Near Shore Destination Costa Rica Attractive Location For Multi-Functional Centers

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Near Shore DestinationCosta RicaAttractive
Location For Multi-Functional Centers

• MAY 2010

Atul Vashistha Chairman Neo Advisory Neo
Group BestOutsourcingJobs
www.neoadvisory.com www.neogroup.com
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Content

• Destination Costa Rica
• The Align Experience
• CINDE
• Poll
• QA
• Presentation available later on
• Cinde.org
• neoadvisory.com

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Introductions
Irving Soto CINDE isoto_at_cinde.org
Ted Callaghan Align
Atul Vashistha
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Outsourcing Location Trends

• Leveraging Unique Capabilities
• Competitive Advantage of Nations
• Geographic Risk Diversification
• Global Delivery Model
• Captive Centers (BPO)
• Multi-functional centers

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Nearshore Trends

• The Americas Opportunity

• Skill-sets

• Affinity

• Proximity

• Time Zone

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Country Assessment Framework
Country Assessment
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Why Costa Rica?

• Ranked 3rd in the world on Environmental
  Performance Index

Workforce quality
Multilingual
Water Supply
Power Supply
Housing
Schools
Costa Rica
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Macro Economic Attractiveness
Parameters Attractiveness
Macro economic indicator
Currency risk
Source Neo Advisory

• Stable democratic country since 1948
• A strong non fluctuating currency.
• No army since 1948, instead a big investment in
  education and environment
• The GDP contribution from the services remains
  very high for Costa Rica pegged at 68 for 2009.
• Costa Rica has a low trade deficit of 2

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Geopolitical Attractiveness
Source EIU
Parameters Attractiveness
Political risk
Crime rate
Terrorism/Ethnic flare-up
Natural disaster risk

• The last World Bank Survey for Global Governance
  Indicators ranks Costa Rica in the first place
  within Latin America for political stability.
• The country has had no terror attacks, social
  unrests/strikes and is the greenest country in
  the world.
• Costa Rica has low trade deficit and low payment
  risk which is the best among the Latin American
  countries.

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Even more stable than the U.S.A.
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Infrastructure Attractiveness
Parameters Attractiveness
Government support
FDI attractiveness
Power supply
Transportation
Software parks/SEZs

• Very good government support, good power supply,
  good transportation and with a good support from
  the Foreign Direct Investments (FDIs).
• Internet services are the most readily available
  and sophisticated in Central America.
• Extensive highway system, two major international
  airports and two seaports. All major U.S.,
  European, and Latin American passenger and cargo
  carriers
• The government fosters growth with incentives,
  which finds favor with the FDIs and increases
  the private participation.
• The power supply situation is one of the best in
  the world with renewable sources of energy being
  used wherever possible and Costa Rica has a
  surplus of Power which it exports to the other
  Latin American power deprived countries.
• Abundant water supply, reliable hydroelectric
  power and an advanced telecommunications system.

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Human Resources Attractiveness
Parameters Attractiveness
Attrition Overall
of offshore/outsourcing Services Sector employees 28,000
Scalability Attractiveness

• Attrition in the offshore/outsourcing Services
  Sector is lower than Asian locations
• Costa Rica offers a good human resource pool in
  the Latin American region, especially with the
  bilingual skills (English, Portuguese, Spanish,
  etc.) and good educational background (6 of GDP
  is allocated for education).
• According to the fdimagazine, Costa Rica has the
  best in the category of availability and quality
  of human resources, with scores higher than major
  competitors like the Dominican Republic, Panama
  and Puerto Rico.
• Costa Rica has one of the highest literacy rates
  (95.9) of the American Continent. Education is
  mandatory until the 9th grade.
• Around 35.6 of the total population are between
  15 35 years (annual growth rate of 2.1).

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An Attractive Location San José

• Ranked 3rd in the world on Environmental
  Performance Index.
• The city has well-educated, creative, innovative,
  English-speaking and highly productive human
  resource. San Jose has technical and superior
  education institutions that generate qualified
  human resource, such as Technical high-schools,
  Private and public universities, National
  Learning Institute, CEFOF, CENFOTEC.
• 50 of the elementary schools and all
  high-schools have computer labs and receive
  English lessons. This allows children and
  teenagers to learn the language and computer
  skills at a very early age.
• Great location for expatriates. Ranks first in
  the Happy Planet Index.
• 62 of the employable workforce lives in the
  greater metropolitan area where San Jose is
  located.

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Costa Rica SWOT Analysis
Strengths
Weaknesses

• Excellent human resources
• Quality education
• Good business and support amenities
• Conducive environment for doing business
• No limitations on capital funds transfers
  associated with an investment, regardless of the
  currency.
• CINDE Great support resources
• Cultural compatibility for expats
• Stable/pleasant climatic conditions
• Access to good health care

• Salary levels for the ITO and BPO employees are
  higher than other developing locations.
• Costa Rica has a local software supportive
  business park formed mainly by highly productive
  PYMES (SMEs - small and medium sized
  enterprises). But not enough software firms or
  human resources.
• Smaller local ITO companies

Opportunities
Threats

• Multi-functional capabilities for BPO, such as
  the case of Align Technologies
• Deep call center experience, ie Sykes, and KPO
  such as Amba Research and PG
• Leverage same time zone coverage for USA and
  Costa Rica, which has a long daytime working
  shift (5 am to 7 pm)
• Leverage bi-lingual, with one of the highest
  gross participation of population in labor pool
  (50)
• Leverage neutral accent
• Close proximity to other larger centers such as
  Sao Paolo

• Smaller labor pool
• Rising cost of labor (average less 3/yr in US)
• Not enough resources in a specific area of
  expertise or too high recruiting parameters
• Payroll fringes (social security, pension plan,
  etc.) account for a fixed percentage of the
  employees salary 34.5

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Recommendations

• The population of the country is about 4.5
  million people and the Services Sector employment
  is around 28,000, which is 1.5 of the labor
  pool. This makes it an ideal location for smaller
  centers (lt1000), though it can support larger
  call centers.
• English and Spanish language based processing of
  work can happen real time in Costa Rica, whose
  time lines exactly match with U.S MDT timings.
• Government support can be leveraged to acquire
  tax benefits/concessions as the Costa Rican
  government is promoting the offshore/outsourcing
  industry with CINDE and Procomer serving as
  strong support organizations.
• Strong focus on education and good universities
  makes it an ideal center for higher end
  multi-functional operations.
• Ideal place for companies with a large carbon
  foot print to start operations as Costa Rica is
  the greenest country in the world and carbon foot
  prints can be acquired with ease.

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Contact Information
Atul Vashistha Chairman atul_at_neoadvisory.com atul
_at_neogroup.com
Neo Advisory Global Headquarters 4000 Pimlico
Drive, 114-108 Pleasanton, CA 94588.
Asia-Pacific Headquarters No. 16 16/1 5th
Floor Phoenix Towers, Museum Road Bangalore
560025, India.
Amsterdam, Netherlands Sao Paolo,
Brazil Monterrey, Mexico Kuala Lumpur,
Malaysia
www.neoadvisory.com