Q&A: Guatemala Optimistic About BPO Growth Despite Turmoil

In early September Guatemala’s President Otto Perez Molina resigned from office. The beleaguered politician had faced five months of protest from citizens before finally conceding defeat and resigning, in the wake of the issuing of a warrant for his arrest on charges of corruption.

The extent of the corruption is still not entirely clear. The Vox’s Amanda Taub wrote just after Molina’s resignation that “the corruption [is] so severe, that [it] has so rotted Guatemala’s government and institutions, that it has left the country mired in poverty, violence, and fear.” Despite the ongoing concerns and continued violence, Javier Zepeda, Executive Director of the Camara de Industria de Guatemala (Chamber of Commerce of Guatemala) regards the current situation as an opportunity.

The BPO and ITO sector saw substantial growth in 2014. According to the Guatemalan Exporters Association (AGEXPORT), sales abroad for 2014 reached $397 million and more than 39,000 direct, formal jobs were created as a result. AGEXPORT looked at activities such as “software development, digital content and contact centers based in Quetzaltenango and serving the United States; customer service via phone, chat, and email; mobile application development, and smart games.” Whether the recent political disruption will negatively impact this growth remains to be seen.

Nearshore Americas recently asked Zepeda about his views on the country and more specifically, the impact the recent troubles have had on the BPO and ITO sectors.

NSAM: Guatemala has been in the news extensively of late as a result of the political scandals impacting the government. How would you characterize the state of Guatemala at present?

Javier Zepeda: After the scandals that affected the country, Guatemala has the opportunity to position itself as a state with institutions that begin to build trust, and whose system of security and justice has been strengthened. This demonstrates Guatemala’s renewed commitment to rooting out corruption; we have the opportunity to change people’s perception about Guatemala.

Thanks to the legal action against alleged perpetrators of acts of corruption, the country has demonstrated that it has serious and responsible institutions such as the Prosecutor’s Office; and a civil society with democratic values and principles that encouraged a political transition without conflict, so that there was a change in government policies without affecting the State or the country’s development.

Another important aspect is the realization of democratic elections, reflecting the institutional maturity of Guatemala. This was a needed change. Guatemala is not the only country in Latin America — or even the world — dealing with corruption, but we are demonstrating our commitment to addressing corruption without bloodshed.

NSAM: Foreign investors in BPO have long been a highly attractive market for Guatemala. How has the recent turmoil impacted on interest in BPO/ ITO investment in the country? How have existing investors reacted?

Zepeda: The political crisis is strengthening the constitutionality in Guatemala. Strengthened institutions improve the competitiveness of countries and although Guatemala is facing political scandal, we believe that the manner in which we are addressing these issues can be turned to a positive.

We consider the recent situation in Guatemala has not adversely affected on investors of BPO / ITO. This may change in the near future, but we believe that foreign companies will recognize the positive steps taken by Guatemala to strengthen its democracy. Any disruption will be short-term because if you consider the actual economic situation of Guatemala there is great deal of potential here.

NSAM: How is Guatemala luring new investors in BPO/ ITO in the wake of the recent disruption?

Zepeda: The attractions remain:

• A fairly large young population, with more than 70% being younger than 40 years old;
• A time zone very similar to the United States, which is very convenient; and
• Costs remain competitive

According to 2013 data we have a labor force of 5.9 million, with an increasingly young population.

We are continuing to highlight these benefits and demonstrate that there has been little disruption to the day-to-day business in BPO/ ITO in the country.

NSAM: Where do you see BPO/ ITO investment in Guatemala going? Are you still optimistic about the future of BPO/ IT in Guatemala?

Zepeda: Investment in BPO / ITO depends on, among other factors, telecommunications. In that sense, the sector is evolving, which allow us to offer services that the market is demanding.

Guatemala is growing mainly on customer care centers; we believe that there is great growth potential in it.

There are challenges, though, chief among them the need to invest in education to ensure that this young population is able to meet the skills needs of the industry.

Currently, we do have not the levels of education that we need, and potentially the quality of  the education needs to be improved. We need more people to speak more languages and to improve the level of English language proficiency. We need to create long-term plans to develop education to meet the changing needs of foreign and domestic business.

We as CIG will work with the new government after the 25 October election to create the opportunities to realize this potential.