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Overview for Technical Nearshore Investment in Costa Rica


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Near /off shore is a very good possibility for companies in developed countries. There are several possibilities such as India and Eastern Europe. But since the late 90's Costa Rica has becoming more popular in the technological nearshore outsourcing industry. This presentation gives an interested party a first glance at the state of the affair.

Published in: Technology, Travel, Business
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Overview for Technical Nearshore Investment in Costa Rica

  1. 1. Nearshoring Costa Rica First knowledge on setting up shop
  2. 2. Agenda ✦ Overall Costa Rica's nearshore attractions ✦ Technical and UXD workforce ✦ Technical and UXD pay grades ✦ SWOT for Costa Rica nearshoring ✦ High-level steps towards setting up shop
  3. 3. Attractions ✦ Time zone (GMT -6) US CST ✦ Strategic location: 6 hour flight from LA or NY (direct flights from major US cities -i.e. Boston and Chicago) ✦ Language: English is a major language ✦ Stability: economic, political and social ✦ Workforce: highest literacy rates of American continent (95%)
  4. 4. Workforce ✦ 34.2% of population is 15 to 35 years old (annual growth: 2.1%) ✦ Labor force (2007): 2.01 million, unemployed 4.6%, underemployed 7.4% (annual labor pool growth: 3.7%) ✦ 6% of GDP is allocated to education ✦ CR ranks 7th in Quality of the Education System and 8th in Adult Literacy Rates worldwide
  5. 5. Technical Workforce ✦ In availability of Scientist and Engineers CR ranks as 8th country in the world ✦ Since 2001 University graduates in Software and Informatics has been growing at a rate of 7.2% (graduates in 2008: 1,750) ✦ Companies such as Digitas, Critical Mass, Schematic among others, have successful workforces in the country
  6. 6. Technical Detail ✦ Employees at Interactive Agencies in the country for US markets perform in areas such as (among others): ✦ Java, .Net, LAMP, Flash, AS, Flex, Silverlight, RIA, Websphere, Mobile technologies ✦ Interface eng., DBA, Solution Architects, QA ✦ PM, Interface/Visual Designer, Flash Designers ✦ In smaller numbers: UXD, Content Strategy, SEM
  7. 7. Technical Pay grades ✦ Example of acceptable monthly Salary Ranges (USD) Position Starting (Juniors) Up to (Senior) Production Designer 900 1200 Visual Designer 1000 1800 Interface Eng 1500 2500 Application Dev 1200 2300 AS/Flex Dev 1500 3000 PM 1400 2300 UXD 1300 2500
  8. 8. Government duties ✦ Besides the salary paid to employees, companies have another cost associated with payroll: ✦ CCSS: CR law states that the employer must contribute to the social security regime of its employees with a fixed percentage of the employees salary - 26.00% ✦ So if the salary for the employee is $2000 a month, the real cost for the employer is $2520
  9. 9. Annual Pay grades ✦ Based on the salary ranges before mentioned, and with the CCSS percentage here the annual pay grades Position Starting (Juniors) Up to (Senior) Production Designer 13,608 18,144 Visual Designer 15,120 27,216 Interface Eng 22,689 37,800 Application Dev 18,144 34,776 AS/Flex Dev 22,689 45,360 PM 21,168 34,776 UXD 19,656 37,800
  10. 10. SWOT ✦ Strenghts: ✦ Knowledge and quick learning curve of human resources ✦ Country’s lifestyle and idiosyncrasy ✦ Lower operation costs ✦ Availability (location, time zone) ✦ Weaknesses ✦ Office space vs human resources availability ✦ Investment incentives only for large operations (Free Trade Zone Regime) ✦ Isolated awareness of interactive industry best practices ✦ Opportunities ✦ Momentum of the nearshoring local industry ✦ Threads ✦ Not enough resources in a specific area of expertise or too high recruiting parameters ✦ Infrastructure: communications and Internet could be improved
  11. 11. Operation Alternatives ✦ Establish a local company office with own payroll (such as Schematic is operating in CR)* ✦ Contract a company and use their payroll (such as Digitas is operating) ✦ Depending on the project’s nature, sub contract local established companies to develop it and have a portafolio of local sub contractors for the various needs (such as Wax Communication is operating)
  12. 12. First Steps ✦ Incorporate the company in the Mercantile Registry (attorney needed for all these) ✦ Register with the General Income Tax Office ✦ Register as an employer with the Social Security (CCSS) and the National Insurance Institute (INS)* ✦ Request a permit to operate from the Ministry of Health* ✦ Request a Municipal License*
  13. 13. Eager to work with you +506-2283-3696 skype: andreatanzi