This document discusses considerations for choosing the right location for outsourcing. It provides an overview of the Nearshore Executive Alliance and Neo Group, as well as the agenda which includes key location selection considerations, perspectives on the Latin America landscape, and addressing location risks. It then discusses various Latin American countries as outsourcing locations, comparing factors like industry development, salaries, talent pools, free trade zones, and geopolitical risks. The conclusion emphasizes understanding demand and supply factors such as scale needs, risk tolerance, and total return on investment when evaluating locations.

1. How to Choose the Right Sourcing Location
July 28, 2015
NAVIGATING THE LATIN AMERICA
GLOBAL SERVICES MARKET
Adriana Castro, SVP Customer Service, Citibank, LATAM HUB
Tim Bilali, Executive Director, Global SAP, Interpublic Group
Brian Tumpowsky, Acting Vice President, Re: Sources

2. © 2015 Neo Group Inc. Proprietary
2
2
Powered by
ABOUT NEARSHORE EXECUTIVE ALLIANCE (NEA)
The Nearshore Executive Alliance (NEA) is the
industry association for the IT Services and
Business Process Outsourcing sector in Latin
America.
A nonprofit organization founded by a broad
selection of industry leaders with the objective
of creating awareness of the capabilities of the
region and increasing the use of the Nearshore
delivery model.

3. © 2015 Neo Group Inc. Proprietary
3
3
Powered by
• Globalization Strategy
• Sourcing
• Location Strategy
• Health Checks
• Renegotiations
• Governance
ABOUT NEO GROUP
We deliver results through three distinct and linked solutions and services:
ADVISORY SERVICES GOVERNANCE
SOLUTIONS
• Design
• Run and Support
• Ongoing Resource,
Contract and Performance
Management Services
SUPPLY MONITORING
& ANALYTICS
• Country
• City
• Supplier
• Real-Time Event Alerts
• Subscription-Based
Monitoring
" Since 1999, we have been helping clients
accelerate benefits and minimize risks
associated with global services and
sourcing.
" We have a singular focus on the global
services supply chain.
" We achieve outcomes through deep
intellectual property, real-time analytics,
proven methodologies, experienced advisors
and co-creation with our clients.

4. © 2015 Neo Group Inc. Proprietary
4
4
Powered by
TODAY’S PARTICIPANTS
Adriana Castro, SVP, Customer Service,
Citibank, has 20 years of experience in BPO.
She has integrated huge international
migration of operational process for Citibank
into a Colombia HUB. Due to her global Best
Practices she has been awarded as a best
performance country for 5 consecutive years
by Citibank Corporation.
Tim Bilali, Executive Director, Global SAP,
Interpublic Group is responsible for leading
the technology for a major business
transformation initiative for this $7B global
advertising and marketing services
company. Previous to IPG, Tim has held
leadership positions with Infosys, Kraft
Foods, and Nabisco.
Atul Vashistha, CEO, Neo Group, is
recognized globally as an author,
speaker and leading expert on
globalization. Atul is passionate about
helping corporations create
competitive advantage by leveraging
global services and sourcing.
Brian Tumpowsky, Director, Strategic
Business Solutions, Re:Sources, is a
trusted advisor and well-regarded market
leader in strategic sourcing and vendor
governance. He specializes in optimizing
organizational resources — both internally
and externally — to improve efficiency and
effectiveness of operations.
Rebeca Hassan, Executive Director,
NEA, is an accomplished nearshore
outsourcing industry professional, with
a background of hands-on IT solutions
development, data warehousing and
business intelligence.

5. © 2015 Neo Group Inc. Proprietary
5
5
Powered by
" Key considerations in location selection
" LatAm landscape and perspectives
" Taking action on location risks
AGENDA

6. © 2015 Neo Group Inc. Proprietary
6
6
Powered by
QUICK POLL #1
QUICKPOLL
Why are you considering Nearshore?
Poll Results:
Agile 33%
Cultural context 44%
Business context 55%
Cost 33%
Other (Feel free to use the chat feature to elaborate) 0%

7. © 2015 Neo Group Inc. Proprietary
7
7
Powered by
NEO IP: SUPPLIER MATURITYLEADINGPRACTICES
Process
§ Standardized and predictable
§ Optimized to operate at lowest possible costs
§ Tightly controlled and monitored
Technology
§ Use technology as differentiator
§ Look for automation opportunities to enhance productivity
§ Skills across multiple technology domains
Productivity
§ Established productivity metrics
§ Continuously monitor productivity and efficiency
§ Provide employee incentives based on productivity and quality
Decision
Making
§ Data driven
§ Rapid and closer to the customer
§ Establish management information system to support decision making
Compliance
§ Routine audits to comply with client compliance requirements
§ Follow relevant industry compliance standards
Quality
§ Zero error focus
§ Quality certifications
§ Consistent, metrics driven
Human Capital
§ Nurture talent; Create empowered employees
§ Focus on training and development
§ Provide opportunities to progress career and compensation
CAN BE IMPACTED BY LOCATION

8. © 2015 Neo Group Inc. Proprietary
8
8
Powered by
QUICK POLL #2

9. © 2015 Neo Group Inc. Proprietary
9
9
Powered by
LOOKING THROUGH THE RISK FILTER
Factor Summary Description
MACRO-ECONOMIC Key macro-economic indicators, including inflation, foreign direct investment, credit risk,
currency risk and market fluctuations
FINANCIAL Key labor cost metrics for each of IT, BPO, KPO, as well as operational costs and taxation
factors
GEO-POLITICAL Political risk and stability, social and security risk (e.g. terrorism), and natural disaster risks
INFRASTRUCTURE Government support and incentives to source (including forward availability), plus power and
utilities, cyber risk, transport and facilities
BUSINESS Ease of doing business (permits, start up, etc), Regulatory and statutory requirements
LEGAL Legal and regulatory policy and acts, IT and BPO industry trade union activity, and key in-
market labor and work day laws
SCALABILITY Size and growth characteristics for ITO and BPO, provider and process maturity, worker
population spreads, attrition / hiring measures
QUALITY OF LIFE Expat quality of life measures, business support and amenities, ease of international travel
Source: Supply WisdomSM

10. © 2015 Neo Group Inc. Proprietary
10
10
Powered by
NEA/SIG CXO SURVEY 2015
What risks concern you about leveraging Nearshore?
Other: Lack of awareness; lack of focus on region

11. © 2015 Neo Group Inc. Proprietary
11
11
Powered by
QUICK POLL #3
QUICKPOLL
Which location are you most interested in?
Poll Results:
Colombia 25%
Costa Rica 25%
Mexico 25%
Other (Feel free to use the chat feature to elaborate) 25%
Brazil 0%

12. © 2015 Neo Group Inc. Proprietary
12
12
Powered by
LATAM HOTSPOTS
Mexico
• Most developed BPO industry in LATAM
• Low English proficiency
• High end digital talent
Nicaragua
• Mature contact center market
• Opportunities for lower cost voice
services
• Lack of skilled labor pool
Peru
• Excellent Spanish fluency
• Strong back-office BPO services
• Lack of skilled labor
Costa Rica
• Emerging market
• Small but skilled labor force, strong
location for high-end voice talent
• Good government support for
education directing at the industry
Colombia
• Excellent software skills
• Small labor force, multi-lingual
• Excellent in IT professional services,
technical & business services
• Suitable for niche operations
Brazil
• High turnout of IT
graduates, nearly 250,000
engineers a year
• Huge Labor pool, suitable
for large operations
• Good people skills and
availability
Uruguay
• Liberalized immigration policies to
meet labor pool demands
• Excellent political stability,
• Good English-speaking labor pool
with good accent
• Lacks in innovative technologies
Argentina
• Excellent software skills and digital
services
• Small Labor Force, multi-lingual
• Excellent in IT professional services,
technical & business services
• Suitable for niche Operations
Chile
• Small and focused industry
• Similar business culture to US
• Ideal for small scale outsourcing,
especially analytics
(Bubble scaled to size of Industry)
Source: Neo Group & Supply Wisdom

13. © 2015 Neo Group Inc. Proprietary
13
13
Powered by
LATAM FREE TRADE ZONES
Mexico
• 4 Free Trade Zones
• No tax on goods exported to
U.S, no export requirements
required
Nicaragua
• 8 Free Trade Zones mostly comprises
manufacturing companies
• Exemption from income tax, sales tax and
value added taxes
Peru
• 4 Free Trade Zones
• Goods are codified and classified - 90% of goods
are taxed at 15% and the rest at 25%
• No quantitative restrictions, exchange control or
licenses required
Colombia
• 11 operating Free Trade Zones and 55 approved
• Income tax – only 15%, no sales tax
• Export products to international as well as domestic
market
Brazil
• Total 4 Free Trade Zones
• Manaus free trade zone - most
developed, more benefits
• Tax reduction and exemption, Value
Added Tax exemption and Value
Added Tax Credit are few incentives
Uruguay
• 12 Free Trade Zones
• Free trade zones offer the possibility
of free entry and exit of currencies,
securities and precious metals
Argentina
• 10 Free Trade Zones
• Exemption from import duties on
capital goods
• Reduction in Value Added Tax
Chile
• 3 Economic Zones
• Enterprises operating in the zones are
exempted from value added and import duties
• 25 years exemption from corporate tax
Costa Rica
• 21 Free Trade Zones and Industrial parks
• 100% tax exemption for import and export duties,
excise duties and remittances repatriation tax
(Triangle scaled to # of Zones)
Source: Neo Group & Supply Wisdom

14. © 2015 Neo Group Inc. Proprietary
14
14
Powered by
Mexico
• High levels of violence in
the country
• Earthquake prone
• High epidemic risk
Nicaragua
• One of the safest country in Latin
America
• Low incidence of street crime
• Highly prone to earthquakes
• High levels of corruption
Peru
• Extreme risk of floods
• Highly earthquake prone region,
falls in the seismic zone 4
Costa Rica
• Increase in crimes such as petty
theft, gang muggings and robbery
• Highly prone to earthquakes and
volcanic eruptions
• Sharp increase in Dengue since 2014
Colombia
• Terrorism (FARC)
• Domination in drug trade
Brazil
• Crime – a major threat
Uruguay
• Low terrorism threat
• Minor incidents of crimes are
common
• Occasional large storms can
cause severe damage
Argentina
• High risk of seasonal floods and
volcanic eruption
• Minor street crimes
• Moderate political stability
Chile
• Highly prone to earthquakes
and volcanoes
• High air pollution in Santiago
during winter months
LATAM: VIEW ON GEO-POLITICAL RISK
Source: Neo Group & Supply Wisdom

15. © 2015 Neo Group Inc. Proprietary
15
15
Powered by
TALENT TRENDS – SALARIES (SAMPLE)
ITO KPO
BPO: Voice BPO: Non-Voice
Predicted LatAm ITO/BPO/KPO salary growth for 2014-15 is in the range of 4.5%-6.5%. Brazil has one
of the highest salary ranges in the region, due to high demand for IT/BPO workers.
Source: Neo Group & Supply Wisdom

16. © 2015 Neo Group Inc. Proprietary
16
16
Powered by
TALENT TRENDS - TALENT POOL
Labor Pool (Millions) Annual Graduate Pool (Millions)*
Headcount Growth Rate** Attrition Rate
LatAm is expected to experience lower attrition than many offshoring regions over the next decade.
Although Brazil has one of the largest labor pools, labor demand is beginning to outstrip in-country supply.
Source: Neo Group & Supply Wisdom

17. © 2015 Neo Group Inc. Proprietary
17
17
Powered by
QUICK POLL #4

18. © 2015 Neo Group Inc. Proprietary
18
18
Powered by
CONCLUSION
Selecting the right LatAm location requires:
DEMAND
" Understand your scale and skill requirement (Now and in
the future)
" What risks really matter to you (Risk tolerance)
" Own or contract (Capabilities and readiness requirements
are uniquely different)
SUPPLY
" Understand the unique opportunities and challenges
in each country
" Understand comparative value
" Understand Total ROI

19. © 2015 Neo Group Inc. Proprietary
19
19
Powered by
THANK YOU
ATUL VASHISTHA
Chairman & CEO
info@neogroup.com
+1.415.839.8050
www.NeoGroup.com
www.SupplyWisdom.com
info@neogroup.com
REBECA HASSAN
Executive Director
rebecahassan@nearshoreexecutives.com
www.NearShoreExecutives.com