Thu | Nov 15, 2018

Outsourcing interest in the Caribbean on the rise

Published:Wednesday | January 24, 2018 | 12:00 AM
Pamela Coke-Hamilton, executive director of Caribbean Export Development Agency.

Pamela Coke-Hamilton, executive director of the Caribbean Export Development Agency (CEDA), says that the preliminary assessment of an investor perception survey initiated by CEDA in the final quarter of last year, shows that nearly half of the respondents are considering outsourcing to the Caribbean.

Indicative results of the survey are that investors are developing a multi-destination strategy based on the attractions of nearness and language, the executive director told an outsourcing conference held in Jamaica in December.

"BPO (business process outsourcing) investments can take anywhere from 18-24 months to materialise. We are hoping that from the event in December, we can see investments in the sector by early 2019, as we had some very solid leads and interest from BPO operators in expanding throughout the region," Suzette Hudson, Caribbean Export's senior adviser for investment promotion, told the Financial Gleaner on Tuesday.

"Regarding new countries in the region for BPO, we've seen an increased interest for investments in countries like Belize, where they offer both Spanish and English, Grenada, and St Lucia. There is also an interest in linking financial services with outsourcing, and smaller territories like Curacao are taking advantage of this by connecting with the Netherlands and positioning themselves in the fintech and cybersecurity market." Hudson said.

Coke-Hamilton said that the survey showed the need for Caribbean markets to address develop-mental issues, including more incentive packages, and the provision of more data or market research on the BPO sector.


Qualified workforce


The Caribbean's BPO industry is pitched to investors as a "13 million-strong and qualified workforce." As a nearshore destination, it is in a similar time zone as New York, with daily flights from key markets, while relative to Miami, regional markets are anywhere between 45 minutes to three hours away, according to Coke-Hamilton.

Across nine countries - The Bahamas, Barbados, the Dominican Republic, Guyana, Haiti, Jamaica, Suriname, Belize, and Trinidad & Tobago - the sector comprises more than 200 delivery centres and 74,000 agents, based on 2015 data.

Caribbean Export said that between 2010 and 2015, the industry grew by an average of 17 per cent, and that BPO and other professional services generated over US$2 billion in revenue in 2014.

"Calculations show that companies in the region generate close to US$25 million in revenue for every 1,000 agents. The level of profit is around 7 per cent for call centres and close to 15 per cent for non-voice, back-office shared services," Caribbean Export says in its online BPO booklet.

According to the BPO booklet, the global BPO market is valued at US$1 trillion, while the size of the cross-border outsourced services traded between countries was estimated at an annual US$88.9 billion in 2015. The value of Jamaica's sector at that point, based on revenues generated, was reported to be US$400 million.

The largest share of this revenue goes to the Asia-Pacific region, which dominates the market for outsourced services with a near 70 per cent share, followed by Europe with 10 per cent, Canada 9 per cent, and Latin America with 9 per cent.

"Among the noticeable trends in the global BPO industry is the focus on new, innovative offerings, for example in contract structuring, with BPO providers becoming more creative in landing mega-sized and multi-year outsourcing deals," the booklet notes.

It adds that among the recent trends, "smaller BPO engagements, with clients splitting a deal into smaller, more specialist providers, as opposed to using one large provider; and more flexible location solutions - for example, agents working from home, onsite, nearshore or offshore - are now possible, thanks to technological advancements."