Colombia: Calling for specialised outsourcing services
Fuelled by a large pool of available workers and advanced communication technology infrastructure, Colombia’s business process outsourcing (BPO) sector is experiencing substantial growth.
Although multinational companies are ready customers for Colombian contact centres to handle customer calls from Spain and Spanish-speakers in the US, local industry leaders argue that firms need to diversify their services and boost language skills to remain competitive in a global market.
According to a recent report by Nearshore Americas, an industry association, the outsourcing sector accounts for 13% of Colombia’s service exports. Revenues from contact centres are growing by 15% each year, hitting $845m in 2012.
Alongside the income, employment is also increasing. Proexport, the national investment agency, says the number of jobs in call centres more than doubled between 2006 and 2011, rising from 32,000 to 80,000.
Multinationals, including HP, Citibank and Siemens, use Colombia to meet their outsourcing needs. Mary Korthuis, chief operating officer for Genpact Colombia, a global business process management and technology services firm with operations in Bogotá, believes there are multiple reasons for the growth. “Colombia has a large number of free trade zones and access to the government via Proexport,” she told OBG. The free trade zones feature a 15% income tax rate, no import duties and VAT exemption for some goods sold from Colombia to these areas.
The next likely step for Colombia will be to expand its offerings to higher value-added products, a goal the government is promoting.
Ana Karina Quessep, president of the Colombia Association of Contact Centres and BPO, told OBG, “Colombian contact centres are perfectly aware that they need to evolve if they want to compete both locally and internationally. While 60% have started to offer value-added services, most companies still focus on the contact centre business, which represents around 80% of their income.”
Identifying suitable niches may not be easy, according to Miguel José López Estrada, general manager of Ventas y Servicios, one of the largest contact centres. In an interview with OBG, he cited customer service, payment collection and insurance as the best choices, adding that IT outsourcing was also a good option.
The IT sector has made major advances over the past decade. Proexport has said that local IT sales, which amounted to more than $6bn in 2011, are growing twice as fast as the Latin American average.
Apart from developing more specialised services, leaders from the BPO industry have at least two additional challenges. Contact centre and BPO operators claim parafiscal taxes, used to finance social security benefits provided to workers, cut heavily into profits.
The other major barrier to development is cultivating a large workforce of bilingual employees, with no major BPO operation in Colombia offering English or Portuguese services.
Some industry leaders argue this should not be a major concern in the short term, and point out that management and technical staff typically have high-level English skills.
Moreover, the demand for Spanish-speaking BPO operations is rising faster than English-based services, according to research by consultancy McKinsey.
However, in the longer run, investments in education to upgrade English skills may be necessary to expand market opportunities and help the industry reach the next level. While Colombia scored low on the Education First English Proficiency Index, a benchmark compiled by EF Education First, a language training company, the country has one of the highest-quality education systems in the region, according to the World Economic Forum’s 2012-13 Global Competitiveness Report.
Boosting English proficiency, as well as perhaps revising tax rules, could go some way toward improving Colombia’s position in the global BPO market.