Revitalized ICT Environment Brighten Nicaragua’s Outsourcing Outook

The prospects for Nicaragua’s outsourcing industry appear to be brightening by the day, given the way the country is positioning ICT services.  For Chris Marlett, founder and CEO of US-based MDB Capital, the changing ICT landscape and lower prices for connectivity intensify the attraction of doing business in Nicaragua. Broadband prices have dropped by 90 percent over the past eight years, he says. “When we first moved into Nicaragua in 2004, we paid US$2000 (per month) for a broadband connection of one MBPS speed. Today we pay just $200 for the same service,” Marlett said.

Nicaragua is also gearing up to launch its own satellite to support its telecom sector. If everything goes according to the plan, the satellite will be blasted into orbit sometime in 2016, enhancing cellular telephony, Internet access and Pay-TV services across the Central American country.

In Managua—home to 30 percent of Nicaragua’s population— the Internet now ranks No. 2 behind TV as the most utilized means for getting news, says the Nicaragua Dispatch. And, according to an urban study by the Nicaraguan Organization of Publicity Agencies, 78 percent of Managua’s population watches TV and 52 percent use the Internet.

Internet has become so popular that the country’s two major dailies—La Prensa and El Nuevo Diario — claim they have twice as many online readers as subscribers to their print editions.

Telecom & Outsourcing

An increased access to communication technologies has also prompted some IT/outsourcing companies to strengthen their base quickly. For an instance, US outsourcing services firm Sitel has gone on expanding in the country, increasing its workforce to 4500 employees from a few hundred people years ago.

“We have multiple broadband options to choose from. Local ISPs, satellite services, fiber cables… so on and so forth. There are a lot of choices,” said Val Vandergrift, Sitel’s country manager for Nicaragua.

The Sitel runs call centers in several countries across the region, including Panama and Colombia. When asked which country he would choose to launch a call center if he is given a choice, Vandergrift said: “From profit point of view, Nicaragua is the best. Telecom prices are cost-effective and the minimum wage for an employee is also not too high.”

In an article posted on Sitel’s website, Vandergrift’s colleague Raul Navarro writes that “telecom costs in Nicaragua are approximately 20 percent to 25 percent lower than costs in many other Latin American outsourcing locations.”

There are reports that Sitel is set to expand into Nicaragua’s other regions including Leon and the country’s Caribbean port, Bluefields. But Sitel’s executives do not confirm the reports.

“The quality of broadband service is relatively good in Nicaragua, yet there will be some disturbances during the rush-hour,” Vandergrift said.

Telecom Market

Like some other countries in Latin America, connection problems were quite common in Nicaragua until few years ago. International connections would break down every now and then. Today telecoms firms are vying among themselves to sign up more customers and in doing so they have driven down the prices for their service. Some ISPs have started offering bundled service, saying that they would give a computer at free of cost if the consumer signs up for a long contract. What changed the market dramatically is the arrival of Chinese.

A little known Chinese company Xinwei has recently won a license to provide telecom services in Nicaragua. Its arrival, analysts say, has destroyed the duopoly of Telefónica’s Movistar and América Móvil’s Claro. In addition to these two giants, there are many more mobile companies –– such as Rostejnologuii, Yota Mobile and IWB Holding –– seeking to grab a larger slice of the broadband market.

The Chinese company, in the meantime, is rolling out more advanced fourth generation (4G) networks, promising to offer far superior broadband service at far cheaper price. Analysts say there is high demand for wireless Internet service in Nicaragua because of the country’s rugged terrain and the scattered population.