World's Riskiest Outsourcing City: Does Bogota Deserve It?

Posted by Bob Evans on Jun 4, 2009 10:25 AM

On Monday I wrote about a list compiled by outsourcing experts showing that Bogota, Colombia, is #1 on their new list of the riskiest cities in the world for outsourcing. Some followup research about Bogota has me wondering just how these outsourcing experts formed their opinion of the Colombian capital, which several other sources describe as a safe, business-oriented, and forward-looking city.

To let you see the extreme contrasts and have a chance to judge for yourself, I'll first share an excerpt about Bogota from the Black Book of Outsourcing, whose list of the world's 10 riskiest locations for outsourcing was topped by that city, and then I'll offer some wildly different opinions of the city, all written within the past several weeks. And finally, I'll offer some comments from the author of the report, Scott Wilson.

First, the profile that put Bogota at #1 for outsourcing riskiness as reported in IndiaTimes:

"Corruption and organized crime are at the highest in Bogota. The country's unstable currency is also regarded as a reason why companies may find it going tough. Other issues that Black Book of Outsourcing highlights are transnational & geopolitical, unsecured & unprotected networks, infrastructure, technology & telephone and terrorist or rebel target threats.

"Besides these, uncontrolled environmental waste and pollution and legal system immaturity also form part of reasons why companies may not consider Bogota as an ideal outsourcing location."

Pretty strong stuff, right? Organized crime, unstable currency, geopolitical unrest, crappy IT infrastructure, terrorism threats, rampant pollution, and an immature legal system – well, at least the list didn't say anything about lousy coffee.

Here's a description of Bogota published last week in the Philadelphia Bulletin by a faculty member from the Wharton School of Business at the University of Pennsylvania who describes himself as a serial entrepreneur – not exactly the profile of someone who'd be drawn to a dirty, corrupt, violent, and technologically backward terrorist target:

"This past week, I was at the Wharton School of Business Latin America Conference in Bogota, Colombia. For those of you who think Colombia is like the early 1990s Harrison Ford movie 'Clear and Present Danger,' where drug dealers are running around shooting politicians and where paramilitaries are overrunning the country, you would be surprised to find a moderately safe, growing country.

"My hotel and the restaurants I ate in were full of Asian and European businesspeople trying to get contracts for infrastructure improvement. The Colombians have a president who is considered one of the best leaders in the world. There banking system is solid, NOT highly leveraged, interest rates are reasonable and Colombians are very optimistic. ….. From talking to businesspeople, their perception of Bogota and Colombia is a creative, hard-working entrepreneurial society. Money is flowing in from the Middle East and China to take advantage of the oldest continuous Democracy in Latin America…. Business leaders used to ride in armor-plated caravans of cars with armies of bodyguards, which you don’t see today."

And here's a recent description of Bogota's mass-transit system written by a resident of Brooklyn, New York, where I know from long personal experience that mass transit is taken very seriously. Beyond this excerpt, the full article describes how such a modern and effective bus system could never have come about without intelligent and forceful public leadership:

"It’s hard to believe until you’ve seen it for yourself, but the city bus can, in fact, be a sleek, fast, efficient, and first-class way to get around town. Unfortunately, you can’t find that kind of bus service in any U.S. city. You’ve got to travel down to Bogotá, Colombia, and ride the TransMilenio bus-rapid-transit system. That’s right: A city in a country that most Americans associate only with Pablo Escobar and Juan Valdez is now running the most modern, high-tech bus system in the Western Hemisphere. As you step aboard your first TransMilenio vehicle, it hits you pretty quickly: When it comes to buses, the United States is a Third World nation."

Even the World Bank – no stranger itself to ongoing claims of mismanagement, corruption, and risky business – made glowing and exceedingly optimistic comments about Colombia, as reported in this English-language summary of news articles about that country:

"Colombia is an example for Latin America. I am very impressed with the government's program, with the economic stability and the measures taken to address the crisis, and the efforts deployed to achieve peace and development, " [World Bank managing director Juan Jose] Daboub told El Espectador. … Daboub met with President Alvaro Uribe earlier this week to discuss the effects of the global financial crisis on Colombia and the steps taken to confront it.
"The Colombian private sector is very dynamic, its competitiveness continues to grow, Colombia is unstoppable," Daboub said. During his stay in Colombia, Daboub participated in the First International Congress on Disarmament, Demobilization and Reintegration, which was held in Cartagena from Monday to Thursday.

And this comment posted to Global CIO's discussion forum for the original blog post notes that none of the cities listed as the 10 riskiest had significant service disruptions last year:

"I note that NONE of the top 10 have had any service interruption incidents of ANY significant impact in the last year. Where does that place the predictions that were so boldly made last year? Looks like the first world view of the developing world is flawed and possibly even seriously biased? Ivory tower prediction is a very inexact science, if actual incidents were included a very different picture of reality versus a biased perception would result."

One last perspective on both Colombia and Bogota notes that a global convention-industry trade association says that both the country and the city are becoming more-popular destinations for international meetings:

"Colombia rose 12 places in a global ranking of the most popular countries in which to hold international meetings. The International Congress and Convention Association released a report on the 90 most popular destinations in 2008. Colombia went from 50th in 2006 to 38th in 2008. It is now a more popular destination than countries such as Uruguay, Russia, Peru, Ecuador, Costa Rica, New Zealand, Panama, and Puerto Rico…. Cartagena and Bogota both increased their rankings of the most popular cities. Cartagena rose 20 places, 89th to 69th. Bogota went from 114th to 108th."

Meanwhile, in response to a few questions I had sent to him via email, Black Book of Outsourcing author Scott Wilson sent along a copy of the report called "The Year of Outsourcing Dangerously," which contains this comment in its description of how it conducted its research:

"The realities of an unsafe world have fully overrun into outsourcing decisions. The responsibility of insuring data and processes remain safe can not be conveyed to the supplier on your behalf. As the savings gap between India and other world locations widens to less than ten percent, the value proposition is tempered by potential threats. The challenging component of outsourcing governance has shifted to mitigating downstream risk by determining the best location choice for their organizational processes. The reality is terrorist attacks, typhoons, crime and corruption will disrupt your corporate operations via offshore outsourcers."

That section also notes that a discussion of the research methods can be found at www.theblackbookofoutsourcing.com.