Honduras BPO Stays the Course Despite Political Instability

The more I talk to those connected to the Honduras outsourcing sector, the more I flagggggrealize that – frankly – the country might just be a lot better off if former President Manuel Zelaya never comes back to the capital of Tegucigalpa. Even US Secretary of State Hillary Clinton says an attempt by Zelaya to return to Honduras would be “reckless” and would damage attempts for constitutional order.

No hard feeling Mel, but if you and the rest of the political leadership want to truly serve your country then walk away from the righteous arguments and let stability – and commercial growth and opportunity – prevail.

Of course, the political situation in Honduras is not that simple. But what is encouraging is that despite the past several weeks of negotiations and high-level wrangling, the country’s emerging BPO industry is holding itself together nicely.

First, it is critically important to note that the cooler heads in such situations are often business people and investors who see well beyond the political rhetoric, knowing that this too shall pass. Companies preparing to establish or expand operations in Honduras include the giant food and agricultural corporation Cargill, the globally renowned marketing and ad agency McCann Ericsson, and Netsol, a global provider of  business services with branches around the world.  This encouraging news was relayed to me by Ruben Sorto, Corporate Marketing and New Projects Director at Grupo Karims, which is establishing several world-class office centers, including the Altia Business Park project near San Pedro Sula. (Check out the virtual tour here.) “The project is right on track and within the scheduled program,” says Sorto. “We will finish the first tower by December and we expect to have everything up and running in the first quarter of 2010.”Sorto says that his firm has rented about 70% of the first tower (14 floors, each floor with 11,000 sq. feet) to corporate tenants.  

Ruben Sorto, left, of Grupo Karims joins Carolina Pascua (far right)  from FIDE (the Honduran Investment Agency) and an unidentified executive during a recent meeting in Honduras.

Ruben Sorto, left, of Grupo Karims joins Carolina Pascua (far right) from FIDE (the Honduran Investment Agency) and an unidentified executive during a recent meeting in Honduras.

Honduran-based business leaders are continuing to come out publicly in support of Zelaya’s ouster: “We’re here to support the brave actions of the new government, said Santiago Ruiz, president of the Agriculture Association of Honduras.

While some might argue that Zelaya’s strength was in promoting Honduras as a public relations pitch man, the reality is – upon reflection – that he appeared to quite keen to establish his own home made brand of continuismo, where he would defy the constitution and hold on to power as long as possible.

As we’ve said in this blog before, Honduras has a great upside in terms of outsourced services. We just hope that same sense of patience and focus that helps create sound businesses begins to form the foundational approach of the national government level.


Is the skills shortage getting more serious in Costa Rica?

222222prosCosta Rica has been blessed with assets that virtually any country in the world would envy: stable government, twenty-some different micro-climates, low unemployment and an educated class that knows how to get the job done.

Yet, there are persistent questions about a saturation point in Costa Rica, where all the best labor is soaked up – especially in technical fields. For a country of just 4.1 million people, there is an impressive list of foreign companies with operations in Costa Rica. Oracle, HP, Intel and Cisco all have offices in Costa Rica and there are countless software development firms providing services to clients all over the world.

According a study just released by Manpower, nearly half of Costa Rica firms cannot meet their needs for skilled labor, particulary in technical fields. The  survey found Peru (56%) and Mexico (44%), are also having a tough time.  On the other hand,  employers in the U.S. (19%), Guatemala (20%) and Canada (24%) reported the least problems.

On my recent visit to Costa Rica – for the June Services Summit sponsored by promotion agencies CAMTIC and PROCOMER – it was clear companies are adapting to the skilled labor challenges by looking beyond borders throughout South and Central America to funnel business to other providers. This is an encouraging trend as the regionalization of service relationships is another shot in the arm to help drive BPO activites – and economies –  in such places as Colombia, Panama and Nicargua.

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?

Colombia Shows Signs of Becoming a Major Outsourcing Hub; Officials Condemn “Risky” Label

By Karina E. Cuevas

Bogota employs over 30,000 people in the contact center industry

Bogota employs over 30,000 people in the contact center industry

Plenty of heads shook with dismay across Latin America, and particularly in Colombia, when Bogota was labeled as the riskiest outsourcing destination in the world for 2009, according to publishers of the Black Book on Outsourcing.

Lots of rankings come out annually about outsourcing providers, specialty areas, regions and cities – but this particular announcement seemed to be so at odds with reality that it triggered a slew of condemnations across the Internet and raised serious questions about the methods used by authors Scott Wilson and Doug Brown. (For further opinion, see Nearshore Americas’ reaction here.)

Modern City on the Rise

A city that generates over $250 million annually in the call center/outsourcing industry can hardly be called a dangerous investment option.  “It [Bogota] has a big and modern economy with over 500,000 college students, a major international airport and the advantage of moving more cargo in Latin America [than any other country],” says Vladimir Ramirez, Managing Director of International Development Group, a management consulting firm with operations in Colombia, New York and Chicago.  “It was number one in foreign investments last year (in LATAM) making it the first port of entry in Latin America and having both Colombian and international Spanish call centers located in Bogota.”

With facts like these, it’s hard to believe the negative comments on Bogota, but Black Book of Outsourcing doesn’t stop there. It places Bogota under the radar as a dirty and polluted city with an immature legal system.  When contact about the report, authors Scott Wilson and Doug Brown did not respond to questions.

“Many people know very little about Latin America and nothing about Colombia, so I don’t know if those people have ever been here or where they get their data,” says Ramirez. “Colombia, within its political context, has never had a coup d’état, it has only entered in a recession once at the end of the last century and from a public order point of view it is no more corrupt than India, Indonesia and other countries in Latin America.”

Teleaccion: Training Plays a Key Role

Colombia counts on the expertise of a consulting and training company, unique to Latin America, called Teleaccion.

  • It’s a 21-employee institution specialized in improving technology and BPO management within the country and nine other nations around Latin America.
  • It has focused on three primary countries of growth for the call center market, including Colombia, Peru and Venezuela.
  • “We have trained around 23,000 people within 157 contact centers in Latin America,” says Patricia Alzate, General Manager of Teleaccion. “We work for Latin American reality, not for American or European cultures. Our method is a practical and simple one that has showed great results.”

According to Ramirez, Colombia is a market waiting to be discovered by the international community.  Currently there are around 120,000 employees within the call center industry.  The largest call centers are located in Bogota which employs around 30,000 people. The country, with seven distinct regions, offers over 12 cities in which to base a company.  In five years, the call center/outsourcing industry is expected to generate $2.5 billion in revenue for the country.
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Opinion: Harsh Criticism of Bogota is Out of Line

The hit on Bogota as the “Riskiest Place on Earth for Outsourcing” is a huge reminder of the vast amount of ignorance that exists both within the outsourcing industry and beyond about doing business in Latin America. I personally contacted “Black Book” author Scott Wilson two weeks ago to pursue details on his research methods and he initially was responsive. Continue reading

Q/A Capgemini’s Steve Rudderham: The Nearshore Splashes into a New Era

I met Steve Rudderham in Guatemala City a few months ago at the IAOP chapter meeting and was immediately struck by his vision for driving higher performing outsourcing relationships and how Nearshore providers have a huge opportunity to capture a bigger share of the global exported services marketplace. We recently checked in with Steve who just recently joined Capgemini as vice president of  client engagement for the Americas. In the interview we talk about critical issues facing the sector including Life Beyond Call Centers, Governments’ Role in Driving BPO activities, the Key Advantages of the Nearshore Customer Relationship, Safety and Risk issues, Building an Active Community of Nearshore Professionals and Capgemini’s Leadership Role in the Region.

Question: Steve, at the recent IAOP Central America meeting in Guatemala you called on Central America outsourcing service providers to think more about higher value services and that “there is more to life than call centers.” What risk do these providers face and where should they be headed?

Steve Rudderham recently left his position at Genpact and is now a vice president at Capgemini's Latin American operations.

Steve Rudderham recently left his position at Genpact and is now a vice president at Capgemini's Americas operations.

I wanted to encourage local providers to look beyond the capabilities of Call Centers – that is what India, Europe and now China have done well. It becomes an iterative process where people see career growth in a company beyond answering the telephone, and stay with that provider, and in turn that allows the providers to demonstrate a stable workforce which then allows them to market more services, and hence more career growth for individuals and the community. Without these value added services, the outsourcing economy for a particular will quickly flatten out in terms of growth and development.

Capgemini Latin America vitals:

Total employees in Latin America  – Approximately 1,000

Locations: Guatemala, Santiago, Buenos Aires, Sao Paulo (San Salvador and Xela)

Services: F&A – O2C, R2R, P2P, Customer Care & Intelligence

Languages: Spanish, English and Portuguese

Question: In looking beyond call centers, what higher-value services can Nearshore services providers move toward and what human capital capabilities will they require?
There has been an increase in demand within the F&A Services sector for Nearshore alternatives – particularly in Accounts Payable and Accounts receivable processes. Once the clients are comfortable with these processes staying Nearshore, it opens up the opportunity for more complex work like General Accounting, General Ledger and FP&A work, so long as the country can support this demand with the resources. Supply Chain and procurement is another growing vertical that Latin America countries should look to take advantage.

Question: Tell us about your new role at Capgemini.

I have recently moved from Business Leader of Genpact’s Latin America operations to Capgemini as a Vice President for Client Engagement in the Americas. In this role, I will be leading the engagement for several key clients in the Americas and ensuring that service delivery is exceeding customer expectations.  I am looking forward to the challenge and excited about working within Capgemini as they expand their Americas footprint.

Question: What has the economic crisis done to impact the way Capgemini supports US clients seeking support in Nearshore markets?
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Poll: Will the ouster of Zelaya hurt the growing BPO industry of Honduras… What’s your opinion?