Industry Commentary

Advantage Communications’ Acquisition Highlights the BPO Value of Tijuana

By January 23, 2020January 10th, 2024No Comments

Recently, Canadian provider Advantage Communications highlighted the growth potential of value-driven delivery points with the announcement that it will take a majority stake in Tijuana-based First Kontact.  Not only does this constitute a strong kick-off to 2020’s consolidation activity, it puts the spotlight on a location that is rapidly becoming a hotspot in the American nearshore.

There are many reasons for the interest in San Diego’s Mexican neighbor.  Advantage Communications is the latest firm to invest in this region, but there is little doubt that other players will also have Tijuana on their radar. Enterprise clients will also be thinking in this direction, as well.

Granted, it will be hard for merger & acquisition activity this year to keep up the frenetic pace of 2018 and 2019.  Over the previous 24 months, front-office BPO was shaken up by global deals like Concentrix’s buyout of Convergys, as well as targeted acquisitions such as itelbpo taking on Granada Corporation.

However, 2020 is off to a strong start with Advantage Communications – First Kontact deal.  At first, a Canadian BPO firm investing in a provider based in northern Mexico may not seem intuitive, but as reported in Nearshore Americas, there were very compelling reasons for this move.  Certainly, company culture was mentioned and undoubtedly figures prominently in this initiative.  However, what was cited as a driver in the article is the geographic location of First Kontact, in the border metropolis of Tijuana.  Over the past few years, an expanding group of outsourcers has made this part of Mexico their base of operations for nearshoring into the US, and the reasons for doing so are as compelling now as they were at the start of this trend.

Perhaps the most important factor in Tijuana’s favor is its geography.  For firms like First Kontact or any other provider, the short hop over the border from San Diego legitimately makes this city one of the closest locations to the US from which outsourcing can be delivered.  And, this not only means easy access; with this short distance comes a number of indirect advantages.

One of the most obvious is agent empathy.  With so many Tijuana contact center workers exposed to US culture and popular media, Spanish / English bilingual levels are very high in that city. That means an abundance of linguistically- talented labor from which to draw.  This contrasts sharply in other parts of the nearshore, where bilingual talent is said to be at a premium due to cross-industry demand for this worker profile.  There is also commercial familiarity, in that those agents based in Tijuana are very likely to be using many of the same products that they will be servicing for American end-users.

The advantages of Tijuana have not been lost on the broader contact center outsourcing industry either.  Today the city abounds with more nearshore delivery activity than ever before, and many upstart firms quickly have made names for themselves.  Among them is Redial BPO, which has recently been very active in promoting their own capabilities, alongside the benefits of the Tijuana / Baja region.  By all accounts, US enterprises are receptive to this message.

The fact is, far more American buyers want a quality solution for bilingual service, without needing to spend an abundance of time traveling to-and-from delivery points.  Tijuana’s location and the associated net benefits have been clearly realized by the BPO players that have chosen to be there.  Soon, others are likely to follow suit.