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Industry Research : Managua Makes Top 100 Outsourcing Destinations
As a general rule, Managua gets better looking the farther away you get. But an advisory firm for global outsourcing and investment says Nicaragua’s homely capital deserves a closer look.
Thanks to improved infrastructure, competitive costs, a skilled bilingual workforce and an attractive geographical location, Managua has moved its way onto Tholons’ list of Top 100 Outsourcing Destinations in the world. According to the referential list, Managua ranks 95 in the world—one notch above Guatemala City, which also makes its first appearance on Tholons’ 2013 index.
The only other Central American country represented on the list is Costa Rica, whose capital city ranks 15th in the world, up five spots from last year. Neither Honduras nor El Salvador—two of Nicaragua’s biggest competitors in the global outsourcing market—made Tholons’ ranking.
India and the Philippines dominated the top 10 spots on the global outsourcing destination list, with Bangalore, India claiming the title as outsourcing capital of the world.
But Nicaragua is now on the map and getting its due as an up-and-comer in the industry.
"With major players such as Sitel, 24/7 Customer and Stream Global Services, Managua has nearly 4,000 FTEs (call center employees) delivering bilingual contact support services," Tholons reports.
The challenge for the two Central American newcomers will be to keep their spots on Tholons’ list by improving their perceptions abroad—something Nicaragua is already working on.
"These two new entrants (Guatemala and Nicaragua) in the Top 100 List have to be more cautious in maintaining a facilitative business environment," Tholons warns. "Nicaragua faces negative perceptions on its political stability, while Guatemala will need to work on improving its natural risk perceptions."
Javier Chamorro, executive director of Nicaragua’s investment-promotion agency ProNicaragua, which is spearheading national efforts to improve the country’s image abroad, says Nicaragua is satisfied with its recognition as an emerging industry player. Nicaragua’s initial call-center growth spurt—25 companies have set up shop here and employed nearly 5,000 Nicaraguans over the past seven years—has been impressive and augurs well for the future of the business process outsourcing industry here.
"Being listed in the Top 100 Outsourcing Destinations implies that international experts in the industry recognize the country as a world-renowned destination for outsourcing, still above other countries in the region such as El Salvador and Guatemala, which started developing the sector years before Nicaragua," Chamorro told The Nicaragua Dispatch. "This means that the country is attracting the right attention and stands out as an emerging destination due to the excellent investment opportunities it offers to companies looking to expand their operations and increase their global competitiveness."
And when it comes to global competitiveness, Nicaragua has several advantages of its own, Chamorro says.
"Among the country’s main competitive advantages for the sector is its strategic location, close to the largest outsourcing market in the world, the U.S.," Chamorro says.
Plus, he adds, Nicaragua has a young and vibrant workforce that "not only speaks good quality English, but has a cultural affinity with the market due to the ‘reverse brain drain’ phenomenon, which refers to people who left the country in the past and have returned to Nicaragua with English skills and market knowledge."
The country’s "greatest advantages," however, are its cheap labor costs and generous tax incentives for outsourcing.
"It is because of this that Nicaragua is able to compete with the global players in the industry, as it offers lower costs with a near shore location, allowing it to provide timely services to the United States without losing valuable working hours," Chamorro says.
Keeping the pot boiling
As Nicaragua continues to make a reputation for itself as an attractive destination for outsourcing, the country will be challenged to meet the growing demand for bilingual personnel to staff its call centers.
The government, in conjunction with the National Free Zone Commission (CNZF) and the Inter-American Development Bank, has established a special capacity-building program aimed at identifying and training a young bilingual workforce to staff the call center industry. The program, known as "Opportunity Builder," is scheduled to start its training program in the coming months with an initial incoming class of 600 young professionals.
Posted by Veronica Silva Cusi, news correspondent
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Published: Tuesday, January 22, 2013