazil. With over 5,000 professionals and revenues in the vicinity of US$500 million, CPM Braxis is the leading provider of application outsourcing, infrastructure services, IT consulting, and business services to clients in Latin America.

With a focus on financial services, telecom, commerce, services, and the government, CPM Braxis boasts of a client list that includes over 200 of the largest companies in the world (Citibank, HSBC, Deutsche Bank, and Motorola, to name but a few). While Latin America is likely to remain a stronghold for CPM Braxis, the company is looking to expand its operations for buyers in North America and Europe and realize its vision to "be one of the top 10 global IT companies."

EPAM, Russia (www.epam.com)

Founded in 1993, as an acronym for "Effective Programming for America." EPAM is a Lawrenceville, NJ (USA)-headquartered leader of software development services in Central/Eastern Europe and Russia. With over 4,000 employees in offshore and nearshore development centers in Russia, Hungary, Belarus, and Ukraine, and client support and delivery teams in the United States, Germany, and UK, EPAM has delivered projects in over 30 countries and 13 languages (the company adopted its present name "EPAM Systems" as it expanded beyond the American boundaries).

A specialist in technologies like Java, .NET, and SAP NetWeaver, EPAM's customer base includes industry leaders like SAP, Microsoft, Oracle, Reuters, Colgate Palmolive, BT, and Philips. Overall, EPAM has emerged as a very strong contender for buyers looking to source IT applications and software services from Central/Eastern Europe and Russia.

eTelecare Global Solutions, The Philippines (www.etelecare.com)

With roughly US$250 million in revenue and over 13,000 people across seven delivery centers in the Philippines and six in the United States, eTelecare has emerged as one of the largest Philippines-based suppliers of BPO services. With a client list including American Express, AOL, AT&T, Dell, Intuit, Sprint, U.S. Cellular, and Vonage, eTelecare's portfolio of services includes complex voice and non-voice based customer care, sales support, and marketing surveys and research.

While the success story for clients in the United States is established, eTelecare's focus for 2008 is to expand its footprint into other English-speaking markets like the United Kingdom, Canada, Australia, and New Zealand.

Neusoft, China (www.neusoft.com)

Founded in 1991 with three people, three PCs, and US$3,000, Neusoft has established itself as one of the largest offshore software and services outsourcing suppliers in China. Tracing its roots to the prestigious Northeastern University (which in fact lends its name to the company) in Shenyang, China, Neusoft has now over 13,500 employees engaged primarily in providing software related services to clients in China and across the globe.

While the domestic Chinese market remains key to Neusoft, the "International Business" segment, which is focused on offering high-end IT (product R&D, embedded software outsourcing, and custom application development services) and BPO services to over 50 large, multinational companies, has witnessed significant traction over the last few years. In fact, with over 6,000 employees engaged in serving international clients alone, this segment crossed the US$ 150 million revenue mark in 2007. Consequently, with one of the most mature service delivery models (in comparison to other Chinese suppliers) and a delivery network spread across seven Chinese cities, Neusoft is must-watch for any buyer evaluating China for their sourcing needs.

Softtek, Mexico (www.softtek.com)

Founded over 25 years ago, Mexico-based Softtek is a leading provider of IT and business process solutions. Credited with the introduction of the "Near Shore" (trademarked) service delivery model in 1997, Softtek now has over 6,000 associates across eight global delivery centers in Mexico, Brazil, Spain, and China.

With a wide array of services including applications outsourcing, IT consulting, infrastructure outsourcing, and BPO, Softtek has a distinctive SAP offering and has won the "SAP Award of Excellence" 10 times in the past 11 years. For U.S. and Canadian companies, Softtek's physical and cultural proximity make it a key supplier to watch south of the U.S. border.

Although these are but a small number of the offshore supplier community, they are emerging as leaders in their targeted spaces and have become credible options. Considering these suppliers is increasingly viable but should be evaluated within the context of a supplier portfolio strategy. Too many subscale relationships lead to too much complexity; so evaluate these options carefully. And be sure to get the facts of today while anticipating what tomorrow might bring.

Lessons from the Outsourcing Journal:

• Beyond the traditional suppliers and India-based suppliers, there are few offshore-focused suppliers with revenues approaching $1 billion.
• The established, non-Indian offshore suppliers tend to provide IT and contact center services but not broader BPO (function-specific, industry-specific).
• CPM Braxis (Brazil), EPAM (Russia), eTelecare Global Solutions (the Philippines), Neusoft (China), and Softtek (Mexico) are leading suppliers with their roots in countries other than India.
• Buyers need to evaluate their portfolio of suppliers and carefully consider the pros and cons of using incumbents or adding new suppliers for offshore delivery outside of India.

About Everest Research Institute's Supplier Intelligence Practice

Everest Research Institute's Supplier Intelligence practice assists companies in making fact-based decisions regarding their suppliers. For more information and a description of our capabilities, visit http://www.everestresearchinstitute.com/Services/SupplierIntelligence.

Publish Date: May 2008

Copyright © 2008 - Everest Partners, L.P.

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