Nearshore Americas

The Canada-Caribbean Connection: Historical Ties Reveal Inherent Advantages

North American buyers looking to outsource have a lot of options to choose from, and English-speaking Caribbean islands have a distinct advantage in that time zones align well and language capabilities are strong. That said, the path to these providers isn’t always a straight one, and there are often a few stops along the way.“We first outsourced our telephone operations in 2005,” says Sandy MacLeod, VP Consumer Marketing & Strategy, Toronto Star, Canada’s largest circulation newspaper.

“We had to walk before we ran, and decided to dip our toes in Canada. Minacs won the RFP, and we moved all our business to Halifax. It went incredibly well.”

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MacLeod says that Minacs, which has since been acquired by India-headquartered Aditya Birla, brought call management expertise to the table, with well-outlined expectations.  After three or four years, the Toronto Star found that the job was getting done and money was being saved. They gave Minacs some back office processing, and India was suggested.

“We had no Indian experience at that point,” says MacLeod. “We said ‘ok’ and tried with 20% of our volume in Bangalore. We had a good experience, and after two years were ready to close Halifax and look at Nearshore opportunities. We ended up picking Jamaica as our second site. We closed Halifax and now have 80-100 people in Bangalore, and another 80-100 people in Jamaica. It’s been a great experience.”

The irony is that when Macleod went looking for Nearshore options Jamaica was low on his list. He looked at other options, but Jamaica won out in part because of its flexibility and depth.

“I visited a call center in Honduras and was very impressed,” he says. “They were stellar at what they were doing, and the quality of the people was great. But I was worried about the depth of their workforce. If outsourcing really took off, they could end up with a shortage of qualified workers pretty quickly. In Jamaica the workers are well-educated. As well, we don’t need Spanish-language capabilities. Our decision was heavily influenced by English language issues.”

Trinidad & Tobago Calling

Jamaica isn’t the only Commonwealth country looking to boost its Nearshore profile. Trinidad & Tobago is also an important player and has brought in some impressive clients.

“I visited Trinidad & Tobago recently for the Caribbean Investment Forum and was impressed,” a managing director from one of Canada’s major banks told Nearshore Americas. “They have fiber throughout the island, and direct submarine cables to Miami, as well as satellite.”

Canadian banks have a long history of involvement in the Caribbean. Specific to Trinidad & Tobago, both the Royal Bank of Canada (RBC) and Scotia Bank have BPO operations in the island nation. The Canadian Imperial Bank of Commerce (CIBC) also has a strong presence in the region, having taken over Barclays Bank operations in 2006, which it now operates out of Barbados as CIBC FirstCaribbean International Bank.

“Overall, the Caribbean is becoming more aggressive in advertising its nearshoring capabilities,” says the Canadian director, who includes in his portfolio technology sourcing, sourcing payments, as well as supplier governance for operations. “At the Caribbean Investment Forum I spent two days listening to trends in IT investment, and how Trinidad & Tobago was differentiating itself. I was impressed. The Trinidad team was quite good. Some have Canadian roots or have been educated at Canadian universities.”

Beyond language and educational depth, Commonwealth countries also benefit from having a political and legal structure that is similar to Canada’s – and not that far removed from the United States, either.

“We are looking at LPO – Legal Process Outsourcing,” says the director. “The banks all have legal teams, and the British system has a similar legal background. We can find common ground in British practices for contract and non-disclosure. There is a value proposition there.”

The Canadian bank acknowledges that a small Caribbean island like Trinidad & Tobago doesn’t have the critical mass that India does. Nonetheless, it can still deliver in areas such as Knowledge Process Outsourcing (KPO), staff augmentation, and quality assurance.

“They also have decent infrastructure for hosting,” says the director. “Fujitsu, for example, has a solid Tier 2 facility in Port of Spain, the capital. This is a secure, well-conditioned facility.”

Add on a stable government that is in ‘let’s make a deal’ mode, subsidized electricity at 3.5 cents per kilowatt hour, and starting salaries at between $12,000 and $15,000, and Trinidad & Tobago clearly puts itself in the running as a viable nearshoring option.

Outsourcing as Diversification

Trinidad & Tobago is a leading regional provider of natural gas, and has built a supporting economy with strong capabilities in financial services and insurance. Given the prevalence of chartered accountants, the government is now looking to diversify and leverage its human capital. And, like other island nations in the Caribbean, there is great value in shifting off of a heavy dependence on tourism, and in opening up the business culture to more ambitious relationships.

“We are big believers in being actively involved with our outsourcing providers, and I am very proud that we have not had a failure on the outsourcing front,” says MacLeod. “We are very careful about who we pick as a partner, and don’t always go for the cheapest price. And we stay involved throughout the process. These things are critical.”

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In fact, MacLeod says that when outsourcing fails, it is usually because the buyer doesn’t handle it very well. This is one reason why having a Nearshore provider close at hand is of such value.

“You have to understand what is important to your business, and protect that passionately,” he says. “You can outsource the work, but not the responsibility.”

This outlines part of the appeal of the Caribbean, which is that a client in the United States or Canada can be on site in a matter of hours. That means providers have to accept deep scrutiny and a hands on approach. This in turn fits in well with market trends towards multi-sourcing a greater number of deals, with each location and provider able to offer distinct value propositions – the sort of diversification that should continue to keep the English-speaking Caribbean on the map.

Interesting in Sourcing and Services in Canada? Join us for a brand new conference “Sourcing Decisions 2017” in Toronto coming in March, 2017: LEARN MORE and REGISTER

Tim Wilson

Tim has been a contributing analyst to Nearshore Americas since 2012. He is a former Research Analyst with IDC in Toronto and has over 20 years’ experience as a technology and business journalist, including extensive reporting from Latin America. A graduate of McGill University in Montreal, he has received numerous accolades for his writing, including a CBC Literary and a National Magazine award. He divides his time between Canada and Mexico. When not chasing down stories, he is busy writing the Detective Sánchez series of crime novels.

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