Latin American Location Trends Labor Analytics Group December 16, 2009

Latin American Location Trends

Labor Analytics Group

December 16, 2009

CB Richard Ellis | Page 2

Regional Overview The Latin American region encompasses Central

America, South America and the Caribbean Islands. The region covers 7.9 million square miles with a population of 596 million across 21 countries.

Spanish and Portuguese are the predominant languages of Latin America. Portuguese is spoken only in Brazil (the most populous country in the region) and Spanish is the dominant language in the vast majority of other Latin American countries. French and Dutch are spoken in several of the Caribbean Islands. English speaking skills vary widely by country and are generally weak, but growing. Argentina, Costa Rica, Mexico, Panama, Puerto Rico and Nicaragua have the largest English-speaking populations.

The Latin American region has become an appealing near-shore outsourcing alternative to more traditional offshore locations, like India and the Philippines. The region’s proximity, language capabilities and cultural affinity to US customers are some of the driving factors for the region’s popularity. Though historically the region has been rife with political and economic challenges, the climate has changed significantly in recent years. Countries such as Costa Rica, Mexico, Brazil, Chile and Argentina have established themselves as viable competitors to the low-cost Asian markets. Some emerging markets in the region include El Salvador, Nicaragua and Guatemala.

The recent economic downturn has had the greatest effect on Mexico and parts of Central America, due to their close economic ties to the US. The effects on South America have been relatively mild and are already showing signs of recovery, though the entire region is expected to see negative growth in 2009. However, despite the current global recession, the region’s appealing fundamentals are expected to position it competitively for foreign investment and outsourcing over the long term.


Regional Overview Latin America’s appeal as an offshore alternative to more traditional

outsourcing markets began in earnest in the late 1990’s, as the telecommunications infrastructure improved and local governments developed attractive polices to incentivize foreign investment.

The comparison chart below highlights some of the key differences between Latin American countries, in regards to people, economy and development trajectory:

1 The Human Development Index (HDI) is compiled by the UN and is an index used to rank countries by “human development”, which is also an indication of their overall development as a country. The index measures life expectancy, literacy, student enrollment and standard of living. A higher index indicates higher human and country development.

Country Population Growth LiteracyUnem-

ploymentPrimary

LanguageGDP

(Billions)HDI1

Brazil 196,342,592 1.2% 88.6% 9.3% Portuguese 1,975.9 0.807Mexico 109,955,400 1.1% 91.0% 3.7% Spanish 1,550.3 0.842Colombia 45,644,023 1.4% 90.4% 11.8% Spanish 402.5 0.787Argentina 40,482,000 1.1% 97.2% 7.8% Spanish 570.5 0.860Peru 29,546,963 1.2% 92.9% 8.4% Spanish 244.7 0.788Venezuela 26,814,843 1.5% 93.0% 8.5% Spanish 362.8 0.826Chile 16,454,143 0.9% 95.7% 7.5% Spanish 246.5 0.874Ecuador 14,573,101 1.5% 91.0% 8.7% Spanish 104.7 0.807Guatemala 13,002,206 3.4% 69.1% 3.2% Spanish 66.8 0.696Bolivia 9,775,246 1.8% 86.7% 7.5% Spanish 43.4 0.723Dominican Republic 9,507,133 1.5% 87.0% 15.6% Spanish 76.2 0.768Haiti 9,035,536 1.8% 52.9% 66.0% French 11.7 0.521Honduras 7,639,327 2.0% 80.0% 27.8% Spanish 32.7 0.714El Salvador 7,066,403 1.7% 80.2% 6.2% Spanish 43.9 0.747Paraguay 6,995,655 2.4% 94.0% 5.4% Spanish 29.3 0.752Nicaragua 5,785,846 1.8% 67.5% 4.9% Spanish 16.8 0.699Costa Rica 4,195,914 1.4% 94.5% 4.6% Spanish 48.9 0.847Puerto Rico 3,958,128 0.4% 94.1% 12.0% Spanish/Eng 70.6 0.950Uruguay 3,949,382 0.5% 98.0% 7.6% Spanish 40.7 0.859Panama 3,309,679 1.5% 91.9% 6.4% Spanish 38.3 0.832Jamaica 2,804,332 0.8% 87.9% 9.9% English 20.9 0.771Trinidad & Tabago 1,229,953 -0.1% 98.6% 5.3% English 24.2 0.833Belize 301,270 2.2% 76.9% 9.4% Spanish 2.8 0.771Barbados 284,589 0.4% 99.7% 10.7% English 5.5 0.889Antigua & Barbuda 85,632 1.3% 85.8% 11.0% English 1.6 0.830

Drivers for the Latin American Option: Low cost Spanish-speaking skills

With 40 million Hispanics in the US and growing, Latin American countries offer a vast pool of labor to service this rapidly growing consumer base at lower costs.

Growing, low cost bilingual skill base Spanish-English language capabilities

continue to be a key skill requirement for US corporations and several Latin American countries offer a deep base of this hard-to-come-by skill.

Geographic & cultural alignment One of the region’s greatest advantages

over Asian locations is its geographic proximity to the US (flights & time zones) and its cultural affinity (particularly to the Hispanic market).

Risks with the Latin American Option: Political & economic instability

Concerns of political & economic instability prevail, as some countries have only recently stabilized.

Limited pool for certain skills Still a region in development, most

countries cannot compete directly w/ mature BPO markets for operations requiring higher, more specialized skills.


Regional Overview

Mature Maturing Emerging

Monterrey, Mexico Buenos Aires, Argentina San Salvador, El Salvador

San Jose, Costa Rica Santiago, ChileGuatemala City, Guatemala

San Paulo, Brazil Panama City, Panama Managua, Nicaragua

Rio de Janeiro, Brazil Kingston, Jamaica Bogotá, Columbia

Mexico City, Mexico Guadalajara, Mexico Leon, Mexico

Puerto Rico Brasilia, BrazilSanta Domingo, Dominican Republic

New Offshoring markets continue to emerge, as multinational companies look to the region for low cost, bi-lingual BPO support.


Regional Overview

0%

3%

5%

8%

10%

San Jose Monterrey BuenosAires

Santiago SanSalvador

% EnglishSpeaking

0.0

2.5

5.0

7.5

10.0



Economic Freedom

Corruption Perception

Political Stability

English Proficiency

Skill & Education

Economic & Political Risk

Monterrey, San Jose & Buenos Aires have some of the highest English proficiency levels in the region. San Salvador & Santiago are improving.

Santiago has earned a reputation as very business friendly, with low barriers to entry and less corruption. Buenos Aires has only recently emerged as a stable political & economic environment.

San Jose, Buenos Aires & San Salvador share a strong base of bus/fin and IT graduates, which aligns well with the needs of BPO employers. Monterrey has a significant base of call centers, but it is still a manufacturing-based economy, first.

Markets of Focus Status

Monterrey, Mexico Mature

San Jose, Costa Rica Mature

Buenos Aries, Argentina Maturing

Santiago, Chile Maturing

San Salvador, El Salvador Emerging

0%

5%

10%

15%

20%



Bus & Fin Degrees

IT Degrees

Engineering Degrees


OPPORTUNITIES

RISKS

Mature Market| San Jose, Costa Rica

COUNTRY & ECONOMIC OVERVIEW

Market Overview

Costa Rica covers 51,100 sq km (slightly smaller than West Virginia) with a population of 4.2 million and labor force of 1.95 millionThe capital is San José, located in the center of the country with approximately 62% of the labor force located within the greater metropolitan area of San José, Cartago, Heredia and Alajuela.Although it maintains a large agricultural sector, Costa Rica has expanded its economy to include strong technology and tourism industriesOfficial language is Spanish, however there is a strong prevalence of English speaking due to strong tourism industries, creating an attractive location for near-shore call centers and shared service centers

5 = Strong, 1 = Weak

Deep base of call center, technology and BPO experience

Low cost near shore option Easily accessible and aligned with US time zones Growing English language skills

Limited labor force increases supply risk Competitive growth increases tightness of labor

market0

1

2

3

4

5

San Jose Regional Avg US Avg Global Avg

Labor Avail

Bus. Cost

Bus. Climate


Metro Area Population: 1,454,816 City Unemployment Rate: 8.2% Population Growth (country): 3.4% Native Language/Literacy Rate: Spanish/95.7% % Pop. Speaking English 7.6%

Pop w/ Post-Secondary Degree N/A % Bus, Fin, Econ Graduates 12.0% % IT Graduates 9.2% Pop Employed in Bus Functions 40,500 Pop Employed in IT Functions 11,920

Costa Rica Institute of Technology University of Costa Rica INCAE INA: National Training Institute

# of Higher Education Inst. 59# of graduates per year 28,000

EDUCATION & SKILLS

MAJOR POST-SECONDARY SCHOOLS


LABOR AVAILABILITY & LANGUAGE SKILLS

Labor Availability & Skill Depth

EDUCATION OVERVIEWCosta Rica has made significant investments in education. Private and public university graduation rates have been growing at an average of 4.1% each year for the last 9 years. Quality of Education in Costa Rica is ranked the highest in Latin America and 32nd in the world.Most high school students graduate with strong writing and reading skills in English, but have a slight deficiency in conversational English to the level required of most call centers.

0%

3%

5%

8%

10%



% EnglishSpeaking


Economic Freedom (Heritage Foundation)

Moderate TI Corruption Perceptions Index Strong EIU Political Stability Rank Strong World Bank Labor Legislation Score Good

Infrastructure Environment IndexModerate

Internet Penetration RateModerate

Network Readiness IndexModerate

Avg. Annual Rental Rate (US$/SqFt) $30.66

San Jose has good accessibility to the US with five daily connections to Miami and two daily connections to Houston via Juan Santa Maria International Airport (SJO).

Travel time from Miami is 2:45. Average travel time from NYC is 7 hours. The airport is 30 minutes from downtown.

Costa Rica is in the Central Standard time zone (UTC-6), making it well aligned with US business hours.

INFRASTRUCTURE & REAL ESTATE

ACCESSIBILITY


ECONOMIC & POLITICAL RISK

Business Climate

BUSINESS CLIMATE OVERVIEWRelative to the Latin American region, Costa Rica offers a moderate to low risk environment for foreign investment and business. Corruption perception is also low. Labor legislation is favorable from an employer perspective with low barriers for hiring and firing staff.Costa Rica has one of the strongest and most proactive economic development agencies (CINDE) in the region and they serve as a strong local advocate for foreign investors.

ECONOMIC FREEDOM AND RISK

60.3

81.8

82.8

88.4

69.7

70.0

50.0

50.0

50.0

61.2

0.0 20.0 40.0 60.0 80.0 100.0

Business Freedom

Trade Freedom

Fiscal Freedom

Government Size

Monetary Freedom

Investment Freedom

Financial Freedom

Property Rights

Freedom from Corruption

Labor Freedom

Source: Heritage Foundation


# of BPO Operations 5Total BPO Employment28,000

Staff/Agent Level $5.17/hr USD Supervisor Level $8.34/hr USD Management $14.27/hr USD

BPO LABOR RATES


MAJOR BPO OPERATIONS

BPO Environment

CURRENT STATE OF THE BPO MARKETSan Jose stands out as one of the most successful BPO locations in Latin America. HP and Proctor & Gamble were early entrants into the market and since then, several other large operations have opened and expanded. The market is nearing the point of over-saturation, though it remains a common consideration for US companies seeking a Latin American presence. Bilingual skills continue to improve while labor costs near the high-end of the spectrum.

Company Primary FunctionsEmployment

LevelHP Shared Services 6,500SYKES Cust Svc/Tech Support 2,500P&G Shared Services 1,350Western Union Cust Svc/Shared Svcs 1,200IBM BPO/HR 700Experian Data, Software, IT 150

0

4,000

8,000

12,000

16,000

20,000

24,000

28,000

San Jo

se

Mon

terre

y

Bueno

s Arie

s

San S

alva

dor

$2.00

$3.00

$4.00

$5.00

$6.00BPOEmploymentHourly Wage


0

1

2

3

4

5

Monterrey Regional Avg US Avg Global Avg

Labor Avail

Bus. Cost

Bus. Climate

OPPORTUNITIES

RISKS

Mature Market| Monterrey, Mexico


Market Overview

Mexico covers 1,923,040 sq km with a population of 110 million. Mexico is the 5th largest country in Latin America by area and 2nd largest by population and GDP. Mexico’s GDP ranks 11th globally.The capital is Mexico City, with a population of 8.8 million within city boundaries and 19 million within Greater Mexico City. Monterrey is the 2nd largest city with 4.2 million.Mexico’s manufacturing industry is a dominant sector of the economy, however, markets like Monterrey & Tijuana, have established themselves as strong BPO markets.Mexico’s official language is Spanish and it is the most populous Spanish-speaking nation in the world.


Deep and growing base of call center, technology and BPO experience

Strong bi-lingual skills (Spanish/English) Easily accessible and aligned with US time zones Pro-business government

Though low cost by US standards, not as low as other, less mature Latin American markets

Ramped crime and violence from drug cartels increases risk



Pop w/ Post-Secondary Degree 19.1% % Bus, Fin, Econ Graduates 10.0% % IT Graduates 8.0% Pop Employed in Bus Functions 103,801 Pop Employed in IT Functions 23,876

ITESM (“Tec de Monterrey”) Autonomous University of Nueva Leon Universidad Regiomontana Universidad de Monterrey


EDUCATION & SKILLS





EDUCATION OVERVIEWMexico’s tertiary education system has both public and private universities. Around 1.8 million students enroll in college and technical degree programs annually. Mexico has approximately 110,000 highly educated, English and Spanish speaking workers who are currently employed in private and public IT companies.

0%

3%

5%

8%

10%



% EnglishSpeaking



Moderate TI Corruption Perceptions Index Poor EIU Political Stability Rank

Moderate World Bank Labor Legislation Score

Moderate

Network Readiness Index Moderate


Internet Penetration RateModerate


Monterrey has very good accessibility to the US with more than ten daily connections to NYC.

Average travel time from NYC is 6 hours. The airport is 30 minutes from downtown.

Monterrey is in the Central time zone (UTC-6), making it well aligned with US business hours.


ACCESSIBILITY



Business Climate

BUSINESS CLIMATE OVERVIEWMonterrey has a pro-business government that encourages foreign investment. According to the Offshoring Institute, the time required to register a new company is only 27 days. Monterrey’s primary industry is manufacturing and many of its incentive programs are geared toward manufacturing operations. However, the large and well educated workforce has attracted a sizable BPO base, and the government has responded with incentive programs that cater more specifically to their needs, such as training grants and payroll tax reductions.

ECONOMIC FREEDOM AND RISK - MONTERREY

80.3

80.2

83.4

81.8

77.5

50.0

60.0

50.0

35.0

59.8

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

Business Freedom

Trade Freedom

Fiscal Freedom

Government Size

Monetary Freedom

Investment Freedom

Financial Freedom

Property Rights


Labor Freedom



# of BPO Operations 1,200Total BPO Employment24,000


BPO LABOR RATES



BPO Environment

CURRENT STATE OF THE BPO MARKETMonterrey has traditionally been a manufacturing-based labor market, but with the advent of such Spanish/English outsourcers as Hispanic Teleservices and Merkafon-Teleperformance in the early part of the decade, BPO operations have become a growing industry. Monterrey offers strong bilingual skills and a very business friendly government.

Company Primary FunctionsHispanic Teleservices Cust Svc/Tech SupportTeleperformance-Merkafon Cust Svc/Tech SupportACS Cust Svc/Tech SupportCentris Cust Svc/Tech SupportGE/Softek Shared ServicesChrysler Financial Customer ServiceInfosys Software DevelopmentACS Cust Svc/Tech SupportAccenture Cust Svc/Tech Support

0

4,000

8,000

12,000

16,000

20,000

24,000

28,000

San Jo

se

Mon

terre

y

Bueno

s Arie

s

San S

alva

dor

$2.00

$3.00

$4.00

$5.00



0

1

2

3

4

5

Buenos Aires Regional Avg US Avg Global Avg

Labor Avail

Bus. Cost

Bus. Climate

OPPORTUNITIES

RISKS

Maturing Market| Buenos Aires, Argentina


Market Overview

Argentina is the 8th largest country in the world by land mass ( 2,766,890 sq km) with a population of 40 million. It is the 4th largest country in Latin America in terms of both area and population. Argentina’s GDP ranks 3rd in the region and 23rd globally.The capital is Buenos Aires, with a population of 2.8 million within the city boundaries and nearly 14 million within the metro area. Argentina’s economy is largely based on abundant natural resources and agriculture. Its well-educated population has created a diversified industrial base.Argentina’s official language is Spanish (Castilian), however English is widely taught as a secondary language in schools. ~1.5 million speak Italian.


One of the most cost-competitive countries in Latin America

Relatively low saturation levels (but growing) Well-educated population w/ good English skills Attractive business climate and incentives

Economic and political risks remain, though currently stable.

Crime and pollution levels are very high




The University of Buenos Aires Universidad Nacional de Tres de Febrero National Technological University Universidad Argentina de la Empresa Universidad del Salvador Facultad Latinoamericana de Ciencias Sociales


EDUCATION & SKILLS





EDUCATION OVERVIEWArgentina has developed a strong public and private education system and the country’s literacy rates are among the highest globally, as a result. The public system is tuition-free through college, but poor funding in the ’80s & ’90s has led to a decline in quality.Three in eight adults over the age of 20 have completed secondary schools or higher. About 11 million Argentinean's were enrolled in school (either public or private) in 2006. This includes nearly 1.5 million in the universities.

0%

3%

5%

8%

10%



% EnglishSpeaking



Moderate TI Corruption Perceptions Index Poor EIU Political Stability Rank


Moderate



Internet Penetration Rate Strong


Buenos Aires accessibility to the US is good relative to non-Latin American offshore markets, however it has one of the longest total travel times in its region. Total travel time from New York City averages about 13 hours. The airport is 30 minutes from downtown.

Only two airlines currently offer non-stop flights from NYC to Buenos Aires: American Airlines and LAN Argentina

All of Argentina observes the UTC-3 time zone, which puts it 2 hours ahead of Eastern Standard time.


ACCESSIBILITY



Business Climate

BUSINESS CLIMATE OVERVIEWOverall, Argentina’s business climate is moderate to favorable. The government recently identified the “software production” industry as an important growth sector and passed legislation that extends many of the incentives available to its primary industries (raw materials, Agriculture, etc.) to the software and BPO sector. The Word Bank ranks Argentina 118 of 183 countries in its Ease of Doing Business report.Argentina received USD 5.7 billion in FDI in 2007.

ECONOMIC FREEDOM AND RISK - BUENOS AIRES

62.1

70.0

70.3

75.6

60.6

50.0

40.0

20.0

29.0

45.6

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

Business Freedom

Trade Freedom

Fiscal Freedom

Government Size

Monetary Freedom

Investment Freedom

Financial Freedom

Property Rights


Labor Freedom





BPO LABOR RATES



BPO Environment

CURRENT STATE OF THE BPO MARKETBuenos Aires’ cost competitiveness increased dramatically following the devaluation of the Peso in 2002. Since then, large multi-nationals have opened IT-BPO operations and the BPO industry has become one of the fastest growing segments of the economy. Helping to enable this growth, has been a well-developed educational system, good telecom infrastructure and strong foreign investment programs.

Company Primary FunctionsSAP IT/Software DevelopmentTata Consultancy Services IT/Software DevelopmentAccenture IT/Software DevelopmentIBM IT/Software DevelopmentHP IT/Software DevelopmentTeletech Cust Svc/Tech SupportReuters Cust Svc/Tech SupportFirstsource Cust Svc/Tech SupportTMF Argentina Cust Svc/Tech SupportIntel IT/Software DevelopmentMicrosoft IT/Software DevelopmentMotorola IT/Software DevelopmentSabre IT/Software DevelopmentLatin3 Creative Services

0

4,000

8,000

12,000

16,000

20,000

24,000

28,000

San Jo

se

Mon

terre

y

Bueno

s Arie

s

San S

alva

dor

$2.00

$3.00

$4.00

$5.00



0

1

2

3

4

5

Santiago Regional Avg US Avg Global Avg

Labor Avail

Bus. Cost

Bus. Climate

OPPORTUNITIES

RISKS

Maturing Market| Santiago, Chile


Market Overview

Chile covers 756,950 sq km with a population of 16 million. Chile is the 8th largest country in Latin America by area, 7th largest by population and 6th largest by GDP. Chile’s GDP ranks 43rd globally.Chile’s capital is Santiago, with a population of 5 million within city boundaries and 6.6 million within the metro area. 1/3 of Chile’s pop. resides in Santiago.Chile’s economy is dominated by raw material exports (copper by a wide margin, then forestry). However, the financial sector has developed significantly over the last decade. Chile’s A+ credit rating is among the highest in Latin America.Chile’s official language is Spanish. English language proficiency is limited, but growing.


Most favorable business climate in Latin America and among the most favorable globally

Well educated workforce with strong IT/Engineering skills

Rapidly growing shared-services/back-office industry (primarily Spanish-speaking)

Good Infrastructure, telecom & technology parks

Limited (but improving) English skills – current BPO presence is largely Spanish speaking and/or non-customer facing



Pop w/ Post-Secondary Degree N/A % Bus, Fin, Econ Graduates 10.0% % IT Graduates 7.0% Pop Employed in Bus Functions 195,049 Pop Employed in IT Functions 39,391

University of Santiago University of Chile Pontificia Universidad Catolica de Chile Universidad Nacional Andrés Bello Universidad Diego Portales Universidad de Las Américas


EDUCATION & SKILLS





EDUCATION OVERVIEWChile has a strong education system and government promotion of IT-BPO industry careers has increased the technical college enrollment by 3X over the last 10 years. According to the Ministry of Education, there were over 50,000 students enrolled in technology related courses in 2006.Though currently English proficiency is limited in Chile, the government has been taking measures to improve – including adding English to the public curriculum starting in 5th grade.

0%

3%

5%

8%

10%



% EnglishSpeaking


Economic Freedom (Heritage Foundation) Strong TI Corruption Perceptions Index

Moderate EIU Political Stability Rank Strong World Bank Labor Legislation Score Strong

Network Readiness Index Strong Infrastructure Environment Index

Moderate Internet Penetration Rate Strong


Santiago’s accessibility to the US is good relative to non-Latin American offshore markets, however it has one of the longest total travel times in its region. Total travel time from New York City averages about 12-14 hours. The airport is 35 minutes from downtown.

There are no airlines that currently offer non-stop flights from NYC to Santiago.

All of Chile observes the UTC-4 time zone, which puts it 1 hour ahead of Eastern Standard time in the US.


ACCESSIBILITY



Business Climate

BUSINESS CLIMATE OVERVIEWSantiago has one of the most stable and pro-business economies in Latin America. Its infrastructure, including telecommunications, roads and real estate are some of the most developed, as well. Labor laws and tax rates are some of the lowest in the region, as is corruption. Chile’s business costs are on the higher end for the region, but its favorable business environment and low tax structure and barrier to entry, help to offset these higher costs.

ECONOMIC FREEDOM AND RISK - SANTIAGO

66.3

85.8

78.2

90.1

77.3

80.0

70.0

90.0

70.0

75.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

Business Freedom

Trade Freedom

Fiscal Freedom

Government Size

Monetary Freedom

Investment Freedom

Financial Freedom

Property Rights


Labor Freedom



# of BPO Operations 130Total BPO EmploymentN/A


BPO LABOR RATES



BPO Environment

CURRENT STATE OF THE BPO MARKETAlthough the list of BPO operations in Santiago appears long, most operations employ less than 200. Tata’s operation is the anomaly with 1,500. The Santiago BPO market primarily consists of Spanish-speaking operations serving domestic and regional customers. As Chile’s English skills improve, it’s business friendly environment, excellent infrastructure and relatively low costs, give it strong potential to be the next hot spot.

Company Primary FunctionsTata Consultancy Services IT/Software DevelopmentAccenture IT/Software DevelopmentExperian IT/Software DevelopmentShell Oil Cust Svc/Tech SupportYahoo! IT/Software DevelopmentCitigroup IT/Software DevelopmentBHP Billiton Cust Svc/Tech SupportEvalueserve Shared ServicesSoftware AG Shared ServicesSoluziona Shared ServicesUnilevel Shared ServicesZurich Shared ServicesSGS Processing Shared ServicesAir France/KLM Cust Svc/Tech SupportDelta Airlines Cust Svc/Tech SupportGE Cust Svc/Tech Support

0

4,000

8,000

12,000

16,000

20,000

24,000

28,000

San Jo

se

Mon

terre

y

Bueno

s Arie

s

San S

alva

dor

$2.00

$3.00

$4.00

$5.00



0

1

2

3

4

5

San Salvador Regional Avg US Avg Global Avg

Labor Avail

Bus. Cost

Bus. Climate

OPPORTUNITIES

RISKS

Emerging Market| San Salvador, El Salvador


Market Overview

El Salvador is 21,040 sq km with a population of 7 million. El Salvador is the 8th largest country in Latin America by area, 14th largest by population and 10th largest by GDP. El Salvador’s capital is San Salvador and the third largest city in Central America, with a population of 2.2 million within the metro area. El Salvador’s GDP is $44 billion (2008), of which 64% is in the service sector, 25% is industrial and 11% is agriculture. Economic development has been hindered by natural disasters, but is currently experiencing stability and growth (3.2% annually since 1996). El Salvador’s official language is Spanish. English language proficiency is limited, but growing.


Pro-business government Neutral Spanish dialect and growing English-

speaking population Low costs and light competition make for a strong

emerging market

Education system is under-funded and lacking in quality and curriculum.

As an emerging market, its skilled BPO labor force is limited.




Universidad de El Salvador Universidad Dr. Jose Matias Delgado Universidad Centroamericana Universidad Francisco Gavidia Universidad Tecnológica de El Salvador

# of Higher Education Inst. 39 (country)# of graduates per year 13,398 (country)

EDUCATION & SKILLS





EDUCATION OVERVIEWWith an 80% literacy rate, the education level in El Salvador is generally low, but improving. The “2021 Plan” has resulted in gradual increases in education funding (2.7% of GDP in 2007) and quality. English courses are required through high school.EL Salvador has both 2yr and 3yr high schools. 2yr is for the college-bound; 3yr is for the workforce-bound. 55,000 graduate high school annually across the country.The U. of El Salvador is the only public college in the country.

0%

3%

5%

8%

10%



% EnglishSpeaking


Economic Freedom (Heritage Foundation) Mod-Strong

TI Corruption Perceptions Index Poor EIU Political Stability Rank


Moderate


Infrastructure Environment Index Poor Internet Penetration Rate 9.5%


San Salvador’s accessibility to the US is very good relative to South American and non-Latin American offshore markets. Total travel time from New York City averages about 6-7 hours. The airport is 40 minutes from downtown.

There are two airlines that currently offer non-stop flights from NYC to San Salvador (United & TACA).

All of El Salvador observes the UTC-6 time zone, which puts it 1 hour behind Eastern Standard time in the US.


ACCESSIBILITY



Business Climate

BUSINESS CLIMATE OVERVIEWThrough privatization, deregulation and adoption of the US dollar as the national currency, El Salvador has emerged as one of the most stable market-driven economies in the region, over the last 10 years.The pro-business government has created income tax and VAT exemptions programs for BPO operations.

ECONOMIC FREEDOM AND RISK - SAN SALVADOR

67.3

81.8

85.7

87.9

77.4

70.0

70.0

50.0

40.0

67.5

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

Business Freedom

Trade Freedom

Fiscal Freedom

Government Size

Monetary Freedom

Investment Freedom

Financial Freedom

Property Rights


Labor Freedom





BPO LABOR RATES



BPO Environment

CURRENT STATE OF THE BPO MARKETThe El Salvadoran investment agency, PROESA, has been actively recruiting call centers and BPO operations since the late 1990’s. Costa Rica’s success in the BPO space has motivated El Salvador to seek the industry out as a good way to diversify and grow its commercial base. The country’s neutral Spanish dialect, pro-business climate and development of technology parks, has made it a strong emerging market option in the region.Several universities has developed call center certifications.

Company Primary FunctionsSykes Cust Svc/Tech SupportStream (formerly Dell) Cust Svc/Tech SupportTeleperformance Cust Svc/Tech SupportAtento Cust Svc/Tech SupportDigitex Cust Svc/Tech SupportDigicel Cust Svc/Tech SupportAmeritech Cust Svc/Tech SupportGlobal Service Cust Svc/Tech Support 0

4,000

8,000

12,000

16,000

20,000

24,000

28,000

San Jo

se

Mon

terre

y

Bueno

s Arie

s

San S

alva

dor

$2.00

$3.00

$4.00

$5.00



Contact Information

For more information, please contact:

Mark SeeleySenior Managing Director

[email protected]

Kristin BeattyDirector

[email protected]

CB RICHARD ELLIS

LABOR ANALYTICS GROUP

Documents

Latin American Location Trends Labor Analytics Group December 16, 2009