Nicaragua’s Outsourcing Sector Not Stressed Over US Travel Warning

Sitel, Convergys, Concentrix, and Accedo Technologies give first-hand accounts on the status of Nicaragua since the US issued its new travel warning.

Travel alerts and warnings can often cause reputational damage to established nations in the blink of an eye, resulting mostly from fear-induced speculation instead of hard facts. Tourism takes a hit, foreign investment deals can be shelved, and businesses start planning for the worst. But it’s often difficult to know exactly what is happening on the ground without first-hand accounts of the situation.

On June 29th, the U.S. State Department issued a new travel alert for the Central American nation of Nicaragua, warning its citizens to avoid visiting the country until later in the year. The warning was spurred on by “heightened sensitivity” surrounding the country’s upcoming presidential elections and the construction of the controversial interoceanic canal.

In order to get a real sense for what this alert means for Nicaragua and its BPO/ITO industry, and whether or not it should be taken seriously, Nearshore Americas spoke to key sources from a number of businesses already operating in the country, all of which showed little to no concern over the warning. As Val VanDegrift, Sitel‘s VP of Operations and Shared Services, told us, “unless you’re overheard asking questions about Nicaragua’s elections or the canal, I don’t think foreigners will have any issues.”

Nicaragua’s Positive Reputation

Nicaragua has long been building momentum in positioning itself as a reputable, safe and productive country to travel to or do business in. The Central American country, which has traditionally been heavily reliant on agriculture, drew US$2.19 billion in goods and service exports in 2013 through free zones that were implemented in the 1990s. Between 2012 and 2015, Nicaragua’s GDP grew an average of 4.7% per year, leading to more jobs and hundreds of thousands of people climbing out of poverty. The United States is also an important trade partner for Nicaragua. Last year, the value of Nicaraguan goods exported to the U.S. reached $3.2 billion.

Companies have been taking advantage of Nicaragua’s safe, reputable environment since the early 2000s, with large contact center players like Sitel, [24]7, and Stream Global Services accelerating the country’s BPO sector to the tune of US$60 million in global services exports during 2011. Additionally, the country’s tourism sector became its second biggest industry in 2014, with visitors commonly drawn by everything from off-the-grid ecological yoga retreats to all-inclusive resort packages.

So why has this travel alert suddenly been issued by the U.S.?

Breaking down the Alert

Diplomatic relations between Nicaragua and the U.S. became strained following the expulsion of three U.S. officials in the middle of June, but Nicaraguan authorities have also denied entry to, detained, or questioned foreigners for any activities documenting the presidential election or the interoceanic canal. These additional foreigners include academics, NGO workers, and journalists. Furthermore, the Nicaraguan government now requires advance notice of any volunteer work trip or charitable visit to the country.

To prevent damage to its trade ties, Nicaragua later explained that the expulsion of U.S. officials was for “delicate and sensitive” reasons, accusing them of performing customs security work tied to anti-terrorism without the knowledge of local officials.

Even so, the U.S. felt it necessary to impose the travel alert, warning visitors that election-related demonstrations have turned violent in the past. But, according to our sources, visitors shouldn’t be worried about the alert unless they intend to willingly participate in political protests.

No Cause for Concern

Customer management and information management provider Convergys operates out of Managua, Nicaragua’s capital city. When questioning Eugenia Rojas, the company’s Senior Manager for Communications, about the new travel alert, she seemed unperturbed. “Our operation in Managua is strong, and any travellers to the country will continue taking the normal international travel precautions,” she explained.

Manfred Kissling
Manfred Kissling: “It’s business as usual right now.”

Providing a little more insight was Manfred Kissling, Vice President and General Manager for Concentrix, Latin America. “We’re not waiting for the travel warning to be lifted; it’s business as usual right now,” he said. “With the elections coming, non-businesspeople come into the country and do things that they perhaps shouldn’t be doing, so the government requires that people are honest about their intentions when visiting, and the U.S. government is acknowledging that fact with this warning. Nicaragua is a very safe and peaceful country because the government provides guidelines and people stand by them.”

alejandro graham
Alejandro Graham: “It’s easy to talk people around their negative perceptions.”

Alejandro Graham, CEO of Accedo Technologies, which has been operating in Managua for around seven years, was the first to point out the public are permeable to these kinds of alerts, and that perceptions can be more damaging than the reality. “The U.S. ambassador, Laura F. Dogu, immediately played it down and told us that the warning was just a formality,” he said. “It is easy to talk people around their negative perceptions because all the recent historical data supports the contrary argument. When people come to Nicaragua they like to keep returning.”

Sign up for our Nearshore Americas newsletter:

Prepared for the Worst

With over eight years’ experience in living in Nicaragua, Sitel’s Val VanDegrift expects little to no problems, but his company is prepared for the worst. “If things do go pear-shaped, Sitel has uninterruptible power supplies and generator power at both of our sites, one of which is in a secure compound, and the other is the former U.S. embassy. During the last elections, we had security guards monitoring our entrances and exits, we provided safe transportation for employees, and ensured we had 72 hours’ worth of diesel fuel at our locations.”

Val Vandergrift
Val VanDegrift: “If things do go pear-shaped, Sitel is prepared.”

According to VanDegrift, the week before the election when campaigning begins is usually the quiet period, but if the results are in dispute following the vote then these preparations are more likely to be necessary. “Not that we expect any issues, but for the three days after the election, we will tell clients not to plan a visit,” he said. “We actually told our clients the same thing during the last elections, but one of them actually sent people down anyway. Ultimately, we’re not worried and have no concerns, so these measures are just a precaution for the safety of our clients.”

Most of the people we spoke to mentioned that the government has continued to be very supportive of businesses through the country’s trade promotion agency ProNicaragua. Nearshore Americas provided ProNicaragua ample opportunities to provide comments, but we received no response to our questions.

Perceptions Can Be Altered

In the outsourcing sector, most large investors have operated in places like Philippines or India, so they’re experienced with travel warnings like this. For smaller investors, a little research should be enough to provide some comfort.

Nicaragua’s homicide rate is just 8 per 100,000 inhabitants, putting it at the lower end of the murder spectrum for Latin America. The country is also the second-fastest growing nation in Central America, after Panama, at 5% a year. So, before you cancel your flights to Nicaragua and think twice about investing in the country, remember that this is unlikely to change because of a temporary travel alert.

And, if you need more convincing, just remember that, due to a spate of police shootings, the government of Bahamas recently issued a warning for their citizens visiting the U.S., so the shoe is also on the other foot sometimes.

Tags