Increasingly, Caribbean countries are relying on offshore outsourcing to generate jobs and to re-energise their economies, in light of the slow recovery that is being experienced due to the COVID-19 pandemic. However, careful planning is essential. 

 

The Caribbean region’s offshore outsourcing sector has been surprisingly robust. Unlike other regions, such as Southeast Asia, where a marked contraction in the size of the sector was experienced in 2020, primarily due to the COVID-19 pandemic, the Latin America and Caribbean region has been experiencing growth. Moreover, and in some Caribbean countries, the offshore outsourcing sector has become an even more important contributor to their economies, especially since the travel and hospitality industries are not yet in a position to fully recover.

As expected, there are high hopes, particularly by policymakers, that offshore outsourcing will continue to generate jobs – at least at the rate that had been occurring over the past few years. However, concerns are emerging about the imminent saturation of the market in many countries, and the absence of planning – or efforts to future-proof – by the very same policymakers, for an industry that might be becoming ‘too big to fail’. 

In 2018, we discussed Future-proofing the Caribbean’s Outsourcing industry, with Rejo Sam of Avasant, on the ICT Pulse Podcast. However, with the pandemic, there is not only a greater urgency to consider the issue, but also a recognition of the changing paradigm. Hence, in the paragraphs below, we outline five ways in which Caribbean countries can begin to address the longer term viability and sustainability of their outsourcing sectors.

 

1.  Increase the pipeline of talent

In Caribbean countries in which offshore outsourcing, and segments such as business process outsourcing (BPO), have engaged relatively sizeable portion of the workforce, it is likely that the pool of suitable talent may no longer be a vigorous as it used to be. For example, if 1 in 3 candidates interviewed would be hired, the hiring rate may be now 1 in 10. The increased frustration and effort to recruit suitable talent, may being to signal to employers that the labour pool is tightening. It may be just about able to provide the replacements due to attrition, but may not be able to sustain any significant growth in industry footprint. 

To address this issue, countries may need to become more intentional about ensuring that suitable talent is readily available to facilitate and sustain the growth desired, such as through the creation of targeted capacity development initiatives. However, it Is emphasised that in addition to industry-specific training, the programmes ought to be more holistic in nature, to also develop logic, reasoning and problem solving, to name just a few areas. Ultimately, the objective ought not to be to prepare prospective candidates just for the entry-level (or the specific) position for which they are being considered, but to begin to prepare them to grow within the industry.

 

2.  Develop middle management talent 

Among policymakers and in countries where youth unemployment is high, there has been an emphasis on generating jobs for that cohort, which preferably would be entry-level positions that would accept high-school graduates. However, in order be promoted into supervisory and management positions in the sector, typically, candidates need to possess university qualifications. 

For example, experienced BPO workers who do not have a university degree, may find it difficult to move into supervisory and management positions. On the other hand, there might be an expectation that university graduates without prior experience in the sector can seamlessly assume positions within the sector, but that is not ideal. As a well-developed and global sector, outsourcing has its own unique culture, vernacular and structures, which can alien to those who have not experienced it before. Further, the scale of the operations and scope of the responsibilities may also be a challenge to newcomers to the sector.

Once again, and to increase the robustness of the local industry, consideration could be given to developing programmes to ensure that there is adequate middle management talent. Due to the hierarchical staffing structures that tend to exist in the outsourcing space, a growing organisation is likely to have vacancies at many levels. As a result, there can be considerable opportunities for promotion and professional growth; but individuals need to be suitably qualified in order to be favourably considered.

 

3.  Managing the potential for labour arbitrage

In comparison to other countries and regions, the Caribbean is not a place for cheap labour. There are numerous low-cost locations, such as in Southeast Asia and Africa that are considerably more attractive than the Caribbean region in both the cost of labour and the size of the labour pool available. However, a key selling point for the region has been the quality of the talent, which essentially, has resulted in clients paying a premium to have their contracts delivered from the Caribbean. 

However, we can easily become a victim our own success, due to the relatively limited supply of talent that we have. As our outsourcing sectors grows, the demand for talent increases. But if the pipeline of talent for the sector may not be sufficiently robust, higher than desired levels of poaching and cannibalisation are likely to occur. Moreover, labour rates will also increase, which could result in countries becoming even less competitive and less attractive.

Although it might be impossible to control the prospect of labour arbitrage, it ought be carefully monitored, and strategies developed as appropriate to lessen its effects.

 

4.  Availability of suitable office space

To sustain the desired growth of the offshore outsourcing sector, suitable real estate must be readily available. Frequently, two scenarios tend to exist when an outsourcing operation has an urgent need for office space. First, the office space does not yet exist, but could be available in 12—18 months. Second, the space exists, but it requires considerable upgrading/refurbishment, which may require between 3 and 6 months to complete. 

Generally, outsourcing firms may have as little as 60—90 days to start delivering services for a client. Hence ideally, prospective office spaces ought to be in an advanced state of readiness so that they can be occupied within the shortest possible time. Having said this, it may not be possible or plausible to sink investment to just have space at the ready. Some planning and coordination ought to occur to ensure that office space is available as and when needed. 

 

5.  Sector development strategy and plan 

The previous points have outlined four out of many areas that Caribbean countries may need to address to future-proof their offshore outsourcing sectors. There would also be some unique challenges that countries would need to consider and to manage. To that end, the creation of a development strategy and plan is recommended, which could guide the efforts to continue to grow sector, and more importantly, to maintain that growth. 

In the first instance, the sector strategy and plan ought to focus on at least two key areas: improving the enabling environment; and the marketing and promotion of the country as an attractive location for offshore outsourcing. The four previous points would fall under the enabling environment, and additional issues that could be considered include ways to improve the cost and ease of doing business. With regard to country marketing and promotion, many Caribbean countries have under-invested in that area, and due to pandemic, the traditional promotion modalities are not as active. Countries may thus need to not only think more innovatively about  how they will promote themselves, but also how those efforts will be financed during these still trying economic times. 

 

 

Image credit: Yan Krukov (Pexels)