Nearshore Americas

As Costa Rica Sizzles, Investment Agency Stresses Focus on Managing Growth

There is little disputing one central fact about Costa Rica’s outsourcing industry: it is on fire and it has been on fire consistently for the last several years. For some countries, such a development is entirely positive news, but for Costa Rica, such success has to be managed carefully. “We are really hot right now, due to our growth and our sophistication,” says Gabriela Llobet, Director General of CINDE, the privately funded investment promotion agency for Costa Rica, during a recent interview.

The Costa Rica brand is on an unprecedented winning streak, seeming to score new business virtually every week. Since late July, several global brands have announced plans to add positions in Costa Rica, including Syniverse, Akamai, CSS and Aegis. Further, there is another swath of lesser known global organizations, including those focused on mobile technologies and high-end banking and financial research, that Nearshore Americas has learned about that have intentions to expand in Costa Rica in the next few months.

Costa Rica is a hot destination not just for traditional Nearshoring, but for shared services, internal support and Latin America-focused customer services. We sought an interview with CINDE in part because the country has come under criticism from some BPO operators who claim that there is a virtual war on skilled talent, primarily in the San Jose – Heredia corridor, where giants such as HP, IBM, Amazon and Infosys vie for professionals along with dozens of smaller, locally-focused services operators.

“Costa Rica is more than 30 percent expensive than other countries there. We left  because it appeared almost impossible to hire skilled English speaking agents” said Salvador Salazar, a vice president at Stream Global Services, which opted to open a center in San Pedro Sula, Honduras in the last year. Salazar was interviewed by Nearshore Americas in April.

Not for Everyone

Llobet, at attorney who at one time was corporate affairs manager for Intel, is quick to stress that Costa Rica is not a destination for all players. “If we are talking about the lower end of the spectrum of the market, then perhaps there might be other options [rather than Costa Rica]”. Llobet points out the lower end of the market is very ‘sensitive’ to labor pressure. “We are definitely targing other types of niches,” she says.

The popularity of Costa Rica is not difficult to understand. Its strength is derived from a combination of factors including proximity (multiple direct flights from North American cities including a direct Newark International to San Jose flight that is just over five hours), well-crafted image as a safe and advanced destination for North America business and leisure travelers, and an extremely strong track record of success in global technology, going back over 15 years when Intel selected Costa Rica for a major chip-making operation.

As added benefit to the Costa Rica package is the performance of CINDE itself, which is considered one of the highest performing and most consistent investment agencies in the world. In short, Costa Rica has a very strong track record – and the manifestation of this long-planned ascent in global services is that more and more providers want in.

In a post about Costa Rica a few months ago, Everest Practice Director Anurag Srivastava looked favorably on the market conditions of Costa Rica, arguing that the country is exhibiting classic signs of maturation and he further predicted that wages will stabilize in the coming 18 months in the call center/ BPO sector, adding: “It will increasingly be leveraged for up-the-value-chain, more complex work, not just in business processes such as F&A, but also in areas including knowledge processes, IT, and creative media. This will be driven primarily by a maturing talent market, synergies with customer service work, and efforts by companies to optimize facility costs.”

The pursuit of niche-focused, more specialized services providers is certainly not new for Costa Rica, which for several years now has been cautious in guiding the expansion of global services – which accounts for nearly 6% of the domestic GDP. Llobet cited several examples of firms that have established operations in Costa Rica in recent years and have decided to pursue expansion based on positive experiences. Among those she cited were Amazon, McKinsey and Company and Procter and Gamble.

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As a possible way to alleviate stress on labor, there is increasing discussion among global providers in Costa Rica to import talent. Llobet makes clear that immigration policies are quite liberal in Costa Rica. “There is no restriction as to these companies bringing people from abroad. Once the company decides to do this the government will grant a temporary residency,” she says.

Many believe that one of CINDE’s core strengths is the fact that it is privately funded, and therefore able to avoid interference from political entities which so often can interrupt or complicate the execution of longer-term investment strategies. For CINDE, today’s successes are actually a reflection of strategies put in place years ago.



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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