Guatemala has set its sights on becoming a regional leader in the business processing outsourcing (BPO) sector. With a large number of US companies moving their back-office operations closer to home, Guatemala is taking the opportunity to target the sector and attract more FDI into the country.
“US companies are moving away from Asia and [becoming] more present in our region, as we are located in a time zone more convenient to serve American clients,” said Juan Carlos Paiz, Guatemalan presidential appointee for competitiveness and investment.
In the past two years, DHL, a German-owned logistics company, and Genpact, a Bermuda-headquartered BPO entity, both decided to establish their shared services projects in Guatemala. But the majority of new ventures in the Central American BPO sector in this period were set up in Costa Rica. According to fDiBenchmark, an FDI site assessment tool, Guatemala falls behind both Costa Rica and Panama in terms of investment attractiveness for shared services projects in Central America. The benchmark indicates that while Guatemala is more favourable in terms of labour market size, it is less competitive in terms of operating costs, access to infrastructure and access to experienced industry-specific staff.
Mr Paiz said that Guatemala is actively addressing such problems. “We are investing $3bn in our infrastructure, we have also recently launched a new project thanks to which we expect add more than 40,000 English speakers to our economy, annually,” he said.
Data from greenfield investment monitor fDiMarkets shows that Guatemala received more than $200m in FDI in 2011, a significant drop from previous years. Between 2007 and 2010, the country averaged annual FDI inflows of $950m. Despite 2011's disappointing figures, Mr Paiz remains optimistic for the country's future FDI prospects. “The end of this year marks the end of old Mayan calendar cycle. Since the beginning of the new era starts, we see it as an opportunity for a fresh start,” he said.