Breakdown: More than Just Dreaming of Caribbean 3.0

There’s something in the Caribbean air besides the smell of sand and sea breeze. The nearshoring trend in the Americas has given the whole region a chance to step up and diversify its credentials as a destination for foreign investment.

Challenges remain, of course, yet the dream lives on. Can the Caribbean make the jump and catch up to the developments taking place in the global services sector?

Dreaming on: “Caribbean 3.0” is a concept which envisions an evolution in the region’s bona fides as a spot for nearshore investment.

It sees the Caribbean as a place where foreign investors will be able to find a market-oriented, tech-ready ecosystem to satisfy their needs not only of BPO services, but of more sophisticated, digitally-enabled ones too. 

• “The concept of Caribbean 3.0 symbolizes the next evolution for the region, where the dream of becoming a premiere nearshoring destination for the US and Canada is not just a vision, but a rapidly emerging reality.,” explained Zia Paton, Partner and Digital Services Leader at PwC’s Caribbean chapter, while moderating a panel on the topic at Nexus 2024.

The numbers: It is estimated that around 200,000 people are employed in the Caribbean BPO sector. 

• “I think Barbados is on fire,” commented Lynda Arsenault, International FDI Consultant and Investment Executive at Invest Barbados, during her participation in Nexus’ Caribbean panel. “In the last 17 months I’ve had 35 calls with potential investors. I’ve also seen that in Jamaica, when working with Jampro. And I’ve had similar experiences in other Caribbean nations.” 
• “The Caribbean in general has such a strong value proposition: the availability advantage, location, cost competitiveness,” she added. “I think the awareness is on track, and they [Caribbean countries] are doing what’s right to get the word out globally.”

Times are changing: Most Caribbean countries are regarded by investors as either great spots for vacationing or as locations that are worth the risks –lacking infrastructure, exposure to extreme weather, inadequacy for scale, etc.– due to them being good for low cost/low value operations.  This notion seems to be changing, however.

• “Barrier of entry in most Caribbean countries was that they didn’t have the physical facilities to support a call center. If they did, it was tiny. Time changes,” stated David Kreiss, President and CEO of KM2 Solutions.
• “I think that when one looks at the physical constraints that one finds in these countries, you can get over them by developing and building,” he added.

A remote revolution: The shift towards remote work has allowed some Caribbean countries to wave away mortifications over the lack of office space for call centers and other BPO operations. 

• “Less than 5% of our team members do work with a security level that requires them to attend the office,” said Kishman Spence, Executive Director at KPMG Jamaica. “And 95% of our team members do hybrid work. Having explored 100% at home and 100% at the office, we think that hybrid work is the sweet spot.”
• “Today we have 420 physical work stations, and that’s going to support up to 1,200 employees. We have no desire for more real estate at this point,” he added.

Counter-revolution: While many see hybrid and remote work as trends that are here to stay, others within the BPO industry are noticing a return to traditional models due to client demand.  

• “Everybody is back in all the facilities. Most of that is being driven by my clients,” said David Kreiss. “Every time they have attrition here in the US, they keep adding resources to the pool of resources that we provide for them in the [nearshore] facility. That’s the trend we’ve seen so far, and I think that will continue. Hybrid work schedules will slowly change as time goes on.”

NSAM’s take: We’ve vouched for the Caribbean’s credentials as a destination for BPO investment. The region is often passed over in favor of better known locations either nearshore or offshore. That has allowed it to silently flourish, earning a predominant –or even central– place in the business strategies of a score of global investors.

We salute the region’s ambitions to improve its standing in global business. However, the challenges cannot be ignored. The Caribbean has still to catch up even to its nearshore cousin (Latin America) when it comes to tech readiness, ease of doing business, FDI performance and marketing itself to foreign investors. 

Like in Latin America, there are glaring disparities among countries in the Caribbean. Some like Jamaica, St. Lucia and Trinidad & Tobago have managed to emerge as strong players in the global services ecosystem. The rest, however, have much catching up to do. Infrastructure, education and business friendliness are but some of the aspects in which they have lagged behind.

Another challenge for the whole region has to do with scale. Most Caribbean nations are small islands with populations comparable to that of mid-sized cities. Some barely crack the 200,000 people mark. Even when investors are veering their approach towards quality instead of quantity, the capability for scale is still considered of prime importance for nearshore operations.

AI promises to undercut the scaling problem, at least in part. Technology that makes operations much more efficient will allow for quality service delivery with less volume. First, though, the Caribbean has to upskill its workforce and make it AI-ready. And even when it does, the technology threatens to bring a host of socio-economic problems to the region.

In short: the dream of Caribbean 3.0 is built on solid footing. However, governments in the region will have to put in a lot of work, and probably pool-in resources, in order to achieve it. If they do, it will change the fortunes of the communities that inhabit the region and add to the nearshore’s growing reputation.