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Turning Chile Into The Service Export Platform of Choice

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The Service Export Platform of Choice Chilean Economic Development Agency -CORFO How do we manage risk? Being a predictable country, where institutions work, rules ... – PowerPoint PPT presentation

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Title: Turning Chile Into The Service Export Platform of Choice


1
Turning Chile Into The Service Export Platform
of Choice
Chilean Economic Development Agency -CORFO
2
How do we manage risk?
  • Being a predictable country, where institutions
    work, rules are clear and properly enforced.
  • Being fiscally responsible (surplus as the rule)
  • Chile has been quoted by The Economist, WSJ and
    Financial Times as an example to follow on its
    economic and financial model in the context of
    the current crisis.

3
What do experts say about Chile?
Santiago is 18th among 50 cities Top 50
Emerging Global Outsourcing Cities 2009 Others
Rio de Janeiro (26), San Jose CR (27), Mexico
City (30), Monterrey (41)
A.T. Kearney Ranks 7th among 50 countries
Global Services Location Index 2007
EIU Ranks 15th among 60 countries Future
leaders in global offshoring 2006
4
At a Glance
  • Population 16.3 M
  • GDP USD 183 B
  • GDP per capita USD 12.7 K
  • FDI (net inflow) USD 7.34 B
  • Annual inflation 7
  • Unemployment 7.5
  • Adult literacy rate 96
  • Corporate tax 17
  • Remitted Profits Tax 35 (corporate
    tax is credited towards remitted profits)
  • Tariffs
  • General 6
  • Hardware 0
  • 95 of imports pay no tax (FTAs)

Time zone alignment
Overnight flights to the U.S.
Sources World Bank, EIU, IMF, A.T.Kearney,
Chiles Central Bank
5
Chiles Business Environment Stands out in Latin
America and Beyond
  • The most stable and competitive economy in Latin
    America
  • Ranked 1st in the region and 26th worldwide by
    WEF World Competitiveness Index 2007 (125
    nations)
  • Mexico (52), Costa Rica (63), Brazil (72) and
    Argentina (85)
  • Ranked Best Place to do Business in the region by
    EIU in 2006
  • 4th among emerging countries and 20th in global
    ranking
  • Lowest country risk (Moodys, Fitch and SP)
  • Santiago ranked 3rd by América Economía magazine
    as the best city for doing business in Latin
    America (2008).
  • Strong, transparent institutions and regulatory
    framework are an example for the region
  • Ranked 5th in the region by Transparency
    International in its Corruption Index
  • 23rd in global rankings
  • Ranked 3rd in the region by World Bank in terms
    of Ease of Doing Business
  • 40th worldwide
  • Positioned as a gateway to the world
  • Free trade agreements with intellectual property
    protection
  • Low tax burden and extensive network of double
    taxation treaties
  • Favorable foreign investment regime (DL 600) in
    force since 1974

6
Chiles Business Climate is Reflected in Moderate
Tax Burden and Flexible Labor Laws
  • 2,600
  • 78
  • 60
  • 52
  • 46
  • 52
  • 40
  • 33
  • 33
  • 69.2
  • 24
  • 20
  • 552
  • 20
  • 37.1
  • 316
  • 27
  • 25.9
  • 11
  • 10
  • Number of tax payments
    per year
  • Man hours required to file taxes
  • Total tax rate
  • ( of profits)
  • Difficulty of hiring
  • Rigidity of work hours
  • Difficulty of firing
  • Overall index
  • Brazil
  • Mexico
  • Chile


Source World Bank (www.doingbusiness.org) 2008

7
Chile is a Gateway to the World
Web of trade agreements provides access to more
than 90 of OECD economies
Web of double taxation agreements covers most of
OECD economies
Spain Norway Portugal Denmark Poland UK
Sweden Croatia France Finland
Hungary Netherlands Czech
Republic Switzerland Ireland Italy
Iceland
Switzerland Lichtenstein
Norway
Canada USA
Russia
Turkey
Japan
Canada USA
European Union
South Korea
South Korea
Mexico
China
Brunei
Mexico
El Salvador Costa Rica Guatemala Nicaragua Hondura
s
India
Malaysia China
Vietnam
Cuba
South Africa
Malaysia
Panama
Uruguay Paraguay Angentina Brazil
Singapore
Argentina Peru Brazil
Venezuela Ecuador Paraguay
Australia
New Zealand
New Zealand
In negotiation
In negotiation
Source Direcon www.direcon.cl
8
At Competitive Costs
  • EIU Worldwide Cost of Living survey 2007
  • Chile among lowest in the world

UBS The world's most expensive cities in 2008
(among 70 cities)
City Ranking
London 1
Sydney 17
Singapore 38
Sao Pablo 42
Budapest 46
Santiago 48
Mexico City 58
Delhi 68
Buenos Aires 70
City Ranking
Moscow  1
Hong Kong 4
London 5
Singapore 17
New York 28
Madrid 53
Sao Paulo 79
Mexico City 68
Santiago 88
Asunción 124
Sources UBS (www.ubs.com), EIU (www.eiu.com),
9
Strong Government Commitment to Turn Chile into a
Global IT Service Platform
  • Increasing productivity also means innovation I
    want this to be a country that not only exports
    copper, but also mining software not only fruit,
    but also techniques to pack and preserve foods
    not only salmon, but also vaccines to prevent
    diseases in fish.
  •  
  • The public sector will increase its spending on
    research and development by 50. Our goal is for
    our country to spend more than 1 of GDP on
    research and development by its Bicentennial in
    2010.
  •  
  • We will increase our efforts to make Chile a
    platform for the export of services.
  •  
  • Michelle Bachelet, President of Chile
  • State of the Nation Address 2006

10
Chiles Strategy to develop the Global Services
Industry
  • The Global Services Cluster has been created to
    turn Chile
  • into the near-shore platform of choice for BPO,
    KPO and ITO.
  • A Private Public Partnership has been created
    for this purpose, that includes Government
    agencies, business associations, academia and
    foreign companies.

11
A Record of Success as a Nearshore Base
12
Successful Experiences
Altec - Santander Bank
Citigroup
Regional platform for IT services Year
established 2001 Investment US 7.7 M Services
to Spain and Latin America to 10 banks in 8
countries include Software dev. and
maintenance US 60M in sales 600 employees High
productivity (CMM5 in 2005) Costs are 60 less
than in Europe
Regional platform for IT services Year
established 2002 130 employees (all
bilingual) Considering expanding services to
US for Tech support Infrastructure
services Technical documentation
BBVA
JP Morgan
Regional platform for IT services
-Opened in 2005 150 employees Services
include Software development Data
centers support Infrastructure services
Regional platform for IT services Year
established 2006 50 employees (all
bilingual) Services to US and Latin America
branches for Software dev. Infrastructure
management services
13
Successful Experiences
EXPERIAN
ORACLE
EVALUESERVE
  • Year established 2007
  • Activities develop and localize software,
    provide analytical and information services to
    manage risk and reward of commercial and
    financial decisions to US customers
  • Scope 200 bilingual IT technical people and
    engineers, sales rep, business managers
  • Customer Support Shared Service
  • Year established 2007
  • Activities Technical support, sales, app
    development for customers in Latin America and US
  • Scope 200 bilingual IT technical people and
    engineers, sales rep, business managers
  • IT and customer service center
  • Year established 2007
  • Activities develop and localize software,
    provide analytical and information services to
    manage risk and reward of commercial and
    financial decisions to US customers
  • Scope 350 bilingual IT technical people and
    engineers, sales rep, business managers

ORION SYSTEMS
  • Year established 2008
  • Activities Indian provider that develops
    software for US customers
  • Scope 120 bilingual IT technical people and
    engineers

14
Successful Experiences
Yahoo!
TCS BPO center
-Year established 2006 -Research lab Web
search and mining hosted in the Engineering
School of University of Chile -Scope 10
PHDs -Only other Yahoo research center outside
the U.S. besides Barcelona -Why Chile? One of the
few places where people are understanding the
internet
Year established 2005 Investment US 30
million Numerous advantages for its plans to
their operations economic and political
stability, risk-free, low costs, high-quality
human resources, good infrastructure. Scope
Workforce of 1,500. Chile considered a hub for
Latam
Other Examples
Regional Contact Centers Air France/Delta
Airlines KPO GE Software Development
Software AG/ Synopsys/Intersystems
  • Shared Services
  • BHP Billiton/Unilever/Zurich
  • IT outsourcers
  • IBM / Sonda / EDS / Accenture/CSC

The main reason to be in Chile is the local
talent. Director of Yahoo! Research
15
Chile Offers Top Talent for Offshore Operations
  • An estimated 1 to 1.5 of the countrys
    population are professionals able to work in
    English
  • Corfos National Register for English speakers
    has 15,145 people certified on the TOEIC test
  • Chilean accent considered closer to neutral
    Spanish than several of its neighbors, though
    still quite different from the likes of Spain or
    Mexico
  • Currently 10,000 annual output of college and
    university engineering graduates and growing
  • 10 large universities around the Santiago area,
    and 60 total in the country
  • Over 25 of all school enrollment in technical
    fields or sciences
  • Over 20 MBA programs offered explain the high
    quality of management education in Chile
  • Renowned for strong skills in finance and telecom
    related sectors
  • Source A.T.Kearney Report 2007

16
Reducing the English Gap
  • Corfo created a National Register for English
    speakers certified with the TOEIC test.
  • Total 37,000 people registered nationwide
  • Profile
  • 70 university students and technicians under 30
    years
  • 39 are related to engineering, IT and business
    careers
  • Corfo launched a 100 funded program to train
    English capacities for 1,000 IT engineers in
    Santiago. In 2009, Corfo will fund an English
    program for 2,000 IT engineers in various cities.

Corfos register and training programs are
available for foreign companies looking for local
talent
17
Local IT Market is Expanding Rapidly
  • 500 IT companies in Chile
  • Over 75,000 people employed
  • Size distribution (annual sales US) Less than
    852K (small) 49
  • 853K to 3,5M (medium) 28
  • 3,6M or more (large) 23

IT Sales
Annual sales (USBillions)
Source ACTI IDC , 2008
18
www.investchile.com
Thank you!
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