A Datamonitor report The Global Pricing Guide to Offshore Outsourcing Balancing the Risks and Rewards of Offshore and Nearshore Outsourcing Published: Sep-04 Product Code: Providing you with: Information on customer care agents in Argentina, Brazil, Canada, Germany, Hungary, India, Jamaica, Mexico, the Philippines, Poland, South Africa, UK and US Use this report to... Understand the current state of offshore outsourcing in the major outsourcing markets Wealth of data on average prices for outsourced collections, direct response, telemarketing, voice-based and multi-media customer care and technical support agents Qualitative discussion on the risks and rewards that outsourcers and end-users face in these ten offshore markets Interviews and data compiled through Datamonitor's focus on the call center www.datamonitor.com/technology
The Global Pricing Guide to Offshore Outsourcing Introduction Given the growth of offshore outsourcing over the last few years, low-cost nations other than India have begun to aggressively pursue a portion of offshore-outsourcing. Outsourcers and end-users focus on the savings made in the move offshore but hidden costs and other risks can complicate the decision to move offshore. This report compares and contrasts the major offshore and nearshore locations. Key findings and highlights Following the devaluation of the peso, Argentina is now the least expensive market for an outsourced voice-based customer care agent and also one of the least expensive labor markets in the world. Although cost of labor and the price of an outsourced agent is definitely an issue, in some markets the risks associated with moving call center operations overseas outweigh the benefits gained from labor arbitrage. Outsourcers and end-users need to consider the risks of a particular country, but more importantly, the benefits of the workforce. Datamonitor predicts that some offshore markets will experience wage inflation due to increasing maturity of the outsourcing industry while the popularity of offshore outsourcing will result in wage deflation in Germany, UK and US. Reasons to buy Understand the current state of offshore outsourcing in the major outsourcing markets Benchmark labor costs and pricing against national averages for outsourcers and end-users Identify developing outsourcing destinations to broaden the scope of offerings Contact us... From Europe: tel: +44 20 7675 7258 fax: +44 20 7675 7016 email: tcmarketing@datamonitor.com From Germany: tel: +49 69 9750 3119 fax: +49 69 9750 3320 email: deinfo@datamonitor.com From the US: tel: +1 212 686 7400 fax: +1 212 686 2626 email: ustcmarketing@datamonitor.com From Asia Pacific: tel: +61 2 9006 1526 fax: +61 2 9006 1559 email: apinfo@datamonitor.com
Sample pages from the report Brazil CHAPTER 4 BRAZIL What is the market like today? The Brazilian call center market offers the most balanced investment opportunity in Latin America. Datamonitor Argentina believes that Brazil is the third largest call center market in the world behind the UK and US and the most developed in Latin America. As such, a quality labor pool of agents and call center managers is in ready supply. Although Datamonitor does recognize Another Brazil s major potential uncertainty as an to offshore take on outsourcing is corruption, which continues to affect the destination, Brazilian offshore outsourcing business is underdeveloped environment and and has will dramatically continue to increased be since the devaluation of the so through 2008. Brazilian outsourcers peso in have 2001. not In been a survey forced conducted to pursue by Transparency offshore International, an international contracts due to the strength of the watchdog domestic monitoring market. Brazilian levels of outsourcers corruption, Argentina are just posted a lower score than Russia beginning to pursue outsourcing from and the any United other States. nation included English is in the this third study. language in Brazil, but is increasingly the language of choice among university students. Datamonitor does believe that Brazil Another can support weakness English Argentina s calling but distance it remains from to be the United States and Europe. A flight seen how effectively Brazilian outsourcers from New York can to communicate Buenos Aires this Market takes message nine context hours, to whereas outsourcing to Mexico prospective clients. involves only a three-hour flight. Many companies do not want to accommodate the risk that is inherent with moving a call center halfway across the globe and the real or For more information about Brazil perceived and the rest loss of of control Latin America that goes please along see with it. Call Center Outsourcing in Latin America and the Caribbean to 2008 (DMTC0975). Rewards: Currently, Argentina is the cheapest offshore destination in the world, Risk vs rewards which automatically compares it with the Figure major 1: offshore Relative locations risks of India and costs and the of nearshore and offshore outsourcing Philippines, and to some extent South Africa. However, it markets should be understood that Argentine outsourcers do not compete directly with outsourcers based in India, the Risk: Economic uncertainty is an issue in Brazil but nothing like the degree to which Philippines or South Africa because Argentina supports bilingual English-Spanish it is in Argentina. Datamonitor considers currency fluctuation to be an issue of which calling. LOW one should be aware but not an overriding concern. Outsourcers operating in Argentina tend to package themselves as the low-cost ZAF ML SA CAN Another major uncertainty to take on is corruption, which continues to affect the alternative to higher-cost but lower-risk alternatives in Mexico business environment and has dramatically increased since the devaluation of the IND and Central America. JAM POL Whereas an inbound voice agent in Mexico is priced at $16.20 an hour and paid peso in 2001. In a survey measuring perceptions of corruption conducted by between $3.00 and $3.50 an hour, an inbound voice agent in Argentina Transparency International, an international watchdog, Brazil ranked 54 or lower than HUN ML is paid MEX between $1.00 and $1.20 and priced at $12.40 per hour. Clearly, labor arbitrage Canada, Hungary and South Africa but higher than Argentina, India, Jamaica, accounts for a substantial portion of the difference between the price of an PHL POL JAM ML Mexico, the Philippines and Poland. outsourced inbound customer care agent in Mexico and Argentina. BRA ML However, it Another weakness is Brazil s distance should from also the be United noted States that outsourcers and Europe. tend A to flight charge a premium for proximity to the ARG from New York to Sao Paulo takes US eight and, more hours, generally, whereas the outsourcing country of call to Mexico origin. involves only a three-hour flight. Many companies do not want to accommodate the ID Except for some lower-value technical support HIGH calls, such as basic inquiries about how to update software or install a wireless adaptor, LOW Datamonitor does not Cost believe per hour HIGH The global pricing guide to offshore outsourcing that Argentina will be able to attract significant Source: Datamonitor amounts of higher-value collections D A T A M O N I T O R and technical support calling, primarily because Page 14 the Spanish accent is considered Datamonitor (Published 08/) This report is a licensed product and is not to be photocopied discordant to native Spanish speakers in Latin America. Therefore, Datamonitor believes that calling will be limited Broadly to voice-based speaking, customer outsourcing care markets calling, can be segmented into two groups of telemarketing and telesales and inbound countries direct response either calling. offshore or nearshore outsourcing markets. Nearshore and offshore is defined by the distance from the country of call origin in which the contact center is located. Offshore: The main attraction to these markets is labor arbitrage. Since labor can account for as much as 70% of all costs, even marginal savings on wages can translate into significant savings for call centers with hundreds of agents. Offshore markets tend to be less secure and present the greatest The global pricing guide to offshore outsourcing risks arising from currency fluctuation, security issues and situations that are Page 12 Datamonitor (Published 08/) brought on by societies with extreme social problems. Offshore markets This report is a licensed product and is not to be photocopied include Argentina, Brazil, India, the Philippines and South Africa. Nearshore: The main attraction of these markets is their proximity to the country in which the call originates. Security issues and general risks tend to be less severe and outsourcers and enterprises are prepared to pay a premium for decreased risk. Nearshore markets are Canada, Hungary, Jamaica, Mexico and Poland. Risk The global pricing guide to offshore outsourcing Datamonitor (Published 08/) Page 10 This report is a licensed product and is not to be photocopied Currently, Brazil is one of the cheapest call center markets in the world, which automatically compares it with the major offshore locations of India and the Philippines Mark Best, DatamonitorTechnology Analyst
Table of contents INTRODUCTION What is this report about? What information does this report provide? Who is the target reader? MARKET CONTEXT Introduction - Relative levels of risk and cost ARGENTINA BRAZIL - What is the market like today? CANADA HUNGARY INDIA JAMAICA MEXICO PHILIPPINES POLAND SOUTH AFRICA APPENDIX Additional information Research methodology Future readings - Datamonitor Strategic Planning Programs (SPPs) - Related research SPP writing team TABLES Table 1: Price per hour or Argentine outsourced agents, Table 2: Price per hour of Brazilian outsourced agents, Table 3: Price per hour of Canadian outsourced agents, Table 4: Price per hour of Hungarian outsourced agents, Table 5: Price per hour of Indian outsourced agents, Table 6: Price per hour of Jamaican outsourced agents, Table 7: Price per hour of Mexican outsourced agents, Table 8: Price per hour of Filipino outsourced agents, Table 9: Price per hour of Polish outsourced agents, Table 10: Price per hour of South African outsourced agents, Table 11: Price per hour of an outsourced voice-based customer care agent, Table 12: Per hour wages of an outsourced voice-based customer care agent, Table 13: Price per hour of German, UK and US outsourced agents, FIGURES Figure 1: Relative risks and costs of nearshore and offshore outsourcing markets...india is the unsurpassed leader in call center outsourcing due to considerable labor arbitrage. Indian contact center agents are predominantly university graduates and tend to view call center work as one of the first steps in building a career... Mark Best, DatamonitorTechnology Analyst
The Global Pricing Guide to Offshore Outsourcing Datamonitor: Your total information solution Datamonitor is a premium business information company helping 5,000 of the world's leading companies across the Automotive, Consumer Markets, Energy, Financial Services, Healthcare and Technology sectors. Our products and services are specifically designed to support our clients key business processes - from corporate strategy to competitive intelligence. We provide an independent and trustworthy source of data, analysis and forecasts to improve these processes and ultimately, to help grow your business. Corporate Strategy & Business Planning Product Development & Commercialization Targeting & Influencing the Market Market & Competitive Intelligence Quality Data Expert Analysis Future Forecasts Make more effective strategic and business decisions Accelerate delivery of commercial success Assess and influence your commercial and market environment Maintain or obtain critical competitive advantage HELPING TO GROW YOUR BUSINESS No-one speaks louder than our clients ACI Atos Origin Avaya Communications Blue Pumpkin BSKYB BT Bull Chello Cisco CMG Computer Associates Convergys CSC Financial Services Deutsche Telekom Diamond Cluster EDS Ericsson Eyretel France Telecom Gemplus Genesys Hewlett Packard IBM Infogrames Intel Intervoice KPN Mobile Manugistics Microsoft Mitel Telecom NCR Nice Systems Oberthur Philips S1 Corporation Samsung SAP Sega Setec Siemens AG Sonera Sony Staffware Sun Microsystems Sungard Telefonica Moviles Teleperformance Thales Thus Unisys Vivendi 89% of our clients use Datamonitor research to develop competitive intelligence Source: Datamonitor Customer Research
Datamonitor's Contact Centers Outsourcing and Services Strategic Planning Program (SPP) is a tailored, continuous advisory service combining a number of information sources. Interested in this topic? The emergence of service bureaus in developing markets, which provide high quality labor at low costs, is changing the customer relationship outsourcing market significantly. This SPP provides analysis of global call center and eservices outsourcing in both developed and developing markets. The service identifies business planning and development opportunities by tracking the number of outsourced call centers and agent positions by vertical market globally and regionally. Related products available Profiting from European Nearshore Outsourcing Describes the Central and Eastern European and North African contact center nearshore outsourcing industry, including a broad market size and two regional SWOT analyses Published: Aug-04 Product code: DMTC1029 Call Center Outsourcing in Latin America and the Caribbean to 2008 Covers developments in the Latin American call center market, tracking the market by country and vertical with an additional focus on domestic and offshore outsourcing Published: May-04 Product code: DMTC0975 European Attitudes to Call Center Outsourcing: A Survey of 250 Decision-makers Analyzes a survey of 250 call center decision-makers in Europe carried out during the summer of 2003 Published: Dec-03 Product code: DMTC0956 Global Offshore Call Center Outsourcing: Who Will be The Next India? Focuses on the markets outside of North America and Western Europe that have emerged as viable outsourcing locations Published: Dec-03 Product code: DMTC1029 Opportunities in Asia Pacific Call Center Markets to 2008 Sizes the market for contact centers in Asia Pacific by agent position and call center, split by national market, size band, vertical market, and by IP/multimedia Published: Feb-03 Product code: DMTC0915 For more information on reports and briefs go to: www.datamonitor.com/technology Subscribe to Monitor A monthly update of Datamonitor's new products, delivered to you by email. Email: monitor@datamonitor.com
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