Invest in Guatemala takes a huge cut in staff

Invest in Guatemala (IIG), the economic development agency based in Guatemala guatmapCity, recently lost 12 of 15 staff members in a sweeping layoff that has many in the local outsourcing industry wondering: What is the government thinking?

The agency is a key catalyst in promoting the BPO/outsourcing sector in Guatemala, and also helps attract investment into other industries such as agriculture, tourism, energy and manufacturing.

The news is a big shock to many who have come to recognize the Guatemala government as having an enlightened approach to attracting foreign investment.  IIG staff are charged with facilitating discussions between local service providers in the BPO sector and foreign clients. Most of the clients are from the US, and those formative relationships – cultivated by IIG – are built oftentimes on trust and continuity.

There is nothing more alarming for an foreign investor to learn about sudden shifts in strategy. We will try to find out more about the issues that triggered this sudden change – but will also invite readers to offer their own opinions.

The Guatemala economy is not enduring the same pain as some neighboring countries – which makes the cut even harder to understand. Just announced figures from the United Nations Latin American and Caribbean Economic Commission indicate the Guatemala economy will shrink by just 1% in 2009.  (Costa Rica, by comparision is enduring a 3% decline).  The overall Latin American region will slow by 1.7%, with Mexico facing a sizable 7% contraction.

The region is expected to get back on a growth track in 2010 – with economies expanding by 3% next year on average.

How much will the losses at IIG impact the outlook for the local BPO economy?

CAD and graphic design a specialty for emerging Guatemala Firm

Mario Espana is the managing director of CADIS, a Guatemala City-based services firm.

Mario Espana is the managing director of CADIS, a Guatemala City-based services firm.

Nearshore services involving product development, R and D and project support are definitely on the rise. While there remain concerns that the Nearshore region – especially Central America – risks being limited to call center and customer support services, we continue to see important signs of growth in value-added business support operations which – in our view – must define the next phase  of expansion for the Nearshore community.
Mario Espana is the managing director of CADIS, a Guatemala City-based operation providing graphic design for sales materials, CAD design for architectural projects, web design and other services. Espana views human capital as one of the primary attractions of the Guatemala services sector. In an interview with the Examiner (an online news journal), Espana points to the emergence of a qualified and eager workforce as a key reason why CADIS located here.
He points out:

  • Guatemala has the largest population in Central America, of which more than 50% of the people are under the age of 25.
  • There is a strong trajectory of outsourcing companies in different industries: from apparel to call centers to back office services.
  • Guatemala also has the largest college student population in the region, and both government and private sector are investing in new industry oriented training facilities and programs.
  • A new $10 million IT training facility has recently opened, which was established to house call center and BPO incubators, CAD and web design labs, and – in partnership with Studio C – a state of the art 3D animation studio.

The Guatemala Story: Will Big Tech and ITO Define the Next Wave?

During last week’s  IAOP Central America conference, I had the unique pleasure to spend some time with Ingrid Jacobs, a high energy and enthusiastic champion of near shore outsourcing in Guatemala. She is a senior advisor in the government-supported Invest in Guatemala agency.

Ingrid Jacobs is a senior advisor at Invest in Guatemala

Ingrid Jacobs is a senior advisor at Invest in Guatemala

Ingrid played a major role in driving the success of the  conference  – pulling together logistics, orchestrating sponsors and driving registration – all in a span of about six weeks.

Ingrid reports that:

  • The number of BPO employee in Guatemala has roughly doubled in the last 6 months, rising to 12,000 FTEs.
  • The government is increasingly focused on bi-lingual education, both in near term and long term.
  • Attracting firms seeking support for ITO functions is becoming a major initiative for Guatemala.

No doubt Guatemala’s leadership sees the advantages of ITO and KPO partnerships — higher service and value delivery to clients, the creation of more vertically-oriented career paths and the potential to become a hub of ICT support throughout the region.

Word is that both IBM and HP have existing near shore operations in Guatemala City.* (see note below)

Another great contact at Invest in Guatemala is Luisa Ybarra. Both Luisa and Ingrid are exceptionally helpful and can answer many of the important questions firms might have about setting up ops in Guatemala. The English-version of the Invest in Guatemala website can be found here.

Editorial Note: We will continue to work with captive outsourcing companies, BPO providers and national investment agencies to shed light on the real impact near shore outsourcing is having in producing greater value to client  organizations. Our intention is not to expose companies not interested in getting exposure – rather it is our belief that near shore outsourcing carries with it a wide range of positive impacts: from creating social and economic stability in near shore nations to spurring goodwill and friendships across borders to providing powerful innovative tools to sponsoring clients.  Continue to send leads and ideas to me: kirk@nextcoastmedia.com Thanks!

IAOP: As India Wanes, Does Central America Become a New BPO Hub?

I kept hearing it throughout the IAOP Central America chapter meeting this week in Guatemala City:

India is reaching a BPO and KPO saturation point. Companies want more options but they want the same kind of process discipline that originally put India on the map. Is Central America ready to fill those big shoes?

qqqqqqqqqqqqqqqqqqqqqqqqqqqLori Blackman, president of DNL Global and a key behind the scenes organizer of the event, made a great point when she insisted the greater Latin America region has to take a close look at itself and decide what it can do better than anyone else. As a result, I kept asking my new provider friends: What makes you different? Beyond building call center operations, what’s the long term value play for your operation? Lori says it’s the natural ability to sell and smoothly engage with people which makes for promising opportunities.

I agree – but to be honest – industry leaders are definitely not there yet in terms of saying “our most precious resource are agents who have a natural proclivity to sell, or upsell.” Mario Lopez, a director with Transactel, pointed out that the region has to walk before it runs.

As far as filling the shoes of India, it’s safe to say that Central America has some room to grow. Standards of organizational process (a theme hit hard by former BP global CIO Don Althoff of British Petroleum which I will blog separately about), where companies and nations get on the Six Sigma and ITIL bandwagon, is not exactly a competency most regional providers are touting.

The “good news” as Stephan Manning, an Offshoring Research Associate from Duke University, pointed out during his presentation: Latin America is rising to become a top destination for call center business, in part because of Spanish language strengths. Demand for administrative support and BPO work, as well as product development (a theme we heard about repeatedly) are all up.

The flipside: There is a nasty race to the bottom in the price-is-everything world of call center sourcing. Commoditization is a very real concern and Manning – as well as others – stressed that providers need to take serious steps toward building a roadmap to higher value, and higher margin services, like KPO. My belief is KPO capabilities will begin to show up more and more and it will be introduced by the major, global players already beginning to build a beachhead in the region. The upside is huge – as long as providers commit to playing for the long haul.

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