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El Salvador Journal: A First-Hand Reaction from the Experts

map of el salvador1 300x2251 El Salvador Journal: A First Hand Reaction from the Experts

By Kirk Laughlin

San Salvador: A number of influential executives from the offshore/nearshore sourcing industry gathered here last week for a brief tour of the expanding call center/BPO industries of this nation of six million people. Meeting several dozen luminaries, executives, managers and country promotion leaders – the group came away with a distinct and real-world view of where the country is headed.

The group included Anupam Govil of Global Equations, Peter Ryan of Ovum, Juan Gonzalez from Frost and Sullivan and  Shannon Curley of Jones Lang LaSalle. We asked them two key questions about El Salvador – and you might be surprised that the country is being called one of “the most interesting markets in Central America.”

What is Your View on the Current State of the Offshore Call Center/BPO Industry of El Salvador:

Anupam Govil: El Salvador’s favorable and stable business climate along with a well educated bilingual workforce make it one of the leading destinations for Nearshore Call Center services.  Over the past five years global firms such as Teleperformance, Sykes and Stream, have expanded their presence in the country to account for more than 50% of the workforce. Main strengths are in Customer service, Sales and Technical support but other areas such as Shared

Volcano San Salvador 1960 300x2001 El Salvador Journal: A First Hand Reaction from the Experts

Over 10,000 people work in the offshore services industries in and around San Salvador.

Services and non-voice Transaction processing could be further developed.

Peter Ryan: In terms of the current offshore market, it is starting nicely, leveraging contact center leaders as much as possible.  The big test will be for El Salvador to attract higher-value, back-office BPO and IT service deployments.  Based on the aggressiveness of the government to bring in outsourcing, coupled with what appears to be an educated workforce, this could come sooner rather than later.

Juan Gonzalez: El Salvador  is currently one of the most interesting markets in the Central American region. While Costa Rica and Panama seemed to be the most matured places for offshoring and Guatemala and Nicaragua the rising stars when looking to new outsourcing destinations, El Salvador seems to provide the right quota of equilibrium to the market.

Salvadorians appears to be very happy with the current status of the market and the idea seem to be to further consolidate the current structure and increase the base of bilingual resources to impel growth in the following years.

Shannon Curley: For me, I found our visit to El Salvador very much a learning exercise and I was impressed by what El Salvador may have to offer to investors. While I think the country is still in its early stages of attracting foreign direct investment, I think it is for that exact reason it may offer special opportunities to the right types of projects. That is to say, El Salvador cannot change the fact that it is a small country and it will not be able to attract (or better said, sustain), multitudes of large scale BPO/Call Center investments. However, I do think there is an interesting opportunity for small-medium sized operations seeking high quality bilingual talent. I also was interested in their focus on the medical device industry and think that could be a niche market for them as their country continues to develop.

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What are the Country’s Prospects as a Viable, High Performing Nearshoring Destination in the Long Term:

Anupam Govil: El Salvador’s dollarized economy and low wage inflation should keep the country very competitive in the short to mid term. Although there are no leading indicators, workforce saturation in the long term (especially for bilingual skills) could be a concern. The government has to adopt a sustainable growth strategy to ensure that the labor force dynamics remain favorable and demand from new and existing firms matches the supply of talent. The country

coastal 300x2251 El Salvador Journal: A First Hand Reaction from the Experts

The pacific coast is about a 45 minute drive from downtown San Salvador.

needs to also develop alternate delivery hubs in Santa Ana and other 2nd tier cities to diversify the labor pool. If it gets these plans right, the country can become an ideal Nearshore bilingual hub, supporting additional spokes in the greater CALA region.

Peter Ryan: On paper the prospects for El Salvador appear strong, and the right fundamentals appear to be in place to develop an offshoring sector.  However, the big question is how much workforce scale will be a limiting factor, and worries about a leftward, pro-union drift must be addressed sooner rather than later.

Juan Gonzalez: El Salvador needs to further consolidate the base and availability of educated and bilingual workforce. This is not the case of a country which can compete with a low-cost and cheap workforce. In order to become a viable place in the long term for nearshoring, the quality of their resources is the key. After being there, I am very optimistic on this regard.

Shannon Curley: I think El Salvador has a value proposition as a nearshoring destination. The trick however, as with all direct investment destinations, is to be able to accurately match the value proposition of El Salvador with right type of investment. El Salvador in the near term will have some limitations, including a perception of violence and limited quantities of bilingual talent (as it relates specifically to the BPO/Call Center industry). However, it appears that the government of El Salvador (from top to bottom) is in support of improving the country as a location for investment and they are making strides to better market the value proposition that El Salvador offers to international investors.

About Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.
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