Setting Up a Treasury Shared Service Centre in Latin America: Pros and Cons of Key Countries
Treasury Shared Service Centres (SSCs) are becoming increasingly popular for global corporations seeking to centralise their financial operations, optimise cash flow, and streamline processes. Latin America offers numerous attractive locations for SSCs, but each country has unique advantages and challenges. This article explores the pros and cons of key countries for SSCs in Latin America—Brazil, Mexico, Argentina, Chile, Costa Rica, Panama, and Uruguay—and includes a comparison table to help you decide the best fit for your operations.
Countries are fiercely competing to become the top destination for Treasury Shared Service Centers (SSCs).
While cost efficiency remains an important factor, companies must also evaluate other critical elements, such as talent availability, regulatory stability, infrastructure, and the ease of doing business, to determine the best fit for their operations.
Brief Country Analysis
BRAZIL
Brazil, the largest economy in Latin America, offers significant advantages for treasury and corporate finance operations. It boasts a mature banking and financial infrastructure and a skilled workforce with a growing pool of talent in finance and technology. The strong local market is ideal for supporting treasury functions in large-scale operations. However, Brazil’s challenges include its complex and frequently changing tax regulations, which can complicate compliance. Additionally, bureaucracy often slows down the operational setup process, and labour costs in Brazil are higher compared to other countries in the region, impacting the overall cost structure.
MEXICO
Mexico provides a strategic advantage due to its proximity to the United States, making it a hub for North American operations. The country has a large talent pool with financial expertise, bolstered by free trade agreements and a relatively stable financial infrastructure. On the downside, security concerns in certain regions may pose risks to businesses, and regulatory changes can sometimes bring unpredictability. Infrastructure limitations, especially in smaller cities, can also create challenges for operational expansion.
ARGENTINA
Argentina is known for its high levels of financial expertise, particularly in accounting and treasury, making it a cost-effective destination for skilled labour. However, the country has historically faced significant challenges such as currency instability and strict foreign exchange controls, which can complicate international transactions. Inflationary pressures further increase operational costs, and an unpredictable political climate adds to the risks of doing business in Argentina.
CHILE
Chile stands out for its stable political and economic environment, coupled with a well-developed financial and banking system. The country is recognized for low corruption levels and high ease of doing business, making it an attractive destination for corporate finance operations. However, Chile has a smaller talent pool compared to larger economies like Brazil or Mexico, and its higher operational costs may deter companies from seeking cost efficiencies.
COSTA RICA
Costa Rica is a well-known hub for shared services, with many multinational companies already operating SSCs in the country. It offers a skilled, bilingual workforce supported by a strong education system, alongside a stable political environment and a favourable business climate. On the downside, Costa Rica’s smaller domestic market limits opportunities for large-scale operations. Additionally, its labour costs are relatively high compared to other Central American countries, impacting cost competitiveness.
PANAMA
Panama offers excellent connectivity through the Panama Canal and Tocumen International Airport, alongside a dollarized economy that eliminates currency conversion risks. The country also provides tax incentives for multinational companies, making it a favourable destination for treasury operations. However, Panama’s labour pool for specialised financial roles is limited, and its reputation as a tax haven may raise concerns about corporate transparency.
URUGUAY
Uruguay is highly regarded for its political and economic stability, low corruption levels, and strong business regulations. The country has a high-quality workforce with robust financial expertise and advanced technological infrastructure. Despite these advantages, Uruguay’s smaller market and workforce size may limit its appeal for larger operations. Additionally, high labour and operational costs could pose challenges for companies focused on cost optimization.
This analysis highlights the unique strengths and challenges of each country, enabling businesses to make informed decisions about establishing treasury or corporate finance operations in Latin America.
Comparison Table: Key Factors
Recommendations
- For Large Operations: Brazil and Mexico are ideal for SSCs supporting high transaction volumes due to their large talent pools and strong local markets.
- For Stability: Chile, Costa Rica, and Uruguay stand out for their stable environments, ease of doing business, and skilled workforce.
- For Cost Efficiency: Argentina and Panama offer lower costs even though Argentina’s costs have increased significantly in 2024, but businesses must carefully navigate Argentina’s regulatory risks and Panama’s smaller talent pool.
Conclusions
Selecting the right country for your Treasury Shared Service Center in Latin America depends on your company’s specific needs, such as cost efficiency, market size, and operational stability. Use this guide and comparison table as a foundation to evaluate your options
Note : “Please note that while we strive to provide accurate and up-to-date information, we are not qualified tax advisers, and the content provided here should not be construed as professional tax advice. Tax laws and regulations are subject to change, and individual circumstances may vary. Therefore, it is recommended to consult with a certified tax professional or accountant for personalized guidance tailored to your specific situation. We do not accept any responsibility for the consequences of actions taken based on the information provided.”