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Caribbean lures growing slice of call-center business
LatinFinance / September 2006

By Larry Luxner

Making toll-free airline reservations or inquiring about your credit-card balance?

Until recently, chances were pretty good your phone call would be answered by an agent in India or the Philippines, longtime leaders in the worldwide call-center industry.

But these days, the Caribbean is vigorously promoting itself as a sensible, low-cost outsourcing alternative to Asia — and it's enjoying huge success.

Jamaica alone has 8,000 "seats" or positions, and 15,000 actual agents.

Christopher McNair, an IT adviser at the government investment promotion agency Jampro, says 18 companies now operate call centers in Jamaica, the largest of them being ACS in the Montego Bay Free Zone, West in Kingston and e-Services Group International (e-SGI) at both locations.

In May, e-SGI, whose 1,500 workers process over 30 million transactions annually for a variety of U.S. and foreign clients, announced it had landed a contract to provide customer-care and reservations services for Delta Air Lines. The megadeal, whose value wasn't disclosed, is expected to double e-SGI's Jamaica workforce to 3,000 and fuel an expansion to St. Lucia.

"We selected e-SGI based on their proven ability to deliver high-quality customer service at a significant cost savings as well as their proximity to the U.S.," said Steve Scheper, vice-president of reservations at Delta.

Patrick Casserly, who founded e-SGI in 2002 with back-office processing for one client and a staff of 35, says his company grew 55% in the first three years. In 2006, he expects revenues to jump by 50%.

"We anticipate that with the success of the [Delta] program, our partnership will redefine the outsource sector in Jamaica, and we are putting all resources in place to ensure a successful agreement," said Casserly.

Meanwhile, Apple Vacations has 110 employees in Montego Bay, while Unique Vacations — which handles reservations for the Sandals resort chain — recently moved its call-center operation from Florida to Jamaica.

"Our biggest advantage is proximity," said McNair. "People are no longer looking to travel two days to get to Mumbai or Bangalore. We're just 90 minutes by air from the U.S. coastline. The fact that we're English-speaking is also important, not to mention we also have a large, educated workforce."

Industry expert Philip Cohen, an adviser to the American Teleservices Association, said GE and American Express were among the first multinationals to move their back-office operations to India, though things really began picking up in 1999, when McKinsey published a report predicting India would have 300,000 call-center jobs by 2008.

"That got companies building call-centers in India — mainly Bangalore — and then other countries started talking about this," Cohen said. "Since then, the whole industry has just exploded."

Today, call centers employ some six million people worldwide.

"India is OK if what you're looking for are large numbers of English-speaking agents, said Cohen. "But if you're looking for smaller numbers, there's really no reason why you should go to India when you have smaller countries like the Dominican Republic, Jamaica, Costa Rica and Panama."

McNair said Jamaican wages are one-third that of the United States — about $2.75 per hour compared to the $8 an hour earned by the average U.S. call-center employee. He said the industry generates over $100 million in revenues annually for Jamaica.

"Right now, we are in the process of adding 200,000 square feet to the Montego Bay Free Zone, giving us more space to attract investors in the call-center industry," he said.

But Jamaica may soon be eclipsed by the much larger Dominican Republic, home to tens of thousands of people who speak fluent English in addition to their native Spanish.

At present, no less than 12,000 Dominicans are working at 35 call-center companies, many of them located in the recently expanded Santo Domingo Cyberpark located five minutes down the road from the capital city's international airport.

The industry's most important cheerleader here is President Leonel Fernández. At a recent conference in Santo Domingo, Fernández thanked call-center executives for setting up shop in the Dominican Republic and urged more to come.

"We must transform our economy from a low-end assembly center to a knowledge-based center of excellence," he said. "I see the digital economy as the best opportunity we in the Dominican Republic have ever had of leapfrogging to a new level of economic development. For the first time in our history, we have a chance to eradicate poverty and increase our standard of living to an unprecedented level."

It helps that the country's telecommunications industry has also been growing almost exponentially. Verizon is now the largest single foreign investor in the D.R., thanks to a telecom boom that saw over one million wireless lines added during 2005. According to regulatory agency Indotel, there are now over 3.5 million cellular lines in the country, up 23% from a year ago.

"The dominant factor is having enough people with the right qualifications. In addition, you must have a good telecommunications infrastructure," said Cohen. "Without that, it won't work."

To that end, Miami-based Terramark recently announced it would invest at least $35 million in a "Network Access Point" at the Santo Domingo Cyberpark.

Eddie Martínez, director of the country's Export and Investment Promotion Center, said "this is basically an 85,000-square-foot building, a centralized location for telecom companies from around the world which will provide increased connectivity."

Martínez, who's also chairman and founding director of the Santo Domingo Cyberpark, said the Dominican government "is promoting joint ventures with India in many areas, and some of them will come to fruition quite soon."

"A multilocation strategy is what pays off today," he said. "Our strategy is to establish a relationship that would be based on Indian know-how and experience, combined with our similar cost structure and ability to offer bilingual, English and Spanish-speaking personnel, and our near-shore location."

Cohen agrees, noting that the two countries can complement each other rather than compete outright for call-center dollars.

"You could have Spanish here and English in India. For example, press one and your call is handled in India. Press two for Spanish, and the call is handled in the Dominican Republic," he explained. "If you need to transfer a call between centers, it can easily be done using VOIP. It's not a big deal, the cost of the actual telecommunications is very small, and just requires imagination to do it."

Edwin Figueroa, who heads the Latin American/Caribbean operations of Avaya, a $6 billion company with 20,000 employees in 52 countries, said "you can't put all your eggs in one basket" when it comes to outsourcing — and that wages aren't the only factor to consider.

"The average Latin American/Caribbean call-center employee earns $700 to $1,000 a month, a proven savings of 30-35% compared to the U.S.," he said. "That's still about $20 per employee per month more expensive than India. However, you have to add security, food services and transportation for India. You have to bring them all to work on a bus. When you add that up, Latin America and India become very similar. And Latin America has the same time zone and religion as the U.S., and also baseball and ESPN. You can bring your customer to the D.R. in the morning and be back home the same night."

The same is true of Panama, Costa Rica, El Salvador and Nicaragua, which are all succeeding at luring call-center jobs away from the United States, thanks to their large pools of bilingual workers who speak English with American accents.

"The beauty of Central America and the Dominican Republic is that a lot of these people have worked in the States and are fully bilingual," said Figueroa, adding that "every call-center job generates seven other jobs. The majority of people who work in call centers become middle-class. They buy houses, they buy cars, they go to the movies."

Says Alvaro Montealegre, founder and president of Almori S.A., which operates a 100-employee call center in Nicaragua: "You have qualified people here who can give you the levels of productivity you need. The people doing these jobs have a higher level of education [than their counterparts in the United States], but because of the job market here, they're more hungry."

Indeed, while critics see these call-center operations as magnets that lure jobs away from American shores, in poor countries like the Dominican Republic, Jamaica and Nicaragua they often mean the difference between poverty and prosperity.

"The United States still has the largest population of agent positions in the world," says Jamaica's McNair, arguing that the amount of outsourcing is still relatively insignificant compared to the overall picture. Besides, he adds, if transferring jobs to the Caribbean helps a company remain in business and stay competitive, then it's a no-brainer.

"According to the experts, for every dollar the U.S. actually outsources [in call center-jobs], it gets $1.50 back," he said. "So from my point of view, the United States benefits."

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