This article was originally published on January 29, 2020. It was updated in August 2021.
Digital transformation is taking hold in Latin America. As the region continues to invest in IT – including in the education and training of tech workers – LATAM has the potential to become a major nearshoring destination and a hub for digital talent.
Yet, this knowledge is nothing new. In fact, the region’s potential was recognized prior to the pandemic in the 2020 Global Talent Competitiveness Index (GTCI). Published by INSEAD and launched during the World Economic Forum in Davos, this report assesses the scope of artificial intelligence (AI) science and the application of technology globally. In Chapter 2 of the global report, Marco Stefanini and Fábio Caversan highlight the current and future scenarios of this theme in Latin America, as well as the advantages of investing in the region.
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The Recent Push Behind Nearshoring in Latin America
One of the most unexpected effects of the COVID-19 pandemic is a debate centered around the world’s dependence on off-shoring services to China. For instance, when it comes to manufacturing, a 2020 Gartner survey of supply chain leaders found that rising costs motivated 33 percent of supply chain leaders to move sourcing and manufacturing activities out of China or plan to do so by 2023.
While the supply chain has clearly faced great disruption in the past few years, many businesses are simultaneously facing an intensified battle for talent. According to the GTCI report, companies encounter obstacles when trying to find talent with the right skills as redundancies and severance expenses continue to mount. And with the COVID-19 pandemic still ongoing, businesses need to find right remote talent for technological initiatives.
Yet, the rise in remote work has made it clear that collaboration can happen across borders – and oftentimes, a virtual team can be just as effective as an in-person one. With nearshoring, companies can benefit from fewer cultural, linguistic and time-zone differences; more involvement in day-to-day decision making; reduced travel expenses; greater regulatory alignment; and less risk to intellectual property.
Taking the Lead
The GTCI report pinpoints Latin America as the next generation hub of talent for AI and digital transformation, and reveals the advances of AI in the region. According to data from the study, Latin America took the lead in national AI strategy. Mexico is among the first ten countries to launch such a strategy, followed by Uruguay, Chile and Brazil. The study also said that among the 100 best-prepared countries for AI, 15 are from Latin America.
The report also confirms the potential that Latin America has in the creation and development of a specialized workforce in AI, which is able to face the challenges and needs of the new digital age.
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Latin America’s Potential
With an estimated population of half a billion people in five of the most promising countries in Digital sourcing – Brazil, Mexico, Colombia, Peru and Argentina – Latin America has been emerging due to its investments in education, with an increasing number of young people attending universities in pursuit of careers in technology. From courses and events related to AI to start-up incentives, these institutions are helping to increase the AI talent pool in the region.
Further, there are numerous universities and research centers in the region working toward expanding the boundaries of the AI field. In Brazil, one particular initiative of note is the Advanced Institute for Artificial Intelligence (AI2), which was established in 2018 by researchers from São Paulo’s biggest universities. The institute aims to help improve society as a whole and, in particular, foster growth in this area to help Brazil engage in state-of-the-art advances in the field.
When it comes to LATAM, the region has already taken advantage of several digital disruptors. According to a report written by IDG Connect, the main market accelerators of digital transformation are AI, big data, the cloud, information and network security, and the Internet of Things (IoT). Leading organizations in the area have begun to utilize AI and machine learning, as well as big data and analytics for business insights, and automation for more accurate, faster and efficient operations.
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Stefanini’s Nearshore Model
Present in eight countries and with more than 16.5K employees in Latin America, we promote nearshore opportunities in the US and Europe. We have big delivery centers in two of the countries designated in the GTCI report (Mexico and Brazil) and a strong presence in six other countries (Colombia, Chile, Argentina, Uruguay, Peru and Venezuela) mentioned in the study.
We also have two massive talent pools to combat the talent shortage and offer cost-efficient and high-quality services by leveraging the nearshore model to improve operations. In Latin America, with 500 million people in eight countries, we can provide services to North America in the same time zone. In Eastern Europe, with 110 million people in four countries, we can provide nearshore services for Western Europe, also in the same time zone.
We already have projects using AI in the nearshore model. Two of them – Toyota and DeVry University – were presented during the 2019 Gartner ITXpo conference – one of the most important global technology meetings of the year.
Learn more about Stefanini’s perspective by downloading the eReport. Perhaps you’ll find that LATAM is well worth your investment!