Drug-related violence in communities on the US/Mexican border has received significant media attention in recent weeks, and could potentially cause concern among outsourcers and their clients with contact center deployments in Mexico. However, Datamonitor believes that serious investors need to look at the long-term value that can be derived from this established national market.
Recent media reports of drug-related violence at the US/Mexico border have led many observers of contact center outsourcing to question the viability of Mexican offshore delivery. This has been compounded by US State Department travel warnings issued in late February indicating that American citizens need to exercise extreme caution when visiting certain Mexican regions. However, Datamonitor believes that outsourcing clients and vendors looking to establish or expand operations in Mexico should consider the inherent value that can be derived from that country when making an investment decision.
One of the first considerations that outsourcers and their clients need to keep in mind concerning Mexico is the location of the current troubles, which appears to be overwhelmingly in communities bordering the US. These centers have traditionally been noted for their strong familiarity with the American way of life. However, Datamonitor notes that there are many cities farther south in Mexico that have sizable pools of labor with English skills and a solid understanding of US popular and commercial culture.
Another important point that should be considered when assessing Mexico as an offshore outsourcing delivery site is that of its ever-growing commercial integration with the US and Canada. As one of the original signatories of the North American Free Trade Agreement, Mexican executives have had a significant head-start on other Latin American locations in regard to understanding how American and Canadian firms conduct business and what it means to deliver a successful contract.
It is also significant that, according to United States Census estimates, up to two-thirds of the US Hispanic population can trace their roots back to Mexico. Therefore, being able to deliver contact center functions from a location that has an inherent familiarity with the vernacular and customer service manner of the end-user market remains a significant advantage for outsourcing clients. This is especially important in terms of penetrating the US Hispanic community, whose collective household incomes have increased significantly over the past 20 years.
Cost is another important issue. For foreign firms, Mexico remains a very inexpensive location in which to do business. In a recent Datamonitor survey, a Mexican contact center outsourced agent's price per hour was roughly a third lower than that of a US-based agent. Compounding this is the fact that the exchange rate between the Mexican peso and the US dollar continues to be very advantageous to American investors, and has been especially so over the last eight months.
There is also a geographical advantage to be exploited: Mexico is a consummate nearshore location in terms of North American contact center delivery, and most major sites are easily accessed in terms of time, relative to other Latin American centers. This is especially important for outsourcers and their clients that wish to minimize travel time.
In conclusion, Datamonitor does not dispute that the levels of violence on the Mexico/US border should be of concern for offshore investors looking for a stable location in which to house their contact center operations. However, it would be futile for both outsourcers and their clients to forsake this country in light of recent worrying media reports, considering its clear advantages and history as a contact center delivery hub.