Cost comparisson for BPO and contact center operations in Central America

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Comparisson between BPO and Contact Center costs in Central American countries

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Cost comparisson for BPO and contact center operations in Central America

  1. 1. Saturday, January 23, 2010
  2. 2. Contact Center, BPO and ITO Hub in Central America Saturday, January 23, 2010
  3. 3. Saturday, January 23, 2010
  4. 4. “…if the people are not trained and are not receiving the right kind of training, then we have to go elsewhere — either elsewhere in the United States or elsewhere in the world — because at the end of the day, we have to find the people.” Business Lexington's interview with Tom Blodgett, ACS Saturday, January 23, 2010
  5. 5. Honduras Business Case Saturday, January 23, 2010
  6. 6. Location Assestment Framework Honduras - San Pedro Sula - Altia Business Park Scale and Quality Business Catalyst Infrastructure Quality of Life Risk Profile Cost Saturday, January 23, 2010
  7. 7. 1. Scale and Quality Labor Pool Skills Availability Cultural affinity Graduate Output Skills and Scalability Saturday, January 23, 2010
  8. 8. English skills…bilingual schools are the source… Statistics: Guatemala, 26 bilingual schools El Salvador, 56 bilingual schools Nicaragua, 5 bilingual schools Costa Rica, 35 bilingual schools Honduras, 410 bilingual schools Several associations: • Asociacion de Escuelas Bilingues de Honduras • AASCA - • Asociacion Noroccidental de Escuelas Privadas Bilingues • Part of SACS (Southern Association of Colleges and Schools) http://en.wikipedia.org/wiki/List_of_schools_in_Honduras Saturday, January 23, 2010
  9. 9. Saturday, January 23, 2010
  10. 10. Important Data •Largest English speaking and IT population in Central America (410 bilingual schools), almost 100% more than the rest of Central American countries combined (Approximately 70,000-85,000 people in the country). Each year this number grows by 7,000 high school graduates, and more than 15,000 college graduates per year just in San Pedro Sula •Safe & Cost-Competitive Near Shore Location: Honduras offers the most cost competitive solution in the near shore area in a safe, stable environment •Positive Business Environment: Solid legal framework for investment ensure the safety and continuity of business relations. Saturday, January 23, 2010
  11. 11. What can we expect from Honduras? •Honduras will become the new hot spot for BPO and contact centers due to several factors: – Labor shortage in neighbor countries: Gua, ES, Ni and CR are all struggling to supply and sustain growth in this industry – World financial crisis will keep on putting pressure for companies for outsourcing services, and Latin America/Central America is a perfect nearshore location – Competitive labor costs will create an increasing interest in opening an operation in Honduras – U.S. Hispanic market will keep on boosting bilingual services – Honduras will be the only country in Central America that will be able to supply the necessary labor pool, which will provide sustainability to the indsutry Saturday, January 23, 2010
  12. 12. Important Data •Cultural affinity – more than 100 years with presence of U.S. companies succesfully operating in Honduran territory •More than 25 yrs of democracy – catalogued by the World Economic Forum as a country with good future perspectives •Multinational carriers presence (Milicom – Navega, Multidata, Digicel (Irish),Telecorp, Cablecolor, Telcel (Mexican – Claro) •Honduras has the human capital and the passion for service culture: opportunity for lower cost operations due to attractive labor rates Saturday, January 23, 2010
  13. 13. 2. Cost Cost of Operations Cost of Training Cost of Real Estate Cost of Bandwidth Cost of Living & Energy Savings Saturday, January 23, 2010
  14. 14. Decision Matrix comparing Offshore Locations CRITERIA PHILLIPINES INDIA CANADA IRELAND PANAMA BRAZIL HONDURAS AVERAGE AGENT SALARY PER YEAR (US $) 4,000-6,000 3,500-5,000 25,000-40,000 25,000-40,000 6,500-8,500 7,500-10,000 4,000-6,000 REAL ESTATE COST (RENT PER SQUARE METER) 26.00 18.00 35.00 38.00 26-28 40.00 18.00 REAL ESTATE COST (RENT PER SQUARE FT/YR) 29.00 20.07 39.03 42.38 31.23 44.61 20.07 REAL ESTATE COST (BUYOUT PER SQUARE METER) 3,000 2,000 3,800 4,000 3000-3500 4,000-4,500 1,800 TELECOMMUNICAT ION (E1) 1,000 - 1,400 1,100 - 1,500 650 - 800 1,300 - 1,700 1,200 - 1,500 1,000 - 1,500 900 - 1,200 Saturday, January 23, 2010
  15. 15. Decision Matrix comparing Offshore Locations CRITERIA HONDURAS MEXICO COSTA RICA CHILE AVERAGE AGENT SALARY PER YEAR (US $) 4,000-6,000 10,000-12,000 8,000-10,000 10,000-12,000 REAL ESTATE COST (RENT PER SQUARE METER) 18.00 35.00 26.00 30.00 REAL ESTATE COST (RENT PER SQUARE FT/ YR) 20.07 39.03 29.00 33.46 REAL ESTATE COST (BUYOUT PER SQUARE METER) 1,800 3,800 2,700-3,500 3,000-3,500 TELECOMMUNICATION (E1) 900 - 1,200 1,200 - 1,700 2,000-3,100 1,200 - 1,500 Saturday, January 23, 2010
  16. 16. But we need to compare operating costs in Offshore locations... • In our financial and feasibility models we must include: • Direct salaries • Management costs • Support staff salaries • Training • Real estate • Technology and communication Saturday, January 23, 2010
  17. 17. Cost Comparisson between Central American countries Honduras Costa Rica Nicaragua El Salvador Guatemala Labor pool availability 85,000 15,000 4,000 Less than 5,000 Less than 5,000 Bilingual schools 410 35 5 55 26 Average agent salary (bilingual) $448.00 $650.00 $575.28 $550.00 $540.00 Labor shortage Guatemala has due to a small Honduras has Labor pool has problems amount of the potential to Labor shortages forced the supplying bilingual Human Resource become the have caused bilingual schools government to start labor force due to has Comments next BPO and high rotation an English training a shortage caused deaccelerated contact center and wage/cost program, but will mainly on the low the hub due to increases struggle in the next amount of establishment of labor availability five years bilingual schools contact centers per capita and BPOs Telecommunication Number of service providers 31 1 9 13 19 Average Internet Cost per Mega $200.00 $526.00 $490.00 $465.00 $525.00 and service E1 $1,089.00 $2,960.00 $3,500.00 $2,400.00 $2,100.00 providers DS3 (Clear channel) $22,000.00 $26,080.00 $30,000.00 Not available Not available Saturday, January 23, 2010
  18. 18. Cost comparisson between Central American countries Honduras Costa Rica Nicaragua El Salvador Guatemala Cost per square feet per year $20.07 $27.88 $17.84 $21.00 $14.00 Altia Business Park Low offer on can offer turn key office space Guatemala has projects, including that can a large office This is one of the Real estate Comments everything needed highest costs in Limited office comply with space offer, to start an operation space availability contact center but presents Central America in the shortest time, and BPO high traffic reducing curve of requirements, problems experience costs high costs Energy cost per Kw-Hr 0.15-.17 0.09-0.13 0.16-0.21 0.16-0.20 0.16-0.19 Problems with Energy costs Yes national grid and Redundant systems energy supply Saturday, January 23, 2010
  19. 19. Stages of Development of Contact Center and BPO in Central America Under Developed New entrants development Labor Pool Location Maturity Availability Honduras % of Savings Potential in Operating Costs Costa Rica Panama Guatemala El Salvador Nicaragua Honduras Nicaragua Guatemala Costa Rica El Salvador Panama Saturday, January 23, 2010
  20. 20. Important Data •Altia Business Park will become the most modern technology and business park in the region: • Energy redundant – Energy efficient: we have designed the park as energy self sufficient, but also interconnected to the national grid. We have designed all the buildings aimed to obtain the LEED certification. This will be translated to a cost competitive advantage on the power bill (20-30% lower than standard consumption) • Connectivity redundancy – high quality, cost effective telecommunication • World class environment – we can deliver turn key office space based on your requirements and needs • World class security • Fully 24/7/365 operational capability Saturday, January 23, 2010
  21. 21. Important Data •Honduras is connected to the NAP of the Americas through 3 submarine cables, which provide reliable communications infrastructure •Honduras has one of the largest fiber optics network in the region. Lowest telecommunication cost in the whole region •Sustained economic growth of more than 5.5% during the last 7 years; it is expected to have a 3% growth during 2010 •Honduran recently elected government has established the service sector as a national priority Saturday, January 23, 2010
  22. 22. 3. Business Catalyst Government Benefits Competitive Landscape Untapped Labor Currently Incentives Pool Employed Business Environment Saturday, January 23, 2010
  23. 23. San Pedro Sula Business Case Saturday, January 23, 2010
  24. 24. Important Data •70% of business visitors to Honduras arrive through San Pedro Sula’s airport •San Pedro Sula is the motor of the Honduran economy, generating more than 60% of the national GDP •San Pedro Sula has become a vibrant economic and industrial city (1.1 M people) with 6 main universities (total population of 50,000 students) and 52 bilingual schools in the urban area and 161 in Cortes, and a total of 410 in Honduras •San Pedro Sula has daily/direct flights to New York, Atlanta, Houston, Miami and connected to Los Angeles, San Francisco, Mexico, Central and South America Saturday, January 23, 2010
  25. 25. Saturday, January 23, 2010
  26. 26. Saturday, January 23, 2010
  27. 27. Saturday, January 23, 2010
  28. 28. Saturday, January 23, 2010
  29. 29. 4. Infrastructure Connectivity Bandwidth availabiltiy Transportation Operational Environment Saturday, January 23, 2010
  30. 30. Saturday, January 23, 2010
  31. 31. Internet costs (VoIP) This price has gone down to US$200.00, information provided by Mario Alvarenga/Navega, January 2010 Source: Julio Herrera, Navega Commercial Manager,March 2009 (Prices in US$) Saturday, January 23, 2010
  32. 32. Important Data •Altia Business Park is based as a free zone, which means you are exempt of any local or national tax. •Competitive real estate cost •We have in place a network of strategic partners and alliances to help you reduce your curve of experience costs and your time to have running an operation •Any BPO or contact center will have at their service a multidisciplinary team aimed to help you have a successful operation: human resource, engineering, logistics, etc Saturday, January 23, 2010
  33. 33. Altia Business Park - Strategic Geographic Location (public transportation routes) 25 minutes, moderate traffic Saturday, January 23, 2010
  34. 34. Building Timeline 70% advance on civil works First tenants will 100% advance be moving their offices and Infrastructure operations May ’09 Aug ’09 Oct ’09 Dec ’09 March ’09 We are on the 11th Interior of Lobby Connectivity and floor (14 floors) design finished power Building infrastructure installation Saturday, January 23, 2010
  35. 35. Our strategic network Saturday, January 23, 2010
  36. 36. 5. Risk Profile Commercial Risk Political Risk Natural Risk Social Risk Saturday, January 23, 2010
  37. 37. Important Data • Honduras has recently designed a Nation Plan for the next 30 yrs. This was elaborated by leaders, academics, businessmen, social institutions and represents the vision of a better Honduras • On November ’09, we elected a new government and President Lobo has established as his priority to execute the Nation Plan • Altia Business Park spearheads the new and modern Honduras, focussed on developing a service industry based on our competitive advantages Saturday, January 23, 2010
  38. 38. 6. Quality of Life Social Infrastructure like Non work culture Availability of Recreation/ Education institutions, Leisure facilities hospitals Saturday, January 23, 2010
  39. 39. Quality of Life Saturday, January 23, 2010
  40. 40. Quality of Life Saturday, January 23, 2010
  41. 41. “Altia Business Park, located in San Pedro Sula near two of its premier technology universities, is the first designated Free Zone facility offering all the tax and customs duty benefits, tailored for IT and BPO firms. Its prime location in the main commercial and industrial city of Honduras with a captive population of over 1 million is a critical element for attracting and retaining quality human resources and managers.” Saturday, January 23, 2010
  42. 42. Conclusions Honduras is a country with the right infrastructure and the human capital, perfect for a near shore operation; a vibrant city with the business environment aimed for successful ventures; a world class business and technology park with all the required energy, telecommunication, security and modern office space, all of them together providing a real competitive cost advantage. Saturday, January 23, 2010

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