LATIN AMERICA & COLOMBIA BPO MARKETS: Strategic Analysis

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LATIN AMERICA & COLOMBIA
BPO MARKETS:
Strategic Analysis
1Linkedin.com/in/jonathandonadoJonathan Donado
Jonathan Donado

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To perform a strategic analysis of the BPO landscape
in Latin America and Colombia
01. Presentation Objective

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01. Overview
Latin America Outsourcing
& BPO Markets

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Mexico
Mature market with high level of opportunities
for outsourcing and nearshore projects
Southern Cone
Improving economic conditions
allowing continuing investments in
Chile. Moderate growth expected for
2016-2017
Brazil
Mature market.. It has large
outsourcing players that mainly
concentrate in the domestic
market
Central America & Caribbean
The political environment has
been mostly stable presenting
new opportunities for foreign
investment in the region.
Panama is the fastest growing
BPO location. Belize is an
untapped market.
Andean Countries
Political stability has
exceled further
international investments;
specially in Peru.
Latin America is developing into an attractive offshoring alternative to Asia for US and Europe-
based businesses. Latin American countries offer a tremendous cost savings in wages, real estate,
infrastructure and tax incentives. It has large young labor pool with a cultural affinity to the USA.
01. Latin America Overview
Source: Frost & Sullivan. Latin America Contact Center Solutions & Outsourcing Services Market

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Brazil •The domestic market is strong and local players are focused on serving Brazilian
companies and the Brazil operations of multinationals.
• A few suppliers like Ci&T and Stefanini are bucking that norm and expanding rapidly into
global markets. Other good firms like BRQ, Tivit and TCI continue to be largely focused
domestically.
Mexico • Large Contact Center projects are only expected for offshore services.
• BPO services targeting both domestic marker and Hispanic population in the USA
Southern Cone • Small and medium size contact centers in Chile drive revenues up
• Argentina still has not fully develop its BPO services. Focus on domestic market.
• Guyana has become the star country for its low wages , English speaking workforce and
stable economy/political system.
Andean Countries • Peru with its stable political and pro-business environment has become a major player in
the BPO market.
• Ecuador and Bolivia while having low wages still have not developed its BPO industries.
Market regulation is high and telecom cost above other countries in the region.
Central America &
Caribbean
• Only Panama and Costa Rica has evolved as leading players in the region.
• Dominated by Medium term small contact centers that serve local markets
Latin America Submarkets Highlights:
Linkedin.com/in/jonathandonadoJonathan Donado

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Source: Frost &N Sullivan. Latin America Contact Center Solutions and Outsourcing Services Market
Drivers
• Booting Factors:
• Strong growth expected in the
market for offshoring services
• US Driving growth in the region:
English Speaking and Hispanic
Customers
• Private and Government support
to growth of outsourcing industry
• Increasing number of BPO
opening locations throughout the
region.
Restraints
• Saturation of large contact centers
in countries such as Mexico and
Brazil restraining domestic growth
• Outsourcing offering create pricing
pressure among service providers.
• Low pool of bilingual English
speaking workforce limits growth
for offshore services to the USA
• Challenging regulatory environment
• Foreign exchange controls and
currency devaluations
Drivers & Restraints affecting the outsourcing market in
Latin America

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01. Main Outsourcing Segments
Information Technology
Outsourcing
ITO BPO KPO
Business Process
Outsourcing
Knowledge Process
Outsourcing
• Software as Service
• Infrastructure as Service
• IT Cloud Services
• Data Center Management
• Software Testing Services
• Contact Centers
• Customer Support
• HR Administration
Services
• Telemarketing / Telesales
• CRM
• Data Entry/ Management
• R&D Services
• Telemedicine/Health
Services
• Legal Process Outsourcing
• Graphical Design
• Marker Research
• Financial Data Research

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01. BPO Market
8
Back
Office
Front
Office
Procedures with relation to the
administration of a firm such as
HR services (payroll,
applications), Invoicing,
Accounting (accounts payable,
accounts receivable), Logistics,
CRM and business analytics)
BPO:
Procedures related to providing
services directly to customers.
Main activities are Call Centers,
Customer Support Centers.
Business Processing Outsourcing delegates one or more intensive business
processes of the use of information technology to an external provider who manages
such processed using defined metrics and Key Performance Indicators (KPI). There
are Back Office and Front Office services:

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$4.87BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
10% .08 MILLION 4-8%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$0.95BILLION 9% .07 MILLION 10-15%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: ARGENTINA
Average Annual
Salary
ITO / BPO
Entry Level $16,500
Lead Level $23,500
Manager Level $38,000Source: Neogroup.com

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$20.57BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
11% .06 MILLION 15%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$6.07BILLION 8.3% 1.1 MILLION 15%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: BRAZIL
Average Annual
Salary
ITO / BPO
Entry Level $14,500
Lead Level $25,500

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$0.17BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
17.4% .003 MILLION 8%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$2.03BILLION 8.3% .035 MILLION 8%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: COSTA RICA
Average Annual
Salary
ITO / BPO
Entry Level $19,000
Lead Level $29,000

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NABILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
NA% .004 MILLION NA%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$0.21BILLION 11.4% .013 MILLION
20-25%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: EL SALVADOR
Average Annual
Salary
ITO / BPO
Entry Level $7,000
Lead Level $12,500

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$0.10BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
20% .01 MILLION 12%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$0.29BILLION 20% 0.2 MILLION 14%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: JAMAICA
Average Annual
Salary
ITO / BPO
Entry Level $10,500
Lead Level $17,200

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- Mexico outsourcing sector is one of the largest in Latin America.
- The proximity to the US makes it highly attractive for American
companies to locate nearshore operations.
- Cybercrime has become a major issue, costing the economy about
$3Billion per year.
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$11.03 BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
7.3% .5 MILLION 5%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$7.58BILLION 10% .25 MILLION 7%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: MEXICO
Average Annual
Salary
ITO / BPO
Entry Level $14,500
Lead Level $24,000
Manager Level $37,500
Source: Neogroup.com

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$0.71BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
8% .01 MILLION 4%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$0.5BILLION 14% .04 MILLION 12.5%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
01. Latin America: PERU
Average Annual
Salary
ITO / BPO
Entry Level $8,500
Lead Level $18,500

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01. Latin America BPO Market: Main Players
LATIN AMERICAN
REGIONAL PLAYERS:
ATENTO
SITEL
TELETECH
TELEPERFORMANCE
DIRECTONE (Caribbean)
ENTEL (Chile)
MULTIENLANCE (Colombia)
CC AMERICAS (Colombia)
TELVISTA (Mexico)
US OFFSHORE
COMPANIES:
CLIENTLOGIC
HISPANIC TELESERVICES
SYKES
LATIN AMERICAN
LOCAL PLAYERS:
Competitive Landscape in Latin America

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02. Colombia
Colombia Outsourcing
& BPO Markets

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Source: http://www.internetworldstats.com/stats2.htm http://news.bbc.co.uk
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02. Colombia: Country Facts
Capital: Bogota
Population: 48.6 million (Census Bureau, 2016)
Area: 1.14 million square km (440,831 square miles)
Monetary unit: 1 Colombian peso = 100 centavos
Main exports: Petroleum, coffee, coal, gold, bananas, cut
flowers, chemicals, emeralds, cotton products, sugar,
livestock
GNI per capita: US $7,780 (World Bank, 2015)
Internet domain: .co
Internet penetration: 58.6% of the population has access to
the web.
International dialing code: +57
Overview
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◉
◉
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02. Colombia: BPO Market
- The Colombian National BPO association estimates
that in 2015, the outsourcing sector sold US$ 1.9
billion and created 189.000 jobs.
- According to the latest study by the Productive
Transformation Program (PTP), the outsourcing
sector can increase its sales between 2.9% and 9.5%
in the next three years.
- During 2015, call center Spanish services
represented 62.41% of the outsourcing sector
revenues followed by telemarketing and collections
& billing.
- According to the Ministry of Education, in the last
14 years Colombia had 2.9 million of graduates.
53.8% had tertiary education, 18.8% had technician
or technological education, and 19.2% had
postgraduate education.
Colombia BPO Overview
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- Colombia is one of the fastest growing countries in the BPO sector
in Latin America.
- Strong Government Incentives and the recent peace accord with
rebels make it a preferred destination for foreign investment in
the BPO sector.
- Companies like HP, Microsoft, AIG, IBM and SAP has installed
operations in Colombia
- Broadband connections of 8.8 million in 2014 and expected to
triple by 2018
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$2.97BILLION
Outsourcing
ITO
BPO
Business Process
Outsourcing
18% .05 MILLION NA%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
$3.12BILLION 10% .13 MILLION 18-20%
Industry
Size
Labor
Pool
Attrition
Rate
Industry
Growth
02. Latin America: COLOMBIA
Average Annual
Salary
ITO / BPO
Entry Level $10,500
Lead Level $18,500

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Source: PTP Colombia – July 2015
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02. Outsourcing Worldwide Market
2006 2008 2010 2014
100.8
157.4
252.2
642.6
CAGR
27%
Evolution Global Outsourcing Services Market in Billion USD:
2009 2010 2011 2013
6.6
9.1
10.6
15.6
CAGR
24%
Evolution Colombia Outsourcing Services Market in Billion USD. Colombia
with $15.6 B in 2014 represents 2.4% of the worldwide market:
2012
13.1

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Rest of the World:
US$642 Billion
Colombia:
US$15.6 Billion (2%)
$38 B
$15.6 B
2014
The Colombia BPO Market though is only 2% of the word market, it expected is
growing an annual 16% per year in the next few years to be a US$ 38 Billion in
2020.
Colombia
BPO
Market:
2020
CAGR
16%
02. Outsourcing Worldwide Market
Source: PTP Colombia – July 2015. Programa Transformacion Productiva / Bancoldex, July 2015
In comparation in 2015, the US BPO Market has a size of $136Billion. . It has an annual growth of 4%, 162,000
businesses employing just below 1 Million people (Source: IbisWorld Market Report
http://www.ibisworld.com/industry/business-process-outsourcing-services.html

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02. Colombia Outsourcing Market Overview
Colombia Market:
In 2013, it Colombia BPO sector generated $15.6B, and
had 772,200 direct employees
90% of market revenues came from domestic services and
10% was from offshoring or $1.51Billion:
1. BPO: $692 Million
2. ITO: $477 Million
3. KPO: $347 Million
Market grew $16.% in 2014, and it is expected an annual
CAGR of double digit growth until 2020, which is 3X faster
than its Gross National Product
Garnet ranks Colombia as one of the top 30 countries in
he world for business outsourcing. The report emphasizes
then strengths of the country as a location for call center
operations and transactional BPO jobs, the proactive
government support and the competitive labor costs.
◉
◉
$15.6 Billion
Colombia BPO Market Size : Domestic + Offshore
$1.52B
Offshore
Outsourcing
Source: Programa Transformacion Productiva / Bancoldex, July 2015
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◉
◉

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02. Colombia BPO Market Overview
Offshore vs Domestic Services in Colombia
Forecast 2013-2020
Source: Frost & Sullivan
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2013 2020

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02. BPO Colombia Market Overview
Top Offshore Markets
- The top country for Offshore services is Spain.
- Though there is economic slowdown Spain; it continues
to be the prime market for offshoring.
◉
◉
25
Spain
◉
USA
Chile
- The #2 country is USA
- USA expected to overcome Spain as main foreign
destination for offshoring by 2020
- The #3 country is Chile

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- In the last 10 years, the main BPO foreign companies have establish a
presence in Colombia
Market has a large number of local competitors
Only 6% of the firms are able to provide bilingual services (1)
Shortage of Bilingual Workers
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02. Colombia BPO Market: Main Challenges

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02. Ranking BPO Segments:
Cell phone companies and IT firms are the main driver for demand in the BPO
sector in Colombia
First: Telecommunications (39%)
It is one of the most dynamic sectors in mobile internet demand. Government
Sought to offer everyone the option to manage their finances using mobile
devices.
Second: Banking / Financial Services (13%)
Due to the growing demand of the population (47 million), this sector requires
and increasing support in mobile telecommunication services for remote
monitoring of patients (telemedicine) and information consolidation (data
entry)
Third: Insurance (6%)
Other markets are: State services (5%); Mass Consumption (2%); Transport & Tourism (1%); Media (1%); Automotive (1%); Other or Various (32%)

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02. Market: BPO Segments
BPO Industry in Colombia – Mayor Segments
Source: ADECC 2012

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02. Services in Colombia
BPO Front Office - Inbound Services is the main market
segment in Colombia
Source: Informe Sostenibildad BPO - Programa de Transformacion Productiva (PTP) - Colombia
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BPO
KPO
+
ITO
60%
40%
6%34%60%
Voice Services: Inbound & Outbound
In Colombia
Front Office Back Office
Inbound Outbound
Market %

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02. GEOGRAPHICAL LOCATIONS
The top locations for BPO companies in Colombia:
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Barranquilla #4
Software: Application Development
BPO: Voice basic services: English
IT Services: Basic Help Desk
Medellin #3
Software: Application Development &
Maintenance. Project Management
BPO: Voice basic services & Back Office
service: English & Spanish
IT Services: Customer Support, Basic Help
Desk, IT Infrastructure
Bogota #1
Software: Application Development &
Maintenance. Project Management
BPO: Voice basic services & Back Office
service: English & Spanish
IT Services: Customer Support, Basic Help
Desk, IT Infrastructure
Cali #2
Software: Application Development
BPO: Voice basic services: English
Source: Sostenibildad BPO - Programa de Transformacion Productiva (PTP) - Colombia

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Located
In top 4
Cities
Software
Development
Application
Development
IT
Services
Customer
Support
Other
BPOs
Data
Mangt
Acco. &
Finance
Market
Research
Tele-
health
E-
Learning
ITO 88% 52% 23% 12%
BPO 95% 43% 21% 16% 15%
KPO 92% 64% 19% 8%
Source: IDB – Tercerizacion de Servicos Informaticos en Colombia. Ricardo Rocha Garcia, PTP y BID 2013
ITO BPO KPO
- The main 4 cities in Colombia (Bogota, Medellin, Barranquilla and Cali) consolidate most of companies in the
outsourcing sector in Colombia:
- In ITO, the main segment of services is in the Software Development with over 50% of companies
focused on that activity
- In BPO, the main service is Customer Support. Most of the companies are specialized in Spanish, though
there is an increase in English language customer help desk in Bogota and Medellin
- In KPO, market research services is the main activity which is focused in the domestic market.
31
02. Activities by Segment in Top Cities in Colombia
Bogota
Medellin
Barranquilla
Cali

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02. BPO COMPANY TYPES IN COLOMBIA
BPO
Companies
Operating
In Colombia
Your Company Name Presentation
32
International
Colombian Companies:
- Have HQ in Colombia
- Provide domestic services and
to foreign clients
- Includes firms that provide
services to its subsidiaries in
the region
- Require skill workforce for IT
help desk services
Multinational
Companies:
- Have an office in Colombia
- Domestic & offshore services
- Can easily introduce “best
practices” from abroad
- Searches for college degree
for Accounting/HR/Sales/
Customer Service
- Look for English/Bilingual staff
SME Colombian Firms:
- Fastest growing segment
- Low Basic services or low
customer value that are
human capital intensive
- Provide mainly domestic
services in Spanish
- Search for High School
graduates for telemarketing
and customer service
Impact Sourcing Firms:
- Have only Colombia
operations
- Provide domestic services of
low customer value, but with
a high impact social value
- Hires displaced workers from
terrorism/ rural areas.
- No formal education required

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02. Colombia Workforce Overview
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Total Workforce Workforce in the Outsourcing Sectors
21.5
0.8
Labor Force in
Colombia
(In Millions people)
27%
17%
12%8%
7%
29%
Commerce
Agrigulture
Industry
Services
Construction
Other
60%
23%
17%
BPO
ITO
KPO
42%
58%
Outsourcing
Services

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02. Market: Workforce
- Colombia after Mexico is the 2nd largest Spanish speaking country in the world (OECD reports)
- The country has the second fastest labor force in the region (IMD 2012)
- It is the 3rd largest country with the highest number of graduates in the areas of Business and Engineering (Euromonitor 2012)
- Every year over 200K people graduate from higher education in Colombia: 55% undergraduate and 30% Masters degrees
(Ministry of Education 2012)
Total
Graduates
2001 -2011
Accounting
Source: Observatorio Laboral (Employment Beacon) Ministry of Education 2012
BusinessComputer
Engineering
Industrial
Engineering
EconomicsElectrical
Engineering
5.101
7.065
4.601
8.751
11.919
44.352A Growing Market with high
capacity of skilled labor

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US$8000
HIGH
US$1000
Educational Level
Avg.AnnualSalary
Costa Rica
Trinidad
Jamaica
Mexico
El Salvador
Dominican
Republic
Puerto Rico
Panama
LOW
Note: Educational scale based on UN and other figures on education at primary, secondary and university level
Argentina
Chile
Colombia
Brazil
02. Market: Workforce
Linkedin.com/in/jonathandonadoJonathan Donado 35

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Source: PTP Colombia – July 2015
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02. Salary Comparation
Argentina
$12,922
Evolution Colombia Minimum Salary vs. Other Regional Countries:
In Thousands Colombian Pesos/month
Brazil
$14,520
$11,612
$10,631
ChilePeruColombiaPeru
$7,720
$6,594

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02. Colombian Trade Associations
Trade Associations
37
The 3 main trade associations represent the interests of the
sector companies in Colombia. These organizations create
the policies and regulatory framework and work to promote
the industry abroad.
Started in 2001. It has 44 member
companies that represent over 70%
of the BPO market.
It has become the main trade
association for the industry.
It is the association for small to
mid-sized local corporations. It
promotes other industries
besides BPO. It has 38
members.
Started in 2011 to promote. Its
main focus ins on Collection
Services, though it support
firms involved in the accounts
receivable/contact centers

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03. Sources: BPO Market in Colombia
1. Colombia’s BPO Industry Hampered by a Shortage of Bilingual Workers: Report. Nearshore Americas.
http://www.nearshoreamericas.com/bilingual-population-worries-colombian-bpo-industry/
2. Colombia Government BPO Promotion Office: https://www.ptp.com.co/categoria/TercerizacionBPO.aspx
3. Analysis of the Contact Center Outsourcing Services Market in Colombia:
http://www.slideshare.net/FrostandSullivan/frost-sullivan-ex-summary-cco-colombia-2013
4. Ministry of Education of Colombia. http://www.mineducacion.gov.co/1621/w3-propertyname-2863.html
5. ADECC – Associacion Colombiana de Contact Centers y BPO: www.adecc.org
Main Sources:

page 51
04. Testimonials
“Jonathan is a very experienced and highly skilled
executive… a great knowledge about both strategic and
managerial issues, with an international approach. He is
highly recommend as a leader, capable to motivate and
improve performance of his teams, and as a business
developer. And definitively, he is a person you can trust.“
Francisco Martinez
CEO
“Jonathan is a very results-oriented persons, a natural
leader and someone that makes his team really perform
efficiently.”
Eduard Fernandez
Executive Director
Source: Linkedin

page 52
05. Connect With Me
Linkedin.com/in/jonathandonado
Thank You
www.branded.me/jonathandonado
Twitter.com/donadosays
Bilingual senior general management
executive with expertise in international
business and Mergers & Acquisitions (M&A).
Senior Executive Fellow - Harvard University
and MBA - IESE
If you like the presentation, please give
a ”Like” in SlideShare. It is much
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LATIN AMERICA & COLOMBIA BPO MARKETS: Strategic Analysis