Venezuela the new Outsourcing Eldorado
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Venezuela the new Outsourcing Eldorado

Are you concerned with ethics? What if you are really helping instead of wrongdoing?

A brief Historical perspective

Since 1830 when it became a fully independent country (after 9 years as a department of the federal republic of Gran Colombia), Venezuela has experienced several periods of political turmoil and autocracy.

The country was mainly dominated by regional caudillos (military strongmen) until the mid-20th century.

From 1958 to early 1980s the country had several democratic governments but a huge economic depression that endured until the 1990s created a sequence of severe political crises (with casualties).

The people lost all confidence in the existing parties and their representatives and ended up entrusting all their hopes in the “Messiah alike” figure of Hugo Chávez with his “preaching” about the Bolivarian Revolution.

A new constitution was drawn in 1999, changing the country’s name “República Bolivariana de Venezuela” and having Hugo Chávez as the new military strongman in power.

Basic economics 1o1

Oil was discovered at the beginning of the 20th century (in fact the largest known reserves), but the exploration is not tier1 (the easiest one, like in the middle east Arab countries), but somewhat more expensive.

Mr. Cahvez “new order” expanded the oil exploration (by partner foreign companies) and channeled the revenues to improve the people’s living standard, yet not through sustainable investment in the country’s social structure, but via financial aids and sponsorship.

 

Under a Socialist/ Communist ideological umbrella, the people was led to feel that work was not required since the “maternal state” would provide for them

 

When the middle east oil became once again “widely available” in 2011, countries like Brazil and Venezuela became uncompetitive in this market due to the highest exploration cost, and there went Venezuela’s economy “down the drain”.

The country is in a desperate situation with a -10% GDP growth rate, and food under controlled distribution, not in enough quantity for a population that has no jobs or means to survive.

Due to all of this, the national currency the Bolivar has an official parity of 10 to 1 towards the US dollar but is being exchanged at an average rate of 1020 to 1.

Currently, the minimum wage in Venezuela is of $13 per month. Still, the wild and unpredictable inflation rate may easily lower even further such number overnight.

Within such context, any revenue in US dollars is just “priceless” and that has been leading the local Outsourcing offering to beat (price wise) other economies like the Philippines or even India and Pakistan.

Nowadays “standard” means getting good freelancers from these countries between $5 and $8 per hour, but Venezuela has reached values ranging from $2 up to $4 per hour for expert resources in basically “all kinds of jobs”.

Market and Humanity

When we read that someone in need has accepted an unthinkably low financial compensation for his/ her work just out of pure despair, it is inevitable to have exploitation in our minds.

Now the fact is that for someone in Venezuela, being able to work even 10 hours per week at $2 means a monthly income of $80 which is almost 7 times the current country minimum wage.

It is the only way the people of Venezuela are able to be competitive towards players from other Geographies and most relevant of all, under current conditions it represents much more income than they could ever get while working a local job.

So, despite the common notion that in fact, it is a very low amount of money, for them, it represents a major leverage towards their lifestyle.

Economic exploitation happens when the retribution is not enough to assure proper subsisting conditions towards the people getting the payment when providing a service that has a higher value in the origin economic context; this is not the case (as hard as it may sound).

competition

The Venezuelans competitive value proposition

Venezuelans have some competitive value propositions when facing other low-cost competitors in the Outsourcing context:

 

  1. It’s a western society, therefore with a social attitude as well as an educational system that fosters a western methodic approach to challenges, in opposition of other geographies. This is not a matter of right or wrong, yet of alignment with main client markets.
  2. Geographically it’s positioned in a time zone that is more favorable for potential clients in North America and Europe than Eastern competitors like India, Pakistan or the Philippines who are several hours ahead.
  3. The language factor is also a competitive edge since English is learned in school and qualified resources usually speak it. Then the official language is Spanish, which is becoming a growing second language in the US. Aside from Mandarin (due to the dimension of China’s population), Spanish is the second most-spoken language in the world, followed by English.
  4. Culture level, the people from Venezuela who have been brought up in a middle-class social environment in the 1990s has become proficient experts in areas that are prone to Outsourcing have a general knowledge and cultural standard that easily surpasses the US average, therefore making them also more likely to be chosen over others.

The professionals from Venezuela that now are driven by circumstances to accept such fees as compensation for their work are also gaining clients and status in the outsourcing market, which means in the long run that their revenue will grow both in size as well as weight.

Venezuela is becoming the Outsourcing Eldorado and that is not a bad thing

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