NSAM EXCLUSIVE GUEST POST

By Peter Ryan, Lead Analyst – BPO and Contact Center Outsourcing & Services, OVUM

Since Fidel Castro’s relinquishment of power to his brother, Raul, many Nearshore outsourcing speculators have been wondering aloud whether Cuba could be the next big thing for contact center services into North America.

How valuable in the proximity of Havana to the US southern coast? ” width=”300″ height=”198″ />

How valuable in the proximity of Havana to the US southern coast?

Clearly, there are many interesting reasons why investors may shudder to imagine housing a customer care operation in that country. However, from an objective standpoint, it is worth considering why contact center players may wish to consider this location for delivery in the long-term, should a significant shift in economic and business ideology overtake Cuba, in a similar fashion to Central and Eastern Europe 20 years ago.

One of the most compelling reasons why an outsourcing player may take an interest in Cuba relates to the proportion of the population that works in services, which according the CIA WorldFactbook amounts to 61%, roughly the same as Mexico & Chile, and only somewhat smaller than Argentina.

However, the most intriguing thing about the Cuban services workforce is the growing proportion that works in international tourism. This has led many individuals to take on significant training by foreign hotel operators and tour companies in order to bring their service skills to western standards. Such a segment of the Cuban workforce would be an ideal pool to draw from when recruiting for nearshore delivery contact centers.

Familiarity Rules

Another obvious advantage that Cuba could play for a contact center in the long-term relates to niche destination-market positioning. Canadians flock to Cuba in droves each year, and Canada remains a significant trade partner for the island. This means that a large number of Cubans working in the tourism sector will already have some cultural and commercial familiarity with Canadian products, vernacular and lifestyles. Another market could be the US Hispanic market, based in Florida, where a great number of Cuban-Americans reside.

Agents based in Cuba would be an immediate advantage for US firms looking to court this end-user base, due to accent familiarity, similar use of Spanish. However, it is clear that tapping this US demographic would not be feasible until the current American embargo has been at least relaxed.

One of the most compelling reasons why an outsourcing player may take an interest in Cuba relates to the proportion of the population that works in services

A final advantage in Cuba’s favour is transparency. Among Latin American countries (which have historically fared poorly on corruption perceptions), Cuba ranks ahead of both Mexico and Argentina, two leading nearshore delivery locations.

Long Term Play

However, it is clear that at least for the time being a number of challenges are certain to make contact center players thing twice about investing in Cuba anytime soon. The first of which must be the customer service orientation among the broader Cuban public, which would need to be tapped long-term for agent recruitment.

Many wonder how decades of communism have impacted the average Cuban in terms of customer service orientation and the willingness to go the extra mile to get the job done for a caller. It is not to say that a customer-care mindset cannot be developed once the current regime leaves office, but certainly it could take some time.

A second issue is developing a liberalized economy. Currently, according to The Heritage Foundation’s economic freedom rankings, Cuba places only ahead of Zimbabwe and North Korea in terms of ease of doing business, and under present circumstances, it is tough to imagine that investors would want to risk significant amounts of capital on that country when many countries in Latin America fare particularly better in this regard.

A final issue that should be of concern is telco / Internet accessibility. While Cuba’s government has made some progress in improving the infrastructure of the wireline and wireless networks, it still lags other Latam locations. Plus, the significant limits that have been placed on Cubans in terms of internet usage are sure to be a short-term limitation on multichannel support contracts.

In summary, it is not unconscionable to imagine Cuba as a Nearshore outsourcing delivery site 10-15 years from now, should that country experience a change in political and economic approach. Two decades ago, the Berlin wall fell and within a few years, Central and Eastern Europe became some of the hottest nearshore delivery locations in the world, and remain known for quality and professionalism. However, for Cuba to emerge as a Nearshore delivery location of choice, significant philosophical changes will be necessary in terms of developing open democracy and a market economy, which are the precursors to high quality service delivery. Peter Ryan, based in Montreal, is Ovum’s Lead Analyst – BPO and Contact Center Outsourcing & Services

Note: We thank Peter for this special guest post.  The prospect of Cuba becoming a call center hub is a hot topic as moves are made to lift the US embargo and the Cuba government, painfully and slowly, adapts to the Internet Age.

Will Cuba come “online” as a true call center destination? Share your ideas and comments below.

Cuba: A report is floating around that over 60,000 well-trained IT professionals are standing by ready to take on BPO work in a country that is quickly shedding its pariah status. Anybody up for planning a BPO conference in Havana?

Honduras: Some savvy folks from this emerging nation are making a strong case for cooking up some deals based on available capacity and its strong English-language training. Country leaders  must continue to define their asset base and bring out the more differentiated characteristics of this promising nation. Searching for answers on this market? Gabriela Calix of Green Valley Industrial Park is a great resource.

Colombia: Wow, what an interesting upside. Over 45 million people and a very compelling combination of favorable factors including a far safer society than in years past,  new telecom infrastructure and tax incentives. Vladimir Ramirez and Pedro Quintanilla both of IGDC. Inc. are helping bring more recognition to the country and plans are underway for a 2010 IAOP chapter meeting in Colombia.

Nicaragua: What can you say about a country which has done a good job so far executing its BPO strategy? Sitel apparently still loves the country, having recently doubled its workforce to support (reportedly) Virgin Mobile.

Raul Castro, Cuba’s president, can bring Havana a bit closer to the US mainland if he signs off on offers to bring fiber optic and satellite telecom services to Cuba. As part of the easing of the US embargo on Cuba, the Obama administration is permitting telecom service providers to turn up service links with its Cuban neighbors. Whether Castro will permit landing rights and okay roaming agreements is not yet clear. About 11 percent of Cuba’s population has telephone service, and less than two percent are mobile subscribers.

The BBC is reporting on a Rare Project to Save Hemingway papers through a landmark joint effort between the Cuban and US governments. We applaud the effort to bury the political hatchet in favor of literally rescuing these literary treasures. Hemingway, who lived in Cuba for 21 years, represents not only a cultural bridge between the two nations but also was not distracted by political disagreement. Although the United States is a long way from normalizing relations with Cuba, we view this latest cooperative effort as hopeful and symbolic.

Cuba is less than 100 miles off the southern shores of Florida. Can you imagine the value both nations could provide in terms of cultural, industrial and educational exchange if the two countries moved toward deeper cooperation? My prediction: In less than 5 years this site will be reporting on a landmark partnership between a Cuban contact center and a client sponsor based in Canada or the United States. What’s your prediction?