Nearshore Americas
San Pedro Sula

Sula Valley’s Culture of Innovation is Key Driver for BPO Investment

Honduras’s second-largest city, San Pedro Sula, has a lot to offer the BPO industry, with the city’s civic and business leaders working hard to make the location appealing to providers.

“San Pedro Sula’s new Municipal Development Plan (PMDM), adopted in December 2017, fully aligns with Honduras’ interest on the pursuit of economic competitiveness and broader opportunities,” says Armando Calidonio, the city’s mayor. “The PMDM specifically focusses on economic development and seeks to achieve economic resilience.”

Many residents of San Pedro Sula – known as “sampedranos” – are proficient in English, which is taught in dozens of schools. The overall English-language proficiency is notable for its neutral American accent. A significant number of young sampedranos have also spent time in the United States, and everyone has had exposure to US media. The local government is eager to leverage these and other skills.

“The city has a strategy to foster the skills and knowledge of the local population,” says Calidonio, who believes that BPO has an increasingly vital role to play in his city. “We want to fully integrate forthcoming BPO opportunities as an integral part of our PMDM initiative.”

The City’s Productive Chains

The city’s economy is dominated by manufacturing, which accounts for 26% of activity, followed by more general commercial activity, which represents 25%. These numbers are well above the national average, which is at 17% and 13.7%, respectively. Given that San Pedro Sula’s urban population is over 850,000, this represents a significant and productive labor force.

“The Sula Valley, which includes San Pedro Sula as the largest of the 20 municipalities that comprise it, represents 63% of Honduras’s GDP,” says Calidonio. “A culture of research and innovation can boost the sustainable expansion of industry, with external support to BPO.”

This is an important point and speaks to how the municipality sees BPO as being complementary to other industries. The reasons are simple enough: BPO requires a young, business-savvy workforce that can handle client engagements in English. These are the young workers that, over time, will build out a more sophisticated and diverse economy.

“We have invested in San Pedro Sula because we know an affordable, high-quality workforce is there,” says Marcelo Larach, executive director of Century Business Square, a purpose-built BPO facility in San Pedro Sula. “Our business park is also benefitting from the tax-free regime in Honduras. This is a critical advantage.”

A Vote of Confidence

The construction of Century Business Square – an impressive master-planned BPO complex that includes the collocation of productivity-enhancing retail facilities, banking, food outlets, and a medical station – represents a significant vote of confidence in BPO in San Pedro Sula. This is because BPO is one of the industries that’s bringing the most investment to Honduras. The result is that established businesses are now venturing into the BPO space. 

“We’ve been in business for 120 years in Honduras, and have provided facilities for numerous industries, including textiles, banking, energy, and hotels,” says Larach. “Now we see the opportunity in BPO, with companies seeking to site their BPO operations in San Pedro Sula because of the advantages the location offers. The sector is booming.”

As well, the BPO sector in San Pedro Sula has appeal over Honduras’s largest metropolitan area and capital city, Tegucigalpa, because, in San Pedro Sula, there’s less traffic congestion, and wages are lower. In overall economic terms, San Pedro Sula also benefits from the proximity of the Municipality to the Cortés Maritime Port and the success of the maquiladora sector.

“San Pedro Sula is the largest service center in the Sula Valley,” says Calidonio. “The Department of Cortés itself represents 84% of the maquiladora companies and 80% of the total employment generation.”

This openness to global markets, with over 30 years of exposure to Industrial Free Zones, has had a positive effect on the BPO industry. Honduras is now home to tenured industry players such as Alorica, Collective Solution, Convergys, and Startek. As a result, the demand for facilities like Century Business Square is only expected to increase.

“We are aiming to differentiate ourselves with a park that’s in an attractive location, with easy access to both public and private transportation,” says Larach. “There are five main universities in a one-kilometer radius.”

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Putting a new BPO operation in a desirable location with robust infrastructure is a big draw for the city’s young, bilingual, and educated population. For many of these workers, the move from a factory floor to an office is a step up. A new, high-quality facility also has obvious appeal to BPO providers.

“In San Pedro Sula, there’s demand for a state-of-the-art facility like ours,” says Larach. “BPO providers benefit from three generators that backup the power grid, as well as fiscal incentives because Century Business Square operates under Free Zone status.”

Clearly, efforts by both the public and the private sector are making a difference in San Pedro Sula, where the BPO industry is expected to continue to show promise. Given the nearshore advantages – a time zone aligned to the US, and close geographic proximity – San Pedro Sula, and facilities like Century Business Square, are increasing the global competitiveness of Honduras’s BPO sector. 

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.