Nearshore Americas

Layoffs Free Up More IT Labor in Costa Rica


Layoffs at larger tech companies like HP and slow downs in expansion at many IT services players in and around San Jose has appeared, at least temporarily, to have loosened up what was once considered one of the tightest labor markets anywhere in the Nearshore region.

A number of local executives said during the IT alliance event this week that Costa Rica´s labor market has become more advantageous for global sourcing and IT oriented employers, many of whom saw HP snap up close to 1,000 qualified IT professionals since arriving in 2006. Other well known tech players with sites here include Intel, Google and Baxter, among others. The tide has shifted as HP reportedly laid off several hundred during the last 18 months, and a host of other firms trimmed staff in response to the economic crisis. Still, it is clear that Costa Rica, like much of Latin America, weathered the storm without too much economic damage.

Other Developments:

  • The failure of the government to take the final steps necessary to make competitive telecom services a reality is causing underlying frustration for both business people and citizens who remain ¨stuck¨ with monopoly provider ICE, which controls fixed line, mobile and electrical services. The president of a 30-person software development firm said that businesses have been tolerant of the lack of aggressive innovation on the part of ICE, but that tolerance will run if Costa Rica falls behind the rest of the world on connectivity and digital infrastructure innovation. ¨If the monopoly is still in place three years from now, that´s going to be a problem for us,¨ said the executive. (The government has declared that the telecom market is liberalized, but the reality is approvals for competitive entrants to initiate services has been stalled.)
  • I sat down with Clotilde Fonseca, the new Minister of Science and Technology within the new Chinchilla government, who stressed that being provided with high speed connectivity is not the panacea it is often made out to be. What really matters in Fonseca´s eyes is a more serious understanding of how to fully exploit what the digital revolution has to offer. ¨The real revolution happens in the mind… we must have a better grasp of the power of the digital platform,¨ she said. Fonseca is working hard to bring a new spirit of fresh thinking to her own ministry by being more proactive in aligning with the leading actors in science and technology in the domestic private sector. ¨We have been very good here in Costa Rica linking with other countries over the years, but we have not been very good at linking up with the different actors within our own country.¨ Fonseca´s approach, influenced by her own consensus building in the non-profit sector, is likely to be a welcomed change. The bureaucratic, paper pushing culture of the Costa Rican government has slowed progress and that can obviously be a real problem in an area as dynamic as high tech. Fonseca seems determined to change that culture.
  • Procomer´s IT Alliance event welcomed participants from the USA, Trinidad, Dominican Republic and India among other countries. The event featured a panel discussion on Innovations in Nearshore Outsourcing with Jeevan Zutshi, of Argus Advisors, Diego May from local IT services player Avantica and Tony Mataya, Partner, ThinkSolutions, and moderated by yours truly. The panel discussion focused largely on the increasingly high value services provided from the Nearshore, but at the same time there was recognition that many US business people have a narrow and often outdated perception of life and business culture in Latin America.

– Kirk Laughlin, Editorial Director

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Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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