Navigating Latin American shared services opportunities
A market-by-market guide
The Latin American shared services market isn’t a monolithic whole; it’s a diverse set of individual markets, each with unique strengths, weaknesses, and opportunities. This series takes a deeper look at the most popular shared services markets in Latin America and provides a road map to evaluating the pros and cons of each.
Shared services in Latin America
Latin America is becoming increasingly attractive as a location for Shared Service centers. Given the very different—and rapidly shifting—political, regulatory, and economic landscapes across Latin American countries, there is no “one-size-fits-all” approach. Companies looking to enter the Latin America shared services market must carefully assess short-and long-term service needs, strategic priorities, and risk tolerance before choosing a location.
This series provides Deloitte’s perspective on the challenges and opportunities in Latin America’s most common shared services markets. We also address specific issues business leaders should consider for each market.
There is no "one-size-fits-all” approach. We address specific issues business leaders should consider for each market.
Argentina: Can a former top shared services destination return to glory?
Argentina has long been an attractive destination for shared services centers in Latin America thanks to its skilled and educated workforce, minimal risk of natural disasters, and cost of labor on par with its neighbors.
Yet Argentina has experienced a significant slowdown in companies opening shared services centers, in large part due to the high cost of doing business as a foreign entity and high rates of inflation.
The election of a new president in November 2015 was a critical inflection point for Argentina. This administration’s economic and political decisions could make Argentina a top shared services destination once again. Organizations that can mitigate risk and “buy low” into the Argentine shared services market have the potential to capture tremendous upside.
Costa Rica: The right entry is critical to long-term success
The Costa Rica shared services market has long been a top choice for multi-nationals. Since 2000, six to seven major players a year have entered. While this has been positive for overall market development, it’s created new challenges for companies seeking to create large centers.
Why? Given its population constraints (~4.9 million), Costa Rica may be reaching the upper limits of its growth potential. Companies looking to enter the market must carefully consider their current needs and future growth plans to mitigate the risk of future talent shortages. One player disrupting this delicate resource balance could create an unsustainable scenario of bidding wars and talent vacuums, threatening the cost-viability of the entire shared services ecosystem.
Proper planning and a solid understanding of the Costa Rican shared services industry are essential for long-term success. Download the article for Deloitte’s perspective.
Mexico: Recent instability shouldn’t shake its shared service reputation
Over the past few years, forecasts for Mexico’s economic prospects have turned from euphoria to disappointment. A variety of complications—including public sector spending cuts, a large drop in oil prices, and geopolitical instability—have overshadowed Mexico’s inherent strengths as a location for Shared Service centers. These complications have potentially put Mexico “on sale” for companies looking to set up shop in Latin America.
From geography to talent to the government incentives available to companies looking to establish Shared Service centers, Mexico still presents an enticing case for companies looking to open a shared services center in Latin America. Mexico should be front of mind for any organization looking to make the leap to Latin America, but the risks—from slow growth to natural disasters to the threat of violence—are real and must be carefully considered.
Read the article for Deloitte’s perspective on the strengths and drawbacks of the shared services market in Mexico.