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Nearshoring to Latin America: Why Costa Rica is the Premier Alternative [Auxis Webinar - 11/06/2019]
This document highlights Costa Rica as a premier nearshoring destination in Latin America, emphasizing its strong education system, political stability, and cultural affinity with the U.S. It details the growth of outsourcing and nearshoring industries, with significant expected increases in BPO and ITO reliance by companies. Key advantages of Costa Rica include a highly skilled, bilingual workforce, proximity to U.S. markets, and a favorable business environment, which have led to a substantial increase in multinational companies establishing operations there.
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Nearshoring to Latin America: Why Costa Rica is the Premier Alternative [Auxis Webinar - 11/06/2019]
- 1. 1 Eric Liebross Senior VP,Business Operations Performance Cortney Dominguez Former VP Financial Operations November 6th 2019 12:00pm ET Ana María Romero Montoya Lead Corporate Services Nearshoring to Latin America: Why Costa Rica is the Premier Alternative Finance, IT, Customer Service and more
- 2. 60% of organizationsare looking to increase their reliance on BPO & ITO Sources: -BPO Market Analysis Report from Grand View Research -2017 KPMG/HFS Research State of the Outsourcing and Shared Services Industry Report - Deloitte CFO Signals 2018) Outsourcing & Nearshoring have become widely adopted practices that keep growing year over year… The global BPO market size is $223B and is expected to reach $343.2B by 2025 (at a 7.4% CAGR) Latin America represents 28% of the “Top 25” Global Outsourcing Destinations (Tholons 2018) In 3 years, US CFOs expect that 44% of their workforce will work from nearshore locations IT continues to be the largest user of outsourcing (94%) but it continues growing across all functions including F&A, Customer Service, Supply Chain, Procurement and others Organizations outsourcing finance are on average outsourcing 38% of their processes, which represents an increase of 81% versus 2013
- 3. 3 Most back officeoperations spend more than 70% of their time on transactional tasks, “keeping the lights on” Finance Departments are a clear example of this but savvy CFOs have started to evolve: “81% of CFOS see identifying and targeting areas of new value across the business as one of their main responsibilities” Re-Focus01 Sources: The CFO Reimagined: from Driving Value to Building the Digital Enterprise. Accenture 2018, Finance priorities in 2019 – Gartner, Robert Half 2019 Finance & Accounting Salary Guide + “53% of CFOs worry that their finance function is reactive or that data and information-sharing processes are not streamlined” Efficiency02 + “91% of CFO’s reported challenges finding skilled accounting professionals, and are concerned about the declining relevance of the current Finance team’s skillset” Talent03 = “63% of CFOS agree that in 3 years the majority of their team’s time will be spent on analysis, prediction and decision support rather than accounting, reporting and compliance“ Modern F&A
- 4. 4 Leading Regions forShared Services & Outsourcing Location Strategy Latin America Eastern Europe North America South and East Asia Lowest cost in the globe Most common global destination for low-value, transactional processes Significant time-zone and cultural differences with the Americas Pan-Regional solution for Americas 30% to 60% labor arbitrage compared to US Used for both low and high value activities Regional solution for US and Canada High cost – not convenient for a global solution Nearshore solution for Europe • Geographic Proximity • Time Zone • Low Cost • Large and Strong Workforce • Cultural Affinity • Language Skills • Lower Turnover than Asia • Infrastructure Primary Drivers
- 5. 5 The True NearshoreDestinations in the Americas Costa Rica, Colombia & Mexico • #1 LatAm Destination • Maturity of the Services Sector • Multi-lingual skills • Gov’t Support/Ease of Doing Business • Higher cost than Mexico and Colombia • High Concentration of Captive Shared Services • Smaller Labor Market • 2nd Largest Labor Pool in LatAm • Low Costs • Multinational Experience • Political stability • Ease of doing business • Gov’t support • Labor Force Quality and Flexibility Challenges • Low Costs • Labor Force Quality • Gov’t Support • Emerging/growing destination • Multi-lingual capabilities • Labor Flexibility • More limited SSC experience supporting the US • Perception of security and political challenges Highlights Costa Rica ColombiaMexico
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- 7. 7 • #1 Englishproficiency in Latin America • #1 Education System in Latin America with the highest literacy rate (98%) • Strong services sector with consistent growth year over year • Central Time Zone with quick direct flights to most major U.S. Cities • Strong Cultural Affinity to the US • #1 Country in Innovation in LatAm by Global Innovation Index (2017) • No Army! It was abolished in 1948 • Safest City in Latin America - recognized worldwide for its politically stability and peace. • Solid Infrastructure & Utilities with 100% power and Telecom redundancy Costa Rica has been consistently ranked as the #1 nearshore destination in Latin America
- 8. 2000 2018 1,061 65,904 2000 2018 6 172 62x28x Compared to 2000, employment is 62x and the number of multinational companies is 28x Costa Rica is the #1 Exporter of high value added services in Latin America Source: CINDE, 2019
- 9. 1.4% 7.3% 8.6% 4.8% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2000 2001 20022003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Exports of selected industries as a % of GDP Telecommunications, computer, and information services; and other business services Agriculture Telecommunications, IT services, and other business services exports represent over 7% of the GDP Evolving from Agriculture to an Industry & Services Based Economy Source: CINDE based on data from BCCR and PROCOMER, 2019
- 10. Over 170 World-RenownedMultinationals have established Services Operations in the country
- 11. Costa Rica End-to-end centers offeringservices 24x7x365 in: English Spanish Portuguese French German Mandarin Italian Regional or Global Centers of Excellence Serving the World in Different Languages
- 12. Contact Centers SharedServices Back Office Financial processes • Accounts Payable/Billing & Billing Adjustments • Accounts Receivable, Invoicing & Collections • Credit Verification • Fraud Control • Auditing • Reconciliation • Cash Application • Cost Accounting • Financial Reports • Financial Planning & Analysis • Fixed Assets • General Ledger • Order-to-Cash • Purchase-to-Pay • Record-to- Report • Revenue Cycle • Tax Filing & Analysis • Treasury • Controlling • Transfer pricing Procurement • Procurement- to-Pay • Bidding • Strategic Sourcing & Purchasing • Transportation planning and execution • Suppliers & Vendor management • Inventory allocation and management • Planning • Forecasting/ Seasonality • Customer order tracking (credit hold, order processing and management claims) Human Resources • Payroll • Regional Recruitment • Screening & Staffing services • Talent Management • HR Planning & Reporting • Employee Administration • Expat Relocations & Training • Travel & Expenses • Benefits & compensation • Hire to retire Other • Business Knowledge Analysis • Business Intelligence • Organization Analytics • Data Entry & Processing • Master Data Management • Research & Data Analysis • R&D • Business Presentation Design • Portfolio Analysis, Investment Research • Project, Process, Contract & Product Management • Change Management • Risk Management • Clinical data reporting • Contract reviewing • Sales & Marketing BPO • Finance & accounting • Data center operations • IT operations (IT helpdesk, IT Security Administration, Software & Web Development, Application Maintenance & Support) • Network design, operations, support & maintenance • Supply chain • HRO: Payroll, Background check, Benefit & compensation management, retirement assistance & corporate travel • Facilities services Financial KPO • Strategic consulting IT • Local IT support • IT Global Helpdesk • IT Infrastructure • Web Development & Support • Software Design, Development & Validation • Application Design, Engineering & Development • Quality Assurance & Testing • Reporting & Analytics • Advanced Analytics • Database administration • Big Data • Cybersecurity • Robotic Process Automation • Collections/legal collections • Simultaneous Interpretation • Video remote interpreting • Customer Service/Care (via phone, e-mail & chat) • Technical Support (Tier 1-4) • Sales/B2B sales • Billing • Insurance validation • Supply chain support • Seller/Vendor support • Marketing support • Cloud support Back office support • Presentation design, business knowledge analysis, learning services • Report & content editing • Social media management • Health industry support • Title insurance management & policy review • Data entry, mining & processing • Logistics processes (auditing freight, international freight payment transactions, customs) A Full Range of Front and Back Office Services Multi-Functional Centers – F&A, Customer Service, IT and more
- 13. Engineering & DesignRegional OfficesDigital Technologies Digital Services • Banking & financial software development • Insurance software development • ERP programming • Statistical programming for clinical data • Embedded software (front & back end) • Software design, engineering, maintenance, customization & implementation • Testing & development support for electronic devices (aeronautic industry) • Back-End Programming • Quality Assurance & Testing • IT Architecture Solutions • Business Intelligence & Analytics • Technical Project Management • Server administration • Front-End web development • Application design, development, maintenance & support • Mobile application & software development • Oracle consulting (apps and ERP, hosting & support) • Engineering support for wireless communication • Cloud services: storage & security. • Cybersecurity • Risk management • Database administration • Networking • Digital production: multimedia, art direction, graphic design, storyboard illustration, web microsites, and banner design • Digital marketing: content production, email production and management (viral mkt, search engine optimization) • Social media management: intelligence, reporting, creativity, social network planning and media mgmt., community mgmt., production and development) • Animation: 3D, HTML • Gaming • Advertising: interactive and digital ad, campaign development and promotions, multi-channel campaigns • E-commerce • Creative design, direction & conceptualization • Web Design, Development & Production • User interface design: UX / UI • Mobile app development (iOS and Android) • Consumer behavior analysis: data and search analytics • VR & AR • Application Engineering • Orthopedic Reconstruction & Design • Orthodontic 3D Design • Hardware design, development, testing & validation • Architecture drawing & design • CAD - CAM Technology support • Proof of concept • Product testing • Prototyping • Writing of technical manuals • Budgeting and sales support • Project Management • Process Management Engineering • R&D+i • Corporate affairs • Distribution of raw material • Inventory Management • Logistics Services • Finance & Accounting • Sales and Marketing Strategies • Supply chain • HR • IT Services (regional and global) • Business management • Legal support Also offering a wide array of complex services
- 14. 14 Why Costa Rica:Location, Location, Location Costa Rica is just a few hours away from North America & Europe From SJO – San Jose Fort Lauderdale Houston Miami Atlanta New Jersey Charlotte Dallas Orlando Phoenix Los Angeles Toronto Montreal Baltimore Chicago Washington 4 daily 4 daily 3 daily 2 daily 2 daily 1 daily 1 daily 1 daily 1 daily 11 weekly 11 weekly 4 weekly 1 weekly 1 weekly 1 weekly Direct flights to Europe Madrid Frankfurt Amsterdam London Paris Zurich Lisbon 1 daily 5 weekly 3 weekly 3 weekly 3 weekly 2 weekly 1 weekly London 1 weekly Houston Dallas Miami Atlanta New York Newark Los Angeles Toronto Minneapolis Calgary Chicago Montreal Charlotte Boston Denver Baltimore 2 daily 1 daily 1 daily 1 daily 1 daily 1 daily 16 weekly 13 weekly 4 weekly 3 weekly 2 weekly 2 weekly 2 weekly 1 weekly 1 weekly 1 weekly • SJO is the 2nd best International Airport in Central America and the Caribbean (World Airport Award, 2017) • Juan Santamaria Intl. Airport (SJO): 818 flights per week during November 2017 • Daniel Oduber Intl. Airport (LIR): 144 flights per week during November 2017 Source: El Financiero, Grupo Nación, and Directorate General of Civil Aviation, 2018 From LIR – Guanacaste Direct flights to USA & Canada
- 15. 15 Costa Rica hasa strong and world renowned tradition of Peace, Democracy and Stability Source: The Economist. Democracy Index, 2017. Source: World Bank. The Worldwide Governance Indicators,2017. • Army abolished in 1948 • Over 120 years of democracy • Presidential system • 3 independent powers • 4 year-term with possibility of reelection Costa Rica ranks 2nd in LATAM in the Global Peace Index, mostly because its low homicide rate and goodrelationships with neighboring countries. (Institute of Economics and Peace,2017) 12,86 13,81 20,00 26,19 30,00 33,81 37,62 39,52 40,95 42,86 44,76 53,33 53,81 57,14 60,48 63,81 70,48 90,48 Costa Rica Chile Panama Dominican Republic Argentina Paraguay El Salvador Ecuador Peru Nicaragua Bolivia Honduras Brazil Guatemala Mexico Colombia Venezuela Uruguay Political Stability Score (0-100) 3,87 4,66 5,72 5,49 6,02 5,86 6,31 6,67 6,66 6,49 6,43 6,41 7,08 6,96 6,86 8,12 7,88 7,84 Uruguay Costa Rica Chile Panama Argentina Brazil Colombia Dominican Republic Peru El Salvador Mexico Paraguay Ecuador Guatemala Honduras Bolivia Nicaragua Venezuela Democracy Index Score (0 - 10)
- 16. • English istaught at public schools around the whole country. • The Costa Rican government announced a strategy in 2018 to make CR a truly bilingual country, setting English as a national priority. The initiative is being undertaken by the Ministry of Education, the National Training Institute and private sector participants • Services offered in English represent more than 79% in 3 of the top 5 processes. • End-to-end centers also offer services 24x7x365 in English, Spanish, Portuguese, French, German, Italian, Malay, Japanese, Dutch, Polish, Czech, Finnish, Mandarin #1 English Proficiency in Latin America Over 79% of the services are being provided in English 1st in LATAM in TOEIC Test (699 points) 1st in LATAM in TOEFL iBT (93 points)
- 17. 17 Ranked 27th inthe world, above France, China and Japan #1 Education System in Latin America Source: World Economic Forum, Executive Opinion Survey. The Global Competitiveness Report 2017 - 2018. Source: Human Development Report, 2016. 98,4 98,1 98,1 97,8 97,3 96,7 96,4 96,3 95,0 94,7 94,6 94,5 94,4 92,6 91,8 88,4 72,1 Uruguay Spain Argentina Costa Rica Chile Thailand China Philippines Panama Colombia Malaysia Peru Mexico Brazil Dominican Republic El Salvador India Adult Literacy Rate (% ages 15 and older) 2 4 7 8 26 27 29 36 40 46 67 71 83 86 96 102 108 111 121 1 2 3 6 7 Singapore United States Ireland Canada Costa Rica China Japan France Philippines Spain Viet Nam Colombia Chile Panama Argentina Mexico Hungary Uruguay Brazil Score, 1-7 (best) 4 5 Quality of the Education System World Ranking
- 18. • The numberof graduates has been growing since 2008 at a rate of 10.2% • 10,854 technical high school graduates in 2017 of which 6,592 were in service-related fields • 54 different specialties in 3 areas of expertise (services, industrial, and agribusiness) • Technical High School begins in the fourth year of High School • Students take the regular academic program + technical training • Technical High Schools have one more year than regular academic institutions (Total = 6 years) • Some specialties: Accounting, Banking & Finance, Computer Programming, Electronics, Graphic Design, Industrial Maintenance, Logistics and Distribution, Network Informatics, Software Development Informatics, among others Technical high school program: 223 institutions, more than 104,800 students enrolled Source: CINDE based on data from MEP, 2018 Note: 2018-2021 FORECAST
- 19. Economic Sciences major programs: •Business • Economics • Finance & Accounting, among others IT major programs • Applied Mathematics • Computer Informatics • Software Development • Software Engineering Total of 63 Universities: 5 public, 58 private Number of graduates (thousands) in IT and Economic Sciences Source: CINDE based on data from CONARE & Universities’ Registry Departments, 2018 / El Financiero, July 2016 Note: 2019-2022 Forecast 1.9 1.9 2.3 2.7 2.5 2.3 2.5 2.6 2.7 2.8 2.9 3.1 3.2 9.7 11.1 12.9 12.9 14.2 13.8 13.3 13.4 14.0 14.7 15.4 16.1 16.9 0 2 4 6 8 10 12 14 16 18 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 IT Economic Sciences
- 20. 20 What savings can youexpect from nearshoring to Costa Rica?
- 21. 21 Captive Key FactorsBPO Implementation timeline, time to benefit Level of investment required, payback period Ability to attract and retain talent “Best of breed” processes & technology (automation, analytics, etc.) Scalability & flexibility Operational visibility and control Operational risk Reduces transactional effort and focus Labor arbitrage opportunity Total cost of ownership Captive vs. BPO: Key Considerations Legend Low High
- 22. 22 It’s not justabout labor arbitrage Savings Opportunity Roadmap One to one comparison of the total labor cost of a resource in US vs. a Nearshore Location Most times the org structure can be releveled to achieve better span of control Efficiencies gained from centralization, process improvement and automation (e.g. RPA, Operational Analytics, etc.) 25%+ 10%-20% ONE TO ONE LABOR SAVINGS ORGANIZATIONAL RESTRUCTURING PRODUCTIVITY EFFICIENCIES 10%-20%
- 23. 23 Savings as highas 50%+ for transactional roles across AP, AR and R2R Auxis 2019 Labor Savings Report for Finance & Accounting
- 24. 24 Savings as highas 50%+ for transactional roles across AP, AR and R2R Auxis 2019 Labor Savings Report for Finance & Accounting Link to download full report for both F&A and IT positions: https://www.auxis.com/nearshore- outsourcing-labor-savings-report-2019
- 25. 25 About Auxis’ Outsourcing Center inCosta Rica
- 26. Confidential & Proprietary26 26© 2017 Auxis – Confidential & Proprietary Multi-function Center of Excellence established in 2010 • Finance & Accounting • Customer Service • Information Technology 400+ employees / 100% multilingual • English – Spanish – Portuguese – French - Mandarin Supporting over 40 different clients & 12+ industries Located in The America Free Trade Zone in Heredia State-Of-The-Art Service Model - 24x7x365 operation - SLAs that provide strong contractual control - SSAE-18 certified Custom-oriented, flexible approach – not “cookie cutter”. We become an “extension of your team,” able to communicate and work together in real-time. 2016 | 2017 | 2018 | 2019 Top 100 Global Outsourcing Provider by IAOP 26 The Premier Nearshore Location Auxis Costa Rica: • RPA Automation & Analytics • Human Resources
- 27. 27 • Robotic Process Automation(RPA) • Automation to support (examples): 1. Invoice processing 2. Cash Application 3. Reconciliations 4. Vendor & Customer Master 5. Employee Onboarding & Terminations • Financial Closing Management • Automated Balance Sheet Reconciliations • Automated Account Reconciliations • Reconciliation Management Workflow • Automated workflow for vendor support • Inquiries routed to a centralized mail box and managed with workflow • Inquiry monitoring and alerts • AP Approval Workflow • Operational and Business Analytics • Custom Data Visualization and Dashboards • Reporting Sharing and Collaboration • AI Data Capture at the header and line item level • Invoice Receipt & Indexing Automation (with RPA) Note: Auxis has worked with UiPath in our Costa Rica center since 2015 and has been a UiPath partner since 2017 Auxis will bring a range of proven finance automation tools to provide you with the highest levels of productivity efficiencies and controls, delivering a lower operating cost model. Typically, these tools are deployed after the initial stabilization phase (first 3 months), with Auxis committing to the additional savings at that time. Business Process Outsourcing Efficiency Drivers
- 28. Our Guest Speakers: CortneyDominguez Former VP Financial Operations November 6th 2019 12:00pm ET Ana María Romero Montoya Lead Corporate Services
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- 30. Thank you forjoining us today! Eric Liebross Sr. VP Back Office Optimization Practice Eric.Liebross@auxis.com Cortney Dominguez Former VP Financial Operations cgshipe@gmail.com Ana Romero Lead Corporate Services aromero@cinde.org