The Hopeless Case of the Capital of Honduras: Most of the Right Stuff Yet Ignored by Global BPO

By Narayan Ammachchi

Despite having a large bilingual population and an increasingly stable government, Tegucigalpa – the capital of Honduras – does not have a single foreign BPO firm operating within city limits. What is wrong with “Tegus”, the city with a hilly terrain, arid climate and over one million inhabitants?  Why is the global BPO community essentially shunning this city, which sits less than 1,000 miles south of Miami?

Tegucigalpa has just about everything that an outsourcer asks for: well-built ICT infrastructure, English-speaking youths, a helpful government and proximity to the United States. Barely a year ago, World Bank’s Doing Business report praised the government here as ‘the top reformer in the region.’

“No country in the region has as many bilingual schools as Honduras has. There are about 728 bilingual schools in the country and nearly half of which are based in Tegucigalpa,” says Jeff Pappas, Executive Vice President & Partner at Arledge Partners, a US-based company that helps outsourcing firms set up BPO operation both in Latin America and North America.

Time Zone and Geography

Honduras, much like El Salvador and Nicaragua, is home to tens of thousands of residents who at one time or another lived in the U.S. There is a deep familiarity with U.S. culture running through Honduras, and the strength of the professional workforce has been a major reason why San Pedro Sula, to the north of Tegus, has attracted half-a-dozen new call center operators in the last two years.

Furthermore, Honduras’ telecom infrastructure is strong enough to support any number of outsourcing companies. The Central American country has three fiber optic cable networks to ensure less than 80 milliseconds on latency. And electricity in Honduras is extremely inexpensive compared to other countries in region.

The Honduran Congress recently passed a law drafted specifically to boost the outsourcing industry. Under the new law, call centers are exempted from an assortment of levies and taxes. In addition, call center operators can approach the government directly seeking to occupy an office space, complete with round-the-clock electricity supply and high-speed internet.

Yet such attractions are apparently not enough to overcome the rising tide of crime. A survey conducted last month by the country’s Chamber of Commerce has found gang violence forcing the closure of 1600 companies across the country. A similar survey from the research firm CID Gallup  ranked Tegucigalpa as the most dangerous city in Central America.

Is Crime Deterring BPOs?

But the crime does not seem to be a major hurdle for other outsourcers. “Crime is certainly not the reason” said Kathia Yacaman, Corporate Marketing Manager of Grupo Karims, an industrial infrastructure provider that built Altia Business Park in Honduras’ second city of San Pedro Sula. “What is preventing them from moving into Tegucigalpa is lack developed properties,” Yacaman said, adding that there is a plan to build a business park in Tegucigalpa on the lines of Altia Business Park of San Pedro Sula.

“It is noticeable that most of the call centers in San Pedro Sula are based at Altia Business Park. BPOs look for developed properties where they can launch their operation in a matter of weeks.” said Pappas.

Data released by the FIDE, Honduras’ trade promoter, says there are more than 20 domestic call centers in Tegucigalpa and all of them cater to local business needs. The lone bilingual call center is LL Contact Center owned by a Honduran by name Carlos Rivera Ferrari. A local Spanish daily has recently reported that Guatemala’s BPO provider Allied Global might expand its operation to Tegucigalpa sometime next year.

“I think this is the right time for global BPOs to move in and set up operation in Tegucigalpa, because the market there has just begun to bloom. Whoever goes first can have his base bolstered before rivals arrive,” Pappas said.

But peace and stability seems to be a distant dream for Tegucigalpa. Analysts say the city will remain violent unless the government cracks down hard on criminal gangs funded by Mexican drug cartels.

In his recent address to the UN General Assembly, President Porfirio Lobo has blamed the international drug trade for the violence afflicting his country. “Our misfortune is to be in between the north and south,” Lobo said, referring to Honduras’ role as a transit point for South American cocaine being smuggled to the US.