Executive Briefings

Nicaragua and Central American Neighbors Are Challenging India's Dominance in Call Centers

India will soon have some major competition in the business of offshore call centers and back-office services, if Central America has anything to say about it. Panama already has some 7,000 seats in its thriving call centers, and both Costa Rica and El Salvador are also making a big play for that market. Now Nicaragua wants a piece of the action. In early May, the country dedicated a brand new 465-seat Contact Center in the capital city of Managua. The facility is aimed at companies in multiple industries, including information technology and pharmaceutical services. And while it was launched without a single commitment by a user, Nicaraguan President Enrique Bolanos, who presided over the opening ceremonies, was optimistic that the seats would soon be occupied. Investment-promotion officials claimed that several major contracts are imminent, which would be a boon for a country where unemployment and under-employment are a combined 42 percent, and per-capita gross domestic product stands at $850, the lowest in Central America. "We need 65,000 new jobs every year just to stay the same," Bolanos told members of the press after the dedication ceremony. He views foreign investment and free-market forces as keys to rescuing Nicaraguans from poverty. ProNicaragua, the promotional agency co-funded by the Nicaraguan government and the United Nations Development Program, is pushing the country's geographical proximity to the U.S., along with its core of fluent English speakers, as reasons for U.S. companies to locate back-office functions there. Juan Carlos Pereira, the agency's executive director, said there are around 5,000 Nicaraguans who speak English well enough to staff call centers serving customers in the U.S. Around 10,000 are proficient enough to handle back-office processes where there is less direct customer contact, Pereira said. In addition, he sees a substantial market for Spanish-language services related to business-process outsourcing. (The country has a total population of around 5.4 million.) Nicaragua already has several smaller call centers in operation, including one that supports doctors and pharmacies based in Texas. The latest Contact Center, part of a brand new, seven-story office building that wasn't even completed at the time of the dedication ceremony, represents an investment of $3.8m. In addition, Nicaragua has assembled a package of incentives, including free-trade zone privileges and 10-year tax breaks, to entice companies to locate manufacturing facilities within the country. Officials are hoping that recent ratification of the Central American Free Trade Agreement (CAFTA), to which Nicaragua was one of the first to accede, will serve as an additional boost to the nation's foreign investment activity. The country wants to recapture some of the momentum that was lost when so many U.S. companies turned their attention to China as a source of low-cost manufacturing. In the face of that trend, "we haven't been as aggressive as we should have been," Pereira said. But the call-center efforts are more of a challenge to India, as well as Nicaragua's Central American neighbors. Pereira said the speculative nature of the new Contact Center, built by government free-zone authorities, is justified by need, although it's something of a risk. "No doubt about it," he said. "It's a bold step."
Visit www.pronicaragua.org

India will soon have some major competition in the business of offshore call centers and back-office services, if Central America has anything to say about it. Panama already has some 7,000 seats in its thriving call centers, and both Costa Rica and El Salvador are also making a big play for that market. Now Nicaragua wants a piece of the action. In early May, the country dedicated a brand new 465-seat Contact Center in the capital city of Managua. The facility is aimed at companies in multiple industries, including information technology and pharmaceutical services. And while it was launched without a single commitment by a user, Nicaraguan President Enrique Bolanos, who presided over the opening ceremonies, was optimistic that the seats would soon be occupied. Investment-promotion officials claimed that several major contracts are imminent, which would be a boon for a country where unemployment and under-employment are a combined 42 percent, and per-capita gross domestic product stands at $850, the lowest in Central America. "We need 65,000 new jobs every year just to stay the same," Bolanos told members of the press after the dedication ceremony. He views foreign investment and free-market forces as keys to rescuing Nicaraguans from poverty. ProNicaragua, the promotional agency co-funded by the Nicaraguan government and the United Nations Development Program, is pushing the country's geographical proximity to the U.S., along with its core of fluent English speakers, as reasons for U.S. companies to locate back-office functions there. Juan Carlos Pereira, the agency's executive director, said there are around 5,000 Nicaraguans who speak English well enough to staff call centers serving customers in the U.S. Around 10,000 are proficient enough to handle back-office processes where there is less direct customer contact, Pereira said. In addition, he sees a substantial market for Spanish-language services related to business-process outsourcing. (The country has a total population of around 5.4 million.) Nicaragua already has several smaller call centers in operation, including one that supports doctors and pharmacies based in Texas. The latest Contact Center, part of a brand new, seven-story office building that wasn't even completed at the time of the dedication ceremony, represents an investment of $3.8m. In addition, Nicaragua has assembled a package of incentives, including free-trade zone privileges and 10-year tax breaks, to entice companies to locate manufacturing facilities within the country. Officials are hoping that recent ratification of the Central American Free Trade Agreement (CAFTA), to which Nicaragua was one of the first to accede, will serve as an additional boost to the nation's foreign investment activity. The country wants to recapture some of the momentum that was lost when so many U.S. companies turned their attention to China as a source of low-cost manufacturing. In the face of that trend, "we haven't been as aggressive as we should have been," Pereira said. But the call-center efforts are more of a challenge to India, as well as Nicaragua's Central American neighbors. Pereira said the speculative nature of the new Contact Center, built by government free-zone authorities, is justified by need, although it's something of a risk. "No doubt about it," he said. "It's a bold step."
Visit www.pronicaragua.org