As outsourcing stalls, construction companies eyeing new growth sectors

With the outsourcing sector in Jamaica facing a level of uncertainty at this time, developers of real estate are putting their construction dollars towards space for other types of businesses.

Dayton Wood, chairman of the Jamaica Developers Association, JDA, says there has been a falloff in the level of construction projects dedicated for housing outsourcing enterprises in Jamaica. Instead, developers are currently looking for opportunities in the housing market, logistics, and the hospitality sector.

The outsourcing sector, otherwise referred to as the global services sector or business process outsourcing, employs about 55,000 persons locally, most of them women. That’s up from around 44,000 during the coronavirus pandemic.

At one point, there were bullish projections for outsourcing jobs to climb to 70,000 by this year, 2025, but the sector has found itself grappling with the residuals of remote work practices, emergent artificial intelligence technology capable of doing tasks now done by call centre agents, and the unfolding changes in policy in a major market, with a keen eye on new legislation known as the Keep Call Centers in America Act.

“There has definitely been a dip. Some of the operators here are consolidating, thus reducing their requirement for office space,” said Wood. “COVID has taught us that people can work from home, so demand for office space has been reduced,” he said.

The JDA head cited logistics, hospitality and housing as areas of possible growth in the immediate future.

“There are possibilities in terms of the transshipment developments taking place. There are also developments in the tourism industry, where there is more and more demand for holistic tourism products that incorporate the wider society … also for housing accommodation for workers, for example, there is a large development to take place in Westmoreland and, from what I understand, it has already been approved to get going,” Wood said.

The JDA represents over 40 members and associate members, including real estate developers, suppliers of construction inputs, lawyers and real estate dealers.

The call centre bill introduced in the United States in July aims to keep jobs inside the US by limiting federal benefits for companies that outsource services overseas.

President of the Global Service Association of Jamaica Wayne Sinclair said it could be months, if not years, before the proposed bill comes up in the US Congress for passage or rejection.

“There is a lengthy process that this goes through before it can even go to the desk of the president to be signed,” said Sinclair. “We have a long way to go before this even gets past the introduction stage, which is where it still is at now,” Sinclair said.

There are about three million call centre workers of all categories in the US, which is less than the population of that country, and it may take some time and effort before the bill gains traction there, Sinclair explained.

There is enough real estate space on the market to fulfil the needs of the sector currently, he said.

“I don’t know that there will be a need for additional space above what exists today. If we need additional space, there’s excess capacity on the market,” he said.

Meanwhile, Mark Kerr-Jarrett, managing director of Barnett Limited, which operates a sprawling technology park in Montego Bay, says the facility is almost fully tenanted.

“Occupancies are good. Some occupancy has gone down some since COVID because of the work from home (arrangements), but it’s still looking very positive. Our overall occupancy is somewhere between 6,000 and 8,000 people working there. All of our buildings are occupied and we expect that will be the case for the near future,” Kerr-Jarrett told the Financial Gleaner.

Currently, Kerr-Jarrett is in the planning stage for the Barnett Logistics and Distribution Centre at North Bank, an industrial development to provide logistical support to Montego Bay.

“Basically what we’re looking at is to take advantage of the upcoming Montego Bay perimeter road and the overall development of Western Jamaica to position Montego Bay as a regional hub … .So, instead of everything being distributed from Kingston, it can be distributed out of Montego Bay making use of the airport, our deep seaport and highway infrastructure,” Kerr-Jarrett said of the 100-acre development.

Tourism is also expected to be a major driver of construction over the next couple of years. For the current fiscal year, the Jamaican government has indicated that construction of six hotels, totalling 5,600 rooms, would begin, bringing foreign direct investment of US$2.5 billion and 10,000 new jobs.

Government also said the buildout of 1,000 houses for hotel workers would commence.

Developers are shifting focus amid signs of renewed energy in the construction sector.

The construction market has been in a downturn in the post-pandemic era, but the direction is now shifting. The sector grew 1.7 per cent in the June quarter, the Statistical Institute of Jamaica reported this week.

Construction contributed $109 billion to gross domestic product or economic output in calendar 2024, but that’s coming from $115 billion in 2021 when the sector was doing robust business.

In 2025, however, the sector’s economic output rose to $52.1 billion, at half-year, up from $51.4 billion in the comparative January-June 2024 period.

luke.douglas@gleanerjm.com