Nearshore Americas

Jamaica Strives to Stay Competitive as New BPO Destinations Emerge

As a well-established business process outsourcing (BPO) destination, Jamaica is now facing the challenge of remaining competitive as other countries in the region emerge as attractive options for companies looking to move into the nearshore.

Jamaica’s BPO industry numbers some 53 companies employing more than 26,000 people, according to the country’s Business Process Industry Association (BPIAJ), which defines one of its roles as lobbying the government to ensure the regulatory system creates business friendly policies and legislation enabling the country to maintain its competitive advantage as an outsourcing destination.

And the government seems keenly aware of the need to remain competitive.

Horace Chang, Jamaica’s Minister without Portfolio at the Ministry of Economic Growth and Job Creation, said in March that in order for BPO to attract more young professionals, greater efforts must be made to demonstrate that the sector’s services far exceed call center operations.

Chang said BPO is “the way of doing business” in the contemporary world, and that Jamaica will have to be “a part of that process”, in order to establish and maintain a dynamic economy, according to Jamaica Information Service.

Horace Chang

Speaking at the opening of Concentrix Global’s new facilities in the Montego Bay Freezone in St. James, Chang dispelled the misconception that the BPO sector primarily entails call center operations for low-paying jobs, highlighting “the socio-economic impact that employment [in the BPO sector] has had on families”.

And the sector is also receiving support from outside the island. In April, the Development Bank of Jamaica (DBJ) said it will offer financial support to BPO companies in a bid to foster the industry’s development. Local BPO players participating in a panel discussion at at the Outsource2Jamaica Conference held that month emphasized the importance of capital intensity for the sustainability of BPO.

In January, the Inter-American Development Bank (IBD) agreed to lend Jamaica US$15 million, which the country will use to develop a pipeline of BPO talent, and the Avasant Foundation announced it is partnering with Jamaica’s investment promotion agency (JAMPRO) to train young Jamaicans interested in working in BPO.

Talent supply

Training new talent is one of the more urgent tasks as the country will likely face a shortage in the years to come.

“The industry employs could add another 15,000 in the next couple of years, but which would mark the end of the hyper growth cycle, moving into a more stable cycle, of around 5% annual growth,” according to Anand Biradar, vice president and head of business at Hinduja Global Solutions (HGS), which has been present in Jamaica since 2011.

“The talent supply could hit its ceiling in three years, by 2022-23, we’ll be looking at 50,000 people employed in BPO,” he told Nearshore Americas.

“But this is not a problem,” he added. “Jamaica is a good, established destination, and everybody knows we are, with good future prospects.”

Anand Biradar, vice president and head of business at Hinduja Global Solutions (HGS)

“The government wanted to see 100,000 people in the industry a couple of years ago, but has come down to around 75,000. Jamaica is the big brother in the Caricom region, with huge support from the government for the BPO industry.”

He pointed to the fact that Portmore Community College now offers a degree in BPO management, which will help to nurture more talent.

“But even so, after a point demand will catch up,” he said.

“The majority of the workfore in BPO are women, around 70%, but Jamaica’s demographics are evenly split, and there are some men out there who could work in the sector, and the government could harness them to increase supply.”

Rising costs

He said that Jamaica is also more costly as a destination for doing business, which eats into its competitiveness compared with other countries in the region.

“In terms of costs, it has got higher, there has been a wage escalation,” he said.

“I don’t want to say it’s lost its competitiveness, but that in time will push prices up a little. But I would still say, pound-for-pound, that Jamaica is still number one in terms of value.”

He also points to rising salaries as positive for the island.

“It has had a good effect, the purchasing power of people in the industry has risen, the government’s tax earnings have risen, and BPO is seen as a great thing for Jamaica, in everybody’s eyes.”

But he also pointed to the disruption that technology will likely bring.

“The whole automation and digitization of customer experience will change a few things. Some of the simple calls will get automated and chatbots will take care of more services, but that is not likely to hurt the industry in Jamaica in the near future.”

He said that, in the case of HGS, the company is focused on more complex conversations.

“We have to upscale our people to more complex, critical thinking, but that is nothing unique to Jamaica, it’s a business-wide phenomenon.”

The majority of HGS’ clients are from the US, with 60-70% of revenues from healthcare companies, and it also works with two Jamaican banks.

Exposure to the healthcare sector also brings its challenges, he said.

“Healthcare companies are mature, large-scale outsourcers who are very big on security and compliance, and many of those companies have had exposure to the Philippines and India, at least for back-office work, and coming into Jamaica was a reality check for some of these clients,” he said.

“They are used to a management team being at a certain level and being on top of everything, being very proactive, very process and business savvy, where the acumen shines through, but they don’t see that very quickly in Jamaica because the country’s BPO growth has exploded in the last few years, and the number of managers has tripled in size. Now there is a gap in management talent, and which we had to face.”

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The healthcare sector is also heavily regulated and subject to strict on compliance, which presents another challenge, he said.

“We spend a lot of time on training people as it can be a shock to some people coming out of college to enter a highly compliant environment.”

He also highlighted the importance of talent retention.

“If you are generating employment you’ve got to sustain it.”

“We are partnering with universities so that students can come to our offices and work while they study, and that is bringing down the cost of their education, and university lecturers come to our office to give classes. We are not the highest payer, but we have a strategy focused on people and improving their lives, and that helps us to have a low attrition rate,” he said.

“If we can make this work in Jamaica we can replicate this in other countries,” he said.

Other shores

Looking beyond Jamaica, as outsourcers will inevitably do as the country becomes saturated, there are plenty of other growth markets in the region, such as Colombia, Mexico and Guatemala.

“Colombia has the size to scale, they are only holding back because of the English, which is the case in Medellín, but as the English picks up Colombia is perfectly poised. Bogotá already has a good exposure to BPO,” Biradar said.

“An English-speaking nation could pick up from Jamaica, and Guyana is on our radar, but when we looked at it two years ago we thought it’s really not ready yet. Costa Rica was always number one on the charts, but it’s more expensive, by at least 20%, and we decided against it for that reason back in 2011 and decided on Jamaica.”

He said HGS also looked at Mexico, specifically Mexico City and Guadalajara, and Guatemala, countries he considers to still be on the list of possible destinations.

At the end of the day, the decision “has to make sense to people, to clients”, he said.

Adam Critchley

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