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Chile's Offshore Services Value Chain

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The Chilean Offshore Services
Industry: A Global Value Chain
Approach
Dec 2009
Karina Fernandez-Stark, Penny Bamber & Gary Gereffi
Center on Globalization, Governance & Competitiveness,
Duke University
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 1
CONTENTS
I. Introduction ................................................................................................................................... 3
II. Background to the Evolution of the Offshore Services Industry in Chile ...................................5
III. Methodology ..................................................................................................................................7
A. Offshore Services Global Value Chain.......................................................................................7
IV. Analysis of the Offshore Services GVC in Chile ........................................................................11
A. Information Technology Outsourcing...................................................................................... 11
1. Current Situation.................................................................................................................... 11
2. Growth Potential.....................................................................................................................14
3. Challenges ...............................................................................................................................16
4. Recommendations................................................................................................................... 17
B. Business Process Outsourcing................................................................................................... 18
1. Current Situation.................................................................................................................... 18
2. Growth Potential.....................................................................................................................21
3. Challenges ...............................................................................................................................23
4. Recommendations................................................................................................................... 24
C. Knowledge Process Outsourcing ..............................................................................................24
1. Current Situation.................................................................................................................... 24
2. Growth Potential.....................................................................................................................25
3. Challenges ...............................................................................................................................27
4. Recommendations................................................................................................................... 27
D. High Value Services in Vertical Industries...............................................................................28
1. Tier 1 .......................................................................................................................................30
2. Tier 2 .......................................................................................................................................37
3. Tier 3 .......................................................................................................................................41
4. Recommendations for Growth in Tiers.................................................................................. 43
V. Conclusions .................................................................................................................................. 45
Appendix.............................................................................................................................................47
A. Description of Categories of the Offshore Services Value Chain ............................................47
B. Key Companies Participating in the Offshore Services Industry in Chile.............................. 48
C. Summary of Incentives in the High Tech Investment Program .............................................. 50
The Chilean Offshore Services Industry: A Global Value Chain Approach
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D. Instrument for Analysis of Potential Investment in Offshore Services in Chile ..................... 51
E. Differing use of the term Knowledge Process Outsourcing (KPO) in the Offshore Services
Industry ............................................................................................................................................53
F. 2009 Chile Interview Series List ...............................................................................................55
TABLES
Table 1. Examples of Offshore Services Providers in Chile, by GVC Segment .................................9
Table 2. Leading Firms in the ITO Sector in Chile...........................................................................13
Table 3. Leading Service Providers in the CRM segment ...............................................................19
Table 4. Industry “Readiness” for Offshore Services Exports .........................................................30
FIGURES
Figure 1. Offshore Services Value Chain.............................................................................................8
Figure 2. Global Innovation Spending By Industry ..........................................................................41
The Chilean Offshore Services Industry: A Global Value Chain Approach
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I. Introduction
In 2001, the Chilean economic development agency, Corporación de Formento de la Producción
(CORFO), began promoting Chile as a service platform. Since then, the industry has grown impressively
and today, Chile is recognized as a leading offshore services destination. The development of the
offshore services sector within Chile has shown a similar trajectory to industry development at a global
level. The country began offering services in information technology, followed by the provision of back
office business services and is now slowly upgrading and beginning to export knowledge processes and
high value added services across different industry segments.
Growth in the past three years has been funded through el Comité Nacional de Innovación para
la Competitividad, a new institution charged with establishing and governing a national innovation
system to transform the Chilean economy from one reliant on natural resources to a knowledge-based
one. As this industry has grown in Chile, the institutional and regulatory frameworks have evolved to
support it. CORFO has played a key role in channeling incentives and information to potential investors.
By 2008, the industry had grown fourfold to close to US$1 billion, representing almost the same amount
in exports as Chile’s renowned wine industry.
While the country has been successful to date, there are important limitations to its potential
growth moving forward. These are largely due to the limited size of the labor force available in Chile.
The total Chilean labor force accounts for approximately 1% of India’s and the country simply cannot
compete in areas where scale has become a relevant factor. These limits mean that Chile must begin to
specialize in segments of the offshore services value chain that correspond to the available human
capital and experience of the country, while maximizing opportunities for value creation.
In order to do so, policy makers require an analytical framework to identify high value segments,
opportunities for long-term positive spillover effects, and the relative competitiveness of industries in
the offshoring of high value services. This framework must disaggregate the market in a useful way; it
must identify industry drivers, relations between clients and suppliers, and the power of lead firms to
influence market demand. For this the Global Value Chains (GVC) framework offers a useful
instrument for analysis by providing policy makers with a method to determine where the country may
be best suited to enter the value chain in order to achieve desired outcomes.
This report presents an overview of the global offshore services industry value chain. The chain
incorporates all services that are currently being provided in the industry and value is correlated to
employee education level. This includes the three key segments: Information Technology Outsourcing
The Chilean Offshore Services Industry: A Global Value Chain Approach
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(ITO), Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO). These
services are referred to as horizontal services since they can be provided across all industries. Industry-
specific services that cannot be easily applied in other industries are referred to as verticals. This report
provides in-depth analysis of the ITO, BPO and KPO segments, including both the current level of
development and challenges for future growth, followed by an analysis of upgrading opportunities for
vertical offshore industries in the country.
The information for the analysis in this paper is drawn from research of the offshore services
industry at a global level, including in-depth analysis of lead firms and of three leading countries or
regions: India, Eastern Europe and Ireland. This broader research is detailed in the accompanying report,
The Offshore Service Industry: A Global Value Chain Approach (Gereffi & Fernandez-Stark,
2009). Information specific to the Chilean value chain for offshore services was gathered from
secondary sources as well as 39 interviews with companies in different market segments and relevant
higher education institutions as well as industry associations and government agencies.1
1 A list of the organizations that participated in this study is included in Appendix F.
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II. Background to the Evolution of the Offshore Services Industry in Chile
Prior to 2000, the offshore services industry in Chile was insignificant yet, by 2008, the country
registered close to US$900 million in service exports (IDC Latin America, 2009). This growth was
spurred by concentrated policy efforts to develop the industry through CORFO’s High Tech Investment
Program (Castillo, 2008).2 Early efforts were focused on “putting Chile on the offshore services map”
by promoting the country’s clear competitive advantages within the region, including a stable
macroeconomic and political environment, a relatively inexpensive world-class telecommunications
infrastructure, high standards of living, low business costs, clear investment rules and the access to an
educated workforce (The Economist Intelligence Unit, 2006). In 2004, when AT Kearney published its
first Global Services Index identifying the top 50 destinations in the world for offshore service activities,
Chile was ranked 9th (AT Kearney, 2004).
The publication of Boston Consulting Group’s 2007 report (2007a) on Chile’s cluster
development strategy provided the true impetus for launching the offshore services industry. Identifying
global services3 as one of eight high potential clusters, BCG provided key stakeholders with a strategic
agenda to drive the industry. This study highlighted the need to establish a strategy for growth based on
the development of high-value added services rather than low-end functions, as Chile has limited labor
cost advantages for offshoring with respect to its Latin American peers. They recommended that the
country focus on companies working in software development as well as to draw on Chile’s tremendous
experience in business analytics and financial services (The Boston Consulting Group, 2007a).
A public-private Advisory Board was established to manage the newly created Global Services
Cluster representing international companies already present in Chile, industry associations, educational
institutions, and representatives from the public sector.4 Following the establishment of this council, the
industry grew tremendously from approximately US$200 million at the end of 2005 to US$843 million
by mid 2009 (IDC Latin America, 2009; The Boston Consulting Group, 2007a). By the end of 2007,
2 In 2000, CORFO created the InvestChile (High Tech Investment) Program to encourage foreign investment. The focus of
InvestChile is mainly on technology intensive foreign investment and to assist companies looking to locate in Chile. The
program has a series of incentives available for investors ranging from feasibility studies, to training and infrastructure
subsidies. In 2008, the Invest Chile program supported 304 projects and provided a total of around US$16 million in
subsidies. The resulting materialized investment amounted to approximately US$374 million. (Insert InvestChile Reference)
For more information regarding these incentives see Appendix C.
3 Global services (servicios globales) is the name given to the industry in Chile. For this report, offshore services and global
services should be considered synonymous.
4 The Ministries of Economy and Education, as well as ProChile and CORFO, were included from the public sector. In
addition to the BCG report, a 2007 Mckinsey article recommended the need to strengthen knowledge and innovation
functions by fostering ties between multinationals corporations and local universities (McKinsey, 2007).
The Chilean Offshore Services Industry: A Global Value Chain Approach
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companies including BHP Billiton, Delta, J.P.Morgan, Sitel and MSD had established offshore services
operations in Chile, principally in ITO and BPO (Agosin, 2009). While efforts were highly successful in
attracting offshore service centers, there was no consistent strategy to attract high value services,
perhaps due to a lack of a coherent framework to differentiate low and high value services. In 2008, an
internal CORFO report by Jeffrey Sinor, drawing on the BCG report and the first value segmentation of
the industry provided by Gereffi (Gereffi & Fernandez-Stark, 2008), identified four industry segments –
Information Technology Outsourcing, Business Process Outsourcing, Knowledge Process Outsourcing
and Innovation Process Outsourcing (Sinor, 2009). This framework was used in the most recent study by
the International Data Corporation to quantify the industry in Chile (IDC Latin America, 2009). (These
preliminary categories have been further analyzed and redefined as explained in the following section.)
These figures estimate that the current market size is approximately US$844 million and employees just
over 20,000 people.
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III. Methodology
A. Offshore Services Global Value Chain
The GVC analysis developed in the accompanying paper, “The Offshore Services Industry: A
Global Value Chain Approach” (Gereffi & Fernandez-Stark, 2009), identifies all aspects of the
production of services in the offshore industry and measures the different values of each stage. While
the offshore services industry has evolved substantially over the past decade, and continues to do so
today, three main segments can be identified: Information Technology Outsourcing (ITO), Business
Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO).
Establishing a global value chain for the industry is challenging not only due its rapid evolution,
but also the wide variety of services that it has come to include as companies become more comfortable
with and recognize the benefits of vertical disintegration. In order to establish a meaningful unit of
analysis, the industry is first subdivided into services that can be provided across all industries
(horizontal services) and those services that are industry specific (verticals). Firms operating in the
horizontal services must be process experts, while those in the vertical chains must have industry
expertise and their services may have limited applicability in other industries. This distinction is
particularly important in understanding where a country with a highly trained but limited labor pool may
be able to effectively participate in the offshore services industry.
Within the horizontal services, all activities are related to supporting generic business functions.
The ITO segment is made up of four categories. The first category is software research and
development (R&D); the second is IT consulting; the third is software, and includes activities such as
ERP (Enterprise Resource Planning, which is comprised of software development for Enterprise
Resource Management activities), applications development, applications integration and desktop
management; while the fourth category is infrastructure, composed of applications management,
network management and infrastructure management. The BPO segment contains three main
categories. The first category is Enterprise Resource Management (ERM) consisting of: finance &
accounting; procurement, logistics and supply chain management; and content and document
management. The second category is Human Resource Management (HRM) made up of training, talent
management, and payroll and recruiting. Customer Relationship Management (CRM) is the last
category, being composed of marketing & sales, contact and call centers. Finally, the KPO segment
includes business consulting, business analytics, market intelligence and legal services. For in-depth
descriptions of each category, please see Appendix A.
The Chilean Offshore Services Industry: A Global Value Chain Approach
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Vertical services include a variety of activities that are offshored by different industries, but are
not related to general business functions and require specific industry knowledge. These activities can be
present along the entire length of the industry value chain, from lower IT services to mid-value industry-
specific repetitive business processes to R&D and new product creation. As with firms searching to
lower costs in non-core business activities, firms seek out low cost locations for low value services and
high talent locations for high value services. Effective market participation in vertical offshore services
requires firms to leverage existing experience in the industry (i.e., to functionally upgrade along a value
chain). Figure 1 shows the main segments and activities of the offshore services value chain.
Figure 1. Offshore Services Value Chain
Source: CGGC
¹ Vertical Activities- Industry specific: Each industry has its own value chain. Within each of these chains, there are
associated services that can be offshored. This diagram captures the industries with the highest demand for offshore services.
² This graphical depiction of vertical activities does not imply value levels. Each industry may include ITO, BPO and
advanced activities.
Note: For in-depth descriptions of each category, please see Appendix A.
Within horizontal services, ITO makes up the low, mid and high value segments of the offshore
services value chain, BPO activities are in the low and mid segments while KPO is considered the
The Chilean Offshore Services Industry: A Global Value Chain Approach
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highest segment of the chain. The value of each activity is correlated with human capital (education
level) -- that is to say, lower value-added services are performed by people with fewer years of formal
education. Call centers or routine BPO activities, for example, are performed by employees with just a
high school diploma. Market research or business intelligence is typically carried out by employees with
a minimum of a Bachelor’s degree, if not a more advanced one, while the highest-level research and
analysis is carried out by employees holding specialized Masters degrees or Doctoral degrees.5 Table 1
below identifies a sample of firms in the offshore services industry in Chile in different segments of the
global value chain.
Table 1. Examples of Offshore Services Providers in Chile, by GVC Segment
ITO
Vertical industries
Equifax (R&D)
Evalueserve (Finance –
Equity Research)
Altec (All)
Monsanto (Agriculture
– R&D)
Sonda (R&D, IT
Consulting)
Hatch (Mining
Engineering)
Citigroup (Software)
BioSigma (Mining –
Biotechnology)
Source: CGGC based on industry analysis.
The relative value of vertical services is correlated in the same way as horizontal services, using
human capital skill levels. Activities lower in the value chain, such as check processing in the financial
services chain, only require employees with high school education and a minimal training in the
software required for processing (Mongillo & Tasner, 2009). In the pharmaceutical value chain, clinical
trials monitoring requires both qualified nurses and doctors (Rigotti et al., 2009); however, the highest
level of activities in this chain (which involves the identification of the molecules to be used in
medications) is carried out by scientists with doctoral degrees and years of experience. These vertical
higher value added activities are not consistently referred to as KPO activities and in Section IV. (d)
High Value Services in Vertical Industries these are referred to generically as advanced activities.
The pace, nature and scale of offshoring of vertical services differs considerably across
industries, making general service categorization along the value dimension very difficult. It is thus
necessary to establish a global value chain for each vertical industry in order to fully identify
opportunities to exploit in offshore services. The one exception is R&D services that are present as one
of the highest value added activities in most value chains. R&D offshoring was initially driven by the
5 See Appendix B. for further details regarding the correlation of value segments with education.
The Chilean Offshore Services Industry: A Global Value Chain Approach
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need to reduce both cost and risk from the R&D activities, while increasing company flexibility and
addressing resource challenges. However, these drivers have changed over the years. Companies now
consider R&D outsourcing a value adding activity that will generate revenue with access to the
worldwide skills and capabilities to improve existing products and services and accelerate new R&D,
rather than simply reducing costs (Jaruzelski & Dehoff, 2008).
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IV. Analysis of the Offshore Services GVC in Chile
A. Information Technology Outsourcing
1. Current Situation6
The ITO segment today represents the most extensively developed segment of the offshore
services industry in Chile. The sector has been supported by government programs, including Innova
Chile, which initially provided US$60 million in resources in order to improve the e-readiness in the
country7 (Chile Innova, 2005), and the High Technology Investment Incentives program offered by
CORFO. A world-class telecommunications and energy infrastructure and competitive broadband costs
have provided a solid platform for the development of the sector. Application software outsourcing
alone is already the third largest service exporter in the country, accounting for 15.5% of total service
exports (US$131 million) and employing over 4,000 people (IDC Latin America, 2009). The sector is
also highly dynamic, with a large number of small companies entering the export market (Cornejo,
2008).
Despite a global decline in captive centers, the Chilean IT industry is characterized by a large
proportion of offshore subsidiaries, accounting for 38% of the country’s applications and software
development services (IDC Latin America, 2009). These primarily serve the financial sector and include
Altec S.A (Banco Santander), Citigroup and J.P. Morgan. The presence of these centers has attracted
provider firms, such as Polaris Software Laboratories, a spin-off from Citigroup that provides the firm
with contract labor (Shenko, 2009). Equifax has leveraged its existing Chilean operations in the financial
sector to establish a Chilean R&D center, which focuses on software platforms for both the financial
sector (APPRO) as well as a platform that serves any company selling a product in any industry
(Interconnect) (Gomez et al., 2009).
The majority of firms have concentrated in Santiago, with the exception of a few, such as
GenShare and Everis, which are leveraging the second tier cities, Valparaiso and Temuco, respectively
(Subramony, 2009; Tello, 2009). Both companies cite the availability of lower labor costs, the quality of
life and impressive telecommunications infrastructure as reasons for location selection. In addition,
6 The analysis of the ITO section was developed using reviews of secondary sources including the IDC Report, the Customs
Services Export Database (Prochile, 2009), as well as interviews with representatives from both industry associations, ACTI
and GECHs, and company interviews with Everis, Citigroup, Sonda, Tata Consultancy Services, Capgemini, Kauel, Scopix
and Equifax. A list of all interviews conducted is referenced in Appendix F.
7 Chile was ranked 4th in E-Readiness in the Americas by the Economic Intelligence Unit in 2008 (The Economist
Intelligence Unit, 2008).
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Everis have developed a Software Factory with Universidad de la Frontera located in Temuco to work
with engineers in the last year of their degree. This allows the students to gain work experience while
simultaneously providing Everis with a supply of experienced staff upon graduation. All exports from
this center are directed to their Spanish clients (Tello, 2009).
Local firms in the industry have followed differing business models in order to expand. Sonda
S.A. and Quintec S.A., the two largest Chilean firms participating in the sector, have opted to develop a
network of offices around Latin America, allowing them to build close relationships with their clients
while developing centers of expertise across the continent. Sonda S.A. notes that a very small percentage
of its US$671 million 2008 revenue was in exports. While the company may not currently export large
quantities, its Chilean headquarters is home to the company’s innovation laboratories and its expertise
lies in developing unique highly complex solutions, such as government procurement systems like
ChileCompra, which is now being replicated for Colombia (Peña, 2009). Other leading Chilean firms
that have seen rapid growth in the recent past have opted to replicate the Global Delivery Model8 that
has made companies such as Infosys and Genpact a great success. One example is Coasin, which has
established three offices in North America to be close to its clients while maintaining a Chilean delivery
center (Coasin Group, 2009a).
Alongside the large companies, newer more nimble IT firms have emerged in the very highest
value R&D niches in the ITO segment of the global services value chain. These companies generally
have fewer than 50 employees and are still within their first three years of operation. They are led by
electronic engineers and their business model is focused on R&D. These include Equifax’s R&D unit,
Yahoo!, Polaris Software Laboratory and Kauel (Casas & Mustakis, 2009; Gomez et al., 2009; Schilkrut
& Vera, 2009). These companies are currently offering very limited exports; however, the potential of
their projects is impressive given that they do not yet have any significant competition on a global level.
Kauel, for example, has already filed for a number patents (Casas & Mustakis, 2009).
8 To find more information about the Global Delivery Model, please see (Gereffi & Fernandez-Stark, 2009, p33).
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Table 2. Leading Firms in the ITO Sector in Chile
Company
Captive/
Contract
No of
employees
Exports
(2008) US$
millions
Destination
Country of
origin
Activities
Altec S.A.
Banco
Santander
700
33.51
All of Latin America
Chile/Spain
IT Consulting,
Applications
Development and Support
Telefonica
Movil
Aplicaciones
y Soluciones
Telefonica
22.7
Colombia, Mexico,
Ecuador, Panama,
Nicaragua, Peru,
Venezuela, Argentina,
Spain
Chile/Spain
Applications
Development and
Support, IT Consulting
Citigroup
Citigroup
140
92
Latin America, Hong
Kong, Singapore,
London
USA
Applications
Development and Support
J.P. Morgan
J.P.Morga
n
In
expansion
92
Mexico, Colombia,
Brazil, Argentina
USA
Applications
Development and Support
Everis
Contract
40
6.7
Spain
Spain
Applications
Development and
Support,
IT Consulting
Synapsis
Contract/
Enersis
4.7
Spain, Brazil, Peru,
Colombia, Panama,
Bolivia Germany
Spain
IT Consulting,
Applications support and
maintenance
DISC
Contract
100
4.5
Chile
Applications
Development and Support
Administrad
ora de
Servicios
Computacio
nales y de
Credito
CMR
Falabella
Falabella
200
3.7
Argentina, Peru,
Colombia
Chile
Applications
Development and
Support,
Network and
Infrastructure
Management
Synopsis
Contract
24
(projected
100)
1.32
Global
R&D Software
Development
Sonda
Contract
2,000
1
All of Latin America
Chile
Network, infrastructure
and maintenance,
software application
development and support,
IT consulting, ERP, BPO
Source: CGGC based on Company websites, Annual Company reports, Company Interviews, Customs Service Database
(Prochile, 2009).
1 This figure likely underestimates the total exports of the company. Figures for 2007 indicate that the company exported
US$35 million in 2007.
2 Based on 2007 figures provided by Sinor (2009).
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2. Growth Potential
While the industry in Chile has experienced success to date, the potential for continued growth
depends to a large degree on the service activity to be provided. The most important factor that will have
an impact in this area is the availability of sufficient, qualified human capital. With respect to adequate
human capital, GenShare are betting that the industry has reached a tipping point and that human
resources in the industry will continue to grow from strength to strength. They plan on hiring 1,000
people over the next five years to staff their new Valparaiso service center (Subramony, 2009). Certain
educational institutes have recognized the need to supply the industry with qualified programming staff
and are working closely with businesses to reshape their curriculum (Barriga, 2009). This is essential for
continued growth; without a new supply of qualified staff there will be upward pressure on the labor
prices, in turn driving down Chile’s competitiveness.
However, the depth of the qualified labor pool in Chile available to serve this industry is
somewhat limited. In 2007, Chile graduated 20,000 people in all areas of technology across the entire
country, including undergraduate and postgraduate degrees (Ministerio de Educación, 2009b).9 The
labor market is thus much smaller than that of Brazil, which graduates 30,000 computer engineers
annually (BRASSCOM, 2008), and just a fraction of the size of India, which graduates over 300,000
three and four year engineering, computer science and IT services graduates per year (NASSCOM,
2006). The shortfalls of an educated workforce with experience, the appropriate programming
backgrounds and an adequate level of English have already become apparent. Rotation between firms is
beginning to increase and this is expected to force salary levels up (Shenko, 2009). Maintaining low
attrition rates is vital for the competitiveness of companies in offshore services to avoid unnecessary
cost increases in recruitment and training, while also ensuring quality service provision (Kaka et al.,
2006). Expected income for the IT industry in the first year after graduation ranges between US$1,000
and US$1,500 per month (Barriga, 2009), while the average salary of an analyst with experience is
slightly more than US$30,000 per year (The Boston Consulting Group, 2007a). Rising labor costs thus
has the potential to choke off the local industry, which will have limited ability to compete with
international companies in compensation packages (Wadhwa, 2009).
9 Accurate statistics in Chile with respect to the IT industry are limited. The category “Technology” referred to here is
understood to include all potential activities in technology, including engineers. Gathering accurate, well-categorized
statistics is essential for the continued promotion of this industry.
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Captive centers in Chile have recognized their inability to compete with similar centers in India
or China due to the slow pace it takes to hire the required staff (Shenko, 2009). While local labor supply
may be limited, the relatively open immigration system and Santiago’s ranking as one of the best Latin
American cities to live in allows companies to meet needs with qualified staff from other countries.10 To
add to this, Chile recently launched the Global Talent Attraction Program,11 which has further simplified
the immigration and visa regulations to attract IT companies and entrepreneurs (Sharma, 2009).
While efforts are being made to support companies such as Coasin Global Services and Adexus
to help them gain market awareness with their key audiences, it is important for these companies to
establish niche markets. The ITO and BPO sectors have become increasingly consolidated at a global
scale. Firms such as WIPRO, Tata Consultancy Services, and IBM have established comprehensive
networks of delivery centers and customer service offices around the world, combined with years of
experience and enormous economies of scale (Gereffi & Fernandez-Stark, 2009). With salaries that are
already significantly higher than other offshoring destinations (triple those in India), new Chilean firms
entering the global market are going to find it difficult to compete in the traditional low value IT
activities.
Despite limits to growth, this human capital shortage has led to firms upgrading along the value
chain in order to remain competitive. Citigroup Chile, for example, generates highly specialized
software products for the banking group, choosing to specialize rather than compete on scale. The
company today only hires staff with five to seven years of experience and 75% of the work they do is in
software development (Shenko, 2009). The Equifax R&D Center has a very small, highly specialized
team innovating on software platforms for the developed world (Gomez et al., 2009), while DISC is
producing high-end security software for Scandinavia (Cornejo, 2008). These firms hire relatively few
people and are less likely to lead to crowding out of the labor market than the giant firms. Research and
development in the IT sector is not yet highly consolidated and is characterized by smaller firms
providing high value services (Gereffi & Fernandez-Stark, 2009). Thus, small entrepreneurial companies
based in Chile have greater chances of competing in the global market. Furthermore, as Chile increases
10 While the Chilean Labor Law (Código del Trabajo) requires that firms with over 25 employees consist of a minimum of
85% Chilean employees, it excludes technical specialists that cannot be replaced by local employees from this restriction
(Ministerio del Trabajo y Previsión Social, 2009).
11 The Global Talent Attraction Program was launched in November 2009 targeting tech entrepreneurs and companies around
the world. The goal of the program is to provide an attractive alternative to the United States for tech companies to establish
their headquarters. In particular, the program has streamlined immigration processes and provides financial incentives (Insert
Source, Sharma).
The Chilean Offshore Services Industry: A Global Value Chain Approach
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its participation in the higher stages of the value chain, it provides career advancement options that may
be helpful to attract more people into the industry.
3. Challenges
The country has made tremendous progress in the ITO sector within the last ten years, becoming
an important destination for information technology outsourcing. However, in order to improve
competitiveness and become a center for innovative services in the IT industry, there are a number of
challenges that must be overcome.
Certification: There are few companies that have high-level CMMI5 certifications necessary for
attracting important contracts. This is a drawback in the ITO industry. While the industry
association, GECHS, is working with companies to help them attain higher certifications there are
still only a handful of companies with level 5 certification (including Altec S.A, IBM, Tata
Consultancy Services, and Kaizen).
Human Capital and Education: It was clear from the interviews conducted that the universities
and educational institutes still need to make significant progress in training engineers and
technicians for this field. Greater effort is needed to connect with industry in curriculum
development. In addition, more attention needs to be made in providing students with global
opportunities to broaden their outlook on the world as well as better skills in marketing and
entrepreneurship.
Positive Spillover Effects: It will also be important to ensure that there are positive spillover effects
from the presence of large multinational IT firms in Chile. This was key in enabling India to
establish a number of leading companies in the field. Positive spillover effects include the turn over
of staff from multinational to local firms as well as the establishment of new Chilean firms. Of
particular importance is access to financing. While foreign tech entrepreneurs are eligible for the
High Technology Incentive Program, which provides tremendous impetus for the development of
the sector’s higher value activities (Wadhwa, 2009), funding opportunities for Chilean entrepreneurs
remain scarce (The Boston Consulting Group, 2007b).
Regulatory Framework: The Chilean labor laws provide a particular challenge for the more
innovative levels of this value chain. Staff are required to comply with traditional work hours and
there are fears that this lack of flexibility may stifle creativity (Gomez et al., 2009). Furthermore,
import regulations can make access to technology expensive. All technology-based goods imported
into Chile face a minimum of 6% import duty (under the Harmonized Tariff Schedule and Most
The Chilean Offshore Services Industry: A Global Value Chain Approach
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Favored Nation policy). However, these imports are also subject to the 19% value-added tax in
Chile. Combined with a minimal fee of 1-2% for handling, initial costs for technology imports can
be up to 30% more expensive than in other countries.12
4. Recommendations
Whether firms elect to develop a Global Delivery Model (e.g., Infosys) or a global network of
offices (e.g., Sonda), it is clear that in order to compete with the large international firms, they need
to establish a presence close to the key markets to develop strong relationships with clients.
International office platforms such as the New York Business Center office established in 2009 by
CORFO and PROCHILE are important initiatives that should continue to be supported (Insert
Source, Invest Chile http://www.hightechchile.com/corfo_det_20090706101756.aspx).
Foster improved relationships between the universities, other educational institutes and
industry to improve flow of qualified human capital. This does not refer necessarily to
establishing R&D relationships, but rather improving the career management centers that bring
together the supply and demand in the labor market. Due to the limited number of IT professionals in
the country it is important to focus on skills upgrading in order for the country to compete globally
in higher value activities. Since Chile clearly cannot compete on quantity, efforts should be focused
on improving the quality of the services provided.
Implement promotion policies to support companies developing high end niche software, rather
than developing standard IT capabilities. If not, these firms will be unable to compete in the
increasingly consolidated market.
Incentivize the inclusion of new technologies such as cloud computing in service offerings from
Chile. This will enable the industry to capture small and medium-sized clients that have been
previously overlooked by the large suppliers. This service depends mostly on a reliable
telecommunications infrastructure.13
12 The value-added tax (IVA) is considered deductible for corporate tax purposes.
13 Cloud computing is an emerging information technology outsourcing service that differs from traditional ITO and BPO
services in that the client pays per use, rather than having to sign a multi-year, million-dollar contract. The average size of the
ITO and BPO contracts in the industry for the past five years was $200 million with an average contract period of five years.
Cloud computing thus provides similar services, but a client will log-on to the service via the internet and pays as they go,
thus allowing small and medium sized companies to benefit from outsourcing of non-core functions.
The Chilean Offshore Services Industry: A Global Value Chain Approach
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B. Business Process Outsourcing
1. Current Situation14
The BPO segment in Chile is dominated by Customer Relationship Management Services
(CRM), followed by Enterprise Resource Management (ERM) with strength in finance and accounting
operations. The country has limited exports in the Human Resource Management (HRM) sectors,
although it has potential for growth in the training and development area.
Customer Relationship Management: Services in CRM, which in Chile include call centers
with marketing and sales functions, account for 18.3% of offshore service exports from Chile, making it
the second largest export sector after engineering services (IDC Latin America, 2009). The comparative
ease with which the BPO segment can set up operations is indicated by the rapid growth of CRM
activities within the past four years. Prior to 2006, due to weak data protection regulation in Chile, few
companies were willing to base their operations in the country (Pérez, 2009). However, as regulations
improved, the sector has been characterized by impressive growth. This expansion has been driven by
the installation of Spanish firms looking to serve the Spanish and Latin American markets (Pérez, 2009).
Table 3 provides a summary of information of the lead firms in this sector in Chile. Most firms
have established their operations in Santiago, although Transcomm has taken advantage of the greater
availability and lower costs of labor in Concepción and Valdivia (Transcomm, 2009). These second tier
cities have demonstrated lower attrition and absentee rates than in Santiago, where absenteeism remains
one of the sector’s key challenges (Pérez, 2009). The limited number of English speakers stifles the
ability of firms to serve a broader audience. However, the size of the Spanish market has so far proven
sufficient to meet the growing capacity of firms setting up operation in Chile.
14 The analysis of the BPO section was conducted based on interviews with Tata Consultancy Services, Capgemini, Sitel,
Chile Exporta Servicios, personal communication with the Asociación de Call Centers, a review of secondary sources
including the 2009 IDC Report and news reports on the market as well as a review of company websites.
The Chilean Offshore Services Industry: A Global Value Chain Approach
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Table 3. Leading Service Providers in the CRM segment
Company name
Year
operations
began in
Chile
Country
of HQs
No of
employees
Market of Chilean
operations
Exports (2008)*
In US$ millions
Teleperformance
(TP Chile)
2006
Spain
1,450
Spain and US
13.0
Sitel
2006
Canada
1,000
Spain
NA
Unisono
2006
Spain
850
Latin America, Spain
and Chile
8.7*
Emergia
2006
Spain
923
Spain
12.5
Transcom
2006
Spain
550
Spain and Brazil
11.5
Source: CGGC based on Company Annual Reports, Company Websites, Customs Services Databases (Prochile, 2009) and
(Sinor, 2009)
*2007 figures.
In addition to the strong presence of third-party contractors in Chile, a number of firms have
established captive call centers in Chile. These include Delta Airlines, LAN Airlines, Air France-KLM,
Shell, Unisys and Oracle.
Enterprise Resource Management: ERM offshoring in Chile is dominated by services
provided in finance and accounting, representing the second largest provider of BPO services.15 In the
domestic outsourcing sector, there are many small providers along with two of the top ten BPO
providers in the world, Capgemini and Tata Consultancy Services are also present in the country.
Capgemini entered the Chilean market through the purchase of Unilever’s Latin American Financial
Shared Services Operations in 2008. The unit in Santiago currently employees 300 people, although the
firm expects to undergo rapid growth before the end of the year to provide regional support for their
second client, hiring an additional 150 employees.16 Their goal is to increase the staff size to 1,500 over
the next five years (Mongillo & Tasner, 2009). Tata Consultancy Services, which principally offers back
office BPO support for the domestic financial sector, purchased Chile’s largest service provider in the
industry, Comicrom, in 2005. It currently exports very little in services to Latin America, preferring to
establish operations centers close to its clients. Nonetheless, the firm has been contracted to provide
finance and accounting services for a large multinational’s Latin American operations, including Brazil,
15 According to the IDC, horizontal Finance and Accounting Services accounted for $28.3 million in exports in 2008 (IDC
Latin America, 2009).
16 As part of the agreement to purchase Unilever’s Shared Services Center, Capgemini signed a contract to provide financial
and accounting services to the consumer products company’s operations in Latin America for 7 years. Unilever was thus the
first client.
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from 2010. The company will be hiring 400 new employees to support this client, increasing the
company size by close to 25% (Roca & Jofre, 2009).
In addition to outsourcing service providers, Chile has established itself as an impressive
platform for shared services centers, dealing principally with finance and accounting, and to a lesser
degree with Human Resources Management (HRM) and procurement. These captive centers account
for US$51.9 million in total exports (IDC Latin America, 2009) and include an impressive number of
large multinational companies: Zurich (F&A, Latam), Phelps Dodge Mining (ERM, Latam), Xerox
(HRM, Latam) MSD (ERM) and Telmex S.A (Chile Decentralizado, 2005). It is difficult to capture the
return on investment for Chile of these operations because the companies use complex internal billing
procedures (J. I. Infante, 2009).17
Offshore logistics and procurement services are still limited within Chile. The Asociación
Logística de Chile A.G., the industry association in Chile, is committed to establish the country as a
platform for logistics outsourcing (ALOG, 2008), but this has been a slow process and the country
continues to provide very little by way of services. SGS Government and Institutions Services are one of
the few providers in this segment providing back office support for customs services around the world
(Jessen et al., 2009). In 2007, Sandvik, the Swedish engineering company that supplies drilling services
and equipment to the mining industry, established a logistics and service center in Chile to serve its
Latin American operations (Sandvik, 2009). In terms of procurement, the largest participant in the
market is currently Quadrem, a firm focused on the mining industry. Despite CODELCO’s key role as
founder of this company, it only provides limited customer services from Chile.
Human Resources Management: The offshoring of HRM services has been relatively slow. It
is still in its nascent stages in Chile and services are less standardized. However, this is consistent at a
global level, where there are few firms providing comprehensive selection, recruiting, payroll and
training services (Gereffi & Fernandez-Stark, 2009). The domestic industry is dominated by small firms
dedicated to selection and placement, with the exception of large multinationals such as Manpower,
Spain’s Meta 4, Boyden and Grafton. One Chilean firm that has had greater success establishing itself in
international markets is the Sonda subsidiary, Payroll S.A. The company provides payroll outsourcing in
Chile and around Latin America. However, like the parent firm, the company has established a network
17 The financial relationship between captive centers and subsidiaries in other countries is generally managed by a simple
contract that includes work hours, cost of services and scope of services to be provided. This contract is used to invoice a
standard amount each month. At the end of the fiscal year, the transactions that were actually carried out are calculated and
compared to the invoices charged. A margin of 5 to 10% is added and the appropriate reimbursements or additional charges
are then made. (J. I. Infante, 2009).
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Page 21
of full service and delivery officer in all countries in which it is present, including in Argentina, Brazil,
Colombia and Peru (Peña, 2009). The company recently acquired a 50% share in CDG Consultores,
marking the first consolidation of local firms in this industry to provide all HRM services (Molina,
2009). Other human resource strengths in Chile include training programs drawing on the high quality
of the business schools, including local universities such as Universidad Católica and Adolfo Ibáñez
(Bertea, 2009). However, this is still a growth area and few programs are conducted outside of the
country.
Upgrading in the sector has been limited with providers entering in one area and establishing
expertise without advancing into new segments of the value chain. Exceptions are limited to growth in
the human resource area as companies consolidate to increase service offerings. Lead firm Capgemini
has expressed interest in upgrading into KPO; however, it stresses the importance in first establishing
credibility as a supplier before clients will demand higher value services (Mongillo & Tasner, 2009). An
upgrading step that has been seen in other countries around the world is the move of CRM providers into
KPO services as they leverage their sizable databases and experience developed through customer
support to provide market research. In 2005, for example, 24/7 Customer launched an innovation
laboratory in India to deliver higher value services to customers in the CRM segment. By 2008, the
company delivered consumer behavior predictive services via the innovation lab to 30% of clients (24/7
Customer, 2009).
2. Growth Potential
Chile should expect to see its competitiveness in this sector decline in the next decade as new
Latin American destinations begin to offer services to the same market. Until now Chile’s superior
telecommunications infrastructure, economic and political stability, and investment subsidies have
provided the country with a significant competitive advantage over other Latin American countries in
attracting both shared services centers and outsourcing operations (Jessen et al., 2009; Mongillo &
Tasner, 2009; Pérez, 2009). However, increasingly aware of the benefits the industry can bring to a
country, much of the rest of Latin America is now beginning to introduce measures to attract companies
(Gereffi et al., 2009).Chile will be less able to compete based on the following factors.
Firstly, BPO operations in Chile principally serve the Latin American and Spanish markets. A
large number of shared service centers provide back office support in finance and accounting and HRM
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Page 22
to the Latin American regional operations of large multinational organizations.18 Third-party providers,
particularly in the CRM sector, almost exclusively support Latin America and Spain. There are very few
firms serving the English-speaking market from Chile due to the shortage of available English-
speakers.19 The market to which Chile can provide BPO services is thus limited. Chile will face tough
competition for this limited market from cheaper regional providers, including the Dominican Republic,
Guatemala and El Salvador in the CRM segment. As other countries, such as Colombia, Costa Rica and
Peru, improve their economic and political stability, they will become increasingly important
competitors for shared service centers providing ERP and HRM support (Gereffi et al., 2009).
Secondly, the sector does not require qualified human capital, but rather largely depends on high-
school graduates. Less than 10% of the labor force in leading BPO companies such as Capgemini have
higher qualifications (Mongillo & Tasner, 2009). Comparative analysis of high school graduates
between differing Latin American countries shows no clear advantage for Chile over other countries in
public education (Manzi et al., 2008). Given that the sector draws on low levels of education, Chile’s
strong professional sector is largely irrelevant and does not provide the country with any significant
competitive advantage.
Thirdly, operating in Chile is more expensive than other Latin American countries, principally
due to the high human capital costs.20 The annual compensation for an accounting technician in Chile is
30% higher than in Costa Rica, while a telesales operator in Chile costs almost twice that of the same
employee in Argentina (Mercer, 2008). SGS Custom Services operations in Chile is facing increased
competition from other locations around the world that can provide the services at a lower cost (Jessen
et al., 2009). Subsidies from the High Technology Incentives Program have helped to reduce these costs
and make the sector more competitive (Mongillo & Tasner, 2009), however, these subsidies are all short
or medium term and thus this competitive advantage is unsustainable in the long term.
18 Captive centers tend to favor regional rather than global offices due to language and cultural benefits (Gereffi &
Fernandez-Stark, 2009) .
19 All companies interviewed in this study stated that English was the most important skills gap that affects their business.
Oracle Chile employs 175 people in the CRM unit to service the USA and Canada. However, despite the small size of its
operations, they have a high attrition rate amongst its English-speaking staff, which is limiting growth (Bocic, 2009).
20 In 2008, Santiago was rated as the 8th least expensive city in Latin America in terms of office space, cheaper than Bogotá,
Buenos Aires, Sao Paulo and Mexico City. Chile is also ranked competitively in terms of taxation, business start up costs and
telecommunications.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 23
3. Challenges
BPOs have served an important role for Chile in the offshore services industry, establishing the
country as a credible offshore destination (Mongillo & Tasner, 2009). In the industry rankings, Chile
has become well known internationally as an emerging destination (AT Kearney, 2007; Gereffi et al.,
2009; McKinsey, 2007). However, the services currently being provided in Chile through the BPO firms
are highly repetitive processes that make up the lower end of the offshore services value chain. The
revenue generated per employee is lower in this segment than in all other segments of the Chilean
offshore services value chain (IDC Latin America, 2009).The challenge the country now faces is to
upgrade into higher value activities that will insert Chile into the knowledge economy and transform the
country into one of the select group of offshore KPO and innovation destinations.
Costs: Chile, already one of the most expensive countries in Latin America to provide BPO services,
will face continued upward pressure in its labor costs and high attrition rate, particularly with respect
to companies serving the English-speaking market. Within the next five years, Chile will face
difficulties in competing with other Latin American countries, as advantages such as a solid
telecommunications infrastructure are eroded by advances in these countries. The country should be
prepared for companies to begin to relocate their offices to cheaper locations in the region.
Human Capital: Companies providing these services principally hire high school graduates
(Mongillo & Tasner, 2009; Pérez, 2009; Roca & Jofre, 2009). Many of these companies are
receiving subsidies provided through the High Tech Investment Program,21 funded by the Chilean
Innovation and Competitiveness fund aimed at fostering innovation and closing the gaps in human
resource skills in the country. However, the activities being carried out are repetitive, requiring
limited tertiary education and they do not promote innovation. In addition, as most of the staff in this
segment is eligible for funding through the national training and employment organization (SENCE),
the training subsidy being offered to companies is effectively being used to subsidize salaries for
companies.
Regulatory Framework: The industry also faces regulatory challenges. On the supply side, Chilean
Labor Law requires greater flexibility to provide around the clock support for clients. Ongoing
attempts to extend the rights of striking employees to prevent employers from using replacement
staff greatly undermine the ability to guarantee continued operations, and the potential instability this
implies may greatly reduce the competitive advantage afforded by the country’s stable political and
21 These companies include Oracle, Delta Airlines, Teleperformance and Transcomm (Agosin & Price, 2009)
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 24
economic macro-environment (Roca & Jofre, 2009). On the demand side, regulatory requirements
differ across countries in Latin America, particularly in the financial and accounting services and
human resources sectors, resulting in decreased regional demand for Chilean offices.
4. Recommendations
Conduct a cost-benefit analysis for subsidies being provided to the BPO segment of the industry
aimed at phasing out current subsidies.
Upgrade within the BPO segment to higher value added activities where technical skills are more
relevant than English language skills.
Offer new incentives for multinational companies operating in the BPO segment in Chile to
upgrade services to higher value activities such as consulting, customer analytics or business
intelligence to prevent these companies from leaving the country when Chile can no longer compete
in the region due to cost pressures. This can include incentives for upgrading of human capital
through formal education training (supporting staff to obtain university degrees) or providing
incentives or assistance to improve certification levels.
In order to encourage continued education of staff, efforts should be made to coordinate with
educational institutes to provide flexible university or technical institute programs for mature
students that can combine their studies with their full time work schedule.
Assistance in attaining widely demanded certification credentials should include processes for
companies to obtain certifications related to security of information such as ISO 27005: 2008. This
will be essential for confidentiality levels of new third-party providers, particularly in the area of
finance and accounting.
C. Knowledge Process Outsourcing
1. Current Situation
The KPO segment is the least developed sector in Chile and offers significant opportunities for
growth. This segment, being the most recent to emerge in the outsourcing arena, is also the least
documented at a global level. Within the global value chain for offshore services, KPO includes the
following activities: business intelligence, market research, risk analysis, customer analytics, business
consulting services and legal process outsourcing. The industry is just beginning to develop in Chile,
accounting for total sales of US$43.7 million, which is just 5% of Chile’s offshore service exports in
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 25
2008 (IDC Latin America, 2009). Given the nascent stage of KPO in Chile, a few characterizations can
be made. These are summarized below.
The most important company to enter the country to date has been Evalueserve, which
established operations in Chile in December 2006 (Srivastava & Ortiz, 2009). The company set up
operations in Chile as part of their strategy to expand its global presence to include teams in Chile,
Eastern Europe, India and China to allow them to operate 24 hours a day, 5 days a week (A. Gupta,
2009). The company, based in Valparaiso, also caters to the vertical financial services market.
Approximately 20% of their 150 person workforce is dedicated to horizontal KPO activities (Srivastava
& Ortiz, 2009).
Other firms that are entering this segment in Chile include Euromonitor International, a global
leader in market research that recently established its first Latin American center in Chile in June 2009.
This center will be used to gather market information from around the continent, and clients will include
both regional and global companies (Euromonitor International, 2009). Local firms offering knowledge
process services have principally been dedicated to the domestic market. One start up that has recently
begun to export services to Mexico is Penta Analytics, a Chilean firm founded in 2003. From 2008 to
2009, it doubled its export sales in business intelligence and market research (Penta Analytics, 2009;
Prochile, 2009).
There is a strong cadre of international consulting firms in Chile, including Mckinsey, Boston
Consulting Group and Mercer. Leading global consulting firms that are not present in Chile have either
not yet established Latin American offices, or have offices exclusively in Brazil or Argentina.22
The growth of Legal Process Outsourcing (LPO) has very limited potential in Chile. The current
structure of the profession makes it unlikely that Chile will emerge as a lead supplier. The largest law
firms in Chile have no more than 150 lawyers, approximately the same size as Infosys´s first LPO
project in India with Lexis Nexis (Sako, 2009).
2. Growth Potential
Chile has high potential for growth in this sector, supported by the availability and high quality
of its professional workforce. Growth is possible both amongst emerging domestic firms and via the
attraction of foreign firms. At a global level, the sector is largely characterized by small and medium
sized companies and consolidated giants have yet to emerge, as in the ITO and BPO sector (Gereffi &
Fernandez-Stark, 2009). This means that small or medium sized local and regional firms are still able to
22 Based on a review of company websites of the Vault Top 50 consulting firm lists.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 26
compete internationally. In addition, established KPO firms such as Evalueserve are beginning to
expand their networks globally, building client teams that bridge all offices, in order to provide
uninterrupted, multilingual and multicultural services for their clients. Chile’s competitive advantages in
workforce availability, smooth immigration policies, tax treaties and economic and political stability
make it an attractive destination compared to other regional alternatives. Chile does, however, face
competition as a regional center from Argentina.23 Copal Partners, one of Evalueserve’s competitors, has
established operations in Buenos Aires, as has Ireva, although a very limited part of the work of these
companies is focused on horizontal industries (Copal Partners, 2009; Irevna, 2009; Srivastava & Ortiz,
2009).
At a global level, firms in this segment can be divided into four types: (1) new firms that have
emerged to provide a range of KPO activities, which also provide advanced activities in the financial
sector (e.g., Copal Partners); (2) large ITO and BPO giants that have expanded their service offerings to
include higher value services (e.g., Genpact); (3) existing firms that have long provided one of the
services included in this category and now are beginning to offer others (e.g., Forrester Research); and
(4) law firms that have adopted the Global Delivery Model through joint ventures with IT firms (e.g.,
Bodhi Global).
Firms are attracted by human resources availability and strategic position with time zones
similar to the United States and off-cycles with Europe and Asia. These companies require multi-lingual
staff with a global perspective that can interact with both clients and internal offices around the world.
Where these capabilities do not have a strong presence in a market, smooth immigration policies and an
attractive place to live become key factors in location selection (Srivastava & Ortiz, 2009).
Chile’s tertiary education provides a labor force with strong business skills. In the 2008 América
Economía Ranking of MBAs in Latin America, Chile has six programs ranked in the top 20 (Argentina
and Brazil have just three programs each ranked in the top 20), and it graduates approximately 1,000
MBAs annually (América Economia, 2009). The country also graduated 3,500 commercial engineers24
in 2007, accounting for over 10% of all university undergraduate degrees and providing a solid supply
of analysts to work in this industry (Ministerio de Educación, 2009a). By comparison, 7% of
Argentina’s undergraduates pursue Bachelor’s degrees in business administration (Global Foundation
for Management Education, 2006). Furthermore, in Chile the annual compensation for a financial
23 While Brazil is well known as a business center in Latin America, the country’s complex and expensive corporate tax
policies create a significant disincentive to offshore services (KPMG International, 2006).
24 A Commercial Engineering Degree is equivalent to a 5-year Business Administration Degree in other countries.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 27
analyst is US$40,789. While nearly twice the cost of an analyst in India, it is much lower than in the
United States (average annual compensation for a US analyst is US$70,000) (Mercer, 2008). Also, a
higher proportion of professionals speak English than the rest of the population (around 7-10%). Where
local human resources are unable to satisfy needs, such as language skills to interact with multiple
cultures or specific industry knowledge, the immigration policies combined with the high standards of
living in Santiago and Viña del Mar make the country an attractive location for international staff
(Shenko, 2009).
3. Challenges
While horizontal services provide interesting potential for growth, it is important to recognize
that leading destinations including India, Ireland and Eastern Europe are all beginning to compete within
this segment.
The most significant challenge is that the use of the term KPO is very broad and is not
consistently used, making generalized policy formation for the sector complex.25 In particular,
individual firms are less likely to brand their services as KPO. It is thus important to brand these
higher value services by activities – such as Market Intelligence or Business Analytics. This
inconsistency makes it more challenging to identify firms that are operating in the KPO segment,
compared with ITO or BPO providers.
These services involve significant interaction with clients and coworkers from all around the
globe. This requires that staff be both fluent in English and have a broad global outlook. The
shortage of staff with international experience and/or English was highlighted by BCG (2007a) and
must be addressed.
KPO operations require higher-level initial capital investments, particularly in human capital.
Companies principally hire MBAs and professional staff and compete with the traditional business
sector for these individuals. Initial capital outlays therefore may require signing bonuses and much
higher salaries with long-term contracts (as opposed to hourly wages of the BPO industry).
4. Recommendations
Approach companies already operating in Chile in the BPO segment such as Accenture, IBM,
Capgemini and Tata Consultancy Services that offer KPO services in other parts of the world. Offer
25 See Appendix D for an overview of the different uses of the term KPO.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 28
training incentives for development of these service offerings in Chile. In addition, target
existing KPO firms in India and promote Chile as a complementary site for the Indian operations.26
Increase awareness of scholarships available for short-term technical training abroad available
to the Global Services Cluster through Becas Chile27 (Becas Chile, 2009). In addition, provide
incentives for companies to offer internships abroad in other global offices to better prepare Chilean
professionals. This will facilitate not only increased cultural awareness, but also knowledge and
technology transfer when the staff returns.
Offer an English program directed to professionals in this field in addition to the current English
program for IT specialists.
D. High Value Services in Vertical Industries
KPO and the equivalent high-value segments of individual industry value chains are the fastest
growing, most dynamic sectors of the offshore services market (Gereffi & Fernandez-Stark, 2009).
Today, these are currently dominated by engineering and innovation services, including new product
design and R&D as firms work “to increase speed to the market for their new products or processes and
to better access Science & Engineering (S&E) talent” (Manning, 2008, p. 3). Given its talented labor
pool, Chile has tremendous potential to become an important player in this R&D and engineering
market. While domestic R&D spending has traditionally been very low, progress has been made in
establishing an effective National System of Innovation through the creation of both institutional
capacity and funding opportunities (Ministerio de Economia, 2009). Even prior to these efforts, in 2006
Chile ranked 20th in the world innovation list. By 2009, the country was highlighted as one of the
world’s new innovation hotspots (Kao, 2009).28
Positioning Chile as an innovation export platform requires an in-depth understanding of the key
elements in the location decision-making of the client firms, and specifically of firms choosing to put
new high value service facilities in emerging economies. For these firms the most important attraction is
the growth potential in the market, followed by the quality of R&D personnel, the presence of strong
university faculty, and costs (Thursby & Thursby, 2006).While Chile’s broad range of free trade
26 See (Gereffi & Fernandez-Stark, 2009).Table 6 and Table 7 provide information on the services provided by different
companies in ITO, BPO and KPO.
27 Becas Chile is the system established under the new National Innovation System to streamline scholarship applications and
awards for students, technicians and professionals to study abroad. The goal is to provide financial support for up to 30,000
Chileans to study abroad during the next ten years (Insert Source www.becaschile.cl).
28 The top 20 countries in this ranking included, in order: United States, Finland, Israel, United Kingdom, Singapore, Japan,
Denmark, Brazil, New Zealand, France, Netherlands, Sweden, China, Germany, Russia and Chile.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 29
agreements, across Latin America and beyond, provides a large market for expansion, high quality R&D
personnel and strong university faculties tend to be more limited. However, Chile has specialized in a
number of industries in which it is in a position to not only export products, but also to export innovation
services.
The following section outlines a strategy in which Chile can offer higher value added services in
specific industries, based on upgrading of the country’s current position of those sectors in their global
value chains.29 In order to identify high potential opportunities for Chile, the following methodology, a
Tier Industry analysis, was employed.
First, potential export industries were considered. The sample of industries was selected
according to: (1) High Potential Cluster recommendations from BCG (2007a): copper mining, financial
services, fruit and processed foods, aviculture, aquiculture and tourism; (2) High Potential Clusters
identified by the Ministry of Economy (Ministerio de Economia, 2009): mining, aquiculture, foods and
special interest tourism: (3) Industries supported by ProChile: architecture, audiovisual, environmental
services, forestry, pulp and paper, mining and legal services related to mining; and (4) industries
currently supported through CORFO’s High Tech Investment Program (CORFO, 2009): biotechnology,
mining, salmon, renewable energy, agribusiness.30 Interviews were then conducted with industry
associations, leading companies, academic institutions and institutional actors.31
Secondly, three key criteria were used to identify the export potential of each industry: these are
expertise or “know-how”; qualified human capital availability; and regulatory framework.32 Table 4
below provides a simple framework for analysis of an industry’s readiness to enter the global offshore
services market.
29 In January 2010, CGGC will present a report with strategic recommendations for the development of the offshore services
industry in Chile.
30 This list of sectors is not intended as a comprehensive analysis of the Chilean economy; rather the goal is to provide policy
makers with a further decision-making tool to identify high potential industries and to reassess current promotional strategies.
31 See Appendix E for the list of companies, industry associations, academic institutions and institutional actors interviewed
for this study.
32 The intensity of regulatory conditions has a negative impact on the ability to start to trade in services while cooperation
between regulatory authorities between the exporting and importing country, or measures such as the adoption of
international standards are key to increase service trade (CEPAL, 2007).
The Chilean Offshore Services Industry: A Global Value Chain Approach
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Table 4. Industry “Readiness” for Offshore Services Exports
Tier 1
Tier 2
Tier 3
Regulatory and/or
institutional
framework
Good
Poor
NA
Expertise
Good-Excellent
Fair
Poor
Qualified human
capital resources
Good-Excellent
Fair
Poor
Potential
competitiveness
Good-Excellent
Fair-Good
Unsatisfactory
Global Value Chain
Positioning
High value segments
Low to Mid value
segments
NA
Examples
Agrifoods, Mining
Engineering Service
Audiovisual,
Renewable Energy
Automotive R&D
services
Scale: Unsatisfactory- Poor- Fair- Good- Excellent
Source: CGGC
Tier 1 presents opportunities with the highest potential. This tier captures industries in which
Chile already has significant experience and expertise, sufficient qualified human capital, a supportive
regulatory and institutional framework, and a large local market. Tier 2 industries require further
measures and development at a domestic level before service exports can become significant. These
industries are those in which Chile can leverage existing strengths, but needs further support to
overcome challenges of institutional, regulatory or human resource constraints. Tier 3 industries are
those with high levels of demand in the global market, but in which Chile has no clear advantage and
limited experience and human capital.
1. Tier 1
Chile already has significant expertise and human capital in these industries that can be leveraged
into the development of new offshore R&D centers and other high value added services. Typically, these
sectors have regulatory frameworks that support the growth of exports. In general, firms in these
segments, both local and international, first entered the Chilean market to address local demand, then
gained experience and developed knowledge and expertise either through technology transfer or creating
local solutions before beginning to export these services (Badilla, 2009; Campos & Schlechter, 2009;
Jessen et al., 2009; Pino, 2009).
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Mining
Engineering Services
Chile has long been a center of mining operations and in the past 20 years, the country has also
emerged as one of the leading centers of engineering focused on the mining industry. As the
international mining companies moved into Chile to tap into the country’s tremendous mineral wealth,
their large engineering partners began to set up operations in the country (Arze, 2009; Sanchez &
Boolan, 2009). These firms, which include Hatch, Fluor, SNC-Lavalin, Bechtel, SKM-Minmetals and
Ara Worley Parsons, have established a significant presence in Chile within the past 10 years (Arze,
2009). Having started providing lower value design drawings in Chile, today, five of these firms have
Centers for Excellence for the copper industry based in Chile.33 These Centers serve as the lead offices
in the development of all copper projects around the globe. Together, they employ over 3,500 people
and in 2008, at the height of the copper boom, engineering services related to mining, alone exported an
estimated US$275.3 million, making it the largest offshore services export in the country for that time
(IDC Latin America, 2009).
The economic crisis has without doubt slowed the exports of these companies Fluor Chile S.A.,
for example, in 2009 exported just 50% compared to its exports in 2008 (Prochile, 2009). However, it is
expected that the positive trend of copper and mineral prices will continue or in the worst case stabilize
at current prices, resulting in growth in the demand for engineering services once again (Badilla, 2009;
Julio, 2009; Pino, 2009).34
Chile has emerged as a leader in this field, but the country does face several challenges,
specifically in terms of costs, to remain competitive versus others countries, such as Peru and South
Africa that have growing competencies in this field (Julio, 2009; Merino, 2009; Sanchez & Boolan,
2009). All companies interviewed said that engineering graduates in Chile are technically very well
educated for this field.
33 These are Fluor, SNC-Lavalin, Ara Worley Parsons, Bechtel and SKM-Minmetals (based on a review of each of the
company websites and interviews with company representatives).
34 The crisis has also had a positive impact in diversification of the industry. Companies such as Hatch have realized the
difficulties of relying heavily on the mining industry and are beginning to strengthen capabilities in other areas, such as
infrastructure and renewable energy. Their goal is to develop sufficient capabilities in the Chilean market and then begin to
export (Pino, 2009).
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Biotechnology
Copper, Chile’s leading export commodity, is a non-renewable resource. While demand remains
high, the supply is diminishing, making it more important to extract the copper efficiently. CODELCO,
together with Nippon Metals, embarked on a joint project, BioSigma, in 2002 to develop new
biotechnologies for extracting minerals from mines to drive sustainable economic and environmental
growth in the industry. BioSigma now holds 17 patents for microorganisms that accelerate the process of
removing copper from low-grade ore. The first plant is being established for CODELCO in northern
Chile at a total cost of approximately US$10-15 million. As the world’s leading biotechnology company
in the mining sector, BioSigma is essentially an R&D company and the company employs 15 PhDs, as
well as a large number of engineers who are responsible for developing the plants in which the
microorganisms are used. The company expects to begin to offer services commercially in 2011
(Badilla, 2009). This is an important development, given that the four other companies in the world that
are working in this field have not been able to commercialize this service on a large scale.
External Monitoring and Diagnostics
A number of companies in Chile are beginning to sell monitoring services and industry-specific
software packages to serve the mining industry. At the cutting edge of these services is the External
Monitoring and Diagnostics Center that has been established by ABB to serve clients in Chile and Peru.
Their goal is to then serve other markets beyond the boundaries of Latin America. The company plans to
expand its service offerings to include other industries, such as forestry and power generation (PR
Newswire, 2009). The multinational firm SGS conducts mineral concentration and quality test services
in the development of new mines. They have four pilot plants worldwide, one of which is in Chile and
serves the Argentine, Peruvian and Brazilian markets (Jessen et al., 2009). Coasin Group, through its
two subsidiaries C2 Mining Solutions and C2 Labs, is developing new techniques and software
platforms to improve efficient use of assets, energy and control processes. They are already exporting
these services to Peru and have announced that they will open an office in Argentina in the near future
(Coasin Group, 2009b).
Agrifoods and Forestry
Given Chile’s favorable geographic and climate conditions, the country has been highly
successful in establishing a large export industry in fruit and vegetables as well as forestry. As upward
pressure continues in food prices around the world, Chile’s strong experience, a wide range of climates
and a disease free environment, combined with significant support from the country’s Department of
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Agriculture, Servicios Agriculturos y Granaderos (SAG), have put the country in a good position to
export R&D, increase the production of seeds as well as export other supporting services in both forestry
and agriculture.
R&D and Biotechnology in Seed Production.
While Chile is not amongst the world’s largest R&D spenders in agriculture, the country has
shown greater success in diversifying its spending into the private sector than countries such as Brazil,
Mexico, India and South Africa, where research is funded mostly by public institutions (McIntyre et al.,
2009). Eight of the world’s leading seed producers have operations in Chile, including the three top
companies -- Monsanto, Pioneer and Syngenta -- all of which have established Chilean R&D centers
(Campos & Schlechter, 2009). While three quarters of the research is conducted in universities and
public research organizations such as the Institute for National Research (INIA), substantial tax
reductions on contributions to universities from the private sector has helped to increase sales of R&D
services (Stads & Covarrubia Zúñiga, 2008). In addition, Chile already boasts independent research
laboratories including Massai Agricultural Services and Tuniche Seed Services with substantial
experience working with multinational companies (Campos & Schlechter, 2009; Hennicke, 2008).
Long term investments in human capital in the sector have also led to Chile having one of the
most highly qualified agricultural research staff in Latin America (Stads & Covarrubia Zúñiga, 2008).
Universities are beginning to interact more consistently with the private sector to ensure that they are
meeting demand for qualified staff and researchers generally have advanced degrees (Campos &
Schlechter, 2009). The regulatory environment is particularly welcoming for companies engaged
transgenic research. While no transgenic seeds may be sold on the domestic market, research processes
are protected for exports.
Engineering
As a leading producer of fruit and other food products, Chile has developed competencies in the
engineering of food processing plants. For example, POCH, a Chilean engineering firm, won a contract
to develop a food plant in the United Arab Emirates for the Brazilian food processing company, Sadia,
having successfully completed two agro plants here in Chile for Agrosuper and the salmon industry
(Poch Corp, 2009). In addition, as ABB have had success commercializing remote monitoring for the
mining industry, Agrosat Chile S.A. operates remote monitoring systems (or precision agriculture) from
Chile and Germany in the agricultural sector. The company currently provides services to Mexico and
Brazil and recently received a grant from INNOVA Chile to further strengthen its technology (Agrosat,
2009).
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In the forestry industry, Woodtech, another company supported by Innova Chile, has developed
an innovative method of measuring log loads, and the volume and density of wood chips, as well as
extending the application to measure coal volume. This method is fast, accurate and environmentally
friendly. The company began offering this method as a product, but they have recognized the benefit of
providing full service installations and now export these services to Ecuador, Argentina, Brazil and
Germany (WoodTech, 2009). Ritrama, an Italian labeling company, has established an R&D laboratory
in Chile as part of its new manufacturing plant that will focus on developing new paper and film
adhesives. The company is looking to expand into the Latin American market (Ritrama, 2009).
Aquaculture
The aquaculture industry is dominated by the production of salmon in Chile. The industry has
developed substantially over the past two decades, undergoing a radical change from an infant industry
to what today is a highly sophisticated cluster. Prior to the 2008 ISA (Infectious Salmon Anemia) crisis,
Chile was the second largest salmon producer in the world (R. Infante, 2009). The presence of large
multinational firms in Chile, including Marine Harvest and Mainstream, has led to significant
technology transfer (Katz, 2006).
R&D and Biotechnology in the Salmon Industry
Research and development in the salmon industry in Chile has been slow, although investments
reached US$77 million per annum by 2006. The research facilities established within the past five years
include Cien Austral, a research initiative that was set up in 2005, and brings together a number of
universities as well as local and international private companies (Cien Austral, 2009). The new AVS
Chile center was established in 2007 with six PhDs on staff (AVS Chile, 2009),35 while the EWOS
Innovation Center was set up in 2008, funded by Norwegian capital (EWOS Innovation, 2009).36 In
addition, Biomar, operating in the fish feed sector, also conducts R&D research in Chile (R. Infante,
2009).
35 AVS Chile was established in August 2007 by the three world class Norwegian research institutes within Aquaculture:
Akvaforsk, Veso and Sintef Fisheries and Aquaculture. The shared goal of these institutes is to become stronger international
R&D players and by this way contribute to the advancement of the global aquaculture industry http://www.avs-
chile.cl/AVSCHILE1I.html.
36 EWOS Innovation aims to be globally recognized as the leading commercial Research and Development company, with a
focus on creative high quality research and the implementation of advances within nutrition
and production technology
http://www.ewos.com/ca/ewos/ewebca2.nsf/0/8cb1e589b32b0a8b88256c4b0001c8b6/$FILE/EWOS%20INNOVATION.pdf.
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However, perhaps the most important research to emerge in this past year has been the initiatives
to tackle the problem of ISA, a disease that limits growth size in salmon. Three Chilean companies have
produced vaccines against this virus, including Corporación Farmacéutica Recalcine, Diagnotec and
Centrovet, investing over US$11 million in this research (El Mercurio, 2009). As Chile was one of the
first commercial producers of salmon to be seriously affected by the virus, they are the first to have
developed the vaccine. Other producing areas such as Scotland are already being affected by the disease,
thus catapulting this research initiative to international commercialization. The development of these
vaccines and vaccination services is being supported by Innova Corfo (Cluster Salmon, 2009)
Other Services
Other high value services include analytics and industry-specific market intelligence. Kaweskar
Desarrollo y Tecnología S.A. provides outsourcing services in process improvement, R&D across all
aspects of the salmon industry, as well as market research and project formulation services (Kaweskar,
2009). SGS Aquatic Health has set up a research laboratory in Puerto Varas that serves the salmon
industry providing analytics for salmon – testing antibiotics, vaccines and microbiology. They are
currently making a large investment in growing this division, and their plan is to develop local capacity
and then to serve the emerging market in Brazil (Jessen et al., 2009).
Retail
The Chilean retail sector is the most advanced in Latin America, and local retail firms have
proven highly competitive in both local and regional markets in the face of competition from global
brands (Bianchi, 2008). Falabella S.A. is already one of the largest and most consolidated retailers in
Latin America, while Cencosud S.A. has successfully expanded into Argentina, Brazil and Peru. The
regional expansion of firms in this sector has led to numerous IT service providers (both large firms and
smaller enterprises) in the industry following suit, while new consumer analytics services are emerging
to serve both the local and international market.
ITO and BPO services for Retail
Administradora de servicios computacionales y de credito CMR Falabella is a subsidiary of
Falabella based in Chile and it supports all IT needs for the company, exporting US$3.685.720 in
services to Argentina, Peru and Colombia in 2008 (Prochile, 2009). While the company remains a
captive center, there are 200 employees involved in the export of these services. Cencosud, on the other
hand, has outsourced all of its IT services around Latin America to Sonda in Chile (Sonda, 2005).
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Smaller companies in the ITO segment include BBR and Proretail. BBR, established in 1995 to
service the retail value chain, provides software interface platforms to facilitate the management of
vendors in the market. In 2008, the company began exporting to Mexico, where it serves a leading
pharmacy chain (BBR, 2009; Prochile, 2009). Proretail in Chile provides outsourcing support to
Sodimac Argentina, Sodimac Peru and Sodimac Colombia. Their platforms help clients reduce losses
and improve organizational efficiency in the retail sector (Proretail, 2009).
Consumer Analytics Services
The firm Scopix has emerged with a sophisticated IT platform to provide customer behavior
analytics for retail outlets. The firm is supported through a close relationship with Fuqua Business
School at Duke University in the United States. The Chilean market provides the company with an
excellent test environment for their services, given that the level of sophistication of the retail industry in
Chile is the same as in the United States and the United Kingdom (Schilkrut & Vera, 2009). Consumer
analytics will be conducted both from Chile and the United States. Another firm, Penta Retail, was
established in 2003 to provide consumer analytics services focused on increasing sales, customer loyalty
and maximizing retail spaces. In addition to providing support for clients in Mexico and Peru from
Chile, Penta Retail set up an office in Brazil in 2007 (Penta Retail, 2009)
Financial Services
Following the privatization of the pension system in the 1980’s and the creation of large private
pension funds (Administradoras de Fondos de Pensiones ), Chile has established a strong, large and
resilient financial system (Financial Sector Assessment Program, 2004). Competition in the banking
sector is particularly high, where firms have access to foreign credit and capital markets. Given its
increased integration into the international financial system, Chile requires efficiency and innovation on
the part of the banking sector (The Boston Consulting Group, 2007b). The country has thus developed
significant capabilities. As an outsourcing segment, however, financial services still contribute very little
to the country’s exports, accounting for just US$23.7 million in 2008 (IDC Latin America, 2009).
Back office Support
Tata Consultancy Services purchased Chile’s largest BPO firm for the Chilean financial industry
in 2005. Tata Consultancy Services now provides for 60-70% of the back office needs of the country’s
banking sector (Roca & Jofre, 2009). Micrologica S.A. has produced a specialized rapid check out
service for banks in the U.S (Palo, 2009).
Investment Banking Services
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Evalueserve Chile works in the investment bank value chain. The company has 60 people in
Chile dedicated to one investment bank conducting index research, derivatives strategy work and equity
research both on US and Latin American stocks. They have two lines connected with the bank in New
Jersey to ensure seamless integration with the client (Srivastava & Ortiz, 2009).
2. Tier 2
Tier 2 industries face either regulatory and/or human resource and experience challenges that
must be overcome before significant growth in exports can be realized. Tier 2 industries are important
for the country to further diversify its service export sector, reducing vulnerability to cyclical downturns
such as in commodity prices that had an important impact on the engineering sector in 2009 (Arze,
2009). Examples in this sector include: architecture, audiovisual services, clinical trials, renewable
energy and astronomy.
Architecture
The offshoring of architectural services is a tremendous growth area in the global offshore
services industry. Many of the services offered in this category include 2- and 3-D modeling, computer
aided design (CAD), and detailed plans for construction blue prints and engineering. While Chile has a
large number of civil engineers, there are limited cost advantages for the country to engage in the
offshoring provision of these services. Chile’s best opportunity is to enter the market through the
exportation of the higher value activities of consulting services and master design plans.37 The country’s
architects already have a well-earned reputation internationally. For example, Alejandro Aravena,
Executive Director of Elemental S.A., a company that provides consulting, original concept and design
work and master plans for social housing, was recently selected as one of just five finalists for the
Global Award for Sustainable Architecture in 2008 in Paris (Global Award, 2009), and several firms
already export services to Spain, the United States and the Middle East (eg. Atelier A4, Alemparte
Barreda & Asociados, Sabbagh Arquitectos, Archiplan).38 In addition, the Asociación de Oficinas de
Arquitectura (AOA) has set up an agency in Beijing hoping to capture a part of the growing Chinese
market.
37 These activities consist of the most advanced segments of the architectural value chain. They include understanding of the
general environment and client needs, which requires a creative approach. These designs are then transferred to detailed blue
prints for construction.
38 Companies identified as service exporters by AOA (Sielfeld, 2009)Followed by a review of company websites
http://www.archiplan.cl/, http://www.alempartebarreda.cl/index01.html., http://www.sabbagharquitectos.cl/,
http://www.atelier4architects.com, http://www.alemparte-morelli.cl/.
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Key challenges: There are very few practicing architects in Chile. While there are 9,000
architects registered in the country (Colegio de Arquitectos de Chile, 2009), the AOA represents 75% of
the country’s architectural market, but only 900 architects (Sielfeld, 2009). This suggests that many
architectural graduates pursue alternative career paths. Secondly, exporting these high-end services is
limited by regulatory requirements in most countries that obligate firms to associate with domestic
architecture offices. This requires initiatives that bring together Chilean firms with firms in target
markets.
Audiovisual Sector39
This sector has seen impressive growth within the past decade in Chile. A growing number of
Chilean production companies, particularly in the publicity sector, registered exports totaling close to
US$16 million in 2008, while design, animation and simulation services totaled US$32.8 million (IDC
Latin America, 2009).40 Cinemagica S.A. produced commercials for Colgate for use across Latin
America, while Moonlighting Chile created spots for Peuguot Latin America. However, the industry
faces several challenges before it can compete significantly in the offshore market. These challenges are
underscored by the fact that the industry must first be consolidated locally and attain credibility as a
service provider prior to entering the global market (Centros de Estudios Universitario-UNIACC, 2009).
Key challenges: The regulatory and institutional framework in Chile is not adequately structured
to support large-scale film productions. This includes challenges such as obtaining permits to film in
public spaces and a lack of tax incentives for firms carrying out export activities in this sphere. In
addition, there is a shortage of human capital – this includes a lack of world-renowned directors and
producers as well as technical personnel. While the supply of qualified labor is growing, the country still
has no experience in major productions (Centros de Estudios Universitario-UNIACC, 2009).
Clinical Trials
The demand for contract clinical research continues to grow around the globe. This growth has
been particularly significant in emerging markets, made attractive by lower costs, greater access to
patients, and well trained professionals and infrastructure improvements (Getz & Vogel, 2009;
Kalorama Information, 2007). Latin America now represents 6% of the global clinical trial market (Getz
39 The information for this section was gathered from a report prepared by Centro de Estudios Universitarios – UNIACC on
the audiovisual industry (Centros de Estudios Universitario-UNIACC, 2009). This report provides an example of industry
analysis necessary to identify challenges to growth for Tier 2 industries.
40 The leading companies that registered exports in 2008 and 2009 were: Compania de Films Ltd., Stilking Film S.A., Pro
Cine, Cinemagica Producciones, Parox S.A., Twiset Films Publicidad and Moonlight S.A (Prochile, 2009).
The Chilean Offshore Services Industry: A Global Value Chain Approach
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& Vogel, 2009). This sector is already beginning to emerge in Chile. The country has a large number of
highly qualified medical personnel, including researchers, doctors, and nurses. In 2008, over 1,000
researchers participated in trials; between 2002 and 2007, 500 medical trials, mostly Phase III multi-
center trials (Cámara de la Industria Farmacéutica de Chile, 2009; Rigotti et al., 2009), were conducted
and 350,000 patients were recruited. That same year, US$24 million was invested in Chile by fourteen
of the leading pharmaceutical companies to carry out trials (Cámara de la Industria Farmacéutica de
Chile, 2009).
Progress has been made in the industry to support these trials, and there are 30 Contract Research
Organizations (CROs) operating in the country today, including those of Pfizer, Roche and Bayer-
Schiling. While the cost of clinical staff in Chile is by no means the cheapest in Latin America, there is a
significant cost advantage when it comes to the overhead charged by research institutions in Chile. On
average Chilean overhead costs are just 18%, compared to 30-40% in other Latin countries (Rigotti et
al., 2009). The country is also developing important capabilities in the development and testing of
medical devices.
Key Challenges: The regulatory framework and institutions are generally supportive. However,
personnel shortages in the Instituto de Salud Publica that approves clinical trials often leads to
unexpected delays, increasing the time for FDA approval and thus reducing Chile’s competitiveness
within the clinical trials arena (Rigotti et al., 2009). In addition, knowledge gaps pertaining to the
management of trial processes must be filled before the country can take on any significant role in the
global market (Rigotti et al., 2009). Finally, given the size of the population compared to Argentina,
Brazil and India, Chile has limited ability to continue to compete for Phase III trials, where the sample
sizes are over 1,000 people and must therefore upgrade into higher value segments.41
Renewable Energy
With 4,000 windy kilometers of coastline, a northern desert that receives over 300 days of sun a
year, and the geothermic activity of the Andes mountain range, Chile has a tremendous wealth of
renewable energy resources to be exploited. The Chilean government has recognized this and
41 Israel, with a population of approximately 7 million, is the leading offshoring base for clinical trials in the world and serves
as a good example for driving growth through investment in niche sectors (Kalorama Information, 2007).
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established the Renewable Energy Center in 2009 to serve as an advisory center. The Irish energy firm,
Mainstream Renewable, estimated that Chile’s wind and solar potential are 44,000MW and 37,000MW,
respectively. To provide context, 44,000MW is the equivalent of the electricity use of 13.7 million
homes in the United States (American Wind Energy Association, 2009; Belyeu, 2009). The company
has invested US$1 billion in Chile in order to realize some of that potential (Clean Tech Brief, 2009).
The Law for the Development of Non-Conventional Renewable Energy, which came into effect
in March 2008, created a market for alternative energies and reduced capital risk by requiring that by
2010, 5% of all energy be “green” and that by 2024 it increase to 10% (Saldías & Ulloa, 2008).
Institutions such as CORFO and the International Finance Corporation have also stepped in to provide
venture capital to support these start up operations.42 Furthermore, efforts are underway to introduce
sustainable energy sources within two of Chile’s largest productive sectors (mining and forestry). A
large wind farm is under construction at CODELCO’s new mine, Gabriela Mistral while Arauco have
implemented a biomass project that uses wood.
Key Challenges: The renewable energy industry is advancing rapidly across the world,
including a number of projects across Latin America. Competition is thus the most important challenge
that Chile faces. The country must quickly establish credibility in the sector with the successful
implementation of projects while at the same time providing support to increase the availability of local
qualified human resources.
Astronomy
The northern skies of Chile are considered some of the clearest in the world and have up to 345
clear nights a year. Today the Atacama Desert holds one of the largest concentrations of telescopes in
the world, with nine major observatories including the Very Large Telescope (VLT) and the Atacama
Large Millimeter Array (ALMA). The Chilean government has been highly supportive of the industry
to date, allowing the observatories tax-free status, and in return Chilean scientists have been granted
10% of viewing time. This has facilitated both knowledge and technology transfer at the very highest
level in the field (ESO/Government of Chile Joint Committee, 2006). In particular, there has been an
increase in both doctoral and postdoctoral staff in a number of Chilean universities including the
University of Chile and Universidad Católica, while dramatically increasing publication rates in
academic journals by Chilean astronomers.
42 The International Finance Corporation has provided matching loans of US$30.5 million to Norvind, a joint venture held
between Norway´s SN Power and Centinela from Chile. This is the first project finance undertaking in renewable energy in
Latin America (International Finance Corporation, 2009).
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Key Challenges: While great progress has been made in improving both the quality and supply
of the human capital in this sector, the domestic industry still lacks a critical mass of staff in order to
contribute significantly to the field internationally.
3. Tier 3
Tier 3 industries are high potential industry sectors in which Chile currently does not have
significant presence in exports. As high value services in innovation and R&D begin to be offshored,
location decisions are based on the search for qualified human capital and growth potential of the local
market (Thursby & Thursby, 2006). Unfortunately, there are sectors in which Chile has neither these,
nor an institutional or regulatory framework to support its development.
Figure 2 below highlights opportunities in the emerging global innovation services.
Figure 2. Global Innovation Spending By Industry
Source: (Jaruzelski & Dehoff, 2008)
Of the leading nine industries for innovation services, Chile contributes only on a limited level
and principally in the computing, electronics, and healthcare sectors. This offers a wide range of
opportunities for the country. However, in order to be able to successfully compete for these services,
significant investments need to be made in the area of human capital, attracting experts and developing
local competencies, plus designing and implementing a corresponding regulatory and institutional
framework. This has to be done rapidly and with an awareness of global innovation competitors, such as
India and China in all industries.
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Page 42
This process of moving into these higher value services is referred to in the global value chain
literature as functional upgrading, that is, acquiring new functions (or abandoning existing functions) to
increase the overall skill level (Humphrey & Schmitz, 2002). Until very recently, participation of most
emerging countries in R&D functions was limited to incremental improvements of knowledge (Schmitz
& Strambach, 2008). Today, innovation services are characterized by what may be called the
“democratization of knowledge” and developing nations have taken on a much more important role in
new knowledge development. This is apparent in both Latin America and Asia. Two examples of
upgrading into innovation services are presented below.
Upgrading Through the Tiers
Jalisco, Mexico provides an excellent example of the strong industry upgrading required to make
the transition from a low-productive industry segment to innovation services. The city served as a center
for the manufacturing of semiconductors in the 1970s and 1980s.43 By 2000, the city was home to an
electronics cluster with eight of the top 100 global electronics companies (Knowledge at Wharton,
2005). Forced by rising Asian competitors and the internet bust of 2001, the city made the strategic
decision to move into provision of high value services in a niche sector, focusing on services such as
design and parts replacement centers that required trained labor, professional support and a clear
intellectual property system. As an early mover in the medium-to-high technology segment, the city
developed a clear competitive advantage over other destinations. The cluster has since undergone
important upgrading, and today hosts 39 R&D centers (Arber et al., 2009).44
Indian participation in the global pharmaceutical value chain provides another clear example of
how these innovation services are deepening interactions and relationships between firms in developed
and emerging nations and increasing the role of the latter in cutting edge knowledge creation. While the
Asian country has long been an important destination for offshoring clinical trials and manufacturing,
within the past three years, a number of multi-year contracts have been signed between large
pharmaceutical giants, such as Wyeth and Bristol Myers Squibb, with up and coming Indian
pharmaceutical research firms, GVK Biosciences and Syngene. These collaborations are focused on
discovery of new molecules and advancing early development projects in the pharma industry. The pace
at which these discovery collaborations are being established indicate that the industry is increasingly
43 Prior to 1968, there was limited if any electronics sector in the region (e.g., Tier 3 industry). Through the 1980s and 1990s,
the industry grew by developing expertise, human capital and fostering a supportive regulatory environment.
44 By 2000, regulatory and institutional changes enabled the industry to clearly establish itself as a Tier 1 export sector
capable of competing in global innovation services.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 43
relying on India for highly skilled knowledge workers and source of innovative research rather than to
cut costs (J. B. Gupta, 2008).
Thus, in the context of innovation and high value service offshoring, where firms are making
decisions to establish R&D centers in emerging countries, it is important for Chile to first leverage the
sectors in which the country already has a strong expertise and can emerge as a global leader, as
happened with the electronics sector in Mexico. Secondary industries should continue to be supported
when they can compete at a global level and in particular, where institutional and regulatory changes can
be affected to allow the industry to advance in service exports.
4. Recommendations for Growth in Tiers
Identify global value chains for each industry represented in Tier 1 and Tier 2, paying particular
attention to the highest value segments of each chain. Tier 1 sector services should be actively
promoted, while efforts should be made to understand where to support Tier 2 sectors, i.e., with
institutional changes, improving human capital or making regulatory changes.
The experience of InvestChile in horizontal services can be further leveraged to promote Chile
as a platform for vertical service exports. Interaction with established cluster organizations can be
useful in identifying Chile’s strengths in each industry, and thus potential competitiveness in the
offshore services market. Incentives provided for companies dedicated to high value service exports
in Tier 1 industry value chains should require basic reporting to ensure the return on investment for
the country and to align policy aims with actual growth.
Continue to streamline investment processes and coordinate promotional programs between
CORFO, InvestChile, Innova Chile and PROCHILE.
Support investments that have higher potential to lead to positive externalities (knowledge
transfer, development of local industry and access to new markets). The analytical framework in
Appendix D. provides a tool to quickly determine these spillover effects.
As with KPO services, the labor force that works in this sector competes at an international level and
thus must have a global outlook. Due to Chile’s size, many companies use Chilean R&D services as
part of a global network of experts rather than stand alone operations; the workforce must thus
interact, principally in English, with multiple cultures around the world. Through Becas Chile
the country can leverage internships through mining, agrifoods, and aquaculture to gain international
experience. In addition, closer relationships are needed between educational institutions and the
private sector to improve curriculum development for these offshore services.
The Chilean Offshore Services Industry: A Global Value Chain Approach
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The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 45
V. Conclusions
To date, the policies of InvestChile have been successful in leveraging the country’s principal
competitive advantages of economic and political stability, availability of qualified human capital, and a
world-class telecommunications infrastructure to establish a productive offshore services cluster,
particularly in the ITO and BPO segments. However, as seen in India, Ireland and Eastern Europe, these
policies must continue to adapt as the global offshore services market evolves. This report provides a
framework within which potential policy options can be assessed to identify opportunities for upgrading
and diversification as the offshore services industry becomes more globalized and new, cheaper
competitors emerge.
Central to this framework is the understanding of the value of each activity in the offshore
services industry. The analysis presented above identifies many upgrading opportunities within the ITO
segment for Chile, particularly with respect to R&D in niche areas. Given the comparatively small size
of the labor pool, the country should avoid projects that require large scale human capital. The BPO
segment, while popularly promoted, has been shown to be one of reasonably low value with limited
opportunities for upgrading into higher value segments. As the industry requires only secondary
education levels and minimum training for the staff, operations can be fairly easily displaced to other
locations, thus reducing permanent positive benefits to the country. Finally, Chile’s long-term
competitiveness in this segment is limited as cheaper locations emerge across the region.
The higher value KPO segment, particularly in market research, business analytics and business
consulting, is an attractive growth area for Chile. The country’s supply of graduates in the area of
business administration at both the undergraduate and graduate levels is impressive for the size of the
labor pool. The large number of multinational regional headquarters in Chile indicates the business
community’s realization of the availability of these skills. There are, however, few visible promotional
efforts focused on this segment. As companies in this segment begin to expand globally, Chile should
aggressively target them by highlighting the economic and political stability of the country, the
availability of qualified human resources, and the relatively simple immigration procedures to fill talent
gaps and the good quality of life in Santiago and Viña del Mar. As other regions, including Eastern
Europe and Ireland, strive to enter this market, Chilean policy should promote the complementary
advantages of adding an office in the US time zone.
Finally, the key areas for substantial economic growth lie in offshoring the high value services in
vertical industry value chains. As companies offshore an increasing number of their core services to
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 46
increase their competitiveness, they are beginning to realize the potential of talent pools in emerging
economies. Within several of Chile’s key productive sectors, including copper mining, agrifoods and
forestry, aquaculture, retail and financial services, the country boasts substantial expertise and both
qualified and experienced human capital. Furthermore, regulatory and institutional frameworks are
already in place to support continued growth in these segments. Other industry segments identified as
potential growth areas, such as architecture, astronomy or renewable energy, represent future sources of
offshore services revenue. These segments should be identified, analyzed and supported.
In conclusion, having already established Chile as a credible provider of offshore services in the
global market, policy makers should now shift their attention to the development and growth of
innovation services for export. The country can continue to build upon its solid economic and political
platform and further enhance its already highly educated labor force to quickly upgrade along the
offshore services value chain. In doing so, Chile will make significant progress in transforming the
economy into a knowledge based one.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 47
Appendix
A. Description of Categories of the Offshore Services Value Chain
Source: CGGC.
Due to the broad range of activities that can be offshored in different vertical industries, vertical services have not been
included in this table.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 48
B. Key Companies Participating in the Offshore Services Industry in Chile
Company
Est. in
Chile
Principal service provision
Atento
2006
Call Center and BPO Provider
Emergia
2006
Call Center and BPO Provider
Konecta
2006
Call Center and BPO Provider
Prego
2006
Call Center and BPO Provider
Transcomm
2006
Call Center and BPO Provider
Teleperformance
2006
Call Center and BPO Provider
Unisono
2006
Call Center and BPO Provider
SITEL
2006
Call Center and BPO Provider
Air France
2001
Call Center and Technical Service
Delta Airlines
2000
Call Center and Technical Service
Int. Center of Excellence
2002
Call Center and Technical Service
Reuters
2005
Call Center and Technical Service
Shell
2003
Call Center and Technical Service
Unisys
2000
Call Center and Technical Service
Capgemini
2008
BPO – Finance and Accounting
Tata Consultancy Services
2010
BPO – Finance and Accounting
Sandvik
2007
BPO – Logistics Center
BHP Billiton
2001
Shared Services Center
Lafarge
2006
Shared Services Center
MSD
2006
Shared Services Center
Oracle
2007
Shared Services Center
Phelps Dodge Mining
1992
Shared Services Center
SITEL
2006
Shared Services Center
Sodexho
2000
Shared Services Center
Telmex S.A.
2007
Shared Services Center
Transcomm
2006
Shared Services Center
Unilever
2002
Shared Services Center
Xerox
2004
Shared Services Center
Zurich
2000
Shared Services Center
Motorola
2004
Software Development
Tenbisure
2009
Software Development
Wise Ocean systems
2006
Software Development
Polaris
2009
Software Development
Everis
2008
Software Development and Application Management
Accenture
2009
Software Development and IT Services
Altec
2001
Software Development and IT Services
BBVA
2002
Software Development and IT Services
Citigroup
2002
Software Development and IT Services
Experian
2007
Software Development and IT Services
GenShare
2009
Software Development and IT Services
Intersystems
2006
Software Development and IT Services
Jigsaw Technologies
2007
Software Development and IT Services
JP Morgan
2006
Software Development and IT Services
Software AG
2005
Software Development and IT Services
Synopsys
2006
Software Development and IT Services
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 49
Tata Consulting Services
2002
Software Development and IT Services
Coasin Global Services
2008
Software Development and IT Services
Synapsis
Software Development and IT Services
DISC
2007
Software Development and IT Services
Readsoft
2008
Software Development and IT Services
CMR Falabella
Software Development and IT Services
Sonda
1974
Software Development and IT Services
Telefonica Aplicaciones y
Soluciones Móviles
Software Development and IT Services
Polaris
2009
Software Development
Collexis
2009
IT - Research and Development
HyC TV
2007
IT - Knowledge Center
Yahoo
2006
IT - Knowledge Center
Evalueserve
2006
Financial Services - Knowledge Center
Equifax
2009
Financial Services - Research and Development
Hatch
2000
Mining – Engineering Services
Fluor
1980s
Mining – Engineering Services
Bechtel
1992
Mining – Engineering Services
SNC Lavalin
1994
Mining – Engineering Services
Ara Worley Parsons
1961
Mining - Engineering Services
Cade-Amec
1969
Mining – Engineering Services
SKM – Minmetals
Mining – Engineering Services
ABB
2008
Mining - Engineering Services Remote Monitoring
Terraremote
2009
Engineering & Remote Monitoring
Diagramma
2008
Agriculture - Biotechnology
Ecotecnos
2009
Agriculture - Biotechnology
Goyaique
2005
Agriculture - Research and Development
Monsanto
2008
Agriculture - Research and Development
Pioneer
2008
Agriculture - Research and Development
Sygenta
2008
Agriculture - Research and Development
Poch
1998
Agrofoods – Engineering Services
Ritrama
2008
Forestry - Research and Development
Woodtech
2008
Forestry – Measurement Services
Aquagen
2008
Aquiculture – Biotechnology
Cien Austral
2005
Aquiculture – Research and Development
AVS Chile
2008
Aquiculture – Research and Development
EWOS Innovation
2006
Aquiculture – Research and Development
Biomar
Aquiculture – Research and Development
Penta Analytics
2003
Market Research
Euromonitor Internacional
2009
Market Research
Rede Brasileira de
Entretenimiento Digital
2009
Audiovisual - Digital Distribution Platform
Doblajes Internacional
1982
Audiovisual – Translation
Cinemagica
Audiovisual – Publicity
Moonlighting Chile
2006
Audiovisual – Publicity
Source: CGGC based on company interviews; company websites; (Agosin & Price, 2009); (Au, 2009); (Cornejo, 2008).
The Chilean Offshore Services Industry: A Global Value Chain Approach
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C. Summary of Incentives in the High Tech Investment Program
Incentives
Financial support
Maximum
Pre-Investment
phase
Pre-investment
Studies or Prospecting
Trips to Chile
(HT1)
Feasibility studies for your
investment project
Up to 60% of the pre-
investment study cost
Max=$30,000 USD
Project launch Assistance
(HT2)
The execution of a working plan
to assist in project
implementation
Up to $30,000 USD for start-up
activities
On-the-job Training
(HT3)
New employee training program
Up to 50% of annual salaries
max=$25,000 USD per person
Equipment and
Infrastructure
(HT4)
Acquisition of technological
infrastructure and equipment
Up to 40% of the total
investment in fixed assets
Max=$2,000,000 USD
Long Term Property
Leasing
(HT5)
Long-term lease of property
associated with the investment
project
Up to 40% of total lease amount
during the first five years.
Max=$500,000 USD
Investment phase
Specialized Training
& Recruitment
(HT6)
Acquirement of specific
knowledge or recruitment of
experts
Up to 50% of specialized
training or recruitment. Max =
$100,000 USD
Source: CORFO
The Chilean Offshore Services Industry: A Global Value Chain Approach
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D. Instrument for Analysis of Potential Investment in Offshore Services in Chile
Positive Spillover
Desired or Expected Return on
Investment per project type
and skill level.
Level of Skills1
Knowledge
transfer2
Development of
local industry
Access to
new markets
Information Technology Outsourcing
Medium - High
High
High
Low
Medium
High
High
Business Process Outsourcing
Low
Low
Low
Medium
Knowledge Process Outsourcing
Medium - High
High
High
High
High
Industry Specific Advanced
Activities
Medium - High
High
High
High
High
1. The level of skill is associated with the level of formal education plus experience of the personnel hired to carry out the
tasks.
2. Knowledge Transfer: In low levels ITO and BPO, activities have become highly commoditized requiring little interaction
between the client and the provider. Little knowledge is thus transferred in the process of service provision. In KPO and
Industry specific advanced activities, services are highly customized to the client and require a high level of interaction
between the client and the provider. This allows for significant opportunities for knowledge transfer (Gereffi & Fernandez-
Stark, 2009).
Low
Medium - Low
Medium
Medium - High
High
Skill
Level
High school
diploma
High school
diploma +
experience
Associate degree (2
years)
Associate
degree (2
years) +
experience
BS
BS + experience
MA
MA + experience
PhD
PhD + experience
Application example:
Positive Spillover
Evalueserve Chile
Level of Skills
Knowledg
e transfer
Development
of local
industry
Access to
new
markets
Information Technology Outsourcing
Business Process Outsourcing
Knowledge Process Outsourcing
Medium High
High
High
Too early to
tell
High
Industry Specific Advanced
Activities
Medium – High
High
High
High
High
The Chilean Offshore Services Industry: A Global Value Chain Approach
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Positive Spillover
Tata Consultancy Services
Chile
Level of Skills
Knowledg
e transfer
Development
of local
industry
Access to
new
markets
Information Technology Outsourcing
Business Process Outsourcing
Low
Low
Low
Medium - High
Knowledge Process Outsourcing
Industry Specific Advanced
Activities
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 53
E. Differing use of the term Knowledge Process Outsourcing (KPO) in the Offshore Services
Industry
Institution/
Company
Comments on KPO
IBM
Their services segment does not include KPO
Capgemini
KPO is one of the segments under BPO
Activities under KPO:
Research and advisory services
Reference data management
Engineering Services
TCS
KPO is one of the segments under BPO
Activities under KPO:
Customer Analytics (Retail)
Spend/Procurement Analytics (Manufacturing)
Equity Research (Banking and Financial Services)
Statistical Analysis (Pharma, Actuarial)
Wipro
KPO is one of the segments under BPO/Specialized services
Activities under KPO:
Business Research
Analytics
Reporting Planning and Analysis
Communication and Publishing Services
(Another BPO specialized services is Legal Process Outsourcing not part of KPO)
Evalueserve
The term KPO was coined by them and all their services are listed as KPO activities:
Market Research
Business Research
Investment Research
Sales Support
Data Analytics
Knowledge Technology
Legal Support Services
Gartner
“KPO emerged as a marketing term to highlight many unique aspects of specific niche types of
enhancement-oriented BPO: business processes involving skill sets that require knowledge workers who
have deeper functional or domain expertise than an average transaction process and can be trained in a
few weeks or months.”
Gartner generally does not include engineering or other services in their estimates as these are
considered subsets of most of the world´s service industries and not highly dependent on IT.
Forrester
“KPO is different from other forms of offshore BPO in that it is not rules-based like most conventional
BPO activities (e.g., contact center, finance, and accounting). The potential opportunities for
knowledge-based outsourcing are virtually unlimited, but early emphasis has been on research and
analytics. Not surprisingly, much of the activity has been in the financial services industry, including
equity research, but opportunities are also springing up in other industries, such as pharmaceutical and
consumer packaged goods, for tasks that include business intelligence, desktop publishing, clinical
trials, mortgage processing, and many others… Knowledge process outsourcing (KPO), as it is known
in offshore outsourcing circles, was originally pursued primarily within the captive context, but it has
now emerged as a major category for third-party providers.”
Mari Sako
“In the 2000s, with India’s reputation rising, global corporations and financial institutions began to
consider offshoring more complex and knowledge-intensive professional services, in business and
market research, financial data analytics, engineering design, radiology, and R&D. This phenomenon
came to be known as knowledge process outsourcing (KPO). Legal process outsourcing (LPO) is
regarded as part of KPO.
NASSCOM
Industry Sectors classification (Does not use the term KPO):
IT Services
ITES-BPO
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 54
Engineering Services and R&D,
Software Products
Dossani,
Kenney and
Mullan
The authors do not use the term KPO or any category for higher value added services: they refer to the
activities by their own name.
Source: CGGC based on companies and institutions websites.
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 55
F. 2009 Chile Interview Series List
Name
Organization
Date
Language
Aguilera, Victor
3IE
Jan. 23, 2009
English
Arenas, Cristian & Alberto
Ergas
Fundación Chile
Nov. 21, 2008
Spanish
Arze, Elias
Ara-Worley Parsons
Jan. 27, 2009
Spanish
Badilla, Ricardo
Biosigma
Sept. 25, 2009
Spanish
Barriga, Rodrigo
DUOC
Oct. 2, 2009
English
Barros, Alejandro
Consultant M. of Economy and
participant in the Global
Services Cluster committee
Jan.21, 2009
Spanish
Cabrera, Alex
Appear Network
Jan. 23, 2009
English
Campos, Hugo & Irene
Schlechter
Monsanto Chile
Nov. 13, 2009
English
Cañete, Patricio
Canadian Embassy- Trade
Commissioner
Jan. 22, 2009
English
Casas, Edmundo and
Alejandra Mustakis
Kauel
Oct. 2, 2009
Spanish
Cornejo, Cesar
GECHS
May 19, 2009
Spanish
Gomez, Fernando, Beatriz
Bruzzone, Marcelo Ampuero
& Gonzalo Sierro
Equifax
Sept. 29, 2009
Spanish
Infante, José Ignacio
BHP Billiton
Sept. 22, 2009
Spanish
Infante, Rodrigo
Salmon Chile
Jan. 28, 2009
Spanish
Izquierdo, Diego &
Bernardita Prado
UNIACC. Project about
Audiovisual industry in Chile
Jan. 26, 2009
Spanish
Julio, Eduardo
Fluor
Oct. 7, 2009
Spanish
Katz, Jorge & Jose Miguel
Benavente
Universidad de Chile
Jan. 27, 2009
Spanish
Leiva, Monica, Arlene
Ebensperger Jessen, Javier
Steffens, Luis Parada Araya
and Andrea Díaz
SGS Aquatic Health
Sept. 25, 2009
Spanish
Machiavello, Liliana
Comité de Inversiones
Extranjeras/ Ministerio de
Economía
Nov. 17, 2008
Spanish
Maiz, Juan
CADE-AMEC
Jan. 21, 2009
Spanish
Merino, Marco
SNC Lavallin
Jan. 29, 2009
Spanish
Mongillo, Leonardo and
Gustavo Tasner
CapGemini
Oct. 6, 2009
Spanish
Pena, Rodrigo
Sonda
Oct. 2, 2009
Spanish
Perez, Julio & Andrea
Santibañez
SITEL
Sept. 29, 2009
Spanish
Pérez, Miguel
ACTI
Nov. 14, 2008
Spanish
Piña, Joaquin
Chile Export Servicios,
Santiago Chamber of
Commerce
May 22, 2009
Spanish
Pino, Ricardo
Hatch
Sept. 28, 2009
Spanish
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 56
Rickmers, Olivier
Biociencia
Jan. 28, 2009
English
Rigotti, Attilio
Universidad Católica Centro de
Investigaciones Clínicas
Aug. 25, 2009
Spanish
Roca, Nicolas and Ximena
Jofre
Tata Consultancy Services
Sept. 30, 2009
Spanish
Sanchez, John & Hassan
Boolani
Bechtel
Jan. 29, 2009
English
Schenkel, Andre and Marko
Knezovic
Citigroup
Oct. 1, 2009
English
Schilkrut, Ariel and Luis Vera
Scopix
Oct. 1, 2009
Spanish
Seilfeld, Rolf
Asociación de Oficinas de
Arqitectos
Apr. 28, 2009
English
Srivastava, Mohit & Jairo
Ortiz
Evalueserve
Jan. 23, 2009
English
Subramony, Arun
GenShare
Oct. 1, 2009
English
Tello, Carlos
Everis
Oct. 1, 2009
English
Ugarte, Pablo & Carolina Soto
CORFO Foreign Investment
Department- Clusters
Jan. 21, 2009
Spanish
Worner, Alfredo
Pro Chile
Jan. 27, 2009
Spanish
The Chilean Offshore Services Industry: A Global Value Chain Approach
Page 57
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... The references show that the production of the ICT activity in its wider sense (considering telecommunication and Internet services, technical assistance, professional ICT consultants, ICT trade, integration and development and programming of software), is dominated by large Internet and communications companies, with other value-added services being limited, and a lesser presence in activities dedicated to lending technological services of high complexity or software development (the majority being small and medium-sized companies) (EMG Consultores S. A.-MINECON, 2006;Fernandez-Stark, Bamber, & Gereffi, 2010). The articulation of the national market is predominately low percentages of exportations (Varela, 2003;EMG-MINECON, 2006;Acha & Bravo, 2009). ...
... On this, the work of Acha and Bravo (2009, p. 111) asserted that "the software industry is located almost entirely in Santiago, 92%, and 8% in the Fifth Region, and it serves, almost exclusively, the Metropolitan Region". This centralism is also detected by the study of Fernandez-Stark et al. (2010). Santiago contains multiple urban centers, a critical mass of potential innovators, a large availability of a highly qualified (MBA, PhD) workforce, and professionals who speak English well, which allows them to do better in business. ...
... (5) A survey of the principle features with respect to the qualities and not of a numeric distribution of the companies in them. This said, the distinct profile of the companies interviewed, with respect to their pertinence to the diverse Knowledge Process Outsourcing (KPO), Business Process Outsourcing (BPO), and Information Technology Outsourcing (ITO) segments (Fernandez-Stark et al., 2010) allows for the outlined attributes to consider an interesting variety of ICT company in terms of type. ...
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Chile Interview Series: Colegio de Arquitectos de Chile. Personal communication with P. Bamber
  • Colegio De Arquitectos De Chile
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