Nearshoring, the Key to US Mexico Relations
For U.S. companies, nearshoring business services to Mexico transcends borders, eases the flow of commerce—and enhances relations.
By Richie and Lucia Matthews for Fox News Latino
“Nearshore” outsourcing is the practice of getting services performed by people in neighboring countries. Many companies in the United States, for example, outsource work to Mexico. Geographic proximity means that logistics and communications are easier and less expensive.
Although the offshoring concept became a popular business practice, escalating uncertainties of regional threats in India combined with increased focus on vulnerability management and demand to keep data close to where business actually located have changed delivery preferences of U.S. businesses towards nearshore options in Mexico.
Mexico has a lot of appeal because of its proximity to American demand and the continuing need of many companies to improve their working-capital positions, which means that new jobs are being created on both sides of the border—and enhancing U.S.-Mexico relations.
“Mexico has made important advances,” said Javier Allard, AMITI president (www.amiti.org.mx). “We don’t want to compete with India, China or the Philippines. Many companies from both sides of the U.S.-Mexico border are making big gains.”
AtelUSA (www.atelusa.com), a Mexico-based company that provides call center outsourcing services for U.S. companies, is one of the companies that is seeing gains, as demand for nearshore outsourcing from U.S. companies grows. They handle sales calls (outbound) for major telecommunications companies; manages customer service calls (inbound) for large banks and oversees the integration of both inbound and outbound calls for a top credit card companies.
“Mexico’s contact center industry remains one of the largest and most robust in Latin America,” said Ricardo Navarrete, Director of Business Development for AtelUSA. “Mexico represents an excellent nearshore alternative for U.S. companies that are looking for diversification or that do not want to use an offshore vendor.”
Mexican call center nearshoring will undergo substantial growth through 2012. This is because Mexico has emerged as the most attractive location from which to serve the U.S. Hispanic population. With an abundance of Spanish-speaking agents, it is also a competitive alternative to other Latin America nearshore destinations from which to serve U.S. Spanish-speakers. As a result, U.S. companies with a substantial amount of bilingual call needs are looking for a lower-cost, nearshore destination.
Mexico is insulated from the economic volatility experienced by most Latin American economies, which has seen a steady improvement in main economic indicators over the last several years. Inflation and interest rates are low, compared to those of Argentina and Brazil.
Companies are increasingly looking to outsource more of their non-core functions to reduce cost and they continue to prefer lower cost offshore solutions. Increasingly, they are looking for a second offshore geography particularly Latin America, so as not to put all their eggs in the Asian basket.
Foreign direct investment in Mexico rose 27% in the first half of 2011 from a year earlier to $12 billion, boosted in part by the rebounding U.S. demand for manufactured goods.
“There is a very large, educated, young population in Mexico,” says Ricardo Navarrete. “Technology is a popular subject with university students. Mexico has approximately 400,000 students studying technology related subjects in universities and technical schools. Roughly 60,000 of them graduate from these programs annually.
The region is considered the main nearshoring destination for U.S. and viable alternative to offshoring to India. Recent ranking of the “Nearshore Americas Power 50″ named the most influential nearshore figures from 16 countries from Americas region. The $10 billion industry has chances to successfully compete with offshore destinations as certainties of hazardous world have fully overrun into outsourcing decisions.
For U.S. companies, nearshoring business services to Mexico transcends borders and eases the flow of commerce–enhancing U.S.-Mexico relations.
Entering Emerging U.S. Hispanic Markets
Insights about expanding marketing plans and attitudes to fit the changing Hispanic market landscape.
By Richie and Lucia Matthews, Co-Directors of DIÁLOGOThere is great motivation for brands to invest more public relations and marketing dollars into the established American Hispanic markets. However, the following points leave little room to second-guess the benefits of investing in “emerging” U.S. Hispanic markets.
Respond to Hispanics’ Needs and Behaviors
In 2000, the majority of U.S. Hispanics lived in California, Texas, Arizona and Florida. Although these four states have maintained their Hispanic population status, they did not develop as much as other American markets such as the South and Midwest.
The National Basketball Association is a good example of an organization that has expanded its marketing plans to fit the changing Hispanic market landscape. Sakia Sorrosa, the Multicultural Marketing V.P. for the NBA said, “This Latino influx into non-traditional markets has had a significant impact in our Hispanic attendance. In markets like Denver, for example, 24 percent of all attendance is now comprised of Hispanic fans; in Philadelphia, that number is 18 percent; Milwaukee 11 percent; and Salt Lake City 9 percent.” Pointing out how many NBA franchises are benefitting by aggressively responding to market forces, Ms. Sorrosa added, “These teams in smaller markets have even started customizing their in-arena and grassroots programming to cater to this audience with programs like Latin Night celebrations, food offerings, and special guest appearances.” Expand Marketing Plans to Fit the Changing Landscape
Arvest Bank, which is headquartered in Arkansas, one of the fastest growing Hispanic population booms in the country, has over 240 branches in Arkansas, Oklahoma, Missouri, and Kansas.
Ms. Sorrosa affirms Mr. Ocasios’ focus on behavioral targeting when entering an emerging market by stating, “We are very attuned to the generational, cultural, and migrational changes that have occurred and will continue to occur as this population continues to grow.” One of the major shifts seen over the last few years is that of migration patterns. “Whereas 10 years ago, we were talking about the top 10 DMAs, today, we’re talking a about a population that is widely spread across the U.S. and living outside of larger cities in more mid-to smaller-sized cities like Denver, Milwaukee, Salt Lake City, and Philadelphia,” said Ms. Sarrosa. Developing a unique Hispanic value proposition and getting the C-Suite on board is key to appealing to these new audiences. Offering a Unique Value to the Market Once a market has been identified and before it should be approached, the company has to offer a unique value to the market, and the C-Suite needs to be on board.
Addressing Arvest Bank’s unique value to emerging Hispanic markets, Mr. Ocasio added, “We have a money transfer ATM card called “Unidos”. The product allows any Arvest Bank customer with an Arvest Bank account and a Unidos account to send money to loved ones to almost anywhere in the world including Latino America.” With 50.7 million Hispanics in the United States, creating a dialogue with the Latino consumer is no longer an option but a necessity. Because of the shifting Hispanic market landscape happening in both large municipalities and rural communities around the country, part of the new marketing necessity for many organizations is to invest in emerging Hispanic markets around the country. ___________________________________________________________________________________________________
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All but six states in the U.S. experienced Latino population growth of over 40 percent between the years of 2000 and 2010. In the last ten years, southern states such as North Carolina, Georgia, Virginia and Tennessee, have almost doubled their Hispanic population. Many Midwestern states saw huge increases in the agriculture and manufacturing communities.
Manuel Ocasio, Hispanic Marketing Director for Arvest Bank, expresses the importance of properly identifying emerging Hispanic markets using behavioral not just population data, “Although the Census results show where the numbers of the Hispanic markets are growing, the annual ‘American Community Surveys’ offers better insight of Hispanics’ needs and behaviors. This is relevant information to companies that are looking at increasing household and customer base.”
Manuel Ocasio shared that, “There needs to be buy-in from the leadership. The leadership of the company sets the tone and drives proactive attitudes towards the emerging markets in their trade markets.”
Latinos Continue to Close Digital Divide
The U.S. Hispanic market has reached a tipping point. Current trends suggest expanding influence will blur the lines and Hispanic and general markets will collide. The resulting merger is revealing a new, younger American consumer market with a heightened element of Latino flair.
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Approximately one in six Americans is of Hispanic descent or origin. More than half are under the age of 26 and by 2020, the number of Hispanic teens is expected to increase by 62 percent as compared to 10 percent growth in the number of teens overall. Hispanic youth are a powerful consumer force underlining the Latino presence in general consumer market culture. Typically English speaking, or at English preferred, socially connected and heavy technology users, Latino teens, “Generation N” are leading the way in general market infiltration.
However, one of the most startling facts is that for the first time, Hispanic births have surpassed the total number of Anglo births in many counties across the nation. The future of the general market is upon us.
To keep up with the Hispanic baby boom, more national brands are courting young, tech savvy Hispanic consumers; incorporating online communities and social networks within their corporate marketing strategy. As these domains increasingly become a fundamental component for business success,compaies of all sizes are looking for experts on the forefront of this industry to understand the extent of the benefits Web 2.0 tactics have to offer.
Technology and innovation have been driving forces for increased interconnectivity. Many young, socially connected Hispanics are on the forefront of this new society. Their affinity for Internet technologies will advance Latinos as business strategies are increasingly built within online models.
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The growing impact of the Hispanic community online is an area requiring enhanced corporate attention. U.S. Hispanic purchasing power is projected to reach as much as $1.3 trillion by 2015. During the past decade, the rate of growth was more than two times the overall national rate. That is a rate worth targeting. The considerably young, up-and-coming Hispanic population has been dubbed media mavens for their avid technology and internet usage and thus can be successfully reached through online strategies.
Hispanics will continue to be a critical part of the U.S. economic system. This segment’s affinity for technologies that ease communicating across geographic boundaries, allow interaction, build communities for like-minded individuals and provide entertainment will affect the way companies approach business.
Marketers with established working models for communicating with Hispanics through technologies can guide the corporate world over the threshold into the new age of technological advancements.
Those who have a stake in understanding the U.S. market should pay enhanced attention to the nuances and complexities of the Latino population. U.S. Hispanics assimilate while maintaining strong ties to cultural traditions and value systems. The resulting assimilated segment is permeating boundaries and forever changing the American consumer market.
Richie
Lucia