Is it a Case of Quantity over Quality in Guatemala?

Although Guatemala offers strong infrastructure, favorable pricing, and proximity to the United States, the country still has a way to go when it comes to English language call center and BPO services. Luis David, Director of Invest Guatemala, talked to us about the strides this Central American nation has made, and what lies ahead for a country that actually has developed a pretty solid BPO resume.

NSAM: What type of English language training exists in Guatemala?  What is the level of Spanish-English bilingualism?

LD: Guatemala is very aware of the need of having bilingual people and this generation is more bilingual than the previous one. Many are bilingual with Spanish and internal dialects that are not international, but when we talk about English-Spanish bilingualism, we have a growing population of bilingual people. Globalization is motivating everybody to watch cable TV, navigate the internet, and this need to be in touch with the world motivates youth to learn a second language.  For 20 years schools have focused on increasing the basic level of education. Over the last 24 months, the government has made it mandatory to teach English for all public and private high schools.

NSAM: What other programs are there?

LD: There are teacher training programs, and we have some technical schools, and the government program INTECAP trains teachers. There is also an institution linked to US-AID and the national English teacher program to support teachers to become bilingual and teach English.  And there are also some two year e-learning programs promoted by INTECAP.

The Instituto de Ciencia y Technologia Agricloas (ICTA) has 7,000 students and the public university has 120,000 students, of which 32,000 are in the ESL program. And we have other programs linked to call centers and alliances with INTECAP for their training programs.  They have the funds, teachers, technology and mandate to do that. They have made an alliance with call centers to proactively promote the program which is open to everybody.  It is essentially a free program, but participants have to pay a small fee.  Although it is accessible for everybody, pre-registration is required.

It is becoming a good business; everyone wants to have an English teaching school.  There are both physical and e-learning programs. The availability to learn English now is ten times more than ten years ago.

NSAM: In September 2011 we spoke with German Lopez, president of Guatemala’s BPO Commission, and he said, “Competition is fierce and wages are extremely tight. Some (operators) are beginning to play hardball and are outbidding the prevailing market rate.”  Is this still the case, and what is being done to create a more competitive environment?

LD: What is happening –which is a good problem for Guatemala– is that whenever you have to compete, prices tend to decrease.  Call centers pay more or less the minimum rate.  There are some private initiatives to promote the teaching of English. I understand that people are competing to get the best quality of human talent.  It is not only a way – it is also facilitating the circumstances for change.

A law is going to be approved to allow part time positions, which will provide a lot of flexibility.  Multinational and national companies want to fulfill their requirements and they don’t hire someone for one or two hours because it is very expensive, because you have to pay them as if they were a full time employee with severance and benefits.  The new bill will help a lot people and it will increase the supply of human talent.

NSAM: When do you see the law being approved?

LD: I cannot give you an exact date, but I hope within 90 days.

Despite our lack of excess of bilingual people, we have the highest concentration of universities in Central America

NSAM: What are the main challenges or obstacles that contact center operators encounter in Guatemala?

LD: I think in the short term it is the supply of human talent. One of our competitive advantages was that we were very cheap, but due to success of the industry, some costs are increasing.

NSAM: Such as?

LD: Labor and energy. We will be competitive in the long-term, but not right now.

NSAM: What incentives exist to attract contact center operations to Guatemala? And where are the centers concentrated?

LD: Most of the centers are in urban areas close to universities. Despite our lack of excess of bilingual people, we have the highest concentrations of universities in Central America.  We are two hours from Miami and four hours from New York or Los Angeles, which is very useful for executives and managers. We share a time zone is in the center of the big US market, and Guatemalans have a lot of cultural affinity with the US. One reason for this is that we there are more than one million Guatemalans in the US. That link has made us very close to the States, we understand culture, we have a neutral accent and can have more communication other than simple language, such as using common expressions.

The telecommunications infrastructure is very good, human talent is very good and governmental support is good. A cluster of BPOs work together to promote their common interests. Our location and our population size is very advantageous.  We have more cities, more infrastructure and more favorable real estate costs than other Central American countries.

NSAM: How many seats does the average contact center have, and what markets are they serving?

LD: The average is around 800 to 1,000 seats.  The market is US and Canada, Spain, Mexico some others in Europe and Central America. We have call center operators who speak French, Italian and Portuguese and these are growing operations.

NSAM: What is the current rate for contact center agents, and how is this effecting interest in that sector?

LD: The min wage is around $300.00 USD per month, and an average salary is around $600.00 USD per month.  It is still competitive, but not as absurdly competitive as it was a couple years ago.

NSAM: Is there diversification from straightforward customer service into Knowledge-based areas such as healthcare, insurance and law?

LD: There is a move toward finance, some back office, some IT and some technical support. This is increasing, but we have to work on improving quality.

NSAM: What is being done to improve quality?

LD: Companies are working with the universities to create specific curricula for these industries. But this is to a lesser extent than in the bilingual area.

NSAM: Is there much software development activity in Guatemala?

LD: Yes, there is.  We are growing a lot. Everything is relative if compared to big markets, but in terms of our own economy, the sector is growing.

NSAM: What types of products are being developed?

LD: They are going into the banking, retail ops, exporting a lot of software to Latin America. The first market for software is Central America, then we go down and sometimes north.   The comments from customers are always positive, and they say that the Guatemalan supplier is doing a better job than local providers and ask them to be their regional supplier.  Some local software development companies even have to go to other countries, and they export their developers and engineers from Guatemala.

NSAM: Is there a mentoring body or incubator helping to grow the tech sector?

LD: Yes, there is a big cluster of software developers and incubators, one called the Campus Tech in Guatemala City stands out. They promote the local development of software, try to incubate ideas. They are in touch with Silicon Valley on the development of software. For us it is a new thing because we have been making money on basic commodities and now we have shown that we can be productive with more technical products and services.

NSAM: How solid is Invest in Guatemala as an organization?

LD: We are an office with full time professionals dedicated to assist potential investors with getting into Guatemala. Our offices are located in the business district and we have commercial attaches in international cities: four in the US, some in Spain, and in Mexico which help us and the potential investors with local assistance. We also have alliances with other organizations that help potential investors. In practical terms, we are allied with the American Chamber of Commerce in Guatemala. We also have alliances with other chambers. We also have a formal board of director composed of people from the private, public and non-profits. Our vision is enriched because we have the perspective of the public and private and non-profit development organizations.

Guatemala has a very good story of stability, monetary policies, micro economics, we have never have defaulted anything and have been very friendly with investors. Foreign investors are protected and they are treated like a local investor. The country is focusing on international investment, especially if the companies are bringing employment with them.