Nearshore Americas

Everest Surprised by Strength and Size of Central America Contact Center Market

The Central American and Caribbean contact center services market is comprised of 80,000 to 90,000 full-time employees, spread across an array of established, emerging and untapped locations. Costa Rica and Guatemala account for half of the market share, while most activity in the region is driven by service providers, with global in-house centers limited to a few of the more mature locations.

These are among the key findings of the Everest Group report titled “Central America and the Caribbean Answer the Call for English-language Contact Center Services,” published in December 2014. Nearshore Americas caught up with the authors of the report, Anurag Srivastava and Aditya Verma, to challenge and discuss their findings.

Regarding their methodology, Verma revealed: “We used multiple sources of information. We keep on traveling to these locations and we’re in touch with stakeholders in the market on an ongoing basis, including industry players who are set up in these locations, recruitment firms and real estate firms.”

Impressive Market Size

The report divides the region’s locations into four categories: established destinations such as San Jose and Guatemala City; high cost, stable environment cities like Panama City and San Juan; sites of untapped potential such as San Salvador, Santo Domingo and Montego Bay; and low cost places with limited current market activity like Managua and San Pedro Sula.

While operating costs vary significantly – driven by difference in wages across the region – all the locations offer 35-75% cost arbitrage compared with tier-two locations in the United States such as Dallas. Most locations have low wage inflation (4-7%), but “the cost arbitrage is likely to decrease slightly in the next five years, as depreciating currencies counter the effect of inflation,” the report predicts.

Among the most striking findings, Verma said, “the size of the market in these locations surprised us. Many of these locations are still emerging so we were not expecting the size of the industry to be as big as it is.” But given the small size of countries in the region relative to the rest of Latin America, and their equally limited populations, how long will it be before the market becomes saturated and the talent pool is exhausted?

“We’ve analyzed the continuity of cost and it’s actually quite good in almost all of the locations. As for talent, there are some concerns because most of these locations are not big and the talent pool is limited. So there is obviously some concern around scalability and how long the talent pool is going to last,” Verma said. “I think there is some time left before these locations reach saturation point, however there are some exceptions. If you look at San Jose in Costa Rica there are companies that are feeling the constraints of the market and attrition rates can be high as we’re seeing more competition for talent.”

Srivastava added: “Broadly speaking, it depends on how fast the market grows in these locations. Some of these cities may not have taken off as quickly as people expected them to, so that is going to be a big driver. But as markets begin to mature, external influences may change how sustainable the market is over time. For example, a location that looks small-to-medium scale right now may have good growth two or three years down the line and if people invest heavily in talent then it may be able to support even larger scale. That is something that only time can tell.”

Assessing English Language Capabilities

With “moderate risk and low talent availability,” Managua and San Pedro Sula “have the least competitive intensity for talent,” the report states. But what can these newer markets do to become more attractive locations? “I think they need to invest in improving the availability of English-language skills,” Verma said. “I also believe there is an opportunity for companies to work in collaboration with universities. There have been some examples of this in Kingston, Jamaica but I believe initiatives of this kind are required in these locations in order to improve the availability of talent.”

The report states that San Pedro Sula has “lower employability due to lower availability of English language skills,” yet the team from Alorica assured Nearshore Americas last week that there are some 45,000 bilingual English speakers in the San Pedro Sula area. How, then, could there be a shortage of talent?

“It’s not just a matter of them speaking English but it also depends on other factors such as a lack of propensity in the workforce for the contact center function,” Verma clarified. “If you have consummate career opportunities, if you want to be self-employed or if you want to enter higher education then you have a lower propensity for working in a contact center environment.”

Niche European Language Services

While the Central American and Caribbean market predominantly serves U.S. customers, and most of the locations can be leveraged for bilingual (English/Spanish) service delivery, Everest notes that the region does offer some opportunities for service in other European languages. However, this currently accounts for under four percent of the market.

“Whatever foreign-language work that is being done there is either because of historic migration patterns or native people learning other languages in language schools,” Srivastava said. “It’s a growing opportunity; we do see evidence of French, German, Italian and Portuguese happening at least in the big centers like San Jose, Guatemala City or in Monterrey, Mexico.”

The report states that “the target buyer geography from these locations is likely to be the United States. It is difficult to establish non-English language support capabilities to Europe.” However, Canada and Brazil also represent realistic markets. Serving Canada’s French-speaking population is “definitely” more viable than serving France because of Canada’s geographic proximity to the region and the aligned time zones, Srivastava said. “I think French support is something that is becoming more important in the Canadian market, so that may be something that companies will have a look at more closely.” Portuguese-language work is more likely to be directed at the Brazilian market than Portugal for similar reasons, he noted.

Service Providers Lead the Way

The report found that the Central American and Caribbean market is much more orientated toward service providers than global in-house centers (GICs). Of 22 new set-ups and expansions of global delivery centers for contact center work reported in the region in the last 18 months, service providers accounted for 16 while only six were GICs.

“Barring a few exceptions, typically with new locations you see service providers getting in first and then the GICs and big buyers coming in on the back of these companies,” Srivastava explained. “Most locations are first populated by service providers because they tend to be more adventurous (in search of) locations that can give them years more arbitrage.”

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Verma added: “Most of the enterprise buyers typically tend to be more risk averse. They don’t want to go and establish centers in new locations, which is why you see a lot of concentration in (more mature) locations like San Jose in Costa Rica and Guatemala City. However, beyond these cities there’s very little presence of enterprise buyers.” In order to attract more GICs, the newer locations “need to step up a little bit in terms of selling themselves and creating success stories – cases of buyers who have established themselves in these locations and are thriving,” he said.

Risk Assessment

Although Guatemala City and San Pedro Sula are often ranked among the world’s most violent cities, Everest states that the safety and security risks in these cities “are not significant enough to affect business operations”. Given the dangers of underestimating the level of risk, how confident are the authors about this conclusion?

“The perception in these locations is often very different to the reality,” Verma said. “We do see that there is a fair amount of drug-trafficking and associated violence in countries like Guatemala and Honduras, at the same time the major business centers are really not badly affected,” Srivastava added. “There is a level of organized crime that people have learned to live with, but that is actually the case across most of Latin America today. The violence typically does not spill over into the main cities and it doesn’t really affect business operations.”

Duncan Tucker


  • I am surprised that Everest is surprised! that means they had never, ever been there. But I am very glad they published the report.

  • Very good report! Although statistics of San Pedro Sula are not quite exact. In Honduras we have more than 75,000 bilingual population; you are able to find various bilingual schools from all price ranges and in all locations. Parents feel now obligated for their children to learn English. Add to that, is important to mention that Honduras has very low competitive costs in infrastructure.
    Finally, I totally agree on the perception on security, this does not affect companies in any way. It is just as you go to any city in any country- you will find places that you know are not able to visit.