Chile Positions Itself As IT Outsourcing Location

The Latin American country is mounting an aggressive campaign to attract more high-tech customers. Many U.S. operations have already established business beachheads in Chile.

Chile views itself as a potential IT outsourcing tiger, and while it has been working hard to convince U.S. companies of its outsourcing expertise, it may have found a surprising supporter -- India's outsourcing giant Tata Consulting Services (TCS.)

"TCS likes Chile because we are in the same time zone as the U.S.," said Constanza Donoso, a representative of the Chilean Economic Development Agency, in a brief interview. "Tata provides financial services to U.S. customers from Chile."

The Latin American country with a population of 16 million is mounting an aggressive campaign to attract more high tech customers. Many U.S. operations have already established business beachheads in the country.

The new drive, said Donoso, comes from the country's new President Michelle Bachelet, who has pledged that Chile will increase its research and development spending by 50 percent. The country is setting aside $200 million this year from mining taxes to invest in high technology; the figure is likely to grow to $350 next year, officials said.

Several U.S.- and Europe-based companies have located service operations in Chile's major cities primarily to serve Latin American customers. These include Delta Air Lines and Air France reservations operations as well as customer service units run by Citigroup, JPMorgan, Unilever and Zurich Financial Services.

Particularly prized are U.S. technology companies, which will carry out sophisticated research and development in Chile. Synopsys, a California-based provider of semiconductor design, has opened its first design center in Latin America in Santiago. It plans to expand the software engineering group to 60 by 2009.

Yahoo has established an Internet Research Lab where the PhDs it has hired develop mathematical algorithms that will facilitate Internet searching. General Electric's International Center of Excellence in Chile has hired many software developers. Software AG, a German company with a large presence in the U.S., develops enterprise software for government and businesses from its XML operation in Chile.

Businesses are increasingly attracted to Chile's high literacy rate (96 percent) and the growing number of Chileans who speak English (7 to 8 percent), Donoso said.