• July 1, 2006
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

Why Nicaragua?

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When our publisher, Bob Fernekees, forwarded me an invitation to attend the unveiling of a new contact center in Nicaragua, I thought I had done something to make him angry. And when my then girlfriend, now fiancee, Galia (we were engaged in June), heard about the invitation, she protested.

Our concerns were based largely on memories of the 1980s political strife and guerilla warfare between the Contras and the Sandanistas. Tens of thousands of civilians were killed and many more fled the country. The war and its resulting Nicaraguan diaspora were more than the struggling country could handle, and it subsequently fell into a long period of economic turmoil.

However, after the country's citizens voted the Communist Sandanistas out of office and the Nicaragua returned to democracy in 1990, it became significantly less volatile politically, socially, and economically--so much so that investors have increasingly been paying attention.

Scheduling conflicts, not safety concerns, put the kibosh on my trip, so freelance photojournalist Larry Luxner was sent to investigate; the result is the cover story, "A Nearshore Niche in Nicaragua."

Luxner states that the Nicaraguan government is investing about $4 million in a new contact center and hopes to create 3,000 contact center jobs over the next three years, up from 500 today. Why such a substantial investment now? Luxner reports that Nicaragua is betting that U.S. companies will opt for educated, bilingual agents for an average wage of $2.35 per hour, which is even lower than India's average agent hourly wage.

And despite its tumultuous past, the country boasts the lowest crime rate in Central America. What's more, it only takes two and a half hours to fly to Nicaragua from Miami and only three hours from Houston. The short flights can save U.S. executives a lot of time and travel expense, compared with going to far-flung locations like India or the Philippines. Last, Nicaragua's proximity to the U.S. may also save companies the dual management costs required when partnering with companies on the other side of the globe.

Nicaragua becomes even more compelling with regard to contact centers as Hispanics are the fastest growing ethnic cohort in the U.S. Published reports suggest that by 2010, consumer spending among the U.S. Hispanic population will exceed $1 trillion. And according to Jeff Humphreys, director of the Selig Center at the Terry College of Business, which conducts minority buying-power studies, this will be more than five times greater than the cohort's 1990 consumer spending level.

Clearly, this group of consumers--many of whom prefer to speak Spanish--is rapidly growing.

Humphreys puts his statistic into perspective by maintaining that in 2003, the U.S. Hispanic market was larger than the entire economies of all but 10 countries in the world. By 2010 the market will likely exceed the GDP of Canada, the eighth largest economy in the world. For these reasons, Nicaragua--and other countries in Central America, such as Costa Rica, which is also a burgeoning contact center resource--offers compelling choices for organizations looking to nearshore contact center services.

David Myron

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