Siemens Plans Cuts to Costa Rica Shared Services Operation

One of Germany’s largest multinational companies, Siemens, has revealed plans to scale back its shared services operations in Costa Rica, as part of a set of global transformations in the German conglomerate.

The company has not made clear whether the shared services operations will remain, at a lower level of capacity, or eliminated altogether. Also, the number of job cuts has not been announced.

Valeria Rivera, Head of Strategy and Business Development at Siemens Mexico, Central America, and the Caribbean, told Nearshore Americas, by email, that this transformation seeks to improve the efficiency in customer relations. “Siemens is carrying out a global reorganization, which includes a transformation in Costa Rica,” Rivera said. “The changes include the transformation of some of our back-office operations that will allow us to privilege actions and operations that will unleash an enhancement in terms of customer proximity, and efficiency in our internal processes,” she added.

HR, finance and IT support functions are currently provided by an estimated 179 employees at the operation in San Jose. Rivera says the changes are set to unfold over the next year.

Costa Rica’s Downsizing Context

Pablo Riba, General Manager at Siemens Costa Rica, said this week to the local financial weekly El Financiero that the operations will not be moved to India, and that the changes will happen mostly in the shared services operations that support Spanish Latin America. Engineering positions, as well as any operations of Siemens in Costa Rica not related to the shared services center, will reportedly not be affected.

Given the nature of the shift, mainly focused on the support of Spanish Latin American countries, Siemens may be looking to relocate positions to neighboring Central American countries or Mexico, where wages tend to be lower.

In recent years, HP also reduced its back-office operations in Costa Rica, relocating 400 seats to Bangalore, India, in a move that analysts attributed to escalating wages in Costa Rica. The situation with Siemens, however, appears to not be as straightforward. Siemens has been downsizing its operations worldwide since 2017 and announced last year it would eliminate close to 3,000 jobs worldwide over several years.

Costa Rican President Carlos Alvarado visited Germany In May 2019 and met with Siemens’s CEO for Mexico, Central American, and the Caribbean, Ignacio Díaz. At the time, Díaz was supportive of the operations in Costa Rica.

“Siemens is an ally for Costa Rica. We share the vision of developing and improving the country, supporting its digital transformation, sustainability efforts and enhancing its talent,” Díaz said during the visit.

Costa Rica’s investment promotion agency, Cinde, confirmed that communications are ongoing with Siemens, but that further details and logistics around the changes are still forthcoming.

Long-Time Presence in Costa Rica

Siemens has had a presence in Costa Rica since 1956. Recently, the company has been involved in a series of technology initiatives in the country that go beyond shared services.

In August 2019, Siemens announced its participation in a private-sector Costa Rican initiative to promote the use of hydrogen-based energy for transportation in the country. The company also signed an agreement with the Costa Rican-American aerospace pioneer Ad Astra to research hydrogen energies with ICE, Costa Rica’s state-owned energy company.

Last September, Siemens also signed an agreement with the local government to provide software that will help Costa Rican startups to develop attractive product prototypes that could be appealing in international markets.

Currently, Siemens has 377,000 employees worldwide on its nine technology divisions, which include renewable energies, energy management, and building technologies, among others.