Over the last five years, Nicaragua has emerged as one of the surprise packages of Nearshore outsourcing, overcoming perceptions the country is undeveloped and anti-business to stake a claim as one of the most promising BPO destinations in the region.
However, with a population of under 6 million people, scalability has remained a looming concern, casting a long shadow over the country’s progress. So far, the outsourcing sector has focused almost exclusively on capital city Managua, but the answer to those concerns may well lie in the untapped resources of second tier cities.
At the moment, there are only two outsourcing operations located outside of Managua – a Spanish language Transactel BPO operation in the city of Leon and White Shark Media, a Digital Marketing Agency with an operation in Granada.
Behind the scenes, though, trade promotion body PRONicaragua is developing a strategy that aims to change all that. “We are still just starting to see companies become interested in second tier cities,” said Javier Chamorro, Executive Director at PRONicaragua. “What we’ve done to work with these companies is we’ve started to do a series of mapping efforts in the cities to identify potential resources with specific knowledge, training or bilingual capabilities.”
These efforts have been carried out with partner businesses, selected for their as yet uncommitted interest in investing in Nicaragua. “If we really want to develop the industry in a sustainable manner we think we have to plan strategically with the companies,” said Chamorro. “It’s not that we want to limit competition but you do want to be able to have a sustainable operation for a company.”
The mapping of second tier locations has allowed PRONicaragua to not only identify potential but also deficiencies and challenges. Primary among these is the lack of depth in English-speaking talent. To address this, the government this year launched a new two pronged English language training program. On one side, the program is targeting those that already have a good level of English – a “finishing school” for English speakers. On the other, it will target learners with a more basic level.
Another issue is the availability of quality real estate for larger operations. One way the country is looking to address this is the development of industrial and technology parks around the country. To encourage this development, the government is not only offering tax exempt status for companies looking to invest in Nicaragua, but also for the construction firms that would build the infrastructure to bring them in.
However, as no Nicaraguan city outside of Managua has a population of over 200,000 people, scalability remains a major issue in these locations, which is another reason PRONicaragua is aiming for a carefully planned second tier expansion. According to Chamorro, most second tier cities are capable of supporting no more than medium-sized 500-1,000 seat operations.
Blossoming New Destinations
Aside from carefully matching locations to companies, PRONicaragua is looking to avoid hitting saturation point by expanding beyond the low value, voice-based operations that currently dominate. “The idea is to build the pyramid so then these young individuals who have been working in voice services can go into a higher level of service within BPO,” said Chamorro. “But at the same time we are carrying out efforts to attract companies into higher end processes such as ITO and web design and other types of KPO processes such as finance and patenting.”
The most likely destinations for a new outsourcing push are the cities located in the Pacific region, which are generally more populated, developed and with a deeper pool of educated workers than elsewhere. They are also within the orbit of Managua – most no more than a couple of hour’s journey away.
Chief among them is Leon, Nicaragua’s second biggest city. Located 55 miles from the capital, Leon is renowned as the intellectual center of Nicaragua and a hub of education. It is home to several universities, including the Universidad Nacional Autonoma de Nicaragua – the country’s oldest and most important university. As a result the city offers a deeper pool of young, educated workers keen to step into the international market place.
Another prime candidate is the historic tourist city of Granada, Leon’s traditional rival. Granada is substantially smaller than Leon but is just 45 minutes away from Managua and so offers the benefits of an untapped second tier location with the convenience of easy access to the capital.
One of the most intriguing prospects is the city of Bluefields on the Caribbean coast. A small city of less than 100,000 people, the reasons Bluefield may open up as Nearshore destination are rooted in its colorful history.
The Former British Colony
For around 200 hundred years, Bluefields was one of the few footholds of the British Empire on the Latin American mainland. It only became part of Nicaragua in 1894, and is still semi-independent, lying in the South Atlantic Autonomous Region (RAAS).
This complex history has left behind a legacy of English speaking unrivaled elsewhere in the country. While the majority now speak Spanish as a first language, English is still spoken by most people, albeit Caribbean Creole English.
This is a resource PRONicaragua is keen to tap. So far, they have carried out an exploratory mapping of potential candidates to measure the quality and depth of English speaking talent and identify what sort of training programs could be introduced to bring the region’s English into line with industry requirements and expectations.
The limitations of size alone mean none of these second tier options have the potential to take the outsourcing world by storm on their own. However, a carefully planned, sustainable expansion throughout the country may well offer the best way forward for Nicaragua and a promising prospect for investors willing to be the first to take a punt on virgin locations.
Meet the ProNicaragua team along with 200 outsourcing colleagues from across the Americas next week at Nearshore Nexus 2013 at the Jersey City Hyatt.