Invest in Guatemala (IIG), the economic development agency based in Guatemala City, recently lost 12 of 15 staff members in a sweeping layoff that has many in the local outsourcing industry wondering: What is the government thinking?

The agency is a key catalyst in promoting the BPO/outsourcing sector in Guatemala, and also helps attract investment into other industries such as agriculture, tourism, energy and manufacturing.

The news is a big shock to many who have come to recognize the Guatemala government as having an enlightened approach to attracting foreign investment.  IIG staff are charged with facilitating discussions between local service providers in the BPO sector and foreign clients. Most of the clients are from the US, and those formative relationships – cultivated by IIG – are built oftentimes on trust and continuity.

There is nothing more alarming for an foreign investor to learn about sudden shifts in strategy. We will try to find out more about the issues that triggered this sudden change – but will also invite readers to offer their own opinions.

The Guatemala economy is not enduring the same pain as some neighboring countries – which makes the cut even harder to understand. Just announced figures from the United Nations Latin American and Caribbean Economic Commission indicate the Guatemala economy will shrink by just 1% in 2009.  (Costa Rica, by comparision is enduring a 3% decline).  The overall Latin American region will slow by 1.7%, with Mexico facing a sizable 7% contraction.

The region is expected to get back on a growth track in 2010 – with economies expanding by 3% next year on average.

How much will the losses at IIG impact the outlook for the local BPO economy?

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