Abstract
EXECUTIVE SUMMARY
At first glance Mexico' s current internal political quagmire and its external immigration challenges with the U.S. convey a perception of a state in chaos. However, a deeper look at the country reflects an economy that is engaged in a progressive and fundamental structural shift geared at becoming a critical player in Business Process Outsourcing (BPO) and IT service globalization provisioning. Over 1 million direct and indirect workers are employed in the sector. Contact center or voice based BPO has experienced sustained growth over the past decade. Increase in the total number of call centers reflect an almost 300% growth - increasing from 3,500 in 1996 to a projected 9,400 by 1Q2007. Three types of service providers define the market and include In-house, outsourcers and SME service provididers.
Increasing from its base of over 150,000 in 2006, agent density is projected to exceed 200,000 by the end of 2007. Bilingual agents serving international customers will exceed 50,000 by 2010 from its current 33,000-agent count. Annual growth averaged 17% between 2004 - 2006. Its International outsourced business, however, is growing at 27% annually. Revenues in 2007 are estimated at US$6.7 billion - a US$700 million increase from YE2006. Its current numbers now challenge Argentina as the market with the largest bi-lingual agent density. With a 60% market share in Spanish agents, Mexico provides the largest nuber of customer care agents serving the Spanish-speaking world.
Approximately, five contact center BPO service providers dominate the Mexican call center industry with a 60% market share. Five more providers occupy an additional
10% market share. In the aggregate, 10 centers control 70% market share. While call center activity can be found in 10 Tier 1 and Tier 2 cities, 80% of its call center business is generated among 5 cities (Mexico City, Monterrey, Guadalajara, Tijuana and Puebla). Approximately 70% of the market' s agent capacity is concentrated in the Mexico City axis. A contingent of smaller urban areas, especially in northern Mexico (Tijuana, Chihuahua, and Tamaulipas) are becoming more attractive due to lower wages and improving talent availability. Compulsory primary education, and affordable university education access businesses with over 1.5 million university graduates concentrated in large centers such as Mexico City and Guadalajara. These high graduated densities, coupled with extensive bilingual education programs, relatively low attrition rates, falling E1 telecommunication costs and favorable BPO and IT investment are favorable to Mexico' s contact center BPO business expansion.
However, Mexico' s contact center BPO market faces a number of internal and external strategic challenges. The key challenges include relatively higher wages and real estate prices, high levels of software and intellectual property costs, and the need to become more Adaptivist™ by expanding and encouraging its indigenous service providers to grow their international business. GDP growth of 4.5% expected in 2007 raises concerns about growth sustainability. Existing political tension and social unrest continue to negatively affect Mexico' s perception score. Additionally, Central America, Argentine, and Caribbean Nearshore (Dominican Republic) locations as well as India and the Philippines in the offshore region offer effective competition.
METHODOLOGY
A team from the Zagada Institute assembled the data and developed the analysis presented in this executive report. Data was obtained from Regional Economic Development Agencies (EDAs), Investment Promotion Agencies (IPAs), contact centers, Business Process Outsourcing (BPO), IT organizations, regional development banks and trade associations. A mixture of email, phone and personal interviews were used to gather primary data. The collection of data from multiple sources allowed for data cross referencing and verification. Qualitative data on market assessment, promotional strategies, social and political conditions, projected growth rates and market competitiveness were also collected and examined. The approach included an exhaustive examination and review of reports, studies, articles and papers produced by Universities, Research and Consulting Firms and Think Tanks.
Table of Contents
- I. Introduction
- II. Executive Summary
- III. Economic Environment
- IV. Market Dynamics
- V. Analysis of Cities
- VI. Strategic Challenges
- VII. Conclusions
- VIII. Methodology
- IX. The Author
List of Figures
- 1Figure 1. Agent Share 2007
- 1Figure 2. Agent Share by City 2007
- 1Figure 3. Outsourcing Service Providers
- 1Figure 4. Cultural Domain Acuity Model™
- 1Figure 5. Vendor Market Share ACDs
- 1Figure 6. Teledensity (% Share of Population)
List of Tables
- 1Table 1. Agent Seats Agents & Personnel Growth 2004- 2008
- 1Table 2. Mexico Performance Indicator 2002-2008
- 1Table 3. Mexico Leading Vendors Performance 2007
- 1Table 4. Mexico Cities Assessment Index™
- 1Table 5. Mexico Cities Demographic Analysis
- 1Table 6. Mexico Cities Cost Comparisons
- 1Table 7. Mexico Personnel Expense Matrix 2007
- 1Table 8. Mexico Cities Bilingual Density (% Share of Population)
- 1Table 9. Mexico Costs & Well Being Matrix 2007
- 1Table 10. Nearshore & Offshore Comparative Evaluation Index
