The document analyzes and compares outsourcing capabilities in Belarus and Argentina. It recommends outsourcing financial services customer relationship management functions to Belarus for the next 2 years. Belarus has a mature technology outsourcing infrastructure and encourages outsourcing through regulations. Argentina has a growing CRM industry but lacks an organized vendor market and institutional support compared to Belarus.

1. GLOBALIZATION,
OPEN INNOVATION,
CROWDSOURCING
NEW WAYS OF
ORGANIZING
Natalia Levina
Professor
Students
• John Hoag
• Mark Pankoff
• Tejal Patel
• Sachenka “Sachy” Pichardo
November 22, 2016
Group Project Part I

2. Evaluating the emerging economies of both Argentina and Belarus is a key
factor
in our recommendation. The analysis team researched the geo-political
environment,
economic outlook, human factors, ease of doing business and vendor
capabilities for
both potential locations.
Armed with this information we recommend that for the next 2 years the
Financial
Services Customer Relationship Management functions be offshored to
Belarus.
The main driver for this recommendation is the mature technology outsourcing
Infrastructure, particularly in the areas of CRM. In addition, the state encourages
outsourcing and offshoring investments through less stringent laws and
regulations.
Summary

3. BELARU
S
Key Findings
Geo-political environment
is stable
Human factors encourage
foreign investment
Ease of business is in the
top 35% worldwide
Mature Vendor CapabilitiesEconomic outlook
is positive

4. ARGENTIN
A
Key Findings
Geo-political environment
is trending stable
Economic outlook
is neutral
Human factors are
lukewarm for foreign
investment
Ease of business is in the
lower 10th percentile
worldwide
Vendor Capabilities are
growing but not
yet mature

5. Geography Analysis: Belarus
Political Landscape
In 2015 Alyaksandar Lukashenka was elected president for a fifth consecutive term. Although his reselection brings internal stability,
the Ukraine-Russia conflict weighs heavily on Belarus. Consistent downward pressure on employment and wages lead to mass
protests
after the 2010 elections and it is conceivable that social unrest may be a problem going forward. Senior leaders fear that actions
viewed as contrary to the goals of the Kremlin may lead to Ukrainian-like conflict (Nice, Laberston).
President Lukashenka is working with European Union nations to ease economic and travel restrictions. Loosening up restrictions will
open opportunities for investments and exports with other nations outside of the Commonwealth of Independent States (CIS) that
include Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Russia, Uzbekistan, Tajikistan, and Turkmenistan.
Economic
OutlookAmidst its first recession in 20 years, The National Bank of the Republic of Belarus (NBRB, the
central bank) reduced the refinancing rate to 18% in August 2016 (Nice, Laberston). The
recession
began in 2015 amidst the global decline in oil prices and coincided with Russia’s slide into
recession
and conflict. Belarus is highly dependent on crude oil and financial investments from Russia
(Nice,
Laberston). The industrial sector is Belarus’s primary export. As Exhibit 1 depicts, this has
declined from the previous year. The decline in exports can be attributed to recessions in both
Russia and the Ukraine.
The conflict between those two countries will continue to negatively impact the economy
although
its exports are anticipated to increase minimally as the conflict has subsided recently. Its
currency
has appreciated slightly in the past year and it is expected to remain stable in through 2017. At
the

6. Geography Analysis: Belarus
Human Factors
Recently, Belarus experienced a decline in GDP and an increase in publicly held debt (Nice, Laberston). The increase in
household/per-
sonal debt is a positive sign that individuals now have access to private financing from banks and other financial services that did not
exist in the 2000’s. We do not see evidence of an overleveraged workforce. A more appropriate description of the Belarusian work-
force is highly educated and low cost. Declining employment and sliding wages have combined to form a competitive job environment
with low attrition rates. Low attrition somewhat reduces the rate of intellectual property theft.
Ease of Business
Belarus ranks 37th out of 190 global economies on the World Bank’s “Ease of Doing Business”
index and 31 on the “Starting a Business” index where the United States ranks 8th. Belarus is a
smaller market compared to neighboring countries, but with increasing sanctions against Russia
by the west, the economy should receive a boost to their businesses. Furthermore, the local
government established a simplified process to set up new businesses and introduced a
simplified tax code.
The state also created what is referred to as Belarus High Technologies Park (BHTP) or Hi Tech
Park.
The government established BHTP specifically to develop new technologies and stimulate
the software industry.
Belarus is a potential outsourcing haven. It is home to over 800 IT companies, roughly 30,000 IT
professionals and a command-esque economy. Additionally, BHTP has provided its software
residents two major advantages: a preferential tax regime and a stable regulatory environment.
Companies registered in the technology park pay a fixed income tax of 9% and receive exemp-
tions from corporate and capital gains taxes, VAT and custom duties (Martynau, Alexander).

7. Vendor Capabilities: Belarus
Maturity:
The outsourcing industry generally considers the twenty years of outsourcing experience of Belarus to be ‘mature’.
Quantity and
Expertise:
Today, there are 164 resident companies in Belarus Hi-Tech Park that are engaged in high-end software development,
customization and IT services delivery for clients in 61 countries of the world
Relevant Categories:
Custom software development = 109
Business process outsourcing = 14
Application software = 61
System software = 20
Application and development deployment market = 30
Software ready for SaaS development = 10

8. Vendor Capabilities: Belarus
Relevant Facts:
About 900 million people in 193 countries are using mobile apps developed
by Belarus Hi-Tech Park (HTP) residents.
Five out of 10 world’s largest companies (according to Forbes Lists)
are among HTP customers.
Five Belarus HTP appeared on the list of 100 best global
outsourcing companies – The Global Outsourcing 100®
91.5% of the software produced in the Park account for
exports.
40.2% account for the USA and Canada,
46.7% – for the European countries and
10.7% - for Russia and the CIS countries (Exhibit 2).

9. Geography Analysis: Argentina
Political Landscape
Argentina’s political environment has historically been far from stable. Since 1930 the country spent most its time
under
military rule. Economic success was not a driver for those who sought power. Thus, Argentina has suffered
numerous
periods of sustained economic weakness. The turn of the millennium was supposed to be a fresh start for Argentina
as
democratic norms were ushered in and the country appeared to turn the corner. Unfortunately, corruption continued
to
override prudent behavior and the weakness came to a head in 2001 when Argentina officially defaulted on its debt.
As
the country struggled to deal with being shut out of economic markets, political opportunists like Cristina de
Fernandez
Kirchner grabbed power under the guise of rejecting capitalism and embracing socialism. Democratic norms fell to
the
wayside and under Kirchner governmental control was further consolidated in the executive branch.
This past autumn, democracy returned to Argentina when the people elected Mauricio Macri who promised and, to
date, has delivered actual reform. Macri “lifted capital controls, let the Peso float, eliminated many trade restrictions,
reduced costly energy subsidies and reached a deal with holdout bondholders…”(bnc.ca, pg 1) The main question
going
forward is whether or not Macri can sustain momentum for a long enough time period in the face of substantial
domes-
tic growth headwinds.

10. Geography Analysis: Argentina
Economic Outlook
Argentina’s economic is bleak but the problems are not insurmountable. Macri’s push to settle the debt default issues from 2001
allowed Argentina access to global capital markets. (bcn.ca) Argentina found itself the beneficiary of a negative interest rate world
when its first debt offering in 15 years found itself oversubscribed by a multiple of four. (bnc.ca) During the run-up to the Great Reces-
sion, Argentina’s growth was driven primarily by China’s seemingly insatiable consumption of natural resources. Argentina’s primary
trading partner, Brazil, was a beneficiary of Chinese growth. China’s recent slowdown coupled with Brazil’s myriad issues has
negative-
ly impacted Argentina. The IMF projects Argentina’s GDP to be just north of 2% in 2016 and 2017. (bnc.ca) Despite anemic projected
growth numbers there is reason for the people of Argentina to be optimistic for the first time in quite awhile.
Human Factors
In our travels through South America we had the opportunity to sit down with several local entrepreneurs and students. What we
found is that Argentina is culture of contrasts. The country has a high literacy rate and a college education is provided to all
those who finish high school. (insidehighered.com) Despite a free education Argentina has a university dropout rate of 73%.
(insiderhighered.com) This unusually elevated rate is the result of the simple need to support oneself and the commodity driven
expansion from 2005-2007 pulled many engineering students into the work force ahead of their graduation dates.(insidehigh-
ered.com) As a matter of import, Argentina is a relatively young country with almost 40% of 43 million people falling between
ages 25 to 54.(cia.gov) The country is focused on pulling itself forward but it is imperative for the Macri reforms to take hold in
order for real progress to occur.
http://www.slideshare.net/leonikvera/outsourcing-guide-to-belarus-2014
http://www.park.by/it/enterprises/?query=&staff=&domain%5B4%5D=4&domain%5B6%5D=
6&domain%5B7%5D=7&domain%5B9%5D=9&domain%5B12%5D=12&domain%5B15%5D=1
5

11. Geography Analysis: Argentina
Ease of Business
Argentina ranks 116th out of 190 global economies on the World Bank’s “Ease of Doing Business” index and 157 on the “Starting a
Business” index. As a point of comparison, the United States ranks 8th. Two significant reforms were passed in 2010. First, Argentina
made starting a business easier by eliminating the requirement for registration with the private pension fund and expediting the
publication process. Unfortunately, in 2014, Argentina reversed these earlier reforms and made starting a business more difficult by
increasing the incorporation costs. Borrowers and lenders have weak legal rights in Argentina and the laws discourages credit, which
does not facilitate access to financing from banks.
Vendor Capabilities
There is a small but established CRM culture that has existed in the country for many years, and some of the most well known
local and global vendors operate within Argentina:
•Teleperformance (French) •Atento (Luxembourg) •Clienting Group (Argentine) •Allus (Brazilian).
In addition, the plethora of secondary cities within the country are a likely source of less expensive labor and real estate and will
be key in Argentina’s efforts to remain a competitive force in the region.
However, we found it difficult to extract precise information (quantity, quality, maturity, etc.) on Argentinian vendors and our
sense is the difficulty in researching CRM vendor’s in Argentina is merely a symptom of a larger disease. That is, the lack of
institutional structure to formally promote and organize the vertical is indicative of the state of the vendor market: unorganized
and unprepared to appeal to the world outsourcing market. For example, the Asociacion Argentina de Customer Relationship
Management website is very difficult to navigate and even translate to English. It would seem the Association would make
translations into many languages easy and a matter of course if targeting and international audience.

12. Exhibits:
Exhibit 1: Belarus Economic Indicators 5-Year Outlook
Alex Nice (lead analyst), Maximilien Lambertson (analyst);
The Economist Investigative Unit Database Country Report - Sep 2, 2016, Published 09 September 2016
Exhibit 2: US National Hockey League Website produced by Belarus developers
The official web site of the National Hockey League
Developer: ObjectStyle
Customer: National Hockey League

13. References:
Bonasegna Kelly, Cristina; “Argentina at the Top — For Its Dropout Rate!”; The World View-A blog from the Center
for International Higher Education; August 5, 2013
https://www.insidehighered.com/blogs/world-view/argentina-top-%E2%80%94-its-dropout-rate
Business Editors/High-Tech Writers; “EPAM Announces Health & Insurance Technology And Consulting Vertical;
Onshore/Offshore Model Focuses On High Quality/Low Cost”; Business Wire; 17 Mar 2003: 1
Charnysh, Volha; “Belarus - An Outsourcing Haven?”; Belarus Digest; 02 Sept 2014
http://belarusdigest.com/story/belarus-outsourcing-haven-19134
Martynau, Alexander; “An IT Solution to Belarusian Economic Malaise”; Belarus Digest; 12 Dec 2013,
http://belarusdigest.com/story/it-solution-belarusian-economic-malaise-16366
Alex Nice (lead analyst), Maximilien Lambertson (analyst);
The Economist Investigative Unit Database Country Report - Sep 2, 2016, Published 09 September 2016
(http://ezproxy.library.nyu.edu:4343/index.asp?layout=displayIssueArticle&issue_id=1054578089&article_id=1064578090)
San Gil, Ernesto; “Latin American companies turn up the volume on global growth”; www.EY.com; 2013
http://www.ey.com/gl/en/issues/driving-growth/growing-beyond---latam---country-insights-argentina-highlights
The World Bank:
http://www.doingbusiness.org/data/exploreeconomies/argentina/
http://www.doingbusiness.org/data/exploreeconomies/belarus
National Bank Financial Market, “Is Argentina finally heading in the right direction?”,
National Bank of Canada, Published September 7, 2016
https://www.bnc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/GeopoliticalBriefing_07sept2016.pdf