Author: ParulJain

Argentina’s Dollarization Dilemma – Assessing Potential Implications | Blog

Implementing dollarization can help resolve Argentina’s economic woes and ongoing inflation, but it poses complex challenges for stakeholders. Read on to explore the opportunities, obstacles, and financial and operational impacts for global companies in Argentina.

Argentina’s chronic economic struggles, characterized by persistent inflation and macroeconomic instability, have reignited the debate surrounding dollarization – adopting the US dollar as its official currency. This alarming scenario of soaring inflation signifies the culmination of decades marked by fiscal mismanagement and monetary recklessness that have deeply impacted the country.

In 1991, Argentina implemented a currency peg between the peso and the dollar to combat inflation. Then-president Carlos Menem proposed fully dollarizing the economy in 1999. However, the dollar peg collapsed amid a severe recession, leading President Eduardo Duhalde to dissolve the 1:1 link in early 2002. During his winning campaign, Argentina’s newly elected president, Javier Milei, championed the dollarization proposal.

While dollarization holds the allure of offering a solution to the country’s woes and chronic inflation, it presents complex challenges for global companies, investors, and other stakeholders.

Potential benefits of dollarization

The potential benefits of dollarization are enticing and include:

  • Hyperinflation tamer: Argentina is experiencing its highest annual inflation rate in three decades (soaring to 254.2% in January 2024), eroding the value of the peso and crippling economic activity. By anchoring the currency to the relatively stable US dollar, dollarization could bring immediate respite from this inflationary ordeal

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  • Fiscal discipline enforcer: Fiscal discipline is paramount, and dollarization would eliminate the central bank’s ability to print pesos and fuel government spending. This could potentially lead to more responsible budgeting and reduce deficits
  • Foreign investment magnet: A dollarized economy would eliminate currency risk, bolster investor confidence, and attract foreign investment. This influx of capital could stimulate economic growth and job creation

Risks of dollarization

While dollarization has the potential to control hyperinflation and stabilize the economy, adopting it also poses the following significant risks:

  • Surrender of monetary sovereignty: By adopting the dollar, Argentina loses control over its monetary policy, a powerful tool for managing economic cycles and responding to shocks. This can limit the government’s ability to stimulate the economy during downturns
  • Reduced export competitiveness: While dollarization may attract investments into the country, it is also likely to make Argentine exports relatively more expensive, hindering international market competitiveness. This could hamper overall economic growth, particularly in export-oriented sectors
  • Heightened poverty: Reduced government spending due to fiscal constraints could stretch social safety nets thin for the already vulnerable two-thirds of the population below the poverty line. This could exacerbate social inequality and unrest
  • Impact on relations with China: This proposed move brings to light a crucial but often neglected concern regarding the continuity of the currency swap line between the Central Bank of the Argentine Republic (BCRA) and The People’s Bank of China (PBOC). This swap line has recently played a pivotal role in averting default on Argentina’s obligations to the International Monetary Fund (IMF)

Dollarization has financial and operational implications for global companies operating in Argentina. Let’s explore these repercussions further.

Financial implications

During the transition to a dollarized economy, global companies may face challenges in hedging due to foreign exchange fluctuations, necessitating careful currency risk management and financial strategy adaptation to maintain profitability. As the currency strengthens, local costs (such as salaries, rentals, and other expenses) will increase, prompting a need to reconsider cost structures through automation or outsourcing to remain competitive.

Additionally, determining transfer pricing between the Argentine subsidiary and other branches will raise new challenges, requiring close compliance attention as tax authorities might scrutinize pricing strategies under the new regime.

Operational repercussions

The uncertainty surrounding dollarization’s impact in Argentina may lead global companies to postpone investments until the dust settles, potentially stalling short-term economic growth and job creation.

Moreover, exchange rate fluctuations during the transition could disrupt supply chains, impacting the seamless flow of goods and services. To address this, building resilient supply chains that incorporate local sourcing alternatives to mitigate potential disruptions effectively becomes critical.

Impact on the competitive landscape

Dollarization could potentially level the playing field for global companies compared to local competitors, as currency risk would cease to be a distinguishing factor. This would likely heighten competition and market consolidation. In the medium to long term, a stable currency environment may attract a wave of investors, further intensifying competition for existing global firms.

However, this stability may also pose challenges for talent retention, as the stronger currency could inflate the cost of retaining skilled employees. To counter this, global companies will need to offer competitive compensation and robust career development opportunities to attract and retain top talent amid changing economic dynamics.

Impact on investors

For investors, dollarization presents a multifaceted landscape. On the one hand, it offers the potential for reduced uncertainty through a stable currency environment, mitigating exchange rate fluctuations and providing greater predictability for investments.

Additionally, dollarization may attract skilled expatriates, thus adding diverse perspectives and enhancing the talent pool. Moreover, if successful, dollarization could pave the way for potentially higher returns on investments in the long run, fuelled by economic growth spurred by the new currency regime.

However, investors must also be wary of these challenges that come with dollarization:

  • Firstly, an influx of foreign investors drawn by a stable currency could intensify competition in certain sectors, necessitating strategic adjustments and potentially impacting profitability
  • Secondly, Argentina’s economic fortunes would become inextricably linked to US monetary policy, introducing new risks and potentially limiting the government’s ability to respond to local economic needs
  • Finally, if not implemented carefully, dollarization could aggravate social tensions and inequality, impact overall stability, and create a less conducive investment environment

What lessons has history taught us?

Valuable insights can be gained by looking at Ecuador and Panama’s experiences with dollarization. While both countries adopted the measure to tackle economic instability, their experiences illustrate the differing potential outcomes of this complex policy.

Panama adopted the US dollar as its official currency in 1903, driven by political uncertainty and a desire for economic integration. Its dollarized economy has enjoyed remarkable stability and growth over the past century, albeit with ongoing challenges related to income inequality.

Ecuador adopted dollarization in 2000 following chronic inflation and currency devaluation. While it saw initial success in taming inflation and attracting investment, long-term challenges such as dependence on oil exports and income inequality persisted. Despite improved macroeconomic stability, Ecuador still struggles with high unemployment and poverty.

Other countries that have gone through dollarization include El Salvador, Zimbabwe, Cambodia, and Turks and Caicos.

The outlook for dollarization

In June 2023, the average monthly salary for a software developer in Argentina was about 500,000 pesos, as reported by the country’s software and computer services observatory. At that time, this salary translated to over US$2,000. However, by January 2024, the equivalent amount decreased to US$650 owing to the peso’s depreciation.

To counter this, some private firms in Argentina have been partially paying employee salaries in dollars to retain skilled talent. Companies such as Mercado Libre, Accenture, and Globant offer partial salaries in dollars as the peso crashes. Along with this, some businesses have started to accept payments in dollars. For example, GoDaddy has stopped accepting pesos and only accepts US dollars in payments. However, this is the exception, not the norm, and everyone doesn’t share the enthusiasm to dollarize.

Investment bank JP Morgan, among other economists, has cautioned that Argentina lacks the necessary prerequisites for implementing the plan, which requires a substantial foreign currency reserve and significantly higher savings rates.

While dollarization promises to be a silver bullet solution if executed effectively, its potential adoption in Argentina presents a complex scenario with inherent risks. Adopting dollarization would entail relinquishing Argentina’s control over its economic policies, representing a significant gamble with long-term implications. It’s crucial to recognize that dollarization is not a one-size-fits-all remedy and does not offer a comprehensive solution to Argentina’s economic challenges.

Stakeholders must carefully weigh the potential benefits and drawbacks to ensure they are well-positioned to thrive in the evolving economic landscape. Seeking expert guidance can help enterprises navigate this intricate landscape and make informed choices that align with individual strategic objectives and risk tolerance.

To learn more about key market dynamics and related opportunities in Argentina, read our latest report, Location Spotlight – Argentina.

To discuss the global services industry in Argentina, please contact Parul Jain ([email protected]) or Harshit Mittal ([email protected]).

Explore Everest Group Talent Genius™, the AI-powered insights platform to guide IT and BPS location and workforce decisions.

Locations and Workforce Strategy 2024: Insights, Trends, and Key Priorities | Webinar

On-Demand webinar

Locations and Workforce Strategy 2024: Insights, Trends, and Key Priorities

What crucial insights from last year can locations and workforce strategy leaders apply to 2024, and what will be the critical priorities this year and beyond?

In this webinar, our experts explored the anticipated trends shaping 2024’s workforce and locations strategies. We discussed the impact of geopolitical and macroeconomic changes on locations, as well as the potential future direction of shoring strategies.

Attendees gathered beneficial insights into strategic workforce decision-making for 2024 and ongoing, with a focus on methodologies for creating an optimized, balanced locations portfolio.

What questions did the webinar answer for the participants?

  • What are the key learnings from 2023 in the locations and workforce strategy space?
  • What are the top strategic priorities for locations and workforce strategy heads in 2024?
  • Which locations offer untapped talent potential?
  • How can locations and workforce strategy leadership leverage key trends for 2024 to achieve an optimal locations portfolio?

Who should attend?

  • Location strategy heads
  • Workforce strategy heads
  • Delivery heads
  • GBS strategy heads
  • Global sourcing heads
  • CHROs
  • HR heads
  • SVM teams
Jain Parul
Vice President
Everest Group
Kumar Sumit
Practice Director
Everest Group
Kumar Santhosh
Aniruddha edited

GBS: The New Epicenter for Driving Value and Transformation in Enterprise Finance Services | Virtual Roundtable

Virtual Roundtable

GBS: The New Epicenter for Driving Value and Transformation in Enterprise Finance Services

March 13, 2024 |
9:30 AM EDT | 7:00 PM IST

The GBS model has become a multifunctional platform with finance among the oldest of the capabilities established. However, our research shows that the overwhelming level of activity performed by both Finance Shared Services (FSS) and GBS organizations is transactional.

As companies increasingly hardwire the GBS model into the business, there is still vast potential to add more value. Finance in GBS can play a vital role in accelerating business growth and delivering greater insights across the enterprise.

Join this virtual roundtable, along with our expert analysts and industry thought leaders, for an engaging discussion on how FSS and GBS organizations can move up the value chain, drive innovation, and yield meaningful impact. We will also explore current challenges and prevailing opportunities for driving future success.

Participants will explore:

  • How FSS and GBS can move up the finance value chain, and what is the breadth and depth of the services portfolio?
  • What changes are required for GBS governance and operating models to enable growth?
  • How can enterprises leverage FSS or GBS to create more value in the finance organization and for CFOs?
  • Success stories from best-in-class peers

Who should attend? 

  • Finance leaders
  • Global business services leaders
  • GBS strategy leaders
  • GBS site leaders

 Virtual Roundtable Guidelines 

The only price of admission is participation. Attendees should be prepared to share their experiences and be willing to engage in discourse. 

Participation is limited to enterprise leaders (no service providers). Everest Group will approve each attendance request to ensure an appropriate group size and mix of participants. The sessions are 90 minutes in duration and include introductions, a short presentation, and a facilitated discussion. 

Agarwal Anish
Practice Director
Everest Group
Jain Parul
Vice President
Everest Group
Kumar Santhosh
Aniruddha edited

Egypt: A Safe Bet in the MEA Region in Unstable Times? | Blog

Given the current unrest in the Middle East and Africa (MEA) region, Egypt can potentially be a reliable choice for businesses seeking stability. Egypt’s support for US interests and its impartial stance in conflicts make it an appealing option for ally-shoring. To better understand the pros and cons of selecting Egypt for service delivery now, keep reading.

The MEA region is currently experiencing significant turmoil characterized by ongoing conflicts in Syria and Yemen, strained relations between Israel and Iran, and persistent tensions between Lebanon and Israel.

The Israel-Hamas conflict that began on October 7 has further intensified the regional instability, leading many global companies to temporarily close offices or implement remote work policies. For example, Bank of America closed its Tel Aviv office, while Citigroup and JP Morgan Chase instructed employees to work remotely.

The prevalence of gray swan events in the MEA region has noticeably risen and become more common, leading to the increased likelihood of unforeseen events. As a result, organizations need to find innovative solutions to maintain stable operations in the MEA’s complex geopolitical landscape.

Considering this challenging situation, a compelling hypothesis emerges: Egypt could be a viable alternative for organizations seeking stability. Owning to its neutral stance in the conflict, Egypt has remained stable with no reported service delivery disruptions or harassment of foreign nationals or tourists. To navigate this complex landscape, Egypt must balance its domestic politics – the geopolitical game of thrones – while pursuing economic growth.

From a global services perspective, Egypt offers several advantages. It has become a key player in the MEA region, attracting various organizations from diverse sectors. Egypt’s service delivery value proposition includes a large, educated, and multilingual workforce of approximately 250,000 full-time equivalents (FTEs), capable of supporting over 20 languages in both voice and non-voice business process services (BPS).

In the relatively less mature MEA region, Egypt stands out as a global services delivery hub, hosting global enterprises and providers offering diverse services, including customer experience management (CXM). Egypt is also expanding its services into IT and technology solutions, exemplified by Luxoft opening a center in New Cairo in the third quarter of 2023.

Additionally, Egypt can serve as a strategic satellite hub for companies seeking to diversify from potentially risky locations in the MEA region. This is primarily due to sharing the same time zone with Israel, which facilitates collaboration.

Moreover, Egypt is experiencing growing demand for BPO talent, surpassing other prominent offshore/nearshore locations, as illustrated below, which demonstrates its increasing delivery capabilities.


Learn more about Everest Group’s artificial intelligence (AI)-powered insights platform, Talent Genius.

The complications with Egypt

At the same time, Egypt possesses its share of economic and political challenges. The country has been confronting multiple macroeconomic obstacles as the economy recovers from the double whammy of reduced tourism due to COVID-19 (impacting a massive income source for the country) and the global uncertainties exacerbated by the Russia-Ukraine conflict.

In 2022, the Egyptian Pound lost approximately 50% of its value and remained one of the worst-performing currencies in the first half of 2023 due to a lack of foreign reserves. It is expected to further depreciate by the end of 2023, putting pressure on policymakers to devalue it even more.

Other economic indicators paint a grim picture, with urban consumer inflation reaching 38% in September 2023. Egypt’s high debt-to-GDP ratio led Moody’s to downgrade its government bonds to the substantial risk Caa1 bracket, seven rungs into junk territory in October. The International Monetary Fund (IMF) has imposed stringent terms for Egypt to address the economic crisis, including selling state assets and further currency devaluation.

This presents a challenge for Egyptian policymakers, as upcoming year-end elections may make currency devaluation and asset sales unpopular with the public, even though Abdel Fattah El-Sisi is predicted to secure a third term as president.

Ally-shoring – a prudent choice during uncertain times

Against the backdrop of these economic woes, global geopolitics have been marked by black swan events since 2020. These include the Hong Kong national security law, the COVID-19 pandemic, the Russia-Ukraine conflict, and the ongoing Israel-Hamas tensions in the MEA region.

This has made the already complex MEA region more challenging to navigate. Ongoing conflicts in countries like Syria and Yemen and the Israel-Hamas dispute further complicate matters. As a result, the much-anticipated Israel and Kingdom of Saudi Arabia peace deal is on hold, and the United States’ detente with Iran, particularly regarding oil supplies, faces threats that could impact the global economy.

In response to these uncertainties, organizations are turning to “ally-shoring” as a strategy. Ally-shoring involves establishing delivery centers in allied nations to build lasting relationships that protect both economic and national security interests. U.S. companies have increasingly embraced this approach, with Mexico in Latin America and Portugal and Spain in Europe becoming popular choices. The Ukraine conflict and trade tensions with China have partly contributed to this shift.

The situation could potentially result in a higher penetration of US-headquartered companies in Egypt in the near and medium term. Let’s explore the reasons for this possible trend:

  • First, a longstanding military alliance exists between the U.S. and Egypt, facilitating the smooth movement of US military assets via the Suez Canal
  • Second, shared concerns about Iran’s regional influence and its support for proxy terrorist groups contribute to this choice
  • Third, Egypt’s limited likelihood of actively participating in conflicts, given its struggling economy and dependence on Western economic aid, positions it as a stable option
  • Lastly, Egypt’s proactive efforts to attract companies, particularly in the IT sector, as part of its 2030 vision, have led to impressive growth, with a 16.7% increase in 2021/2022 and a 5% contribution to GDP, despite global economic challenges. These growth indicators are driven by digital infrastructure investments and improved business conditions, making Egypt attractive for companies looking to establish centers in the region

In the near future, Egypt’s business environment appears stable, although concerns persist related to its neutral stance in ongoing conflicts, potential refugee issues, and economic challenges. Nevertheless, the overall risk to business operations remains low. Pro-Palestine protests in Egyptian cities have been peaceful and have not disrupted daily activities. Egypt’s role as a mediator between the West and the Arab world through the Rafah border is noteworthy, but its likelihood of becoming a major player in conflicts remains low.

The outlook

Egypt’s alignment with US interests and its neutral stance in conflicts make it an attractive ally-shoring option. However, businesses should be mindful of Egypt’s economic challenges, including a depreciating currency and high inflation, exacerbated by political pressures due to upcoming elections. Despite these threats, Egypt offers a strategic advantage, supported by a growing global services sector and government initiatives for business development in these uncertain times.

Everest Group’s dedicated team of analysts tracks 30-plus cities in India and more than 300 cities globally from a global services perspective. If you have questions or would like to discuss global services destination topics, please reach out to [email protected] or [email protected].

Contact us to learn more about popular global services locations.


Positioning GCCs for Success: Drive Superior Value and Advance Business Impact | In-person Roundtable



September 29, 2023 |
10:00 AM IST - 12:30 PM IST

Global Capability Centers (GCCs) / Global Business Services (GBS) organizations are now key strategic partners for enterprises, driving business impact beyond cost savings and operational improvement. Yet, challenges remain in establishing ownership and accountability, reducing hand-offs with global counterparts, building business context, and delivering more value.

These softer aspects have become critical as GCCs strive to deliver superior value for the global enterprise.

Join this in-person roundtable discussion held at The Westin in Gurgaon, along with your peers and our expert analysts, to discuss the future vision for GCCs – from how they can deliver value beyond arbitrage to which enablers can position them for sustained success.

Participants will explore:

  • Methods for GCCs to elevate their impact from cost savings and operational improvements to strategic business outcomes
  • Key areas and enablers for future value creation
  • The current role of GCC leaders and the change in mindset required to enable their movement to global roles in the enterprise
  • Approaches to implementing innovative talent management practices and developing high-performance teams
  • Success stories from best-in-class peers

Who should attend? 

  • GBS heads
  • GCC/GBS strategy leaders
  • GCC site leaders

Roundtable Guidelines 

The only price of admission is participation. Attendees should be prepared to share their experiences and be willing to engage in discourse. 

Participation is limited to enterprise leaders (no service providers). Everest Group will approve each attendance request to ensure an appropriate group size and mix of participants. The sessions are 90 minutes in duration and include introductions, a short presentation, and a facilitated discussion. 

Anish Agarwal
Parul Jain

Masterclass in Managing Your Locations Portfolio and Workforce Strategies | Webinar


Masterclass in Managing Your Locations Portfolio and Workforce Strategies

Access the on-demand webinar, delivered live on August 17, 2023.

Is your location portfolio and workforce strategy primed to manage black swan events, persisting economic uncertainties, cost and price pressures, and the geopolitical changes of today’s business landscape?

Watch this webinar as Everest Group experts deliver approaches to secure maximum value from delivery location portfolios and offer exclusive insights into the best practices for managing location portfolios and workforce strategies.

Whether you hold the reins as a sourcing leader, a delivery head, or a workforce strategy executive, this engaging webinar will provide you with valuable insights and actionable advice to optimize your locations portfolio and maximize returns.

What questions will the on-demand webinar answer for the participants?

  • What are the hottest global sourcing locations trends of early 2023?
  • What are the different models for managing your locations portfolio?
  • What are the key challenges and best practices for optimizing locations portfolio and workforce strategy?
  • Which crucial aspects are often overlooked when managing locations and workforce strategy?
  • What is the ultimate checklist when evaluating a new location?
  • How can you proactively and programmatically gauge the health of your locations portfolio?

Who should attend?

  • Workforce strategy heads
  • Workforce planning heads
  • Location strategy heads
  • GBS strategy heads
  • Delivery heads
  • CHROs
  • HR heads
  • Sourcing and vendor management teams
  • Global sourcing heads
Garg Sakshi
Vice President
Jain Parul
Vice President
Kumar Sumit
Practice Director
Gunjan Mundra
Senior Analyst

How can we engage?

Please let us know how we can help you on your journey.

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