According to the UN’s World Economic Situation and Prospects (WESP) 2021 report, Latin America and the Caribbean experienced a devastating contraction of 8% for 2020 and is expected to face moderate growth of 3.8 per cent for 2021. “The recovery will likely remain fragile and uneven, with outlook risks tilted towards the downside,” the organization noted.
In light of these economic challenges, the region’s BPO industry could add tremendous value from a macro and micro-economic level.
The disruption of the Philippines’ outsourcing market as a result of the Covid-19 crisis has given Caribbean islands a unique opportunity to offer competitive Nearshore services. However, many Caribbean nations have different approaches to the sector in 2021 – some are based on the country’s capacity and others, on the short-term ability of the BPO sector to boost the domestic economy.
Interviews with various industry executives in the Cayman Islands, Dominica, Antigua and Barbuda and Grenada have revealed that these Caribbean islands are all implementing different strategies to encourage growth in the Nearshore sector.
The Role of the Private Sector
Gene Thompson, director of Thompson Development Ltd based in the Cayman Islands, told Nearshore Americas that the Caymans’ government has enabled strategies to allow the private sector to engage with the most lucrative market opportunities – particularly within the technology space.
While not speaking on behalf of the government, Thompson said: “What government strategy is, is to change whatever legislation, whatever enabling that needs to be done to allow the private companies to make this happen.”
Given the example of technology, Thompson said that many other countries would want the control and promotion of the industry to fall within the remit of the government. Within the Cayman Islands, the government enables the private sector through companies like TechCayman and Cayman Enterprise City, he said. These businesses act as portals through which businesses can establish operations on the island.
Meanwhile, Junia Nibbs, economic development coordinator of the Antigua and Barbuda Investment Authority, told Nearshore Americas that the country tends to be reactive rather than proactive when it comes to investment promotion strategy.
“It’s not deliberate, it’s just the lack of financing,” Nibbs said, adding that the country’s focus tends to be on other issues such as investment facilitation and enterprise development, which requires less financial output.
Whereas both Ronald Theodore, CEO at Grenada Investment Development Corporation (GIDC) and Rhoda Joseph, executive director at Invest Dominica Authority, have contended that the strategies destinations use to attract attention post Covid-19 must be reworked and updated.
Why Caribbean Islands Are Different
Joseph argued that Dominica is known as “nature island” throughout the Caribbean and brand awareness around this unique factor would make the island distinct from others. “We’re really going to be placing a premium on high value niche areas,” she said.
According to Joseph, since Dominica has a small population, it doesn’t want to attract investments that don’t fit culturally.
Theodore noted that Grenada is one of the safest and most picturesque islands in the Caribbean. “Based on the sector you’re promoting, there are different attributes that we can use to sell the island,” he noted.
Furthermore, Nibbs said that Antigua and Barbuda had always positioned itself within the Organization of Eastern Caribbean States (OECS) as the leader in attracting overseas investments. He said that this is because of “our nearness to the United States, which is what we’re focusing on; the similarity in language and culture, and we have very good air connectivity.”
Nibbs noted that the country also has reasonably good telecommunications infrastructure and great quality of life, like Grenada.
Thompson also suggested that the Cayman Islands could become a unique tech hub. Although the Covid-19 protocols have hindered travel and the ability to market the destination as such through conferences and networking, many companies have discovered the island through word of mouth.
Misperceptions and Misconceptions
Thompson also contended that there are two or three misperceptions about the Cayman Islands. The number one misconception is that the island is expensive. “We’ve proven that we are expensive if you stay on Seven Mile Beach,” Thompson said. However, the island operates on a cost basis similar to US states like North Carolina, Charlotte or Austin, Texas, the serial entrepreneur said.
According to Thompson, the second misconception about the Cayman Islands is that it is a tax haven. “We’re not a tax haven, we’re a heavily regulated tax neutral jurisdiction,” he said, adding that some people think the island is too good to be true. In the Cayman Islands there is no corporate, income, sales or capital gains taxes.
As it pertains to misperceptions concerning Antigua and Barbuda, Nibbs said many believe the island is not cost competitive since labor and energy costs tend to be a bit higher on the island compared to regional neighbors. However, he said the scales are balanced by the generous concessions that are offered on prospective investing companies by the government.
While Joseph dispelled the notion of the difficulty of accessing Dominica (since the island does not have an international airport), Theodore noted that Grenada – like other Caribbean destinations – suffers from the perception that the region is about “fun and sun”. According to Theodore, the Caribbean has to show that it is about business and investments as well.
Nearshore Investment Compared to the Rest
While the Cayman Islands, Dominica and Grenada have described the BPO sector as ranking high on its agenda as an investment stimulator, Antigua and Barbuda does not share the same sentiment in the short to medium term.
Nibbs said that in Antigua and Barbuda’s recent draft report of economic activity, the BPO sector was not identified as one of the major sectors that would be an area of focus for the next 12 months.
“In spite of the various strategies having been employed, there has been absolutely no growth in that sector for the last five years” he said. “And that’s after the boom we had in the mid-2000’s in the online gaming industry, as well as financial services.”
While all these islands have indicated that education and the introduction of information technology to the curriculum plays a major role in developing a robust local talent pool to be accessed by companies that want to set up Nearshore operations – this is one of the greatest challenges for the Cayman Islands.
“We import all of our talent,” Thompson said. However, while developing local talent is difficult in the Cayman Islands, Thompson said the private sector’s agreement with the government does not make it difficult to import the talent that is needed.