#NearshoreNexus: U.S. Companies Look to LatAm to Regain Competitive Edge

The United States ranked seventh in the World Economic Forum’s 2012-2013 Global Competitiveness Report. This marks a two-spot fall from its fifth-place position in the 2011-2012 ranking and follows a consistent pattern of decline, the U.S. having failed to garner the top spot since the 2008-2009 report.

What’s the problem? Where is the United States, the top economic and political power in the world, falling short?

“Worldwide, companies are grappling with a competitive global marketplace, and U.S. companies are trying to adapt to a global world. The reality is that our political establishment really hasn’t digested or understood the fact that this is a global world,” said Kirk Laughlin, Founder and Editorial Director of Nearshore Americas. Today, global corporations have to establish offices overseas, hire overseas and have a presence in emerging markets – something U.S. companies generally recognize but, due to government regulations, often fail to completely execute.

This is one of the main issues to be tackled at Nearshore Nexus 2013, an event hosted by Nearshore Americas designed to generate knowledge and dialogue about the opportunities, risks and advantages of doing business and developing relationships in Latin America. It seeks to answer one vital question: How can Latin America become a strategic player in the ability of U.S. companies to compete globally?

Who, How, What, Where

Latin America can contribute in numerous ways, from producing software for U.S. companies to providing professional services in finance, accounting and customer service. Simultaneously, U.S. businesses must raise their awareness of opportunities in Latin America and recognize that Latin America has arrived.

A number of companies are already on the right track, namely, global services providers like IBM, HP, Infosys and Accenture. They see business opportunities in local markets for IT and back office services, especially in Brazil. Things are happening in other Latin American markets as well.

Laughlin pointed to Colombia, noting the level of managerial professionalism in the market as well as a strong understanding of the way U.S. entities do business. He was enthusiastic about the Mexican market as well, highlighting Guadalajara for its ability to bring in best practices and training programs to develop top-quality professionals in the global services field. He noted Mexico’s startup ecosystem and the value of government incentives in bringing in local and international businesses and entrepreneurs. Costa Rica, Guatemala and Chile have also fared well, while locales like Peru are coming along.

Market Variations: A Mixed Bag

With experience in India, China, the Philippines and Eastern Europe, traditional outsourcing hubs, U.S. companies are aware that they will face unique characteristics and barriers in all environments, whether cultural, business-related or otherwise. This transfers to their Latin American encounters as well.

“The reality is that every market is quite unique. You have very different scenarios between places like Argentina, versus Mexico, versus Colombia, versus Brazil, which has some pretty restrictive labor and tax laws,” Laughlin explained. Many stereotypes and preconceptions surrounding Latin America are dissipating. Corruption is an issue that, as with any locale, has to be considered, but given the rate at which companies are expanding into Latin America, it is by no means a deal breaker.

Policy the Problem

As Latin American countries, generally, seeming to be moving in the right direction in terms of their relationships with U.S. corporations, the U.S. itself has proven much more hesitant and slow moving.

Following a 2012 presidential election season including the persistent rhethoric of keeping jobs in the United States, Laughlin asked whether this type of controlling notion is even relevant in today’s economy.

The reality is that the government has to stop living in denial about the real world and the real global economy. They still have this 20th century mindset of ‘we can control where our corporations hire and fire people,’” he remarked. “It’s not a strategy that’s going to succeed in this global economy. People have to understand that our businesses have to succeed in emerging markets. They have to expand into those markets, and they also have to develop relationships in those markets.”

Eye on Immigration

U.S. policymakers will also need to turn their attention to immigration policy, an issue Joe Nocera, Op-Ed Columnist for the New York Times, will address in his keynote speech at the upcoming Nearshore Nexus.

United States immigration laws often prevent corporations from bringing in talent and also keep entrepreneurs and innovators at bay. Why does this matter? Startups are job creators. Whether they’re led by entrepreneurs from the U.S. or abroad, new companies and startups create an average five new jobs within their first year of existence.

Laughlin pointed to a more specific type of Latin American entrepreneur who builds a brand in the United States, adding jobs and fueling the economy, but also keeps part of the business, such as software building or development, at home. A prime example of this is PulsoSocial’s own Andres Barreto, who has proven to be a driving force in both the United States and Latin America with his various entrepreneurial ventures. These types of entrepreneurs lead to a win-win situation on both sides of the equator.

The Competetive Edge

When it comes to competition, has the U.S. lost its edge? No. But it’s not exactly the fiercest competitor out there right now, either.

Smart business executives and forward-thinking policymakers will prove essential in bringing U.S. corporations back to the forefront of the global business economy. Support from Latin America, one of the fastest-emerging regions in the world today, will also be key.

At Nearshore Nexus on April 24th, the potential of business relationships between the Americas will be expounded and explored.