Outsourcing offshore: Costa Rica, where are we?

I recently had an assignment at university regarding outsourcing offshore, especially Costa Rica and India current situation, advantages and disadvantages.

I worked together with Leonor Anglada and Esteban Fuentes and we researched in the Internet. We found very interesting studies and articles, i.e. “Gartner’s 30 Leading Locations for Offshore Services”, “Gartner rates offshore outsourcing hot spots” and “Traditional Offshore Outsourcing on the Skids”. We also consulted CAMTIC (Camara de de Tecnologias de Informacion y Comunicacion), CINDE (Costa Rican Investment Promotion Agency), Wikipedia and IP Mall and http://www.business-in-asia.com websites. Finally, since offshoring is what Informatech does, we decided to interview Phil Palmer (Informatech CR president). We also took some information from people that are customers of offshore services, including big companies and middle size ones.

According with our findings, making a decision to use offshore services usually would require analyze different variables like: language skills, costs, government support, infrastructure, talented people, employment pool, educational system, political and socioeconomic situation, cultural compatibility, maturity, data security and privacy. Also, there must be a reason why a company wants to try offshore services: sometimes is hard to get talented or specialized people where the company has its office, sometimes having resources in a different time zone will benefit for example if a 24/7 tech support schema is required. Finally, having resources overseas could help companies to reduce costs.

India is still country #1 in the top of offshore service providers around world. However in the recent years some other countries have started to grow and follow it very close, like China, Philippines, Ireland… India bests Costa Rica in most of the decision criteria according to Gartner studios, but I would say it is because of the proportion of people… for example, if 20% of Indian citizens speak English, it represent more than 200 million people. So, they have more English speaking people. However, Costa Rican accent is more familiar for the US people. India graduates about 300,000 software developers every year while Costa Rican public universities receive every year only about 400 people. So, their employment pool is definitively wider than Costa Rican. However, some companies that have experience with both India and Costa Rica say ticos are more proactive. I think it is hard to compare it because of the huge proportional differences between the two countries. We found cases of US companies that went to India, failed and then came to Costa Rica and succeed. We also found cases of companies that currently have services offshore in both countries with success: they decide countries according to each specific need.

Costa Rica has experienced a great increment as an offshore provider in the recent years, and today is part of the 7 Latin America countries that are part of the top 30 world countries to contract offshore services, according to Gartner. As an advantage, Costa Rica is located in a geographical strategic location, pretty close to time zone of most of North America and easy and cheap to travel. Also, Costa Rican pronunciation is very friendly for US people, professionals here are proactive, dedicated, have willing to learn, to improve, and to grow; those are qualities that US companies value. So, Costa Rica is very attractive and especially for US companies.

There is a challenge for the government here to go forward in making Costa Rica a more attractive place for business. But this is not only an effort of the government. The challenge for us, IT people that work for offshore companies, is to keep the good work and delivering results to our customer so Costa Rica can continue incrementing its rating between the best places to do offshore.

Ricardo Sánchez

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One thought on “Outsourcing offshore: Costa Rica, where are we?

  1. Pingback: 2010 in review « Informatech CR Blog

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