Austerity Measures Lead to Stability and IT/ BPO Growth For Jamaica

Jamaica’s BPO Sector appears to be gaining strength with strong signs indicating that the country is on track to recover from a serious financial crisis in 2013. That was when Jamaica’s debt reached almost 150% of the country’s GDP, despite a general recovery experienced in Jamaica’s primary export markets of North America and Europe. This translated into 55% of Jamaica’s national budget going towards debt service, when the country defaulted on roughly $9 billion in local government debt.

Jamaica called upon the IMF to structure a $2 billion rescue, on the condition that the country adhere to a strict fiscal and monetary regimen. Having successfully done that, the macroeconomic indicators are now pointing in the right direction. Two years ago, ratings agencies were warning of an abyss, but last month Fitch Ratings raised its outlook to positive, after Prime Minister Portia Simpson Miller’s government has made progress in restructuring the economy.

“In the World Bank’s Doing Business Ranking, Jamaica moved up 27 places, from 85 to 58 in the 2015 report; In the Logistics Performance Index, we jumped 54 places, from 124 in 2012 to 70 in 2014, and in the Global Competitiveness Index, we improved our position to 86 out of 144 countries in 2014, when compared to 94 out of 148 countries in 2013. For all this, at the end of 2014, Jamaica was declared the best country with which to do business in the Caribbean,” said the Hon. Anthony Hylton, minister of Industry, Investment, and Commerce, in opening remarks at the 2015 Jamaica Investment Forum last week. “It is also worth noting that our international credit ratings also moved positively in 2014: Standard and Poor revised Jamaica’s long-term sovereign outlook upwards to positive from stable, Fitch upgraded Jamaica’s long term foreign currency and local currency issuer default ratings to B- from CCC, and Moody’s upgraded the outlook on Jamaica’s government bond rating to Caa3, positive from stable.”

“We are on the path to stability, and now growth,” Diane Edwards, the President of JAMPRO, Jamaica’s investment promotion agency, told Nearshore Americas at last week’s forum. “We have passed seven IMF tests, and now we are in agreement with the IMF for an extended fund facility. That means a strict and harsh program of austerity, and the government has stuck to it. One of the brilliant things that they did was bring together a group called the Public Sector Partnership For Transformation, and that is bringing in the trade unions, employers, public sector, heads of private sector—everybody, to coalesce around this goal of ‘we have to stick to this program because this is the only way we are going to get fiscal sanity,’ and so everybody has stuck to the program. Getting the unions on board was absolutely brilliant because without the unions, without getting the workers involved, saying ‘ok we’ll moderate our wage demands,’ you wouldn’t have a deal.”

“On top of that, JAMPRO has been out there promoting: We go to Nearshore Nexus, we go to Gartner, we go to IAOP, and word has gotten out; we haven’t gotten to 17,000 people in the industry overnight, it has taken seven years,” adds Edwards. “There were pioneers who came in early on, like Xerox, and they are still the biggest. Vistaprint is probably the second biggest, and they started quite some time ago; I think they have been here six or seven years, and then it slowly grew from that. Others heard about it, so now you have Teleperformance, Hinduja, you’ve got Sutherland, other guys have come into the picture, and there are still a number of them that we are talking to.”

Sutherland Global is an example of the reinvigorated interest that BPO firms are demonstrating in Jamaica. Employing over 2,000 Jamaicans already, Sutherland is expanding beyond BPO (and tourism) hub Montego Bay, and its operations in Kingston, to open in the city of Mandeville, Manchester Province, in the island nation’s interior, roughly two hours away from Kingston.

“Sutherland Global is an outstanding example of the expansive growth now taking place in our ICT/BPO industry, the epicenter of which is located here in the city of Montego Bay. They are now expanding to Mandeville in Manchester. I commend the principal of Sutherland Global,” said Jamaica’s Prime Minister, the Hon. Portia Simpson Miller, at the investment forum. “Data shared by the Business Process Industry Association of Jamaica demonstrates that the ICT/BPO sector has had a major and positive impact on unemployment, especially youth unemployment. The sector currently employs more than 17,000 people, up from 12,000 in 2012. The sector has also improved on its earnings, moving from US $300 million (US) in 2012 to $500 million in 2015 – an increase of 66%.”

In addition, Vistaprint demonstrated their long term commitment to Jamaica by taking the unusual step of purchasing land and building their own larger, contact center facility to house their rapidly growing contact center operations that handles traffic from North America and Europe. In addition to customer contact, Jamaicans are doing graphic design work for Vistaprint’s global customers, and according to Jon Habeski, Vistaprint’s Global Senior Vice President of Service and Design, the Jamaican-designed graphics for Vistaprint’s products are the most popular with the customers.

Smaller operators continue to move into the island, as well. “With respect to the ICT/BPO sector, over the past five years we have seen considerable growth…Smaller operations, such as Global Gateway Solutions, Island Outsourcers and Accent Marketing also increased personnel, resulting in a total of 500 jobs being created within this niche,” said Minister Hylton, in his remarks.