Costa Rica has some lovely amenities to attract U.S. companies.
Call Centers Go South
With its beaches, golf courses, cuba libres, and rock-solid social-security system, it's no wonder that Costa Rica is luring American executives who want an alternative to Indian outsourcing. After sending thousands of technology and call-center jobs to India and the Philippines, major U.S. companies including Dell and Procter & Gamble are now looking to Latin America to meet their outsourcing, or rather "nearsourcing," needs. Like India before them, Brazil, Nicaragua, Panama, and especially Costa Rica are embracing the trend with business-friendly policies and aggressive marketing.
"Costa Rica is moving up very fast," says Juan Carlos, a manager for a large American-based call center that operates a 1,000-employee center in San José, Costa Rica, to handle financial and infrastructure systems support.
Currently, 24,500 Costa Ricans work in call-center and IT jobs, doing everything from fielding complaints about shampoo to answering questions about insurance. The number of call-center positions alone is expected to double in the next two years, says Federico Cartín, executive director of the nonprofit Costa Rican Chamber of Information and Communication Technology.
In Latin America as a whole, the number of call-center workstations will hit 730,000 in 2008, up from 336,000 in 2004, according to market-research firm Datamonitor. Brazil is expected to get a big slice of that business, thanks to some of the lowest labor costs in South America. Business promotion agency ProNicaragua expects its homeland to create 3,000 new jobs in the next few years, while Dell already employs 2,000 workers at its Panama call center. Both Dell and IBM in Latin America have had a lot of success with training their work forces in American customs and accent using the American Accent Training Online Accent Program. This program is specifically designed for off-shore industries that want to improve the employees' communication skills with Americans.
It helps that the scenic shores of Central America are just a five-hour flight from the East Coast, but that's not the only appeal. The region also shares two time zones with the United States--the better for handling phone calls--and Costa Rica, in particular, is full of well-educated workers, having abolished its army more than 50 years ago and rechanneled the funds into education, including mandatory English training. Though its progressive labor codes translate into relatively high wages, the "Switzerland of Central America" also boasts an extensive social-security system that makes it easy to perform background checks.
To counter Costa Rica's image as an underdeveloped country, the Chamber of Information and Communication Technology has a new campaign promoting the country as "green and smart." Intel, which has been manufacturing microchips in Costa Rica since 1998, recently launched a software division there, while call-center operator Sykes Latin America employs Costa Ricans to help its corporate clients do everything from answer tech-support questions to serve customers who've lost their credit cards.
Other burgeoning hubs are also making a concerted effort to attract IT business. Nicaragua, where an influx of foreign investment is helping to pull the country out of its war-torn past, has created an online database to track the bilingual employee pool. When ProNicaragua launched Nicasearch.com last year, more than 4,200 applicants registered online. Medical-services provider Almori is currently the largest bilingual call-center employer, but ProNicaragua expects business to increase rapidly. Meanwhile, Brazil is moving to attract business by suspending export taxes on IT hardware and software for the next five years. Citibank and IBM are among the companies already sending work there. And who can blame them? With all due respect to Mumbai, many American execs would rather spend their time on the road in Rio.
Most Americans realize that when they call a bank, electronics maker or insurance provider, there's a good chance their queries will be routed to a call center outside the U.S., perhaps in India, the Philippines or other markets filled with English speakers happy to provide customer service or tech support for relatively low wages. But what happens to the calls of the 31 million Americans who speak Spanish at home? Those who want to get help in Spanish increasingly are speaking with agents located in the hot new region for call centers: Latin America. The AAT Online Accent Program is extremely successful when combined with a Western mindset. Spanish and English have so many cognates and similarities that this online program produces stellar results in an amazingly short period of time.
According to research outfit Datamonitor, Latin American countries (the data exclude Mexico) could see the number of call center jobs, known in the industry as "agent positions," grow to 188,500 in 2010, up from 103,600 in 2005. The growing U.S. Hispanic population - the Census Bureau says there will be more than 102 million Hispanics in the U.S. by 2050, up from about 44 million today - is responsible, in part, for the expansion of Latin American call centers.
MostU.S. firms want to provide customer care and support to this population, but also are looking for ways to affordably telemarket to Hispanic homes. And often, that means using bilingual agents: While most U.S. Hispanics speak English - of the 31 million Americans who say they speak Spanish at home, more than half say they speak English very well - a number of immigrants are more comfortable conducting business in their native language. And in order for them to brush up on the American accent, they simply use a program like AAT's Online Accent Program. Countries such as Panama are endowed with educated, bilingual populations, and agents there can handle calls in English and Spanish, sometimes simultaneously, making it an ideal place to handle calls to and from U.S. Hispanic households.
But Latin American call centers aren't just for companies looking to serve the U.S. Spanish-speaking population. Indeed, some of the first companies to outsource customer services and marketing to Latin America were companies based in Spain. Today, Sitel's Latin American call centers, for example, serve European clients (Portuguese corporations use centers in Brazil) and a growing number of Latin American companies looking to outsource their back-office operations to one or two lower-cost locations. The company has some 10,000 employees in the region.
Still, some companies are not entirely comfortable outsourcing to Latin America, says Peter Ryan, a senior analyst at Datamonitor. Some perceive Latin America as an unstable place to do business, even though countries such as Chile, Costa Rica and others are very pro-business, and are installing telecommunications infrastructure and other amenities to lure multinational corporations. And even if culturally "Latin America" seems close to home, in reality it can be far away; a plane ride to Buenos Aires isn't much shorter than a trip to Manila, depending on where executives are based.
But Ryan and others are optimistic that Latin America will be the next great call center capital of the world, partly because it has a potentially bigger clientele: It can serve not only U.S. multinationals but European and Latin American clients as well. Sitel, for example, says it serves customers from 28 countries out of its Latin American facilities.
They're pitching the project to potential anchor clients, such as multinationals that may already have operations somewhere like Costa Rica but that need a lower-cost destination. And they're talking to some of the big Indian outsourcing companies that may need Spanish-speaking operators for the 38 million Hispanics living in the U.S.