Belize, Guatemala-Based BPOs Dispute Latest US State Department Warnings

BPO companies on the ground in the two Central American countries pay little heed to travel advisories, instead focusing on the other obstacles they face when setting up shop there.

The US recently raised its travel advisory alerts for Belize and Guatemala to Level 2: ‘Exercise Extreme Caution’, but BPO companies active in the Central American countries say the reality is very different on the ground.

Such warnings, issued sporadically by the US State Department, are not based on clear criteria, but rather a reaction to a spike in violent crime, but with no clear methodology on how one is issued.

In its 2019 Belize Crime and Safety Report, the US Overseas Security Advisory Council (OSAC) details the country’s annual murder rate (94 in 2018), and lists the specific crime threats by region and city. Belize has the third-highest homicide rate in Central America, after El Salvador and Honduras, according to the United Nations Office on Drugs and Crime (UNODC).

Such information is undoubtedly invaluable for travelers, but must be taken in context, as it could skew a potential investor’s image of a country’s suitability as an operations hub.

Allowing for an advisory to influence a business decision could be myopic, according to Scott Newman, CEO of Transparent BPO, which has a presence in Belize since 2009 and will open its third and largest contact center there this year.

Newman says that, if he were setting up shop in Belize now, he would not heed the travel advisory.

“Certainly it’s on the list of things to validate, and doing your due diligence is part of what’s necessary, but checking something off the list due to a travel advisory would be very short-sighted,” he told Nearshore Americas.

“The reality is very different on the ground,” he said, describing how he goes about his daily business in Belize City without security or a driver.

And while travelers and investors should not ignore the facts or local news, investors will have other issues to face once installed, Newman said, admitting that building the company’s presence in Belize has been more difficult than he expected, but due to obstacles other than violent crime.

“The first six or seven years were more difficult, compared with the last three or four, because Belize is still an emerging contact center destination, it doesn’t have the scale in terms of population and labor to be up there with Costa Rica, the Dominican Republic or Guatemala,” he said.

“We were the third contact center to open in Belize. Back then, Belize didn’t know what the contact center industry was all about, and the sector had a bad rap, and there was a lot of learning, on both sides, about how to operate. And then the government began to realize it is a good industry for them, and that they should be encouraging it,” he added.

‘A rockier road’

“Belize is an emerging market, and when you sign up to enter an emerging market you’ve got to be prepared for a rockier road, but if you can get through it you can find some great advantages,” Newman said.

That ‘rockier road’ has included regulatory changes along the way that have made business less lucrative, he said, such as tax changes that pushed up the company’s expenses by 2.5% overnight, and which have dampened the company’s prospects in the country.

In 2018, the Belizean government eliminated a series of business tax benefits, eroding incentives for investment, and which had enabled BPOs to claim back 12.5% in tax on local purchases such as telecom costs, rent and electricity.

“Our new facility opens in July, but if I had known about the changes a few months before we had signed the lease, we would probably not have made the decision to open it,” Newman said. “Over the next year, as we evaluate our expansion, there will be some hard decisions to make, as to whether or not we will have to look at other countries in the region to fuel our growth.”

He says that, if he were to look elsewhere, Jamaica would be the most interesting option, which is seeing strong BPO growth and where the government is supportive of the industry.

And in Guatemala, which consistently ranks third in the region by number of homicides per 100,000 inhabitants behind Honduras and Mexico, which is classified as Central America, by UNOCD, and for which the State Department advisory recommends requesting security escorts and warns against using public ATMs, call center services provider Alorica’s man on the ground is equally blasé.

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“If you look at the advisories, which are raised and lowered frequently, it is quite worrisome if you’re coming here,” José Urizar, Alorica’s acting president for Latin America and the Caribbean, told Nearshore Americas.

“We host some 10-15 visitors a week in Guatemala, and during 10 years we haven’t had a single incident regarding security.”

The company currently employs around 6,200 people across five facilities in Guatemala, the most recent of which opened in late 2018, and where the company plans to add another 2,000 staff.

José Urizar, Alorica’s acting president for Latin America and the Caribbean.

“We’ve been operating here for 10 years, we started with one client, and we now have 11, most of which are Fortune 500,” he said, while underscoring the country’s safety record.

“The situation is very different to what the travel advisories say, and the performance and reliability and commitment of the workforce in Guatemala easily outweighs any security concerns,” he said.

He lists Guatemala’s advantages as an outsourcing hub as: demographics, proximity to the US, and the government incentives in place to facilitate investment, such as tax breaks. The Guatemalan Export Association (AGEXPORT) has begun collaborating with Alorica and more than a dozen other BPO players to develop a finishing school certification for call centers.

Alorica also has its own English academy to fine-tune its employees’ language skills, Urizar said.

He says that employees in Guatemala see the BPO industry as an attractive option, given the job’s international vocation, with higher than average pay, while he sees the competition brought by the proliferation of call centers as positive, as companies increase staff benefits to retain their personnel.

He also believes the Guatemala BPO market has great potential for further growth as more outsourcers target the country.

“Nothing tells me right now that we should stop investing here. All the fundamentals are there, especially because of the quality of the service providers here,” he said.

“It’s important to demystify the image of the country, and to show that we enjoy conditions that are very different to those portrayed in the advisories,” he said, echoing Aldous Huxley’s maxim that “to travel is to discover everyone is wrong”.

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