Narayan AmmachchiDebate has been brewing in Jamaica of late as to whether the country should continue pouring millions of dollars into tech parks to house foreign outsourcing firms. The debate was sparked when Carlene Sinclair, President of the Jamaican Realtors Association, told a local newspaper that the high-end infrastructure would go waste if the BPO firms leave the country in few years time.
“This is a misconception that foreign BPO firms flee the country after a while. No outsourcing firm has shuttered office here, most of them are operating for nearly 15 years now,” said Diane Edwards, President of JAMPRO, Jamaica’s investment promotion agency and a leading group lobbying for BPO firms in the country.
“I am not foreseeing such a scenario, of course. All I am saying is that real estate firms would be saddled with a huge pile of debt and empty buildings if their tenants leave after five or six years,” Sinclair said.
According to Sinclair, private real estate firms in the Caribbean country are little cautious about pouring so much money into ICT-ready buildings. To ward off this fear, she suggests that the government find a way to finance entire construction projects or offer hefty subsidies.
But Edwards does not buy this argument. Realtors involved in building infrastructure for BPO firms have nothing to worry about, she retorted, adding that the Development Bank of Jamaica is offering low-cost loans for companies building complexes to house outsourcing firms. The bank, says Edwards, gives 18 months moratorium on repayments.
The participants of the debate have now gone quiet, but nagging questions over the longevity of the BPO industry in this picturesque Caribbean nation have continued to haunt some of the policy makers.
Why the Worry?
Is there really a need to worry about the durability of the BPO industry in Jamaica? The answer, according to analysts, is no. Jamaica’s outsourcing sector is growing at a rapid pace, generating jobs for thousands of its youths. According to Mark Jones, Chairman of Global Gateway Solutions, Jamaica’s BPO industry is on course to double in size over the next five years.
“We have about 15,000 people employed by the industry so far. Jamaica is cost-competitive with several Asian countries,” said Jones, a native of Boston, Massachusetts, who has successfully boosted his company’s fortunes in Jamaica by increasing its operation from a mere five agents in 2007 to more than 500 staff today.
To double in size, the Jamaican BPO industry needs another 750,000 square feet of commercial space in the years ahead. “I don’t think infrastructure is an issue. We have several tech parks under construction, and government is proposing very large tech parks on 100 and 200 acres of land,” Jones added.
The Montego Bay Free Zone is the centerpiece of BPO infrastructure, which alone has generated over 7,000 jobs and US$121 million in foreign exchange earnings. Here, real estate firm Mark Kerr-Jarrett has set about building another tech park specifically for BPO companies.
In a recent statement, Kerr-Jarrett said it will develop 50,000 square feet of office space by the end of 2014, putting in place all the necessary amenities, including high-speed Internet and a round-the-clock electricity supply.
Involvement of Realtors
In the outskirts of Kingston, Jones said, two private real estate firms are constructing a tech park each. This is in addition to 12,000 square feet of commercial space a government agency is building in Kingston.
“No doubt, these all will be ready for occupancy over the next couple of years,” Jones said. “But these large industry complexes and the campus-like environment alone will not make the BPO industry sustainable in the island. We have other urgent issues to deal with, such as lack of experienced employees to take up senior-level jobs.”
Jones says hiring call center agents is not at all a problem in Jamaica, but there appears to be a shortage in experienced staff to handle executive roles. “As the industry grows you need to hire experienced managers to serve enterprise clients,” he added.
Another hurdle Jones pointed out is electricity. “We have electricity, which is very costly. In fact it is my third largest cost behind people and rent.”
But almost all BPO operators, including Jones, praise the government’s effort in addressing these issues. Foreign BPOs, Jones says, can easily count on the government because it strongly believes that the outsourcing industry will help it reduce the high employment rate – one of the biggest political hot potatoes in the Caribbean nation.
It is, therefore, surprising that the real estate firms are doubting the growth of BPO industry. Jamaica has been recognized by Gartner as a destination to watch and by A.T. Kearney as a favorable BPO destination. Moreover, it is the only Caribbean country where the Inter-American Development Bank (IDB) is funding a BPO incubator program.
The biggest draw, Jones says, is the tax benefits offered to BPO firms. Outsourcers operating in the Free Zone area are exempted from paying tax on their profits. In recent years the Jamaican dollar has also decreased in value, benefiting a large number of BPO firms, particularly those serving foreign clients.
“We have about 40 BPO firms operating in the country, nearly nine of them set up shop in the past one year,” stated Edwards, adding that none of them found trouble in finding space for launching their businesses.
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