Ensuring sustainable English language support, good accent neutralization programmes, and the ability to offer great customer care across multiple channels are core criteria when it comes to site selection in the nearshore. More pressingly, though, is the question of the next big market.
Nearshore Americas spoke to Ann Harts, Executive Vice President of Site Selection and Incentives at ESRP Real Estate Services, and Jeff Pappas, Executive Vice President of Site Selection and Brokerage at ESRP Real Estate Services, about the latest site selection trends, if investment trade promotion agencies are delivering, and the ever-elusive next big market.
NSAM: What are the key site selection trends you are noticing at the moment and where is the nearshore positioned in terms of those?
Pappas: One of the core issues is the sustainability of the English language, because when we talk nearshore, you always used to think it was about wages and wages only and that’s not necessarily the case. Cost effective labor is still important but now you have to have the quality and ability to hire English support. If you want Spanish support you can find that anywhere except for parts of the Caribbean. Anywhere in Central and South America you can find cost effective Spanish support.
The questions are: Is there enough English talent and are the schools graduating enough quality English speaking people to offset and sustain the needs of BPOs?
Places like Jamaica, Guyana, Belize, parts of Central and South America are English speaking, so you have no problem. The only problem you have in a market like Jamaica is too many companies going there because the English is prevalent. Then it becomes if we want to really grow and expand, we need to make sure these schools are graduating the people we need.
Harts: English is one of the issues, but to tag on to that there is also accent neutralization. Companies needs to have very good, sustainable accent neutralization programmes within their sites. We do see very good English coming out of some of the countries, but accent neutralization is still important.
That doesn’t just go for English, though.
If you are in Honduras or Costa Rica or you go further South to Colombia, Uruguay or wherever, if you are doing Spanish support there needs to be accent neutralization for whatever country you are serving. If you are serving clients in Mexico from Colombia or vice versa, you will need to ensure that you have consistent Spanish because the dialects are so different.
Companies need to take a real hard look at that as well because customers are getting more critical about their customer service needs.
Email is becoming a thing of the past. Phone calls are somewhat becoming a thing of the past. Because everybody wants to have their interactions answered immediately.
We are all becoming the “immediate generation”. You don’t want to wait for your technology to work. You want to get an answer right now.
So not only are the English skills important, the written skills are becoming more important because we are doing more chat. I was at a client’s nearshore site recently and I saw one person doing four chats simultaneously and I thought, “this is where we are going now”. For chat, they are going to need to be able to multitask, have good English both written and spoken, and have good customer service skills, and then to be able to sustain and help that customer who wants that immediate gratification.
The industry in general is pulling away from email for their customer care, so you are going to see more chat.
NSAM: What markets in the nearshore are enticing you right now?
Pappas: I still think Colombia is one of the hottest markets because it is big enough that you can have enough cities. What companies like about Colombia is that you have five or six large markets that are accessible to BPO size-wise, location-wise, English-wise, whereas in Central America you have one major market in each country: Guatemala City in Guatemala, San Salvador in El Salvador. The biggest issue is where is the next Colombia going to be?
It doesn’t seem like it’s going to be Bolivia, it’s definitely not going to be Venezuela, Paraguay probably not either – although it’s a good size, the English is not as prevalent. It could be Chile or Peru, but the English is very expensive there. Argentina is not very stable and Brazil is just not cost effective.
So where is that next major market after Colombia because eventually Colombia will get tight? Baranquilla, Cartagena and the coastal markets are already saturated. Maybe some additional markets in Honduras could be looked at, and, of course, the Caribbean is always going to be important – Trinidad and Jamaica – because the English is prevalent and university is typically cost effective or free, so you are getting a good quality educated person in your contact center.
Harts: I think what you are seeing in Colombia is not only do companies have the opportunity to do call center BPO work, but you can scale. I have many tech clients there and they are doing very well and in fact, those sites are some of the best sites that they have in their footprints.
Colombia is scalable not only with other cities but also to different skills sets. So not only can you do customer care and tech support, but you can actually do tech work like software and app development.
I think you also still see that in Argentina. Argentina still has the higher end play. It is a great market for Latin America related businesses that need a higher level, primarily for the Spanish speaking market. Sometimes that is often overlooked because it is seen as a high cost market.
Where’s the next big thing? That’s the thing we ask ourselves every day. I don’t want to ever downplay the fact that there are several countries in Latin America that aren’t just wonderful for BPO support; they have the real true ability to take the whole spectrum, from customer service via chat, email, voice all the way up to the high tech type of app production. You see that in Mexico too.
NSAM: How much are environmental factors influencing decisions in terms of ‘green’ thinking and design?
Harts: It depends on the client. Every client is concerned about the cost of energy and how they can work to reduce the cost. There are a lot of clients that have an interest in solar power. I do see clients looking to offset some energy costs and also be a good steward at the same time.
NSAM: What are you noticing about the evolution and performance of investment trade agencies in the nearshore?
Harts: I don’t have as much contact from those agencies as I used to, which is surprising to me. There are a couple that are very aggressive and do a very good job, but I also don’t see as many of them hosting conferences to try to promote themselves.
I started my career in economic development and I understand that you have to be in front of decision makers all the time to catch one fish. I have noticed that the responsiveness isn’t always the way it was, even three years ago.
Pappas: There are some countries that are pushing and the governments are pushing. Jamaica is one of them. They are at every single show. Colombia is at every single show. Trinidad is at every single show. Even some of the smaller islands like British Virgin Islands and the US Virgin Islands are there.
But the concern I have is I don’t think they have a handle on their own labor and their own labor supply. One of the biggest issues we have as site selectors is confirming labor data from countries. In the US you can have anything you need to know. But in these countries you can’t find out what the unemployment is, you can’t find out what the under-employment is, you can’t what people are averaging in wages in the sector.
I don’t put a lot of stock in the ones that promote themselves more unless there is good background data. It’s all driven by our clients’ needs. Government promotion and government data go hand in hand.
NSAM: What data remains the hardest to obtain when evaluating countries?
Pappas: Labor data, 100%
Harts: There is no census data. So what we have to do is rely on the government promotion agencies to provide us with labor data. Our goal for them would be to do some type of labor study.
We also go and interview universities and do focus groups with potential employees. We will do information sessions to see what kind of interest there is for the type of job our client might want to bring there.
There are a couple Promotion Investment Agencies that have this data ready and they may have labor studies or information from focus groups or university grad stats. But 100% labor data is the hardest data to obtain.
Pappas: It’s easier to find crime stats than labor data and that’s the last thing they want you to find.
NSAM: What other core issues or challenges have you observed?
Harts: For a while I noticed that nearshore growth just stalled. We had clients looking to grow in the US. But I just saw it stalling out, and I was so surprised by it. Now I have recently seen it starting up again.
One thing I would say to investment promotion agencies is to have a catalog of available sites and the timeline in which they will be ready. That’s another issue we have, is trying to find the right building for our clients. In the US, economic development agencies have a website that you can go and find real estate in the US without a problem. I am doing a project now and it is very difficult to find the available real estate.
We saw a lot of work being done offshore and in the US. It wasn’t long but it did stall. Now we are starting to see a pick up in new requests for new demand.