Contact Centers in a Young Democracy
1 Nov, 2005
By: Rhonda ProctorIn this edition of Profile, we interviewed Juan Carlos Pereira, co-founder and executive director of ProNicaragua (www.pronicaragua.org), a public-private institution that supports foreign investors seeking offshore opportunities in Nicaragua. Pereira is an international thought leader whose ideas and opinions have been published in The Washington Times, Financial Times, La Prensa, LatinoLA, Journal of Commerce, Apparel Magazine and American Shipper, among others.
We were fortunate enough to catch up with him to better understand the story about Nicaragua’s burgeoning young democracy and their emergence on the contact center outsourcing scene.
CP: Please give us a snapshot view of ProNicaragua’s mission.
JCP: We’re dedicated to attracting foreign direct investment to Nicaragua. Our mission as a public-private agency is to provide companies seeking nearshore opportunities in Nicaragua with assistance in investment efforts, cost data, referrals, government contacts and workforce development. Nicaragua is an ideal location for bilingual nearshore contact center and BPO operations, and we are proud to promote the development of this key industry for our country.
CP: Outsourcing has been criticized in the United States in recent years. How has your organization been addressing that criticism?
JCP: In a competitive global economy, companies must cut costs but still maintain high levels of service. Given this reality, either automation will increase or offshoring some functions [will happen]. Doing nothing is simply not an option. In fact, the outsourcing phenomenon is not much different from technological innovations that eliminate low-end, repetitive tasks. And, by outsourcing these tasks, the savings can be put toward growth in other areas that will serve as the impetus for new jobs and careers in research, technology, training, etc.
CP: So you’ve seen an upsurge in the outsourcing business in recent years?
JCP: In the last few years, we have seen a huge amount of growth in outsourcing in the nearshore area, which includes Central America. Companies like Dell, Sykes, Sitel, Teleperformance, IBM, P&G, Western Union and others have been growing steadily in our region. Many of them are now operating in multiple countries in Central America.
Since the ratification of CAFTA (Central American Free Trade Agreement), we are seeing new companies constantly coming down to evaluate potential outsourcing opportunities. Very successful have been companies that provide back-office services to U.S. health clinics by supporting collections, appointment reminders, help desk and tech support. We don’t see any end to it, and as long as we can maintain a large enough supply of bilingual, college-educated people ready to work in the industry, we will continue to grow at a strong pace.
CP: What are some of the unique advantages of a contact center presence in Nicaragua?
JCP: No longer the Nicaragua associated with the Iran-Contra hearings, we are the safest country in Central America, with a stable 15-year-old democracy, a rapidly growing economy and competitive markets open to foreign investment. The country is still very poor, but our people are eager for opportunity, and our workers are increasingly recognized as among the most productive in the nearshore area.
Paradoxically, the turmoil of the 1980s has now become one of our great selling points for the call center industry: Over 400,000 of our people who fled the conflicts of the 1980s moved to the U.S. and Canada. Many, including myself, have now returned to the country well-educated and speaking beautiful English. Unsurprisingly, they have also developed a strong cultural affinity with the U.S.
Our English language registry, which we call Nicaserach.com, provides new contact centers access to a database of over 4,000 people who have been pre-screened for their English skills. We are also working to develop an English language scholarship program to upgrade the English skills of 7,500 of our 90,000-plus students currently enrolled in local universities. Our goal is to develop aggressive training programs that will supply the skilled personnel the industry needs for its future growth.
We are only 2½ hours by air from the southern U.S. and work in the CST time zone. We have the right infrastructure in place, with redundant fiber optic networks (access to Arcos, Maya and Emergia cable systems) and Class A buildings available that meet the needs of any world-class call center operation.
Nicaragua offers an extremely competitive cost structure, with a typical call center operator making $300 to $400 per month. The government also offers extremely generous tax incentives—100% tax exemption, in fact—to contact center and BPO operations. Companies can set up anywhere in our national territory and obtain those tax incentives as long as they are providing services to customers outside our borders and meet the basic requirements as established in our Free Zone Law.
CP: What are some of the pitfalls of a contact center presence in Nicaragua (real and perceived)? What has your organization done to overcome these pitfalls, and what best practices have evolved as a result of some of the challenges you have encountered?
JCP: Since our country is one of the “new kids on the block” in the contact center/BPO industry, we didn’t offer a lot of options for companies looking to “test drive” the country without having to make a significant capital investment in renting a building, equipment, servers, backup systems, etc.
In order to allow top companies to try out Nicaragua without having to commit to large up-front investment, the government of President Enrique Bolaños, through the National Free Zone Corporation, decided to build a world-class “incubator” facility to house a 500-seat call center. The facility, designed and implemented with the help of U.S.-based industry experts, will be outfitted with all of the equipment and systems required by any world-class contact center. The core infrastructure of the incubator is based on the latest “best of breed” technologies offered by Avaya, Cisco, IBM, Liebert Systems and Caterpillar. Redundancy N+1 is found at all levels. The center can be customized to meet the needs of any major call center/BPO operation and is designed so that a provider can be ready to operate in 4 to 6 weeks or less. It will be ready to go at the end of the year.
CP: Are most of the centers concentrated in a particular metro area or widely dispersed throughout the country?
JCP: All of our centers are currently located in the capital city of Managua; however, there are opportunities in areas such as the English-speaking Atlantic Coast of Nicaragua that are being explored due to the abundance of bilingual staff.
CP: You have a couple of clients that have very unique successes. Can you share their stories with us?
JCP: Certainly. Almori is a center that currently supports 25 healthcare clinics in the U.S. They provide a wide range of services including insurance claims processing, accounting and financial management services, prescription management and reminder services so that patients don’t miss their appointments. One-and-a-half years ago, they began with a staff of 20 people, and today they employ over 80 including programmers, customer service reps and accountants, all of whom are fully bilingual.
Call Center Nicaragua (CCN) is a joint venture between local businessmen and a U.S.-based collection agency. CCN provides collections services for top U.S. telecommunications and financial services companies. They began operations in late July and today employ 70 bilingual agents.
Both CCN and Almori have been extremely pleased with their experience in Nicaragua and have plans to double their staff in the next 12 months. The move to Nicaragua has allowed Almori to save as much as 70 percent on its operating costs compared to its previous U.S. operation. CCN has also achieved significant savings for their U.S. customer without sacrificing productivity.
CP: I’m sure you’ve encountered opponents of outsourcing, who believe that it takes jobs away from the U.S. worker. Is there a perspective you can share that helps assuage their fears?
JCP: Outsourcing, in different forms, has been happening for hundreds of years. To cite a simple example: when the tractor was invented, farmers suddenly needed fewer people to till their fields and work on their land. This improved yields and productivity per acre of land, which lowered relative prices and allowed consumers to buy more food with less money. Some of the workers who used to work the fields before the tractor came along now had to find another job. Many of them probably went to work in the manufacturing plants that produced the tractors, where they likely received better salaries than they did as simple farm hands.
Did anybody complain back then that manual farm jobs were being “stolen” or “outsourced” by the new tractor technology? Probably not. The outsourcing phenomenon is not much different. If we force companies to stop certain jobs offshore, they will find technology-intensive solutions to minimize the labor required to carry out certain tasks. Either way, the jobs will disappear. The key is to retrain workers and help them find jobs that are not easily outsourced.
