Locating a Shared Services Operation in Latin America
With a wide selection of viable geographic location options in Latin America, many large corporations have chosen to locate significant Shared Services organizations in that part of the world. There are a variety of reasons for doing so, including leveraging an existing company location, a well-educated workforce, favorable labor arbitrage, a well-developed infrastructure, the availability of technical talent, tax incentives, and being located in the Americas time zones.
iPollingTM Results Review
A recent poll created using Peeriosity’s iPollingTM technology looked at the specific geographic location of shared service centers in Latin America at major companies across the world and the primary reason they chose that particular location. Reviewing the results from the first question, Costa Rica was the most popular location with 23% of the responses, followed closely by Mexico with 16% and Brazil with 13%. A significant percentage (39%) do not have a Shared Services operation located in Latin America.
It is also interesting to note that Argentina, Chile, Peru, and Puerto Rico were not used as Shared Services locations by any of the companies participating in the research.
The second poll question then looked at the primary reason companies selected the specific location in Latin America for their Shared Services operation. Utilizing an existing company location was the dominant response (43%), followed by favorable labor quality and cost at 26% and a well-developed infrastructure at 4%.
Some of the comments made by Peeriosity members related to this poll include the following:
Consumer Products & Services Member: Important factors included existing company location, favorable quality, cost, and access from both North America and Latin America.
Manufacturing Member: We chose Mexico City due to the IT Oracle talent needed for the IT Shared Services.
Computers & Electronics Member: Current benefits are more related to talent, quality, and innovation.
Consumer Products & Services Member: Quality of labor and time zone with the Americas are also favorable.
Healthcare, Pharmaceuticals, Biotech Member: Our Shared Services for Latin America is in India where we have our Global Finance Shared Services.
Healthcare, Pharmaceuticals, Biotech Member: Moved to Costa Rica last year from multiple locations in Latin America.
Consumer Products & Services Member: Our Latin America shared service center has been in Mexico City for some time. I’m not sure what the primary reasons were for locating there. We do enjoy favorable labor quality and cost.
The variety of viable geographic locations in Latin America is appealing to many companies and the migration to these locations from higher-cost locations will likely continue at a strong pace for the foreseeable future. Certainly, having an existing company location in Latin America is a compelling reason to stand up a Shared Services operation there, but this region also offers many locations with a well-educated workforce, solid infrastructure, and the opportunity to realize significant labor arbitrage.
Does your company operate a Shared Services center in Latin America? Is your current geographic structure effective or would the possibility of starting a Shared Services operation be an approach to start investigating?
Who are your peers and how are you collaborating with them?
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.