The Caribbean nation of Saint Lucia has proven a profitable location and the source of excellent human talent for U.S.-based BPO firm KM2 Solutions. However, the island’s potential is limited by several significant constraints: the small size of its talent pool, the lack of large facilities suitable for use as contact centers, and the absence of investment incentives for service providers.
St. Lucia in Brief
An island of 238 square miles located in the eastern Caribbean, St. Lucia has a population of just 182,000, a labor force of 92,000 and an unemployment rate of 23%. English is the nation’s first language, although some people also speak French Creole. According to the CIA World Factbook, GDP per capita was US$13,100 in 2013. GDP real growth that year was 0.2%, an improvement from the -0.9% of 2012. Annual FDI inflow is approximately $113 million.
Although it fell five places to 100 in the World Bank’s 2015 Ease of Doing Business rankings, St. Lucia was praised for making “trading across borders easier by implementing the ASYCUDA World electronic system for the submission of export and import documents”. The World Bank also lauded St. Lucia for having “merged two forms in order to ease the filing of documents on exports.”
The World Bank notes that it is not difficult to set up a business in St. Lucia. There are only five procedures and it takes an average of just 15 days. However, there are certain areas where the nation needs to improve. It remains difficult to get credit and the nation is not highly rated when it comes to protecting minority investors. In case of contract disputes, enforcing contracts can be a long, complicated and expensive process that takes an average of 635 days, involves 46 procedures and ends up costing 37.3% of the value of the claim (mostly through attorney fees).
The Outsourcing Industry
Earland Labadie, Senior Investment Services Officer at Invest Saint Lucia, told Nearshore Americas that “the availability of cheap labor, good infrastructure and the legal environment in which you operate” are the main advantages for outsourcers in St. Lucia. “There’s not as much red tape as in some other countries in the region,” he explained.
As of 2011, there were 1,200 people working in the national ICT sector, according to Invest Saint Lucia. The investment promotion agency states that “ICT development is essential for the emergence of Saint Lucia into the knowledge society. The ICT sector has the potential to actively contribute to human development, social inclusion and economic development. Saint Lucia’s ICT sector offers compelling investment opportunities in Voice and Call Center Operations, Business Process Outsourcing (BPO), and Knowledge Process Outsourcing (KPO) operations. The sector’s growth is supported by a skilled workforce and advanced telecommunications infrastructure.”
KM2 Solutions, which opened its first ever call center in St. Lucia in 2004, is the largest BPO provider on the island. KM2 has served clients such as AOL, Santander and auto-finance company American Credit Acceptance from its center in Castries, the capital and largest city on the island, where it is currently at full capacity with 450 staff.
Sandals also has a call center to provide support for all of its Caribbean resorts, while U.S.-headquartered call center provider Ark TeleServices Ltd. has a facility with a capacity for 300 agents in the Bisee Industrial Estate just north of the capital. Ark Teleservices’ clients include the Saint Lucia Tourist Board, on behalf of whom it provides prospective visitors from North America with toll-free information about the island.
The Talent Pool
David Kreiss, President & CEO of KM2 Solutions, told Nearshore Americas that St. Lucia’s biggest advantage is that it has “a great workforce. The agents are absolutely terrific.” When KM2 started serving AOL it was competing against eight other vendors, but Kreiss noted that because of the quality of staff that his company had found in St. Lucia, “we actually came out number one. We outperformed everybody in quality.”
Kreiss also emphasized the fact that the locals speak English with a different accent to natives of Jamaica or Barbados, who some find difficult to understand. “There’s a French accent to the English here. It’s a very nice accent,” Kreiss said.
“With the talent here we’ve been able to do a long-term job for some clients. We’ve had Santander for seven years now,” he added. “We don’t have very much attrition at all. I’d say it’s 25 percent annually.” However, Kreiss noted, “The challenge is that it’s a small island with a small population compared to somewhere like Jamaica. We’re at full capacity and I don’t believe the talent pool can handle another U.S. call center. Most U.S. call centers stay away from St. Lucia because of that.”
As for operational costs, Kreiss said that “The electric costs are higher than in other Caribbean countries. It seems that the whole country has not experienced the reduction in cost of gasoline that other countries have … Overall, the costs are comparable to Jamaica and probably a little bit lower than Barbados.”
Regarding connectivity, Kreiss added: “The big challenge we’re going to have in the future is seeing what happens with Cable & Wireless and Columbus. We always need two providers at the center for redundancy purposes and Cable & Wireless is looking to acquire Columbus and if that goes through then all of the circuits now belong to Cable & Wireless and we won’t have two vendors anymore. That’s a concern.”
But for Kreiss the two drawbacks of operating in St. Lucia are the paucity of suitable sites for contact center operations and the lack of financial support from the government in return for investment.
Invest Saint Lucia, which facilities investor site visits and helps identify sites for potential business development, says it “manages seven industrial estates which house 26 factory shells in industrial parks strategically located throughout the island’s economic hubs. This allows us to provide the best rates for leasing property and factory spaces thus making business set-up easier.”
Labadie added that, “We do have sites, depending on the capacity. We have factory shells that range from anywhere from 5,000 square feet to as much as 50,000 square feet, but these are just open spaces that you would have to retailer to meet the needs of the call center.”
Yet Kreiss is not impressed by the available options. “There is a very big barrier of entry for anybody wanting to come to St. Lucia: there are no facilities. There’s just no big building that you could really turn into a call center facility,” he said. “We’re trying to scour, we’re going into 2015 and we’ve got three clients here that want to continue to grow and expand, and we’re just about to go full capacity. So either we introduce them to another one of our facilities outside of St. Lucia or we find somewhere here where we can extend ourselves – maybe a smaller site, that’s a possibility – but there really aren’t any facilities and the country doesn’t have the money to be able to support the BPO sector. That’s the biggest issue.”
No Incentives For Outsourcers
Furthermore, Kreiss added, “As far as the government is concerned, there are no more tax-free zones for call centers. They really haven’t been very active in assisting us in continuing to expand – unlike Barbados for example. Barbados has given us training dollars, investment dollars. They’ve moved us into larger buildings and done a lot to help us continue to grow.”
The St. Lucia government “does not seem to have a large BPO investment incentive to do business in St. Lucia,” Kreiss said. KM2 rents its facilities from the government but “they didn’t give us any money for training or rebuilding the center so we’ve been doing it ourselves, without any help, because we’ve got a solid base here.”
The Government of St. Lucia does offer a range of tax and non-tax incentives to the manufacturing sector under the Fiscal Incentives Act, while business from some other sectors are eligible for incentives under the Special Development Areas Act, but neither act is applicable for ITO and BPO firms. “There are no incentives for service-orientated businesses,” Labadie confirmed.