Cost comparisson for BPO and contact center operations in Central America
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Transcript of Cost comparisson for BPO and contact center operations in Central America
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Contact Center, BPO and ITO Hub in Central America
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“…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
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Honduras Business Case
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Honduras - San Pedro Sula - Altia Business Park
Location Assestment Framework
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1. Scale and Quality
Labor Pool Skills Availability Graduate OutputCultural affinity
Skills and Scalability
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http://en.wikipedia.org/wiki/List_of_schools_in_Honduras
Statistics:Guatemala, 26 bilingual schoolsEl Salvador, 56 bilingual schoolsNicaragua, 5 bilingual schoolsCosta Rica, 35 bilingual schoolsHonduras, 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)
English skills…bilingual schools are the source…
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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.
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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
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•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
Important Data
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2. Cost
Cost of Operations Cost of Training Cost of Real Estate& Energy
Cost of Bandwidth Cost of Living
Savings
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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 18.00REAL ESTATE COST (RENT PER SQUARE
FT/YR) 29.00 20.07 39.03 42.38 31.23 44.61 20.07REAL ESTATE COST
(BUYOUT PER SQUARE METER) 3,000 2,000 3,800 4,000 3000-3500 4,000-4,500 1,800
TELECOMMUNICATION (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
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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 30.00REAL 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
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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
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Cost Comparisson between Central American countries
Honduras Costa Rica Nicaragua El Salvador Guatemala
Human Resource
Labor pool availability 85,000 15,000 4,000 Less than 5,000 Less than 5,000
Human Resource
Bilingual schools 410 35 5 55 26
Human Resource
Average agent salary (bilingual) $448.00 $650.00 $575.28 $550.00 $540.00
Human ResourceComments
Honduras has the potential to
become the next BPO and contact center
hub due to labor availability
Labor shortages have caused high rotation
and wage/cost increases
Labor shortage due to a small
amount of bilingual schools
has deaccelerated
the establishment of contact centers
and BPOs
Labor pool has forced the
government to start an English training program, but will
struggle in the next five years
Guatemala has problems
supplying bilingual labor force due to a shortage caused mainly on the low
amount of bilingual schools
per capita
Telecommunication and service providers
Number of service providers 31 1 9 13 19Telecommunication and service providers
Average Internet Cost per Mega $200.00 $526.00 $490.00 $465.00 $525.00Telecommunication
and service providers
E1 $1,089.00 $2,960.00 $3,500.00 $2,400.00 $2,100.00
Telecommunication and service providers DS3 (Clear channel) $22,000.00 $26,080.00 $30,000.00 Not available Not available
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Honduras Costa Rica Nicaragua El Salvador Guatemala
Real estate
Cost per square feet per year $20.07 $27.88 $17.84 $21.00 $14.00
Real estate Comments
Altia Business Park can offer turn key projects, including everything needed
to start an operation in the shortest time, reducing curve of experience costs
This is one of the highest costs in Central America
Limited office space availability
Low offer on office space
that can comply with
contact center and BPO
requirements, high costs
Guatemala has a large office space offer, but presents high traffic problems
Energy 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
Energy costsRedundant systems
YesProblems with
national grid and energy supply
Cost comparisson between Central American countries
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Honduras
New entrants Under development Developed
Stages of Development of Contact Center and BPO in Central America
Location Maturity
Nicaragua
El Salvador
% of Savings Potential in Operating Costs
Guatemala
Labor Pool Availability
Costa Rica
Panama
Honduras
Nicaragua
El Salvador GuatemalaPanama
Costa Rica
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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
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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
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3. Business Catalyst
Government BenefitsIncentives
Competitive Landscape Untapped LaborPool
CurrentlyEmployed
Business Environment
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San Pedro Sula Business Case
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•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
Important Data
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4. Infrastructure
Operational Environment
Connectivity Bandwidth availabiltiy Transportation
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Internet costs (VoIP)
Source: Julio Herrera, Navega Commercial Manager,March 2009 (Prices in US$)
This price has gone down to US$200.00, information provided by Mario Alvarenga/Navega, January 2010
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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
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Altia Business Park - Strategic Geographic Location (public transportation routes)
25 minutes, moderate traffic
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We are on the 11th floor (14 floors)
Connectivity and power infrastructure installation
First tenants will be moving their
offices and operations
Interior of Lobby design finished
Infrastructure
70% advance on civil works
100% advance
Building
Building Timeline
May ’09 Aug ’09 Oct ’09 Dec ’09 March ’09
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Our strategic network
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Commercial Risk Political Risk Natural Risk Social Risk
5. Risk Profile
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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
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6. Quality of Life
Social Infrastructure likeEducation institutions,
hospitals
Non work culture Availability of Recreation/Leisure facilities
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Quality of Life
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Quality of Life
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“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.”
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Conclusions Honduras is a count ry w i th the r igh t 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.
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