Startek’s Rationale Behind Second City Expansion in Honduras

Startek’s recently announced decision to expand its nearshore footprint deeper into Honduras with the opening of a site in Tegucigalpa is interesting news on several fronts. Not only does it point to increased confidence in Central America as a delivery location of choice for end users in the US, but it also signals that Honduras is rapidly becoming the “go-to” country within this region. More broadly speaking, the decision to enter a city with relatively few existing deployments shows that the vendor community is becoming more creative in its site-selection processes. This will benefit vendors’ own operations as well those of enterprise clients, by lowering costs and providing access to quality pools of labor.

The announcement from Startek’s CEO Chad Carlson that his firm will lease a new contact center facility in Tegucigalpa is big news in the front-office outsourcing industry. Startek’s financial performance has improved in recent quarters, and its announcement that this expansion is driven by client demand reflects an expectation of better fortunes.

This move is especially compelling considering Startek’s already sizable presence in the country at the Altia Business Park in San Pedro Sula, which over the past few years has emerged as one of the leading BPO delivery centers in Central America and the most important contact center hub in Honduras. The fact that a leading US contact center player such as Startek is willing to forego other countries in Central and South America is testament to the value for money and volume of quality labor that can be found in Honduras, as are the operations of other outsourcers in the country (including KM2 and Stream Global Services). Startek’s expansion will put pressure on firms not already operating in the country to place it on their radar, in order to anticipate likely interest from enterprise clients.

Tegucigalpa Makes Sense

Prior to the announcement, Honduras’s capital city was yet to land a major BPO player the size of Startek. However, much of the BPO groundwork had been laid by LL Contact Center, a Honduran outsourcer servicing the US market, which proved the ability of agents based in the city to handle nearshore delivery.

Tegucigalpa is well positioned for further expansion in nearshore outsourcing. It has a level of bilingual schools similar to that of San Pedro Sula and has approximately 12 universities, and its infrastructure is at least comparable to major cities in the the region. In terms of population, it is one of the largest cities in Central America. Combined with San Pedro Sula, this makes Honduras the only country in the region with two hubs from which contact center services can be delivered, which is a major advantage over countries where the industry is concentrated in one urban center, as this can lead to inflationary pressure on real-estate and labor.

The one question yet to be answered concerns Tegucigalpa’s stock of plug-and-play real estate for future outsourcing investors. One of the principal drivers for San Pedro Sula becoming an outsourcing hub over the past four years has been the availability of office space at the Altia Business Park, where most BPO operations in Honduras have set up shop. For Tegucigalpa to move forward in building an outsourcing vendor base, it is important that prospective investors have confidence in the city’s ability to provide a similar volume and quality of facilities.

Startek’s willingness to look beyond established outsourcing delivery sites is something that vendors across the BPO spectrum must adopt and continue if they want the Central American nearshore to survive. It is unrealistic to believe that it is sustainable to house front-office BPO in four or five cities sandwiched between Mexico and Colombia, so it makes sense to expand into new cities (as Startek has done). The due diligence that many site-selection specialists and vendors are putting into other emerging countries is also encouraging, with Belize the most frequently mentioned of late. However, outsourcers will need to look beyond the usual suspects to benefit from the high-quality customer service skills, language proficiencies, and labor volume in the region.

NSAM is republishing this article with permission from the author.