Inside HP’s Big Bet on Costa Rica

Does Costa Rica’s gain become Argentina’s loss?

By Dennis Barker

Call it a vote of confidence in Costa Rica.

When HP last week announced details of its $1 billion plan to expand its offshore outsourcing services, the little country of 4 million was revealed as one of the company’s six new global delivery hubs. (The other “Best Shore” hubs are China, India, Malaysia, the Philippines, and Bulgaria.) As a result, Costa Rica will play a bigger role in HP’s Latin America operations and will also see an increase in the number of job opportunities.

So, why Costa Rica? We asked Jeff Womack, VP of Best Shore Enablement within HP’s Enterprise Services group, and the first thing he cited is “the increasing amount of client demand in the Americas for time-zone-approximate support.”

Womack also mentioned “the availability of skilled resources and the cost footprint, not just in immediate terms but as you look at labor-rate inflation and real estate expenses going forward” as reasons supporting the selection. He said that many of the factors were “not specific only to Costa Rica” but that combined with other things made it the best location for a Best Shore facility.

Those other things included “cultural affinity with local and national governments,” and the ability to tap into “additional capacity we have with other HP entities” in the country. “We have access to a large contingent of other HP employees,” he said, “and have a nice base of support from other services, such as Technology Services” to provide back-office functions.

Costa Rica also has a breadth of services that means HP can be more flexible in meeting client needs and put together multiple services in one location, Womack said. “In Costa Rica we support applications, BPO, and ITO, whereas other locations focus mainly on one aspect of that portfolio,” he said. Panama, for example, is “mainly an ITO facility.”

“The last point around selection criteria is proximity to high-growth markets,” Womack said.

Womack was quick to emphasize that expanding the hub operation in Costa Rica does not mean cutting back elsewhere in the Nearshore region. Those other countries will continue to play an important role in HP’s global model, he said, but it will often be a “more specialized role.” For example, Argentina has a lot of expertise in airlines and legacy applications, Womack noted — “deep expertise that you don’t just move or rebuild in another location.”

“This is not a consolidation play where we would start ramping down in Argentina and Panama, for example,” Womack said. “What it means is that a higher portion of our growth and new clients will grow into the hubs.”

The hubs will also be responsible for managing next-generation technologies like cloud-based services. Staff in Costa Rica, for example, will be in charge of remote-monitoring HP’s recently announced datacenter in Chile.

To accommodate that anticipated growth, HP will be scaling up and out in Costa Rica in two ways. “First is further development of our existing resources, involving investments in training and deeper experience to build capability,” Womack said. “The second is around more targeted hiring. If we needed to expand mainframe expertise, as one example, it is often more expedient to hire that into the team than to develop it internally. We balance both of these strategies.”

Speaking of Argentina, HP will be making an announcement regarding that country “within the next few weeks,” Womack added.