Low costs, proximity to US bolster Trinidad's role in growing BPO sector
With the increasing global spread and high growth of business process outsourcing, the industry is seeking nearshore locations for both expansion and cost-cutting.
BPO is rapidly being integrated into the economies of some Caribbean nations, according to the new Foreign direct investment in the Caribbean report by the Economic Commission for Latin America and the Caribbean (ECLAC).
Trinidad and Tobago (T&T) ranks high among Caribbean countries able to provide high value BPO, reports ECLAC. An estimated 3,000 BPO jobs exist in T&T today, with several more BPO projects under consideration.
The government is committed to increasing BPO opportunities and provides many incentives to BPO investors.
The Trinidad and Tobago International Financial Centre (TTIFC) was created specifically to promote the country as a destination for middle and back-office operations for financial institutions and third-party BPO providers.
Investment by major transnational companies in the country’s extractive industries and financial services has helped to build a telecommunications and data infrastructure that supports sophisticated BPO, financial services and other ICT functions.
Two primary ISPs offer wired broadband. There are seven wireless or wired broadband and Internet access providers altogether. Trinidad's location outside of the hurricane belt also delivers high uptimes.
Scotiabank, RBC Royal Bank and Pan American Life Insurance Group, three sizable organisations, were early multinational BPO investors in Trinidad and Tobago.
Scotia cited multiple benefits for locating its hub in Trinidad and Tobago, most notably the country’s position as a gateway to the Caribbean, Latin America and North America, a well-educated and qualified labour force, mature IT infrastructure and excellent tax incentives.
Trinidad and Tobago’s BPO investors also mentioned the comparatively lower cost of doing business in the country compared with other potential Latin American or Caribbean locations.
Trinidad combines its relatively low-cost workforce (average annual salary US$14-18K versus US$42-56K in the United States and Canada) with an extremely high (98 percent) literacy rate.
Its well-educated workforce has been built to respond to the needs of high-tech companies, via several technical schools and top-tier universities that offer degrees in engineering and IT, and an aggressive programme of customised workforce training for major FDI projects.
This strength is echoed by Trinidad data centre manager Lyndon Sooknanan, who noted the country’s steady supply of top-level talent and stated, “Almost 100 percent of our management is local Caribbean.”
Rich in oil and gas, Trinidad has extremely low-cost energy and utilities. At US 3 cents per kilowatt-hour, its electricity rate is the lowest in Latin America and the Caribbean and among the lowest worldwide.
By contrast, U.S. utility costs can be double that rate, depending on location. The United States Energy Information Administration’s March 2014 report shows New York City rates in the range of $0.1654 per kilowatt-hour.
The ECLAC report mentions Trinidad’s shared time-zone with and proximity to the eastern United States, plus English as its official language, as big plusses for BPO. At the same time, T&T has extensive cultural diversity and can provide multilingual capacity.
To date, Trinidad and Tobago’s primary BPO focus has been human resources and financial operations. It is also pursuing BPO projects in legal, medical and animation industries. The government provides very generous benefits to BPO enterprises, including exemption from income tax.
Foreign investors who build on or get certified as a “free zone” pay no corporate, value-added or land and building taxes and are exempt from duties.
Free zones must be recommended by the Trinidad and Tobago Free Zone Company Limited (TTFZ) and designated by the Minister of Trade, Industry, Investment and Communications, under which the TTFZ falls. There are 16 free zones now operating in the country.
Looking to the future of BPO in Trinidad, two providers, Quatrro Global Services and Caribbean Electronic Payment Systems, are launching a pilot project for a card processing operation.
Recently, nine potential foreign investors, including BPO firms, visited the country to learn more about opportunities, incentives and other supports, and to hear from existing BPO operators about their experience in doing business in Trinidad.
According to the World Bank’s Doing Business 2013 report, Trinidad is now ranked 69th out of 185 economies worldwide for ease of doing business.