Why is Alorica So Bullish About Honduras’ Prospects in 2015?

Since opening a delivery center in Honduras last year, U.S. BPO firm Alorica has seen an increase in client interest in the Central American nation and expects to experience significant growth there in 2015.

Headquartered in Irvine, California, Alorica has over 40 locations and nearly 20,000 associates worldwide. In Latin America this includes 600 seats in Sao Paulo, Brazil and 1,800 seats at its two centers in Santo Domingo, Dominican Republic.

Thursday’s announcement that Alorica is acquiring Omaha-based West Corporation’s agent services businesses – including 1,500 employees in Jamaica and Mexico – for US$275 million, illustrates the company’s growing interest in Latin America and the Caribbean. That news followed the launch of Alorica’s latest Latin American site in the Altia Business Park in San Pedro Sula, Honduras on April 28, 2014.

“We opened with a project for one of our primary customers and over time we’ve added a couple of other projects,” Site Director Mark Montgomery told Nearshore Americas. “Currently we’ve got just under 100 personnel at the site, with the intention to ramp up to around 400 people by August and hopefully we’ll be close to capacity, which is just under 600, by the end of the year.”

The agents are providing billing services, customer care, sales and upselling – primarily in English but at times in Spanish – to entertainment and telecommunications firms in the United States.

“The majority of the customers that are coming to us and looking for services out of Honduras are primarily Fortune 500 companies in the business-to-consumer area,” said Chief Sales and Marketing Officer Chris Crowley. “They’re primarily companies that are in the retail, communications or technology vertical markets and they’re looking for either customer care or technical support services. They want bilingual support services: English support for their U.S. customers and Spanish for the components of their companies that operate in Latin America.

Why San Pedro Sula?

“When we are looking at our geo-presence worldwide there are five key categories that are important to us: skills; languages; cultural affinity; opportunities to make sure that we’re not just an also-ran; and lastly, charter alignment – meaning safety, security, continuity, productivity and aesthetics,” said Scott Wilson, SVP of Shared Services.

The Altia business park in San Pedro Sula passed the test in each category, he explained: “In San Pedro Sula we found people with strong communication skills. There’s a service orientation that exists in this part of Honduras and so we felt very good about the embedded skills that are there. Additionally there is a high potential learning orientation with Unitec – which is right there at the business park – and seven other universities within a very small radius. Seventy percent of the workers in San Pedro Sula are in this 20 to 26-year-old age demographic and have some college education – they’re currently at university or they’ve completed a university education – so there’s this ability for us to grab their skills.”

As for languages, Wilson noted, “We’ve found English to be in very strong abundance in San Pedro Sula. There are about 45,000 bilingual English speakers just in the area.” Tom Silzell, Alorica’s SVP Business Development, added, “The one thing that is different about Honduras in general is that they… really understand that in order for there to be a long-term benefit for their country itself they’ve got to create a sustainable workforce. So they’re investing heavily with the government in English as the primary language and they’ve actually got 250,000 people that will be fluent in English within the next 18 months.”

With regard to cultural affinity, Wilson said, “There are about 40 other U.S. companies that have been doing business in the area for a long time so there’s an awareness of our culture.” And as for ensuring that Alorica is not an also-ran in another saturated market, he noted that “There are some other players in the market near San Pedro Sula. We’re the third major player in the business park, but we’re really using those early movers as a foundation for our learning and we think there’s an opportunity for us to be something distinctive in the market.”

Getting Prospective Clients Onboard

Prior to bringing prospective clients to the site, Silzell said, “We work with them in prepping them for the market itself and we do things like sending them call recordings so they can listen to the accent. They spend a lot of time understanding the various strengths of the market and why they want to be there.”

Alorica then invites them to visit its facilities. “Our approach to site visitors is actually more of a natural approach,” Silzell continued. “We want them to spend time on the floor, we want them to spend time talking to agents and supervisors and managers. Although we do prepare the site for the visit, we don’t typically prepare the agents, aside from giving them basic information about the clients. We want it to be a very natural environment so we do things like focus groups and we set up dates with local government and local universities.”

An important aspect of any site visit is introducing potential clients to the teams that would be running their operations, Silzell added. “We spent a lot of time acclimating them to the people that are going to do the work for them. So a full day in the center is about what you need to evaluate it. We try to put the management team that’s going to manage the program in front of them, so they get a sense for who they would work with on a daily basis,” he said. “That’s the same approach that we take with all of our visits, whether it’s a domestic U.S. site, a nearshore market or an offshore market, the idea being to give (prospective clients) a sense for the people themselves. Each market is different and each management team has different strengths and weaknesses, but we want clients to feel good about the market that they’re in and the management team that will be supporting them.”

Is San Pedro Sula Safe?

As is often the case in Latin America, Alorica have also had to assure clients that there are no serious security issues that threaten their operations in Honduras. The international media has frequently cited San Pedro Sula as the world’s most violent city in recent years, but the Alorica team believes the truth has been distorted and that the city’s reputation is unwarranted. “The data actually shows that there are a lot of Latin American markets out there that are much higher than Honduras in terms of murder rates and burglaries,” Wilson noted, citing the latest figures from a December 2014 report by United States Agency for International Development.

“In two years on the ground now in Honduras I’ve not experienced any issue. I feel perfectly comfortable here and I’ve had lots of conversations with other site directors and nobody’s had an issue with any clients coming down or any guests in the city,” Montgomery added. “It might not be the world’s most dangerous city but it could have some of the world’s most dangerous neighborhoods. Thankfully, we’re not anywhere near those neighborhoods, which are on the outskirts of the city much like those you would have in any large city in the United States. If you look at the current statistical data available and the population of the city, the numbers are just slightly higher than you might find in Detroit, Michigan.”

Local Growth Prospects

“We expect that we will continue to grow in Honduras and San Pedro Sula. Once we reach capacity of give-or-take 600 seats there’s another tower that will be opening up in the park that we will have access to should we choose to expand there. So we would consider continuing growth in San Pedro Sula,” Wilson said. “The capital Tegucigalpa also offers the opportunity for growth, although it’s not a primary location for us because as a capital city it’s a much more government-centric environment. But Grupo Karim’s is also in the process opening a park in Tegucigalpa and because of the success that they’ve had in developing the park in San Pedro Sula, and the vision that they have around it, I think Tegucigalpa could also be an option for us as we look to expand.”

Silzell also emphasized the great work Grupo Karim’s has done at the Altia business park: “I looked at this park in around 2010 and it was just an idea and I remember hearing the pitch that ‘We’re building this big park with a university, a hotel, a mall, restaurants, living units and office buildings,’ but I think many of us have seen other instances in LATAM when people have these great ideas and they put up a shell but it’s still a shell five years later. So I was extremely impressed to see how this has come along and all of the work that they have done for the park. It’s really been a distinguishing factor for us in San Pedro Sula.”

Alorica’s Global Strategy

Since opening the center last year, Alorica has found that interest has been strong. “Our clients have started talking to us about Honduras much more so than they have in previous years. Just over the last 60 to 120 days there has been an increase in inquiries about Honduras as (clients) look at the global footprint that they want their partners to have as they go into 2015,” Chief Sales and Marketing Officer Chris Crowley said. Given Honduras’ proximity to the United States and competitive costs, it’s become a strong alternative not only to other nearshore destinations, but also to offshore stalwarts such as the Philippines. “There is a growing sense among a lot of our clients and prospects of over-subscription to the Philippines. Honduras provides one of those lower cost, high-quality options that is certainly easier to get to,” Crowley added. “So it’s not only a competitive alternative to other Latin American countries but in some cases it’s also attractive for customers that are looking to diversify outside of the Philippines. That’s why we’ve seen an increase in client and prospect interest and why we’re so bullish about it going into 2015.”

Beyond its facilities in Honduras, Brazil and the Dominican Republic, Alorica is looking to expand further into Latin America and the Caribbean. “We’re looking at Trinidad, Guyana and Jamaica and it’ll continue to be an interesting market for us,” Wilson said. “I’ve spent time in the region and I see LATAM generally as a very strong growth market for a couple of reasons. Firstly, because the level of sophistication of the business environment continues to improve. You’ve got some very strong free trade structures across the region and it’s become very attractive for U.S. companies to open up operations there. Secondarily, the entire region in the next couple of years will probably surpass a population of one billion. So you’ll also see opportunities for even inter-region growth if the company should decide to expand operations and support services within each of those countries. We’re already doing this in our Sao Paulo site, where we’re supporting Brazil from that location. So there are tremendous growth opportunities in the region.”