Earlier this summer, Capgemini signed a deal with Brazilian conglomerate Grupo Algar, to support its accounting, account receivables, account payables, tax, human resources administration, payroll and procurement services. Capgemini says the engagement, which includes standardization of processes and service levels across two Algar business units and nine of its companies, will increase productivity by over 45 percent in addition to improving quality and flexibility to keep up with the privately-held holding company’s expected growth.

Latin America is an increasingly important market for international BPO providers. Capgemini opened its Brazil BPO hub in 2008, joining such BPO powerhouses as Accenture and IBM, local leaders including Politec and Stefanini IT Solutions, and Indian competitors Tata Consultancy Services and Satyam. According to Capgemini’s global head of BPO sales Claude Hartridge, the country is one of the company’s top three growth markets. Last September, they made an even bigger bet on Brazil investing nearly $300 million in regional IT and BPO service provider CPM Braxis. “Latin America is an increasingly important part of any global company’s portfolio,” Hartridge told the Outsourcing Center. “We are starting to see a significant increase in opportunities in the region.”

Brazil serves as both a nearshore and onshore services hub. “Currently, we have an interesting balance of international customers with strong central decision-making that want us to execute locally, a number of global companies where BPO decisions are made within the region or locally, and a number of local and regional companies that are first movers to BPO,” said Hartridge, noting that at least 40 percent of Capgemini’s BPO business in Brazil is local. For Brazilian-based providers, the number is even higher with as much as 90 percent domestic revenues, says Forrester’s Belissent.

More Than Cost Savings

Those local customers like Grupo Algar are in high-growth mode. They’re looking for BPO partners to deliver what Hartridge calls the five “C’s” — control, compliance, consistency, consolidation, and cost savings—to support sustained and profitable growth.

“The main driver is compliance,” said Grupo Algar’s shared services director Mauricio Llemos. The company was also looking for a BPO provider who could apply it best-in-class processes to the conglomerate’s transactional services so its companies can focus on their core business, in industries as varied as agriculture, technology and aviation.

“The key success factors [in Brazil] are not always cheaper prices or simple labor arbitrage,” Hartridge said. “Clients want to have confidence that the service provider can help them get to the next level of managed growth.”

While Brasscom touts an average of only 4 percent turnover within BPO teams in Brazil, which can have a positive impact on productivity and costs, the region’s BPO market remains challenging for global players who must contend with such issues as rising costs and the potential for geopolitical instability. Out of the largest developing economies, Brazil has the second highest number of English speakers behind only India, according to Brasscom, but language skills remain an issue for customers requiring English fluency.

Such problems are par for the course in any emerging BPO market, Hartridge contends. “Inflation is a global issue,” he said. As for geopolitical risk, “we need not look any further than the riots last summer in France over retirement age or the recent riots in the U.K. to see that politics and the socio-economic environment can give rise to strong passions or irrational behavior,” Hartridge added. “The countries where we primarily operate in Latin America—Brazil, Chile, Argentina, and Guatemala—have had years of stable political environments and crime rates have not impacted our operations or the safety of our staff or the clients.” Language requirements for BPO services are addressed early in discussions with clients, according to Hartridge, to determine how much interaction is voice-related in native tongue versus written documentation and which transactions may necessitate native speakers.

Strategies for Success

The outsourcing business processes that work in Brazil for the first time must not rely solely on their vendors to mitigate such potential risks. Potential BPO customers should:

• Keep an eye on costs. BPO customers looking for rock bottom prices should look elsewhere. Brazil has the highest salaries and taxes in Latin America today. Factor in currency and inflation risks when making a business case for Brazilian BPO.
• Don’t expect Brazil to be India. For better or for worse, Brazil is not a mini-India. On the upside, it’s much closer in distance and cultural perspective to U.S. customers, and its workforce is reported to be more creative. On the downside, some industry watchers report less of a sense of urgency in employees than their counterparts on the subcontinent, and local providers have less process experience.
• Plan for language issues. Many BPO customers may require only Portuguese or Spanish speakers, but those that require English fluency—for call center work for example—should insist on unannounced site visits and call listening sessions throughout the course of the deal.
• Consider scale. Brazil is the biggest provider of BPO services in Latin America, but it still pales in comparison to India. Make sure your provider can meet your capacity needs while maintaining quality.

One solution: harmonize and standardize global processes using one ERP system. How do you do this efficiently and cost effectively?

For Amcor, the answer was outsourcing to a local provider.

The need for one platform for 10 Latin American countries

Amcor Rigid Plastics, a packaging company, is a division of Amcor Ltd., an Australian corporation. Amcor, which has 35,000 employees in 43 countries, divides its workforce into three regions. The Latin America business unit works with 10 Latin American countries from its headquarters in Buenos Aires, Argentina.

In 2006 it outsourced SAP implementation and support to Grupo ASSA, which is headquartered in Argentina. Roberto Wagmaister, President and CEO of GrupoASSA, says “our job is to help business process executives shape the way they work with their IT systems.” The company, which is about to celebrate its 20th birthday, was one of Latin America’s first application service providers (ASPs. Remember them?)

Its largest assignment to date was integrating 70 different countries into a single entity. The Amcor assignment was only 10.

Before outsourcing, Amcor used proprietary software, according to Cielo Hernandez, director of operations, finance for Amcor. Each unit behaving independently “jeopardized our financial template,” she explains. “We needed to be on a single platform so we could benchmark across countries. One platform meant we could look across the region in a controlled process,” adds Hernandez, who is also director of IT for the region.

Standardization was also more cost and time effective, she adds, because it meant Amcor had to do only one IT development instead of 10 for each country. Amcor also saved money because it had different providers in each country, many of whom charged higher rates than Grupo ASSA, which now handles the entire region. “Because our IT is less expensive, our prices to our customers are lower. That makes them and us more competitive in our marketplace,” Hernandez continues.

To date, the savings are in the millions, according to Guillermo Perez, regional IT manager, Latin America for Amcor.

Outsourcing’s other benefits

Outsourcing SAP support also sped up IT development, Hernandez reports. Today Amcor receives “better information. That allows our business to make better decisions,” she notes.

Amcor is a company always on the hunt for merger possibilities. (Amcor has completed two in the last first years.) When Amcor buys another company, the consolidation process is faster because Grupo ASSA implements SAP, Hernandez continues.

The service provider has helped Amcor implement best practices, which it shares across all 10 Latin American countries.

One of the trickiest parts of the SAP implementation is business process management. As the head of finance, Hernandez is responsible for financial compliance and Sarbanes-Oxley implementation. “We had to document all these processes,” she explains. Grupo Assa has a tool that is already integrated into SAP to produce the requisite narratives and flow charts for each finance job. An added benefit: the partners used these charts to implement the processes whenever they rolled out SAP in a new country.

Finally, there is just one throat to choke. “We have a direct point of contact when SAP is broken. Now I don’t have everyone calling me to ask, “Who is going to help me? Outsourcing is easier to manage when you have just one provider,” says the Amcor executive.

Why Amcor wanted a Latin American-based provider

The company, which was using multiple service providers, invited three to bid for the entire region. “We wanted someone with Latin American experience, someone who understood Latin American culture,” says Hernandez. Wagmaister says many of its Latin American clients select his company “because we are closer to home.”

Typically the buyer selects one country as a pilot. After the first implementation, Grupo ASSA makes adjustments to the model and then rolls out the new-and-improved version to all the other countries. Grupo ASSA always keeps a small group of people on site.

The importance of merger and acquisition experience

The new provider also had to have merger and acquisition experience, especially in Brazil, where Amcor’s past two acquisitions occurred. “Grupo ASSA is helping us grow our business,” says Perez. He includes Grupo ASSA executives in early discussions every time Amcor is considering an acquisition.

Grupo ASSA did such a good job in Brazil, Amcor decided to use the company to do the SAP implementation when Amcor bought Ball Plastics Packaging Americas in Broomfield, Colorado. “We had a tight integration time: just 90 days,” says Hernandez. “This integration was a huge priority for our company.”

However, there was one hitch: Amcor and Grupo ASSA had already agreed to implement SAP in both Ecuador and Peru during that exact same 90-day period. “This was just as important,” she says. (The partners found that if they do two Latin American countries at the same time, it saves both time and money.)

The three-part assignment in three different countries required great coordination, the Amcor executive recalls. The two partners decided to test all development work before they put it into production. “Everything had to work the way it did before the SAP implementation,” she explains.

IT people at both companies “worked night and day all through the Christmas holidays,” Hernandez recalls. “Grupo ASSA was committed to delivering everything on time and on budget. And they did.”

About Grupo Assa
The service provider specializes in what it calls “mission critical business transformation” using SAP or Oracle to replace legacy applications. “We hold round tables with executives to address the needs of their business processes and then work with their IT departments to support those results,” explains Wagmaister. He says business transformation success only happens when “IT executives understand the soft infrastructure—creating a rewarding user experience—as well as they understand the technological infrastructure. We realize we manage people not just IT systems.”

By leveraging its nearshore location and full overlap with US-EST time zone, Belatrix is able to provide agile development services.

Belatrix was established in 1993 and started its exclusive focus on international outsourcing in 2001, which makes it one of the longest-standing IT outsourcing companies in Latin America.

Service Lines

• Software Development Outsourcing: Belatrix provides agile enterprise software development services on the following platforms and technologies: Microsoft .NET, Java, Android, iPhone.
• Software Quality Assurance: Belatrix’s expertise in QA is second to none in Latin America. With many public and Fortune 500 companies using its high value-added testing services: automated testing, functional testing, security testing, etc.
• Remote Systems Support: With a team of highly trained systems administrators, Belatrix helps its clients manage their IT infrastructure including mail servers, Linux and Windows servers ,and CISCO routers and firewalls, among many others.
• Graphic Design and User Experience: Belatrix’s dedicated team of graphic designers and user experience experts help our clients make sure that the applications not only work great but that they also look great and are intuitive for their users.

Distinctive Capabilities

• Cloud-based solutions: We have experience helping our clients implement cloud-based solutions and SAAS products.
• Advanced testing of complex software: Belatrix is the leading LatAm company when it comes to testing. Those that seek a complete and reliable quality assurance solution work with Belatrix leveraging its advanced automated testing skills as well as its deep understanding of different verticals such as finance, retail, e-commerce and e-learning among many others.
• Product Development: ISVs and SAAS providers find a strategic partner in Belatrix as its expertise in agile product development allows them to design, develop and deploy their solutions at a much faster pace, with complete visibility and control.

Belatrix at a Glance

Founded: 1993
Employees: 170
Service lines (business processes, IT infrastructure, IT applications): Software Development, Software QA, Systems Administration, Graphic Design.
Headquarters location: Mendoza, Argentina
Locations of global delivery centers: Mendoza, Argentina; Beijing, China; Lima, Peru.

For More Information

Telephone: +1 (617) 608-1413 x 2001
E-mail: businessdevelopment@belatrixsf.com
http://www.belatrixsf.com

Certifications

• ISO 9001:2008
• CMMi Level 2
• Microsoft Gold Certified Partner
• SUN Partner Advantage

Essentially, the buyer controls the amount of the ROI in a Remote Infrastructure Management Outsourcing (RIMO) arrangement because the buyer’s up-front decisions – before signing a contract – are contributors toward the ROI. Three areas of decision making put into play the potential value of RIMO and form the basis of the business case. While the three areas appear at first glance to be aspects of outsourcing that have been long understood, there are nuances in these areas that are specific to a RIMO context. This paper discusses the misconceptions as well as guidelines for these three areas of decisions.

Gartner predicted that, by 2012, 50 percent of the labor hours for global IT infrastructure service delivery for commercial businesses will shift from on-site support to remote delivery, and RIMO is quickly becoming a must-do strategy.

The paper shows how companies around the world are making decisions that result in increased value from their Remote Infrastructure Management Outsourcing arrangements. It also includes:

• Principles involved in choosing a RIMO location
• Four case studies that show how the selection of the provider impacts the benefits that companies achieves through RIMO
• Kinds of service provider behaviors and “soft skills” that are crucial to success in RIMO
• Key questions to ask and a checklist of recommendations for service provider selection criteria
• Best practices in transitioning to RIMO

Download the white paper by clicking here.

The recent economic downturn heightened the need for companies to reduce costs while maintaining the quality and availability of IT services. Both open-source software and nearshore outsourcing are proven strategies for enabling growth while reducing costs. Combining both strategies in one solution creates a powerful value proposition for extracting more business value from IT investments.

This paper discusses these trends and presents a case study of an organization that benefitted from a Brazilian service provider’s solution using open-source applications.

Download the white paper by clicking here.

The company ranked Brazil the No. 1 Latin American location in 2007; it did not complete a study in 2008. Last year Chile took over the top spot in the region, which makes the earthquake recovery process even more crucial, given the country’s booming global services industry.

Christian Callieri, Principal, A.T. Kearney, says nearshoring is attractive to U.S. companies for the following reasons:

• Location. They want locations closer than Asia for easier and more affordable travel. “Some buyers believe closer proximity often breeds better relationships,” he says.
• Diversification.
• Round-the-clock coverage. Many suppliers want workers toiling 24 hours around the globe so they can meet the demands of time-sensitive buyers.
• Risk mitigation. The Mumbai attacks “escalated the risks in India.” Callieri points out India has always had terrorist attacks but “this one raised the profile.”

The executive says Midwestern U.S. cities typically can’t compete against Latin America on a cost basis. But they are attractive on other levels: in this economy, talented people who have the skills they need are available. And the United States has the infrastructure necessary to make outsourcing work. “The United States is rarely the first choice but becomes competitive if a buyer has specific requirements,” he says.

Here’s how the 2009 study rated each of the locations it studied:

Argentina. Callieri says Argentina has a well-educated workforce. Its Achilles heel is its political environment. “The large fluctuations in the exchange rate haven’t helped either,” says Callieri.

Brazil. Brazil benefits from being the most populous country in the region. Its service providers offer cost-effective programs for American companies especially in IT. And its infrastructure is good.

Chile. Even in the aftermath of the earthquake, Chile offers “a stable economy at Latin American prices,” according to the executive. It also has a well-educated work force and excellent infrastructure. Chile‘s twin challenges have been a smaller population and the relatively low number of English speakers. However, governmental agencies like CORFO, the Chilean Economic Development Agency, have instituted programs to develop English language skills among the labor pool.

Costa Rica. Costa Rica benefitted from being one of the nearshoring pioneers with its relationship with Intel, Callieri points out. “It’s an attractive market,” he says. “One of Costa Rica’s main disadvantages is its small population.”

Mexico. One of its big pluses is Mexico “is quick and easy to get to” from most of the United States. Cost is another attraction. Mexico also scores high because of its breadth of quality people. Callieri reports many of the Mexican states have intrastate competition to capture outsourcing investments, which raises everyone’s game. “Mexico does suffer from environmental issues and economic stability,” the A.T. Kearny executive points out. Last year’s violence in the north produced some bad press, but a Mexican national topping the recent Forbes list of the richest people on the planet may help.

U.S. cities. Location, skills, English capabilities, political stability, superb infrastructure – smaller U.S. cities have them all. The negative is cost. Today the U.S. locations are still more expensive than their competing nearshore cities. Companies choosing U.S. cities believe customer satisfaction or the availability of hard-to-find skills are worth the extra cost.

Lessons from the Outsourcing Journal:

• A new A. T. Kearney study found nearshore locations are gaining in popularity with U.S. businesses for the following reasons:
  1. Location. They want locations closer than Asia for easier and more affordable travel.
  2. Diversification.
  3. Round-the-clock coverage. Many suppliers want workers toiling 24 hours around the globe so they can meet the demands of time-sensitive buyers.
  4. Risk mitigation. The Mumbai attacks escalated the risks in India.
• Smaller U.S. cities can compete with nearshore locations, but they are more expensive.

The Citigroup team fixed the application and world commerce continued.

Today, companies are offshoring to other places in the world besides Asia to diversify their risk. Schenkel says Citigroup opened its Chilean captive — the financial services company now has seven worldwide — because “we needed to balance the resource distribution.” Arun Subramony, chief operating officer of GenShare, says his company announced a joint venture with GE in September “because it’s a matter of policy to diversify our services and reduce our numbers in India.”

Why Chile?

Four years ago the Chilean government conducted a study to determine how to expand its economy. Global services was one of five focus areas it selected, according to Carlos Alvarez, executive vice president and CEO of CORFO, the Chilean economic development agency.

Offshoring to Chile has these benefits, he points out:

• It’s in the same time zone as New York City
• The country has signed numerous free trade agreements, including NAFTA
• It has a low corporate tax burden of 17 percent
• Chile has an open immigration policy. He says it’s “easy” to get a work permit; the employee just has to live in the country.
• There is a stable political environment with a popular president

Suppliers in Chile add other reasons why they like doing business there. Labor costs are attractive. Mario Godoy Zanni, CEO of Equifax Chile, says he can hire an employee with 10 years of IT experience for $5,600 a month. Entry-level positions for “fresh grads with fresh knowledge about the newest technologies” hire in at $2,100 a month.

Rodrigo Sandoval of Synopsys Chile, which simulates semiconductor fabrication to help companies design chips, says his engineers are “half as expensive as engineers in Silicon Valley. (Synopsys is based in Mountain View, California). He says there is plenty of educated talent available. “We got 1,000 resumes to fill our 30 slots,” he says. And when Google Brazil needed talent, its recruiters contacted several Synopsys engineers..Even though the salary was better in some cases, they all stayed, he reports.

Mohit Srivastava, country manager, Evalueserve, says Chile has a good pool of qualified engineering talent. “We are easily able to hire bi-lingual quantitative research analysts to serve our investment banking clients in the United States,” he says. And his attrition rate is just seven percent.

He says the country’s immigration policy “is a big advantage.” His staff hails from more than 20 different countries. Shenkel adds foreign nationals comprise 30 percent of his staff.

Srivastava says one of his competitors in Argentina hired an Indian national. It took him almost a year to get his work permit. “Here, you can get work permits within a week. This helps us respond effectively to our client needs to start new projects and ramp up quickly,” the Evalueserve executive reports.

Srivastava likes the business transparency in Chile. Everyone pays their taxes online. In general, there are no hidden costs.

Schenkel notes Chile is an attractive place to visit. “If we invite someone in Europe or the United States to work in Chile, they usually respond, ‘You bet! There’s a beach.’” The eagerness typically disappears when he mentions the other captive locations, he adds with a smile.

He adds Santiago is “extremely safe by South American standards.” It’s a livable city. Citigroup has clients in New York that spend two hours on a train to get to work. “I have a seven-minute walk,” Schenkel notes. Srivastava reports his staff can rent a beautiful apartment on the coast overlooking the Pacific Ocean for between $500-$700 a month.

Chile is known for its innovation, adds Juan Carlos Munoz, executive director of ACTI, the country’s IT industry association. “We are a test market for new technologies,” he says. He points out many telecommunications companies came to Chile to test their latest technologies because of the country’s “extensive” network of fiber optics cable.

A negative for Chile is the small number of English speakers. The country has 42,000 English speakers in the country’s national register; Alvarez says the agency and the private sector are working on solutions. Last year CORFO gave 1,000 scholarships to employees who want to study English. This year the number doubled to 2,000. In 2008 Chile also began to provide English language education grants for IT workers. The pilot program was a success and by 2010, 3,000 people with IT backgrounds will receive English language training.

Schenkel says Citigroup has a fixed contract with a language instruction provider to help its employees improve their English. At Equifax Chile, everyone is forbidden to speak Spanish on Wednesdays; only English is allowed. In order to improve English language skills, the employees of this project agreed to fine each other 1,000 pesos if anyone spoke a word in Spanish, according to Godoy.

Equifax: the American captive

In 1994, Atlanta, Georgia-based Equifax bought a Chilean credit reporting company. In 2008, Equifax conducted a study where to open an offshore captive center to provide services to Canada, Latin America, the UK, and the United States. The study narrowed the list to four places: Argentina, Brazil, Chile, and India. It selected Chile.

Godoy says the American company selected Santiago because of the “safety of the city and country, political and economic stability, and the knowledge of its young professionals.” Santiago also is a magnetic place for Americans, he adds. “There’s always someone from Atlanta visiting.”

This division’s clients are banks and credit companies. The home office uses this center to create fraud detection programs and run risk models for credit decisions. Because “fraud is constantly changing and the criminals are becoming more creative,” the CEO says the home office charged the captive with staying one step ahead by being innovative.

It currently has 22 staffers; it expects to employ 80 by 2011, according Godoy.

Evalueserve: the near-shore KPO center

After opening delivery centers in Gurgaon, India, in 2000 and Shanghai, China, in 2005, Evalueserve, a KPO provider, opened its third delivery center in Valparaiso, Chile, in December 2006. The knowledge process outsourcer has added 60 professionals each year. Currently, 160 people work in the Chilean office, which operates rent free in a building owned by CORFO. “We hope to have 500 employees by 2014,” says Srivastava.

Evalueserve provides research and analytics services to Fortune 500 companies as well as small and medium enterprises across industry verticals. “Being able to operate in the same time zone as our clients in North America results in real-time collaboration and higher productivity and innovation,” says Srivastava.

Genshare: the local start-up

Currently GE is serving its divisions in 87 countries with its order-to-cash sourcing platform from India. Now GE, with its JV partner UST Global, plan to use this platform as the basis for a new services company. The two American companies decided they didn’t want to set up another GE captive. Instead, they wanted to start a new supplier.

And they didn’t want to domicile it in India. Subramony says the partners looked at seven countries in Latin America before selecting Chile. “The younger generation here is confident. They are able to speak peer to peer,” he says.

The venture, called Genshare, already has 30 people working to deliver the platform as software as a service (SaaS). They are currently in India learning the particulars. The next wave of hiring will be in February. Subramony hopes to have over 1,000 in five years.

He says the company plans to test the waters locally before expanding globally. “We want to be a pioneer for IT services in Chile,” says the general manager.

ABB: the purely local supplier

Seventy percent of Chile’s revenues come from natural resources, especially copper. ABB is a two-year-old supplier that remotely monitors copper mills, just like IT suppliers remotely monitor IT infrastructure.

Currently, ABB monitors seven mills 1500 kilometers from its headquarters in Santiago. “We would have to fly two hours and then drive another four to get to the mine,” says Emilio Vega, product manager, automation product division. “But we can remotely troubleshoot from our homes. It seems mill failures happen in the middle of the night.”

The supplier connects its computers to the computers operating the mills’ crucial rotating drums. It can tell if the machine’s temperature is rising or if a virus is infecting the computer controls. Keeping the machines running is crucial because the mill owner loses $200,000 per hour when the drum isn’t working, says Vega. “The real savings is getting the system running,” he explains.

ABB’s first offering is troubleshooting. But it also collects and analyzes data so “we can propose improvements to the mill owners,” says Vega.

The supplier’s early successes are allowing it to branch out to pulp and paper factories in the southern end of Chile. It’s also having conversations with a factory in Switzerland.

Last year, Chilean outsourcing suppliers earned $843 million. He hopes the number will top $1 billion by the end of 2010.

Lessons from the Outsourcing Journal:

• Companies wanting to diversity their offshoring are finding Chile is a good candidate.
• Companies are offshoring to Chile because of:
  1. Attractive labor rates
  2. Easy immigration policy
  3. Same time zone as New York City
  4. Low corporate taxes
  5. Ease of doing business in a transparent environment
  6. Safety
  7. Attractive quality of life
  8. Economic and political stability
  9. A highly skilled labor pool
  10. Telecommunications infrastructure

The company, which supplies search information, product data, and niche client marketing services to virtually every Internet-connected country on the planet, needed a development partner to help create hotsites (a unique Web site that promotes a marketing campaign and/or partner’s content) to support the growth and maintenance of Yahoo!’s and its partners’ platform products.

Such hotsites and other Yahoo! Web services require quick turnaround in a manner of days, sometimes even hours. If Yahoo! doesn’t launch these pages on time, the information becomes stale even before it’s uploaded and its customers don’t achieve the new page click-through objectives they want.

In addition to speed, Yahoo! needed agility since it must launch new sites using new tools. These pages must be free of unforeseen usability bugs or other challenges since a large amount of users will visit them.

Today, Web providers like Yahoo! are meeting those deadlines using an outsourcing provider. Yahoo! wanted a partner qualified in LAMP technology, which it uses in developing dynamic Web sites and application servers. Cost effectiveness and scalability were important as well as an ability to quickly incorporate its processes into Yahoo!’s methodology and culture.

From vendor to outsourcer

Over the years, Yahoo! has tapped many companies to help keep its Web portals user-friendly, responsive, and content compliant within the countries it serves. However, many of them are strictly vendors, working with direction from Yahoo!, but with no real stake in the engagement other than fees.

A few have morphed into outsourcing partners. One is Brazilian-based Ci&T, a consulting and technology outsourcing services company and CMMI Level 5 independent software developer (ISV). Ci&T provides consulting and technology services, including customized applications, SAP, business intelligence, business process management, IT governance, digital marketing, and Web 2.0 applications.

“We are starting to see models where suppliers are leveraging other companies with local expertise and market knowledge,” according to Anand Ramesh, research director for the Everest Group.

Yahoo! initially engaged Ci&T to address Yahoo!’s presences in the South and Central American markets and its North American Spanish-speaking portals. Engineering director CJ Singh, who manages these initiatives in Yahoo’s American regions, says it didn’t take long for Ci&T to transition from vendor to outsourcing partner.

“In the beginning, Ci&T was an overflow software developer to augment our efforts,” he says. “But over time, we needed a consistent relationship with an ISV that displays state-of-the-art engineering practices found in a CMMI Level 5.” Those competencies, coupled with provider understanding of the Yahoo! brand in the many different Hispanic nations in which it has a presence, instilled confidence in Yahoo! to begin outsourcing complete projects to Ci&T, according to Singh.

Through this partnership, Yahoo! works with Ci&T’s team to leverage the newest and best technologies for Web development. This allows Yahoo! to meet the needs of its portals, which over 350 million people worldwide use daily.

“We know that innovation is very important, particularly for Yahoo!,” says Leonardo Mattiazzi, vice president of international business for Ci&T. “It’s about bringing new products to the market in the most usable fashion. It’s also a part of their culture we’ve grown accustomed to quickly.”

Yahoo! has extended its presence in Latin America and delivers sponsored sites as soon as three days from the definition of layout to market. Prior to this, such sophisticated Web development could take as long as two weeks.

“They have access to great talent in the Latin America region and that has produced the results we anticipated,” says Singh. “They engage good young engineers and it shows in the quality of the work they do for us.”

Successful hotsites

The initial challenge, according to Mattiazzi, was simply coping with the amount of work and on-time, quality delivery. “During the vetting process in 2007, Yahoo! told us they needed a company with similar values: a lean and agile structure and young, talented, and flexible minds that displayed an appetite for innovation.”

Peter Allen, managing director for Global Practices with TPI, suggests, “Outsourcing’s benefit for labor arbitrage is just about gone. Productivity and outcome-based value, not just effort-based services or cash savings alone determine success.”

The initial hotsite engagements were a tremendous success throughout Latin America and especially in the U.S. Hispanic market. One of them, a beauty contest, allowed visitors to upload, vote, and comment on contestant pictures. It registered more then two million page views and over 9,000 contestants uploaded pictures during the two-month campaign.

Another involved Yahoo! partner The Brazilian Sports Authority after reformulation of its national soccer league. That site registered 10 million page views from three million unique visitors in a single month.

Ultimately, Ci&T continued to reduce defect-free hotsite launch times from two months to three weeks, and sometimes less.

Such successes inspired a broadening of the engagement. Today Ci&T provides engineering, product, and search marketing services to Yahoo! and interacts with more of its divisions, such as development frameworks and content management. The Ci&T executive says he can feel “palpable excitement” when he’s around the teams as they work on their projects.

Buyer dividends now include quicker ramp-up times and greater efficiency within a broader sphere of Yahoo! properties. In addition, Ci&T is also slowly branching into some of Yahoo!’s Far Eastern enterprises.

Both Singh and Mattiazzi agree that the Yahoo! value proposition doesn’t stop with just the services it retains from its provider. “They are a techie icon,” Mattiazzi says. “We are learning more about this technology together. They’ve always been in the cutting edge of the Web. In a sense, we are peers. It’s a true collaboration.”

“Ci&T shows great responsiveness through its developer innovation skills,” according to Singh. “Our internal processes and methodologies can’t help but improve because of this association. It’s a large reason why Ci&T moved from simply a vendor to trusted outsourcing provider.”

Lessons from the Outsourcing Journal:

• When penetrating new geographic regions, successful outsourcing buyers look for best-in-class providers based in those regions.
• Successful outsourcing providers often can assimilate buyer culture. These characteristics can often produce capable collaborators rather than simply task-performing suppliers.
• With growing frequency, productivity and outcome-based value rather than just labor arbitrage determine the success of outsourcing engagements.