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Offshore Number Crunching
Américas / January-February 2001

By Larry Luxner

When entities as diverse as United Parcel Service, Deutsche Telekom and the Worldwide Wrestling Association need to file financial statements for the U.S. Securities and Exchange Commission , their 10-Ks often take an electronic hop through Barbados.

R.R. Donnelley Financial Barbados is a division of New York-based R.R. Donnelly Financial, a $600 million company. It employs 185 workers -- most of them women -- to process different file formats and prepare them for various media, from print-based typesetting to ASCII data formatting.

"Our operations started here in 1986," says general manager Ed Olivares. "At that time, it was a prepress facility where we processed film for publishing books. In 1994, the book business unit was downsized, and the financial business unit was inaugurated." The facility that Olivares supervises, an18,000-square-foot plant within Wildey Industrial Estates just outside Bridgetown, hums 24 hours a day.

"New work is sent to us by clients in standard word-procesing applications and spreadsheet files. We consolidate the different formats into a uniform format for posting onto the Internet, for filing with regulatory agencies or for final print applications."

Says company spokeswoman Judy Poole: "Our overriding objective is the ability to maintain quality, security and speed. When you're dealing with financial markets, those factors are everything."

Barbados clearly wants to lure more companies like Donnelley to its shores.

Reginald R. Farley, the island's minister of industry and international business, says Barbados -- whose manufacturing sector has remained relatively stagnant for years -- has nonetheless managed to attract several top-notch information technology (IT) firms. In the beginning, these companies did simple data entry, but are now moving into higher value-added forms of IT such as credit-card transactions, medical insurance claims processing and software development.

"Geography no longer matters with high-tech," said Farley. "What really matters is efficiency."

He says the IT and financial service sectors today employ 2,500 Barbadians, or 2% of the labor force. The industry generates $100 million a year in revenues, making it second only to tourism. To date, 45 companies have set up shop -- many of them in the Harbour Industrial Estate complex, which has been set aside exclusively for IT firms.

The largest IT employer in Barbados today is Confederation Life, whose 300 employees process medical claims. Other large companies operating here include Offshore Keyboarding Corp., Canada's Scandata Processing Inc., Great Britain's Technotype and CCS Information Technology of Trinidad and Tobago.

The latest IT firm to establish in Barbados is American Computer Technologies of Maitland, Fla., which set up shop in April at the Harbour Industrial Estate.

Franklyn Jackman, director of ACT's Caribbean Software Division in Barbados, says his 12 "talented, young professionals" spend their days developing e-commerce applications at a fraction of what it would cost to do such work in the United States.

"We're an Internet-based company, so we're looking for reliability in terms of telecom infrastructure, which we found in Barbados. It's also very easy to do business here. Because we're an international companies, the tax incentives allow us to have an operation down here and reduce our taxes substantially," Jackman said without elaborating.

In fact, Farley says wages for IT workers are 40-60% less than in the United States, while IT companies that establish in Barbados pay only a 2.5% tax on profits.

"What we offer that's unique is the overall quality of our work, and the business environment," he said. "Things in Barbados work. There are no hidden costs. Everything is above-board and very transparent."

Yet in trying to attract IT companies, Barbados has stiff competition from nearly Caribbean and Latin American countries.

"Barbados recognizes that it has to continue to concentrate on the factors which make it competitive," says Farley. "This includes education and training, and improving the quality of people working in the IT sector. At the primary and secondary level, we have a program called EduTech 2000 that'll introduce computers into all aspects of the school curriculum over the next five years. This will ensure that content in all subject areas is up to date, and that the our students are just as comfortable with computers and high-tech as our parents were with rotary telephones and the post office."

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