Kirk LaughlinJavier Chamorro, the man at the helm of PRONicaragua (and #33 on our Power 50 Ranking) is part of a new generation of Nicaraguans looking to reshape the perceptions of the country to fit the year 2010.
A steady tide of multinational organizations have shown up in Nicaragua over the last few years, with many raving about the quality of the workforce. But the fact that Daniel Ortega is still the man in charge causes many potential investors to stop in the tracks. But, according to Chamorro, Ortega has been a money magnet, drawing billions in investment over the last several years.
What is PRONicaragua’s plan over the next two years to bolster the image of Nicaragua as an outsourcing destination?
Our focus traditionally and for the future has been on developing success stories, instead of specific marketing initiatives. We bring in recognized companies, and use their positive experience to position Nicaragua as a sourcing destination. In recent years we’ve opened operations of two well known companies – Sitel and Stream – and have also promoted local entrepreneurial businesses that are joining the BPO sector, either by developing infrastructure within the country or by starting operations as service providers themselves. So our interest has been more in creating a successful IT sector in the country to serve as a testimonial to other companies that we bring in to evaluate the Nicaragua’s opportunities.
To promote ourselves to those companies, we do participate in trade shows and other marketing initiatives, as well as work with media outlets like Nearshore Americas that transmit information about the country. But for now the main focus is on approaching specific companies and convincing them to come down to Nicaragua to evaluate us. Once we have a sector that is a little more developed, we will focus on joint communications efforts with companies already doing business here who want to expand their operations.
Many countries in our region are affected by high levels of personal insecurity, and so one of the important selling points of Nicaragua is personal safety. That’s not the normal perception of our country, but in reality there is an important combination of safety and quality of life here that is very attractive for executives that come down to do business.
What are Nicaragua’s strengths in terms of outsourcing? What is the business environment like?
Many countries in our region are affected by high levels of personal insecurity, and so one of the important selling points of Nicaragua is personal safety. That’s not the normal perception of our country, but in reality there is an important combination of safety and quality of life here that is very attractive for executives that come down to do business.
Nicaragua also has one of the most modern telecom infrastructures in the region. The reason is that we invested in this sector quite late – the mid 90’s, an era when communications technology was really advancing – which allowed us to invest in more modern systems than other countries that began telecom investments in the 70’s and 80’s. For example our telecom system is completely fibre optic cables, which is not the case in the rest of the region. Normally you’ll find fibre optics in the main cities, but here you’ll find it all over the country. We also have very modern mobile telephony providers – we were one of the first countries to offer 3G service, and now we’re the first country to offer 4G service.
We have a very strong legal framework for attracting investment – Nicaragua is ranked first in the region by the World Bank’s Doing Business Report in terms of protecting investors. We’re a very open market to foreign investment, guaranteeing no discriminatory treatment and no restrictions on moving capital, profits and resources. Aggressive fiscal incentives are available as well. All companies that come in under the BPO or IT service category can locate in our free trade zones, where they pay no taxes whatsoever. We are also the most cost-competitive option in terms of labor cost. Because of high unemployment levels in Nicaragua, there’s an appreciation of the importance of the outsourcing sector and the job opportunities that it provides, which has led to a competitive structure in terms of direct salaries to employees and social benefits. We have one of the most flexible labor pools in the region.
What are Nicaragua’s challenges as an outsourcing destination? What are the overall market issues in the country?
The main challenge that hampers our development as a sourcing destination is the perception that Nicaragua may not yet be ‘open for business’. That’s why we try to demonstrate through real testimonials of companies already in Nicaragua that not only are we ready and able to support your business, but that you can be very successful here.
The challenge once we defeat that negative perception is to guarantee the flow of bilingual human resources that can continue to feed the outsourcing industry here in Nicaragua, and to keep those resources cost competitive. To that extent we have been working with local academia at the university level and at language institutes around the country to secure the flow of bilingual workers into the market. We’re making sure that our growth won’t stall; that we won’t reach a point where we saturate ourselves. We currently still have room to grow, but we’re planning for the future.
Nicaragua faces very high levels of unemployment. Official unemployment is around 8%, but under-employment is around 33% of the workforce. Our challenge is to create jobs, and so we need to make sure we have a labor pool with the correct capabilities in order to attract companies.
How does President Daniel Ortega’s government help or hurt the chances of Nicaragua to thrive as an outsourcing destination?
I’m glad you brought that up. This is one of the first issues we deal with when talking with foreign companies, and their concern is understandable. The perception may be that Nicaragua is not open for business, but the numbers show that the country and the government have been quite aggressive in courting foreign investment. For example in the first two years of this administration (2007-2008), we were able to attract over a billion dollars of foreign investment – more than we attracted in the previous four years. According to the Latin Business Chronicle, Nicaragua now ranks third in Latin America as a country that attracts foreign investment as a percentage of its GDP, after Chile and Panama.
So we have been able to attract investment and we have been able to find political support here in the country. We try to show potential investors that there’s a definite disconnect between the perception of the country, and the reality of doing business in Nicaragua. Many North American companies have set up here – GE, Walmart, Kraft Foods, Stream, Sitel – and they’re all doing very well. Sitel in particular is a real success story. They set up here in 2008, and expected to grow to 400 seats. Today they are expanding to around 2000 positions, and are one of the fastest growing operations in the world. That would only be possible with real government support.
Specific monetary incentives from the government are not offered in Nicaragua because we know that with our current mixture of fiscal and labor incentives, when a company runs the numbers, we will be more cost-competitive than any other region.
In the coming years will PRONicaragua be focusing more on IT outsourcing, or on call centers and BPO?
We target call centers and BPO services more than IT sourcing because we see it as the initial entry step to the sector. Call center activities are also more job intensive – they meet Nicaragua’s need to create more employment. But our vision in the future is definitely more value-added services, including IT, software development and financial services.
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