Forget Perception Issues, Nearshore Must Focus on Central America’s Value

The summer of 2015 was not the most positive for certain Central American countries. One of the biggest stories emanating from the region was the recent resignation of Guatemala’s president Otto Pérez Molina following a wave of protests that centered on corruption concerns. For a country where transparency and improved investment climate have been hallmarks of attracting outsourcing investment, such events cannot have been helpful.

The fact that the first round of voting for Molina’s replacement was won by a local television comedian with no political or public administration experience will likely do little to assuage worried BPO investors.

It is clear that as the second round of voting, on October 25, gets nearer, the scrutiny on not just Guatemala’s political atmosphere, but that of the rest of countries in the region, will be intense as investors (on both the vendor and client sides) look for any hint of instability that could impact BPO delivery.

Equally, headlines associated with El Salvador in recent weeks have been less than positive for BPO investors. With gang violence escalating to what some news agencies have reported to be the highest since the country’s civil war in the 1980s (one estimate from the BBC was that over 900 had been killed in August alone), the solid base of both contact center outsourcers and clients that have made El Salvador their Latin American beachhead could become shaky; this is significant in that El Salvador had developed a strong reputation over the last 10 years as a delivery center with an improving public security atmosphere.

Despite the issues facing Guatemala and El Salvador, Ovum believes that all is not lost for Central America’s ongoing prospects for contact center nearshore delivery. In the case of Guatemala’s political upheaval, the precedent of Honduras’s post-presidential coup in 2009 is encouraging; not only has that country held multiple democratic elections since the removal of Manuel Zelaya in that year, its BPO sector has flourished during the same period due to the progressive policies of each subsequent administration.

For El Salvador, clients of outsourcers based in that country should be heartened by the contingencies that each vendor has in place to mitigate delivery disruption and to ensure personnel security.

However, there can be no doubt that in the case of Central America, outsourcers will need to get ahead of potential perception issues. In Ovum’s recently published 2015 CRM Outsourcing Business Trends Survey, a number of countries in that region were identified by enterprise contact center managers as among the most preferred of all offshoring options. The price points in Central America are extremely competitive, and agents in that region continue to show adeptness at multilingual, nonvoice delivery.

Thus, in order to ensure that Central America’s attractiveness is not eroded, vendors would be wise to proactively engage clients and prospects on the benefits of working within that region. Equally, maintaining a good strategy of diversifying delivery locations to complement Central America – such as Colombia and the Caribbean – would also be prudent for outsourcers.

Not only would this reassure clients, but should things deteriorate further in Central America, having contingencies in place where at least some call volumes can be moved makes good business sense.

Peter Ryan is a leading analyst with Ovum and contributes regularly to Nearshore Americas. This article is reprinted with permission of the author.