Nearshore Americas

Central America is Not Keeping Pace

Arledge Partners Real Estate Group The nearest of the Nearshore outsourcing markets are gaining plenty of global attention, but are they prepared to react and adjust to market demands?

According to Indrajit Basu in his article entitled Latin America Offers New IT Outsourcing Challenge states: “Although work has not started running away from India yet, over the last few quarters, few new businesses of inbound voice back-office processes are coming to India,” says Ramesh Kamath of Aditya Birla Minacs, an IT-services BPO company.

The main reason:  Latin America is getting fiercely competitive. “While Indian service providers are still conscious about margins, Latin American providers offer rates that are at least $3 to $4 cheaper than Indian voice process rates per hour,” says Kamath. “Consequently Latin America is not only emerging as more competitive in terms of cost, but many governments there are also reshaping their policies to encourage the back-office industry there,” says Kamath.

While there are now many reasons to consider LATAM offshore call center operations: stable economy; young and “semi” qualified labor force supply; neutral English agents and strategic location in the region; many countries are still hindered by high crime rates, illiteracy, low levels of education, and an inadequate capital market.

The Central and Latin American region usually comprises seven countries – Belize, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Panama.  In Guatemala, for example, English is NOT taught in the public school system. A student that wants to better his odds of locating a “white collar” job in a contact center (and is unable to afford a private school) will drop out and enter the workforce as soon as possible. Guatemala, as an example, has the lowest literacy rate in all of Central America.

Not Keeping Pace

Therefore, to support the current growth pace of the local contact centers requirement for a greater number of bilingual employees, the Guatemalan workforce must produce at least 1,000 bilingual workers per month. As of today, the country is well below that figure.  Without the cultural emphasis on speaking English at younger ages, it is likely that prospective employees, with sales skills to compliment their English, will be incredibly difficult to find.

For the company that wants to open a customer service center, LATAM can be an excellent option. However, for the company that needs inbound sales, many are realizing that certain LATAM countries may not be a great long-term market if they require agents with a strong sales focus, due to the lack of early English bilingual education and U.S. cultural affinity.

While these areas produce excellent agents in the area of customer service, culturally we are finding that they are not as adept at providing services that require a strong sales ability, largely due to a cultural reluctance to be perceived as aggressive or abrasive.

Another factor is that labor absentee rates at call centers can be as high as 50% during weekends.  Absenteeism generally occurs in those companies that have invested very little in the professional development of their own employees and sales demands an extremely high level of training.

Honduras is more difficult to assess because it depends on which companies locate there next and how much of an impact they will have on the workforce.

There has not been any consistent commitment in the industry toward choosing appropriate management personnel, and training those people and helping them develop as professionals in charge of customer care. The logical result of this omission is that employees lose motivation and become less committed to the company. As a result, absenteeism rises, as do employee turnover rates, leading to a service quality that is inadequate. It makes the ability to find even more motivated employees suitable for a sales position even harder to find.

Honduras Excels

Honduras, as an example, has an excellent education system, with its National Autonomous University of Honduras being one of the largest in Central America. There are around 80,000 students enrolled in some kind of university education in Honduras, so you’re graduating about 12,000 a year, with about 47% of the employable workforce between the ages of 20-34.

In spite of the lack of awareness about the outsourcing industry, Honduras’ 27.8% unemployment rate means that there is huge labor potential, at low wages. But quantity does not always equal quality. Honduras is more difficult to assess because it depends on which companies locate there next and how much of an impact they will have on the workforce. With more of a bilingual population than Guatemala, the possibilities are wide open. But without much help from the government, Honduras may begin to feel the same pressure in a few years. As things stand now, the perception is that Guatemala is on its way, while Honduras is still trying to find its way.


And for the Call Centers That Need Agents to “Sell”…

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If the industry wants to improve the quality of its service, it must invest in business intelligence, meaning call centers must hire qualified professionals; it must invest more in software; and it must redesign its business model. The countries who want to increase their offerings to include customer service and sales will need to recognize that English needs to be taught at a much earlier age to produce the necessary workforce numbers.
Susan G. Arledge, SIOR, is president and CEO of Arledge Partners Real Estate Group, located in Dallas, Texas.

Other Columns by Susan Arledge:

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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