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Guatemala Gets Serious About Becoming More Competitive and S&P Takes Notice

Guatemala Gets Serious About Becoming More Competitive and S&P Takes Notice

By Narayan Ammachchi

When Guillermo Montano co-founded a BPO called Transactel in Guatemala, he and his co-founders were working from home. They had no office of their own, nor any staff. But that was over a decade ago. Transactel later merged with Telus International and became a leading BPO provider in Central America. Fortunes are changing for Guatemala too.

U.S. rating agency Standard and Poor’s recently revised the economic outlook of Guatemala from negative to stable.

Much of S&P’s optimism stems from Guatemala’s recent legislation to widen the tax collection net and increase public revenue.  In addition, the federal government is in the process of signing a string of free trade agreements with neighboring countries as well as developed economies like Canada and South Korea. The country has unveiled 16 economic reform programs over the past two years in an attempt to improve the business climate in the region. Today, starting out a business in Guatemala is far easier than it was a year before.

One recent independent report, from The Global Entrepreneurship Monitor, found that the average cost to start a business in Guatemala is only $7,569, compared with $17,513 in Brazil and $39,670 in Costa Rica.

Some facts about Guatemala:

  • A short journey away from Miami, United States.
  •  The time difference between USA and Guatemala is just two hours.
  • A democratic nation with business-friendly administrative system.
  • Lower labor costs and a growing number of U.S. Expatriates.
  • Lot of cultural similarities with North America.

Millions of Guatemalans are residing in the United States. But, according to one estimate, every year 25,000 of them are returning to their home country to seek re-employement or launch a business of their own. Those who are returning are reportedly saying that there are more opportunities in Guatemala.

As a result, Guatemala’s English-speaking workforce is expanding. About two years ago, the government here made it mandatory to teach English at all public and private high schools.

Today there are numerous training programs to support teachers to become bilingual and teach English.

In the ‘Doing Business 2012’ report, Guatemala was ranked 97 out of 183 countries evaluated for ease of doing business. During the year 2011, Guatemala received $985 million in foreign direct investment, larger than Nicaragua’s $460 million and El Salvador $386 million.

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The Ministry of Economy has recently launched a website with the objective of making administrative procedures transparent and swift enough for private entrepreneurs to do business in the country. The website guides entrepreneurs through a formal process of registration, answering questions about government support, workforce availability and timeline for business registration.

In May of this year, the economy ministry unveiled a new program called ‘Agile Counter Plus’ offering tax incentives for business people willing to provide employment to local citizens.

Infrastructure

Much of the country’s 3,519 mile highway network is in poor condition, its electricity and telephone density is low, and all of its television stations and newspapers are concentrated in Guatemala City.

Though Guatemala has three seaports, La Aurora Airport is the only national airport capable of handling both freight and larger number of passengers.

The biggest hurdle facing the country is the lack of skilled labor. Guatemala’s economy is largely dependent on the traditional export sector, with approximately 50 percent of the labor force in agriculture.

The crime rate is rising these days with drug cartels in South America increasingly using its territory as a transit point to smuggle narcotics to their main market –– the United States. Mexico is also facing the same crisis, but Guatemala is fighting this battle with far smaller resources.

About Kirk Laughlin

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

One comment

  1. I think another great advantage that Guatemala offers is a large labor pool of college students. They are studying a variety of majors such as engineering, accounting, graphic design, business administration, law and medicine to name a few. While in school they make for a large educated work force that can benefit companies in the BPO sector.

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