The Caribbean has a unique opportunity to attract global services investment migrating from the Asia-pacific region due to the Covid-19 crisis. The region also possesses a stunning amount of upside, but getting to that higher plateau will require coordination, vision and perhaps most of all, courage.
“There is no question that the pandemic put a great deal of pressure on the Asia pacific outsourcing services sector,” said Kirk Laughlin, Founder and Managing Director of Nearshore Americas. “Particularly in the Philippines and to a lesser degree India.”
Speaking on the ICT Pulse podcast recently with Michele Marius, Laughlin said some of the dust had settled in the Philippines but that many challenges to the system remain. As a result, both clients and service providers are contemplating further de-risking from the region. “There’s no question, the net benefactor of that analysis has been the Americas,” he said.
Laughlin also stressed that organizations based in the US may not have fully grasped the tremendous value of the Nearshore market in the Caribbean, where workers live in similar time zones, have a highly motivated workforce, and have a closeness and familiarity that is the envy of many rival destinations.
Laughlin also highlighted areas that need more attention to strengthen the outsourcing industry in the Caribbean.
1. Opportunity Beyond Traditional Call Centers
Laughlin said there were many more business opportunities to pursue in the Caribbean’s outsourcing industry, beyond the traditional call center model. “I have concerns about putting all of the focus in that direction,” he said.
According to Laughlin, the call center model continues to be perceived “as low hanging fruit,” and trade promotion agencies in the region are heavily concentrated on that sector. However, he said there were other areas that needed to be looked at more seriously, especially in the direction of digital services.
“I really am encouraged when I see startups in the Caribbean, creating themselves in what we would consider to be a digitally-focused direction”
2. Lack of Deep Market Research
While the Caribbean has the potential to offer massive value to investors, Laughlin said that communicating that value would require more than a few social media campaigns or short-lived lead generation initiatives. “The successful countries in this space take it much more seriously in terms of real market analysis, applying some rigor to understand the direction of the space and getting really deep into the weeds,” Laughlin said.
Part of the challenge for the Caribbean is the lack of regional integration. Laughlin said closer collaboration was needed to demonstrate potential to investors. That includes more rigorous research and data.
“We get approached by investors about certain markets, or certain opportunities in the Caribbean region,” Laughlin said. “I would love to be able to point them to a robust market research report or something truly exhaustive that uncovers some of the really valuable assets of the Caribbean, but there’s very little of that.”
3. The Need to Embrace Digital Entrepreneurs
In recent years, Caribbean thought leaders like Mia Mottely of Barbados, Andrew Holness of Jamaica, Dr. Irfaan Ali of Guyana and Dr. Keith Rowley of Trinidad and Tobago have highlighted the need for technological innovation. A key part of that message also needs to demonstrate the strong, consistent backing of entrepreneurs.
“I really am encouraged when I see startups in the Caribbean, creating themselves in what we would consider to be a digitally-focused direction,” Laughlin said.
He added that non-governmental organizations were crucial to the region. The Inter-American Development Bank (IDB) recently launched the PIVOT movement, where entrepreneurs are given the opportunity to develop an innovative idea.
However, Laughlin stressed that there was not enough time spent building bridges between nations. “Countries get very busy internally, and they have their internal conversations, internal dialogues, endless meetings that are all in isolation,” Laughlin said. “They are not spending enough time getting the perspective from outside their own country or outside their own region.”
4. Fintech: A Logical Fit
Given the financial technology revolution around the world and the Caribbean’s strength in the financial sector, Laughlin said fintech was a logical fit for the region. “This is part of a really exciting transformation of the way banking and finance is handled and interacting with consumers,” Laughlin said.
Trinidad and Tobago’s International Financial Center has recently launched initiatives to strengthen the use of data analytics in the country. Deloitte has also asserted that financial analytics can bring fresh insights to give companies a strategic and competitive edge.
The eastern Caribbean has also embraced this movement since it was credited as the first in the region to issue a digital currency using blockchain technology. Laughlin said there were approximately 12,000 fintech startups globally and many of those organizations have unique needs across the spectrum of services, ranging from digital software to development technology requirements.
Laughlin said Covid-19 has redefined shared services and many industries must now confront the prospect of digital transformation.
5. Take Note of the Risks
Despite the many opportunities, Laughlin also asserted that there were risks to consider with regard to the Americas. “Is the work-from-home concept a sustainable practice for a longer period?” Laughlin asked, before highlighting the challenges of remote work for the region. “Most notably of course, the stability of the internet, fixed-line infrastructure – the accommodations that are necessary at home to support that long-term approach.”
Earlier this month, a power outage in Curaçao impacted the internet in Trinidad and Tobago, causing connectivity issues across the country. These situations pose major risks to the migration of workflow to the Americas, Laughlin admitted.
Additionally, Laughlin said the business cycle in the US also impacts the Nearshore industry, since a downturn triggers a decline in spending.
6. At Least 50,000 Positions Migrating to the Americas
Despite these reservations, Laughlin projected a strong future for the outsourcing industry in the Caribbean. “We’re projecting at least 50,000, probably far more, but at minimum 50,000 positions moving from the Philippines to the Americas by the end of next year,” he said.
Laughlin said there was tremendous value in the outsourcing model, and it would be critical for businesses that want to adapt quickly and enhance growth. “We see a really, really strong upside for the foreseeable future,” he said.