Growing Importance of Outsourcing in Latin America and the Caribbean

Photo: Ariel López, Flickr

Last year, offshoring was worth over 200 billion dollars worldwide, which represented ongoing growth based on the process of economic globalization, internationalization of labour markets and the implementation of new business models.

According to analysis from the experts in the ECLAC International Trade and Integration Division, the industry began with information technology outsourcing (ITO) in the 1990s, and has received a considerable boost from the development of information and communications technologies.

This went on to include business process outsourcing (BPO), and eventually incorporated a wide range of activities with significant added value, such as knowledge process outsourcing (KPO), research and development (R&D) and innovation processes.

For the first time, the implementation of the global delivery model and mass outsourcing through global value chains is giving developing countries the opportunity to make a significant contribution to the world service industry, thereby facilitating the structural changes needed to foster development.

In Latin American and Caribbean countries, this sector has suffered less from the recent crisis than other sectors in the real economy since offshore services are typically business-to-business and based on multi-year contracts, which counteract the downturns of the business cycle, consumer demand and price volatility. One of the key issues to be examined are the structural changes taking place in business services before and after the crisis. However, evidence on these issues for Latin America and the Caribbean remains scant and elusive.

In this context, the Economic Commission for Latin America and the Caribbean (ECLAC), the Latin American and Caribbean Network on Services Research (REDLAS) and the WTO chairs in Mexico City (ITAM), Santiago (University of Chile) and Buenos Aires (FLACSO Argentina), in cooperation with the World Trade Institute (University of Bern) are organizing the joint academic conference Offshore services in Global Value Chains: New drivers of structural change in Latin America and the Caribbean?, which will be held on 18 and 19 October 2012, at the ECLAC headquarters in Santiago, Chile.

The conference will be attended by leading academics in this field and prominent policy makers from the World Trade Organization (WTO) and governments in the region, who will analyse evidence on the participation of Latin America and the Caribbean in these offshore service type value chains, in sectors such as software and business and knowledge process outsourcing (BPO and KBO) and back-office services.

They will also tackle topics such as how logistics, financial services, and specific business services have promoted the integration or upgrading in value chains, the role for regional and north-south free trade agreements (FTAs) and foreign direct investment and the incorporation of small and medium-sized enterprises (SMEs).