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· Population: 3.4 million
· Total workforce size: 1.6 million
· Unemployment Rate: 8%
· Literacy Rate: 98%
· GNI Per Capita: $8,020
· AT Kearney Global Services Location Index: 41st
· Ease of Doing Business rank: 124th
· Standard and Poor’ currency risk rating:BB-
· Economist’s 2010 Democracy Index: 21st, received 10 out of 10 for both electoral process and civil liberties (Full Democracy)
· Transparency International’s Corruption Perception Index: 24th, score of 6.9
· National Language: Spanish

With a strategic location in the south cone of Latin America, Uruguay is one of the founding members of MERCOSUR.  Major Indian player Tata Consulting Group established a presence in Uruguay in 2004, and that operation has now grown to over 800 employees.  While the country faces concerns including scale issues (Their total population is a mere 3.5 million, with almost half residing in Montevido.) and a problematic infrastructure, Uruguay has been making strides in IT services.  Montevido and the Free Trade Zones (FTZs) in Uruguay attract growing numbers of IT firms that seek low-cost professionals in a tax-free environment; some of the well-know firms include Accenture, IBM, HP, Towers Watson, and Sabre Holdings.  Most of the offshore industry is based in Uruguay's capital, Montevido.  The government is supportive of the industry, passing a federal non-discriminatory law (Law 16906) in 1998 that requires that state and national investments are treated equally, investments are allowed without prior registration, and investors may freely transfer abroad their capital and profits from their investments.  Despite the support investment environment, the state maintains control of the electricity and telecom infrastructure, and the monopoly means slow internet and phone services for those in the area. 

Investment Promotion Uruguay

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Uruguay's Role in the Nearshoring Industry

Uruguay's early entrance to the Latin American nearshoring industry has allowed the country to develop a strong sourcing market.  While the high cost of labor and taxes keeps Uruguay out of the top of our Nearshoring Destinations Index, Uruguay offers an experienced and educated workforce to potential buyers. The Global Delivery Report interviewed Mario Tucci, formerly the head of operations for Tata Consultancy Services in Latin America, about Uruguay's role in the IT Outsourcing Sector.
Q: How did Uruguay gets its start in the IT industry?
A: We started very early (educating) IT engineers in Uruguay and Argentina. That ignited the IT software development (sector). Since we’re far away (from other major markets) we had to learn a lot. You couldn’t call an 800-number in the 1980s for help. You had to develop something locally. As a result, for example, Uruguay is now home to two vendors of core banking software, with customers in Mexico, Costa Rica, Peru, Ecuador, Chile and Argentina among others.
Q: Has this been supported by government investment in training?
A: (In the 1970s) there was a university across the river in Argentina, the La Plata University where some people from Uruguay, some from Argentina, created the first Latin American IT engineering institute. It was a very well known and prestigious institute. All this builds on a very high cultural appreciation for education, as in Uruguay all education is free and public, from K-12 through the university level.
Q: What are some of the key areas where Uruguayan software developers are active?
A: Beyond banking, there is logistics. A logistics software solution developed for PepsiCo in Uruguay was taken by PepsiCo and adopted throughout the entire Asia Pacific region. Another is Artech, developer of the GeneXus Technologies cross-platform development and maintenance framework.
Q: When did the shift to also offering BPO begin?
A: It began when TCS came and put a stake in the ground in 2002. When TCS came here, nobody ever thought this operation could reach 1,000 people. In 2008 TCS senior management came to us, based on our ITO experience, and said “We know you don’t have any BPO experience, but you do have the people and attitude we need.” This operation has now grown to 400 people, and is the largest BPO operation of a service provider in the country and employs half the TCS employee base here. It was a very nice demonstration that if you have the right team, which is willing to grow, and to (take on) an ambitious task you can do wonders.
Q: How about other BPO operations besides TCS?
A: After ten years, this country, via the free trade zone and other (efforts) we have seen growth in BPO and IT services, not only for Uruguayan companies, but also many international companies. For example, MercadoLibre, which is the eBay of Latin America, is doing all their back office work from Montevideo. You can also see, a lot of smaller Uruguayan firms providing agile development and technology services and consulting services to companies in the U.S. and around the world. There are several companies here working with Africa, and several working with as far as Japan.
Q: How would you compare Uruguay with other Latin American countries as a source of BPO and IT services?
A: We’re a country of foreigners. Everyone here is the grandson of either a Spaniard, an Italian, a German or a Frenchman. As a result, the country is very cosmopolitan. A lot of people here speak different languages, which is good for this industry. Also, since we’re far away (from other markets) we had to create our own environment.
Finally, historically it’s very rare that Uruguay has fought or had a problem with any other Latin American country. It’s seen as a friendly country by the rest of Latin America. That helps to compete also.

Brazil Industry Losing Out to Lower-Cost Mercosur Members

Brazilian industry leaders are complaining that the strong growth of the Brazilian economy and the Super Real are acting as a disincentive to Brazilian investment. Brazilian companies are turning instead to less expensive options like Argentina, Paraguay, and Uruguay.

With the Super Real, manufacturing in Brazil has become very expensive and Mercosur partners offer comparative advantages: Paraguay, cheap energy; Argentina, natural gas at competitive prices and Uruguay qualified labor. On top of this, the total cost of taxes is significantly higher in Brazil compared to other Mercosur members.

Read it at MercoPress.

Ankur Prakash Discusses TCS Latin America

As part of the Thought Leaders in Cloud Computing Series, Ankur Prakash, VP and COO of Tata Consulting Services Latin America, gives insight into the Latin American outsourcing market. To give a background on TCS Latin America, they began operations in Mexico City in 2003, and have since expanded into Ecuador, Colombia, Peru, Chile, Argentina. Brazil, and Uruguay.

Prakash gives his take on the talent in Latin America, the strategy behind seeking first tier cities, and recruiting from the Latin American labor pool. When asked about the cost advantage of the region, he replied, "As for the Latin American cost advantage, cost arbitrage, I don’t think that any company that works just on cost arbitrage in Latin America can provide any kind of value additional and advantage to local customers." He also explains that because of the vastly different economies that exist in the region, it is difficult to generalize on cost savings. Indeed, companies will find most regional generalizations unhelpful when examining Latin America.

Read the full interview here.

Jet Blue Prepares to Offer More Flights
to Latin America

Jet Blue may become the airline of choice for companies with nearshoring strategies...

JetBlue Airways Corp., with 65 daily trips to the Caribbean and Latin America, may fly to more distant international destinations as it adds fuel-saving winglets to planes and receives new Airbus SAS A320neo jets.

The changes, along with replacing smaller Embraer E190 jets with bigger planes on some routes, will allow the New York-based carrier to fly farther and carry more passengers. JetBlue announced a $2.5 billion order Tuesday for 40 A320neos.

The plan will allow JetBlue to expand its strategy of focusing flying in New York, Boston and the Caribbean. The carrier said it also is likely to use Airbus A321 aircraft it will receive to boost service on high-demand cross-country routes between New York and San Francisco and Los Angeles.

Read it at Ashbury Park Press

Outsourcing in Latin America: What a Vendor Won't Tell You

The outsourcing market in Latin America has undoubtedly matured leaps and bounds in the past 5 years, but there are some potentially less obvious disadvantages to the region that should factor into your decision.

Here is what potential provider won't tell you about the Latin American outsourcing industry:

1.The workforce lacks a sense of urgency: More follow-up may be needed with It or BPO providers.
2. The political situation could be a threat to your business: Anti-business and Anti-American governments are currently in power in Venezuela, Nicaragua, Ecuador, and Argentina
3. Prices are rising quickly: Labor arbitrage has faded, and inflation can dramatically affect your TCO.
4. Not all Latin American countries are equal: Closely examine the wide array of business, legal, and economic climates in each country.
5. They will say no: Unlike less direct cultures like China or India, Latinos are more likely to challenge customers if they feel something is wrong.
6. Don't expect perfect English: Even call center providers may not speak as clearly or accent-free as advertised.
7. Process is not their strength: India's strong IT services reputation is built on quality repeatable processes, but Latin American providers are less rigid.
8. Don't expect scale similar to India's: Populations in Latin America are smaller, and many inhabitants are already employed in the IT and BPO sectors.
9. Physical security is a risk: This doesn't speak for every country, but violence in Mexico and Guatemala could detrimentally affect the mindset and physical environment of IT or BPO sectors.

Read it at Network World.