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December 01, 2009

Cuba the Next Contact Center Hub?
By Brendan B. Read
Senior Contributing Editor

Could Cuba become, down the road, the hottest new outsourced contact center location? That is the speculation in an intriguing exclusive Nearshore Americas guest post by Peter Ryan who is the lead analyst – BPO and Contact Center Outsourcing & Services at OVUM titled,” Is Cuba Poised to Become a Call Center Hub?”

Ryan reports that the interest is out there about Cuba. The change driver may be Fidel Castro’s relinquishment of power to his brother which many believe may lead to more liberal policies in that country.
There may be strong motivation for a Cuban government to liberalize with attracting contact centers as a core strategy: opportunity and necessity. Cuba has the fundamentals to draw contact centers report other observers: namely an available, smart workforce. The CIA World Factbook reports that Cuba, with 11.4 million people, is one of the largest Caribbean nations. It also has a well-educated potential employee base; Cuba has a high literacy rate.
Yet Cuba’s economy is in rough shape, with one of the factors being stringent political control over the marketplace. The World Factbook reports that the average living standard is lower than that before the 1990s downturn. Cuba’s people have become one of its exports. It has been obtaining oil from Venezuela in exchange in part for Cuba personnel including healthcare professionals.
“Clearly, there are many interesting reasons why investors may shudder to imagine housing a customer care operation in that country,” writes Ryan. “However, from an objective standpoint, it is worth considering why contact center players may wish to consider this location for delivery in the long-term, should a significant shift in economic and business ideology overtake Cuba, in a similar fashion to Central and Eastern Europe 20 years ago.”
Here is the evidence Ryan provides:
-- High proportion of the country’s population, estimated at 11.4 million whose labor force that works in services, which at 61 percent reports the CIA World Factbook is roughly the same as Chile and Mexico and only somewhat smaller than Argentina.

“However, the most intriguing thing about the Cuban services workforce is the growing proportion that works in international tourism,” says Ryan. “This has led many individuals to take on significant training by foreign hotel operators and tour companies in order to bring their service skills to western standards. Such a segment of the Cuban workforce would be an ideal pool to draw from when recruiting for nearshore delivery contact centers.”

-- Niche markets. Ryan cites two of them. The first and lowest-hanging fruit are the Canadian ‘snowbirds’ who flock to Cuba in droves each year; Canada remains a significant trade partner for the island. This means, he says, that a large number of Cubans working in the tourism sector will already have some cultural and commercial familiarity with Canadian products, vernacular and lifestyles. Helping this sector take flight is that Canada’s economy has been weathering the financial storm better than the U.S. report other observers, leaving more disposable income for travel.

The second, larger but more problematic sector for Cuba is the growing U.S. Hispanic market, based in Florida, where a great number of Cuban-Americans reside. Cuban contact center agents would be, he writes, an immediate advantage for U.S. firms looking to court this end-user base, due to accent familiarity, similar use of Spanish.

“However, it is clear that tapping this U.S. demographic would not be feasible until the current American embargo has been at least relaxed,” reports Ryan.

-- Transparency. Among Latin American countries (which have historically fared poorly on corruption perceptions), Cuba ranks ahead of both Mexico and Argentina, two leading nearshore delivery locations.

Peter Ryan is realistic though about the very stiff challenges that lie ahead before Cuba can become a viable outsourced contact center location. This is a long-term play that depends on political changes before it can happen.

The first obstacle he identifies in the Nearshore Americas post is the customer service orientation among the broader Cuban public, which would need to be tapped long-term for agent recruitment.

“Many wonder how decades of communism have impacted the average Cuban in terms of customer service orientation and the willingness to go the extra mile to get the job done for a caller,” says Ryan. “It is not to say that a customer-care mindset cannot be developed once the current regime leaves office, but certainly it could take some time.”
The second is developing a liberalized economy. Currently, according to The Heritage Foundation’s economic freedom rankings, Cuba places only ahead of Zimbabwe and North Korea in terms of ease of doing business.

“Under present circumstances, it is tough to imagine that investors would want to risk significant amounts of capital on that country when many countries in Latin America fare particularly better in this regard,” reports Ryan.

Lastly is telco/Internet accessibility. While Cuba’s government has made some progress in improving the infrastructure of the wireline and wireless networks, it still lags other Latin locations. Plus, the significant limits that have been placed on Cubans in terms of internet usage are sure to be a short-term limitation on multichannel support contracts.

“It is not unconscionable to imagine Cuba as a Nearshore outsourcing delivery site 10-15 years from now, should that country experience a change in political and economic approach,” concludes Ryan.

“Two decades ago, the Berlin Wall fell and within a few years, Central and Eastern Europe became some of the hottest nearshore delivery locations in the world, and remain known for quality and professionalism. However, for Cuba to emerge as a Nearshore delivery location of choice, significant philosophical changes will be necessary in terms of developing open democracy and a market economy, which are the precursors to high quality service delivery.”

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Stefania Viscusi


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