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Shared service centers in Uruguay: Why there’s a boom

by | Aug 26, 2023

Shared service centers in Uruguay are attractive due to the quality of the country’s labor force.

In recent years, Uruguay has positioned itself as a strategic point for installing Shared Services Centers (CSC). These centers have gained popularity in the current context. According to data from Uruguay XXI, today, the country has more than 50 CSCs that generate around 11,670 jobs. 80% of their operations are in captive centers, while 20% of shared service centers in Uruguay are international service providers.

Seventy-six percent of these companies are in free zones, while the remaining 24% are in the metropolitan Montevideo area. The primary industries CSCs in Uruguay cover are pharmaceuticals, commodity trading, technology, retail, and chemicals.

The signing of President Luis Lacalle Pou’s authorization for the creation of a free service zone in Punta del Este is the most recent sign that Uruguay is taking a proactive approach to attracting these types of centers to the country. What reasons lead businesses to establish shared services in Uruguay? What are the strengths of the country? What are the centers for? What possibility is there for further development in the future?

Quality workers and stability

Valentina Sena, Business Development Manager at KPMG Uruguay, indicates that the “quality of the Uruguayan labor force has played a fundamental role” in attracting the CSCs.

“When we speak with CSC leaders, it is common for them to highlight proactivity, the ability to innovate and ‘think outside the box,’ as well as the level of productivity of the Uruguayan workers,” Sena asserted.

Similarly, Ana María Peluffo, Human Resources manager of BASF Services America, declared that the differential offered by Uruguay is in its people. “Uruguayan professionals are people with an excellent learning capacity. The Uruguayan worker is a flexible, curious professional, making a lot of sense to invest because he learns, develops, and has an outstanding capacity for creativity,” he maintained.

Ignacio Del, general manager of the World Trade Center Free Zone, where close to 9,500 people work, points out that when companies arrive in Uruguay, they find good levels of technical education in terms of languages and technology.

“They find a country that has good people to integrate into their work teams, and that makes them try to establish shared service centers in Uruguay first, and as they begin to work, due to all these characteristics, they begin to increase their employee base,” Del said.

Peluffo also highlighted Uruguayan connectivity, the capacity for technology development, and excellent quality of life as essential elements when different CSCs decide to settle.

Del emphasized the country’s stability from both a political and a social point of view. “Investors know that they can come to set up shared service centers in Uruguay, and they won’t have any problems. Looking at a region in turmoil, they know that in Uruguay, the rights of companies will be respected and that government policies toward business will have some stability over time,” he said.

“Sometimes the decision to install a CSC in Uruguay occurs as part of a natural process of familiarization with the country and following the clarity of its rules of the game and its political and economic stability,” said Sena.

Uruguay XXI explained that “access to talent, together with the stability and certainties that the country offers are the main attributes that have supported both the original decision of the companies to install their CSC for the Americas in Uruguay, as well as that of betting on its sustained growth in the country.”

The labor demanded by this type of company needs to be of elevated quality, and the remuneration is commensurate.

“We are talking about a level above a call center type activity; they are jobs that have high added value,” said Jaime Miller, president of Uruguay XXI.

Peluffo, for his part, said that BASF is an organization that trains its people and that it is interested in people who can maintain performance quality at high levels and have long cycles in the company. In this sense, “the salary proposal accompanies this process. Neither much more nor much less, we want to be interesting in the sense that a professional sees an offer from BASF and does not have to pre-qualify it above or below any other market proposal,” he added.

Shared service centers in Uruguay: The future and opportunities

The chemical company BASF is restructuring its shared services center in Uruguay, BASF Services Americas. It will now have Montevideo as a hub for the region, North America, and South America.

Peluffo marked the difference between hub and CSC and explained that the hub installation implies “the integration of services into much more finished concepts in terms of providing a solution to the client.”

“In the hub, the processes are integrated, simplified, and supported by potent integration systems that automate everything that is transactional or operational. So, people dedicate themselves to doing much more value-added work, understanding customers, development, and providing new solutions,” he added.

Around 600 people are employed at Uruguay’s BASF shared service center today. With the restructuring process and the hub installation in Montevideo, the company aims to generate another 200 positions for Uruguayan workers by the end of 2023.

From Uruguay XXI’s perspective, they understand that this increase in the functions carried out by the CSCs is the result of a shift from a specialized model with processes disseminated in different centers without coordination among themselves towards multifunctional CSCs. These shared services centers in Uruguay share unified governance for the various functions, translating into better performance focused on particular regions.

Furthermore, they consider moving from transactional processes, which remain the majority within the CSCs, towards activities with greater added value.

In the future, Robotic Process Automation (RPA) will increasingly be a part of Uruguayan CSCs. This technology reduces the effort of routine tasks, frees up resources to focus on higher value-added tasks, generates better data for analysis and decision-making, and optimizes human resource management, making it possible to offer improved and more efficient services.

Here, new opportunities arise for shared service centers in Uruguay. “The weakness that Uruguay had before was that it did not have many people. It is no longer so important today because a robot does the most repetitive transactional part. The added value part is done by qualified personnel, so we have a better position there because we can become a high-added value shared service hub, where the number of people and costs don’t matter so much, but rather the quality and level of services that are provided,” said Miller.

Options for locations of shared service centers in Uruguay

The Uruguayan government has shown signs of wanting to attract investors not only to Montevideo but also to other regions of the country, which it considers to have the potential to house CSCs and become additional poles of development.

In this sense, in 2021, the president of Uruguay, Luis Lacalle Pou, signed the authorization for the creation of a service-free zone in Punta del Este, and the World Trade Center Punta del Este will be the first service-free zone to be installed in the country’s leading tourist venue.

The general manager of the WTC Free Zone in Montevideo, Ignacio Del, said there is confidence that “many people want to go and live in Punta del Este and work there. In the same way, it will become an attractive hub for companies to set up shared service centers in Uruguay.

For the president of Uruguay XXI, it is always convenient to have a diversity of locations, especially considering that there is a tendency for Punta del Este to house residents permanently. “That there is a free zone there will add to the attractiveness of Uruguay. This sends a message that global services are important to the Uruguayan government’s agenda. These are very positive initiatives that seek not only to expand or broaden the base from which services can be provided but also to decentralize,’ maintained Peluffo.

Sena understands that Punta del Este is an attractive option not only for shared service centers in Uruguay that decide to set up from scratch but also “for CSCs already established in Montevideo who want to have a satellite center there, which allows them to attract new employees and/or expand its operations.

The Salto Grande region and the department of Rivera in Uruguay are also seen as having the potential to attract CSCs.

According to Miller, Salto and Rivera have “great potential” since, with the advance of teleworking, the importance does not depend on the center’s location but rather on the abundance of qualified human resources that can be found in the area. “Medium-sized cities are increasingly attractive for companies looking for alternative sites to set up operations,” he added.

“Rivera is another important place due to the ability of much of the workforce to speak Portuguese. In this sense, if Uruguay could generate a policy that makes it easier to sell services to Brazil, Rivera would undoubtedly be a place where an additional pole for shared service centers in Uruguay could be established,” explained Miller.

 Conclusion

Uruguay stands out as an excellent destination for establishing shared service centers due to its blend of a skilled workforce, strategic location, and stable business environment. With a well-educated talent pool proficient in languages like English, Spanish, and Portuguese, the country offers a resourceful workforce capable of delivering high-quality services across various domains. Its favorable time zone ensures convenient collaboration with North and South American markets. Political stability, low corruption levels, and a supportive government provide a reliable and secure business environment. Moreover, the country’s modern infrastructure, coupled with competitive labor costs, enhances the operational efficiency and cost-effectiveness of shared service centers in Uruguay. Uruguay’s combination of skilled human capital, geographical advantage, and conducive business atmosphere makes it a compelling choice for companies seeking to establish efficient and successful shared service centers.

For information on establishing a shared service center in Uruguay, contact LATAM FDI.

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