Jui Narendran
Rukmini Priyadarshini

India has been sitting pretty as a favoured destination when it comes to outsourced jobs from the US. Spin the globe for a threat in the offing - the Caribbean.

THE Caribbean beckons more than just the beach-loving globe-trotting tourist. More and more flights into this clutch of islands south-east of the US carry business visitors evaluating local service providers and workforce for call centre and BPO capabilities.

The Central American Free Trade Agreement, expected to come into force from January 2006 (at least in part) will end tariff restrictions on the over $33 billion in trade between the US and Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. With such a trade incentive in place and attracted by the ease of working in the same time zone, many US companies are exploring the option of locating their call centres and BPOs out of the Caribbean and Latin American locations.

Already, Dell, P&G and other MNCs either have or are actively looking to have operations out of these countries. The passage of the CAFTA and its expected implementation has made a number of the Caribbean locations confident that they can capture a growing share of the market, despite India's much lower cost structure and scope for scaling.

One of their compelling attractions is their very nearness to the US — politically, geographically and culturally. Situated as they are close to Central America and in almost the same time zone, troubleshooting or even just a flying visit to the near-shore contact centre could be managed better than flying halfway across the globe; the promptitude of communication because of the time zone is also attractive to many US companies.

The Caribbean countries have a mix of language skills - primarily Spanish, English, Portuguese, Dutch and French — that lets them be a suitably flexible resource serving a number of locations and customers. A number of universities and training institutes, encouraged by governments, are involved in imparting increased language skills to students.

The region also has a long history of service orientation from its tourism sector - a major foreign exchange earner for many countries. They have not just familiarity with American and Western customers but are also at home with American cultural considerations.

Some Caribbean locations — Puerto Rico and the Netherlands Antilles — are under either the American or a European administration and therefore offer a much more politically familiar environment.

Though priced higher, the region's technically qualified workforce, general higher levels of literacy and high school education, the countries' deregulating telecom sectors and falling communication costs, together with newly enthused governments are attractive to companies. Governments in the Caribbean are actively engaged in creating `free zones' and they have managed to attract a number of companies to set up local operations. Many more are actively evaluating the location to outsource or offshore to.

Fly in the ointment

The fly in the ointment for the Caribbean as an outsourcing destination, however, is that the islands — each a few hundred sq.km across — lack the sheer scope and scaling potential of an India or a China. Labour costs in the region are higher than South-East Asia and China (though admittedly lower than in the US) and the region is yet to demonstrate its BPO capabilities, though initiatives from industry and local Governments are apace. Information technology outsourcing capabilities and the number of engineers that China and India produce each year are not to be equalled either.

However, that is a lesser concern as in a mature and globalised service delivery environment, it is not necessary that all skill sets be available at the same location.

Despite their higher labour costs and smaller labour pool, the Caribbean countries are optimistic about garnering market share in the coming couple of years. Companies in the region are also alive to the need for having operations in locations such as India.

On the other hand, the Caribbean countries offer a great opportunity for service providers from countries such as India to expand their global footprint. The need of the hour for Indian service providers is to further develop their intrinsic strength - offshore delivery. Replicating this strength across various low-cost geographies, including countries in the Caribbean, will serve them better than developing strengths solely in one location. To truly compete globally, all service providers will have to develop a global footprint. Nearshore destinations such as the Caribbean could be ideal.

The authors are with global sourcing advisory, TPI.

Picture by Raju V

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