It’s on the minds of virtually every buyer who has long-term visions of outsourcing to Latin America – will there be enough qualified people to go around? This is acutely true when we consider the contact center industry, for which it takes years to build English competency.
Two rising powers in Central America outsourcing – Guatemala and Honduras – are faced with exactly that scenario. As more providers arrive, pressure for qualified and bilingual workers is increasing. Which begs the question: What is being done to anticipate that demand, and will it be enough? Get the answers here.
A country of over 13 million people with 70% below the age of 30, Guatemala has one of the youngest labor pools in the region. But the perception is that it’s a labor pool which soon may not meet the standard of enough qualified workers. Everyone from the government to the universities to the country’s investment promo agency is aware that decisive steps need to be taken if Guatemala is to maintain its strong status as an emerging location.
With ten universities (the most in Latin America), and 170,000 students currently enrolled, it’s hard to see how “not enough qualified workers” can be the issue. But the call center industry is concerned about English proficiency, and that’s where Guatemala doesn’t deliver. According to consulting firm Neo Advisory, only 11% of the college population has the technical and English training to perform BPO shared services. “The demand for bilingual services will not be fully met by the current capacity in Guatemala City”, says Ken Carosella, Executive Vice President and Partner at SunSource America. “We’ve studied the current output of their universities – it’s a tight match. They’ll see problems in the coming years if language development does not improve”.
The upside is that it won’t take much to change things for the better, according to John Glasgow, General Manager of CEDS, a regional language training organization. “We collected a database of 10,000 calls, and what we found was that the situation is getting tight, but it’s not as bad as people think”, he says. “The average English ability in Guatemala is a very affordable and trainable level. So if proactive steps are taken now, there can be the adequate labor supply produced”.
The Right Commitment
There is definitely a solid commitment from Guatemala to take proactive steps, even if those steps have not yet materialized. That’s why Mario España, Investment Promotion Director at Invest in Guatemala, is working with the private sector. “They move faster than the government, and we’re engaged in a few joint programs with them”. He mentions the Contact Center Commission, a group of language schools, promotion agencies and private companies trying to implement a network of English training programs in key areas in Guatemala. And about a timeframe for that initiative – “It’s fairly new, and still in the planning phase. By the end of this year we’ll have a solid project, and by next year we’ll be implementing it”, he says. “Until we get there, the language schools are working within the Commission to provide independent training solutions for companies”.
There is also the right commitment from the public sector that English training be subsidized and included in public education. A new program of 2000 Scholarships for intensive English courses coordinated by the Guatemala Export Association (AGEXPORT) is being offered to four call center players in Guatemala – 24/7 Customer, Capgemini, Allied Contact & BPO, and Transactel – to help them offset costs of language training for their employees. “This is the only government program in place for English training currently”, says Glasgow. “There will be more, but they’re still thinking about how to make plans financially viable”.
A Different Reaction
What we’re seeing in Honduras is a very different response to the labor supply issue. In Guatemala we found the right attitude and the right words being said, even if there are no tangible results yet. Honduras by contrast suffers from a lack of awareness about what its infant outsourcing industry can offer. With the exception of eminent projects like Altia Business Park in San Pedro Sula, the outsourcing scene is being centered solely around Tegucigalpa. CEDS reports that it’s difficult to convince employers to invest in training of workers, and this may soon cause problems.
“Any company coming to Honduras is going to find an excited labor force and a business environment that’s happy to have them there. It’s a very new market so companies have the chance to really shape the workforce” – John Glasgow, of CEDS
With the recent constitutional crisis, it’s clear that the Honduran government has not been contributing much. “The universities are the ones really being proactive”, says Glasgow. “We’re working with the Technological University of Honduras (UTH) to raise awareness among students through workshops and press conferences. If we can get more interest in the industry, that’s the first step. UTH has committed to have a completely bilingual student population by 2014, which means each year they will be producing three to four thousand qualified English proficient graduates”.
Honduras has an excellent education system, with its National Autonomous University of Honduras being one of the largest in Central America. “There are around 80,000 students enrolled in some kind of university education in Honduras, so you’re graduating about 12,000 a year”, says Carosella. “47% of the employable workforce is between the ages 20-34, which is a foundation for a lot of talent. So the numbers work”.
In spite of the lack of awareness about the outsourcing industry, Honduras’ 27.8% unemployment rate means that there is huge labor potential, at low wages. “Any company coming to Honduras is going to find an excited labor force and a business environment that’s happy to have them there”, says Glasgow. “It’s a very new market so companies have the chance to really shape the workforce”.
But quantity does not equal quality. FIDE, the country’s investment promo agency, is working hard to develop Honduras’ labor supply by aligning universities and educational institutions with the hiring goals of investing companies. Honduras does have higher English proficiency per capita than Guatemala, as well as more bilingual schools. But the labor market is still struggling to define itself, and there will be a learning curve of a few years.
International Standards for English
One indicator of the English ability of a workforce is how well they perform on international language tests such as TOEFL and IELTS. We looked at the extent to which these standards were used in Guatemala and Honduras.
In Guatemala, the TOEFL is administered (the regional test center is in the country), and some universities require a high score for graduation. In Honduras, the Association of Bilingual Schools regularly implements TOEFL and other global standards. However by and large we found that companies in both countries prefer to do their own assessment of English skills when hiring. “We partner with local universities and set up joint programs before we go into any country. It helps us do our own internal hiring and English qualification”, says Carosella.
By contrast CEDS works on a ten-point scale for English ability, on which a 7.5 score is a hirable language level. Their CEDS Diagnostic language assessment program has been used by many corporate clients in the Central American region. It can be customized for specific needs of each company, and can establish the scores for skills necessary to filter successful candidates. “Listening comprehension and cultural affinity in both Guatemala and Honduras is very high because of exposure to US media and music”, says Glasgow. “For the voice component, there is a weakness in fluency and accent, but based on the study we did, we saw that significant increases in those levels can be made without too much investment”.
Five Years in the Future
Both Guatemala and Honduras have good labor pools, but not deep ones. Which means that small problems finding qualified labor today could turn into sustainability issues in the future. What is required from both countries is a concerted effort to anticipate that increased demand for workers, or diversify into other sectors. Mario España from Invest in Guatemala is looking to do just that – “I think there will be more growth in finance, accounting and back office operations than call centers. As an agency we’re trying to shift our focus to more value added and technical functions, where the pressure for so many workers is not as great”. He admits that companies in Guatemala are currently feeling that pressure, although it’s not critical.
Honduras is harder to read because it depends on which companies locate there next and how much of an impact they will have on the workforce. With more of a bilingual population than Guatemala, the possibilities are wide open. But without much help from the government, Honduras may begin to feel the same pressure in a few years. As things stand now, the perception is that Guatemala is on its way, while Honduras is still trying to find its way.