Near Shore Destination
Costa Rica
The P&G Story
March 2011
Atul Vashistha
Chairman
Neo Group
BestOutsourcingJobs
www.neogroup.com
Presenters
 Alfonso Cos
• Former Global VP, Shared Services, P&G
 Atul Vashistha
• Chairman & CEO, Neo Group
 Pilar Madrigal
• Director of International Affairs, CINDE
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© 2011 Neo Group
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Content
 The P&G Experience
 Destination Costa Rica
 CINDE
 Q&A
 Presentation available later on
• Cinde.org
• neogroup.com
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© 2011 Neo Group
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Outsourcing Location Trends
 Leveraging Unique Capabilities
• Competitive Advantage of Nations
 Geographic Risk Diversification
• Global Delivery Model
 Captive Centers (BPO)
• Multi-functional centers
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© 2011 Neo Group
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Nearshore Trends
The Americas Opportunity
Proximity
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Time Zone
Affinity
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Skill-sets
Country Assessment Framework
Macro Economic Attractiveness
Infrastructure Attractiveness
Macro Economic indicators
Government support/Incentive
Country Assessment
Currency attractiveness
FDI attractiveness
Power supply
Financial Attractiveness
Salary Level (ITO, BPO, KPO) for entry level
Salary growth (ITO, BPO, KPO) for entry level
Rent (Grade 1 CBD)
Rent growth
Transportation
Software parks/SEZ’s
Business Environment Attractiveness
Ease of doing business
Quality of life
Cost of living increase
Cultural compatibility/Support facilities for expats
Geopolitical Attractiveness
Access to healthcare
Political risk
Pollution levels
Crime rate
Terrorism/Ethnic tension/Social unrest
Quality of education
Business and support amenities/5 star rooms
Natural disaster risk
Industry Attractiveness
Industry size ITO
Industry size BPO
Industry size KPO
Human Resources Attractiveness
Scalability risk
Number of industry employees
Attrition – Overall and client
Projected industry growth ITO
Projected industry growth BPO
Mature Service Providers
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© 2011 Neo Group
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Why Costa Rica?
Multi-Functional
Centers, Large
call center
capacity
Good
Infrastructure
Cultural
Compatibility
for Expats
Low geopolitical,
business ,
macroeconomic
& environment
risk
Costa
Rica
• Ranked 3rd in the world on “Environmental Performance Index”
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Macro Economic Attractiveness
Parameters
Attractiveness
Macro – economic indicator
Currency risk
Source: Neo Group
Very Low
i
8
Low
Medium
High
Very High
• Stable democratic country since 1948
• Typically a low fluctuating currency.
• No army since 1948, instead a big investment in education and
environment
• The GDP contribution from the services remains very high for
Costa Rica pegged at 68% for 2009.
• Costa Rica has a low trade deficit of 2%
© 2011 Neo Group
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Geopolitical Attractiveness
Source: EIU
Parameters
Attractiveness
Political risk
Crime rate
Terrorism/Ethnic flare-up
Natural disaster risk
i
Even more stable than the U.S.A.
9
• The last World Bank Survey for
Global Governance Indicators
ranks Costa Rica in the first
place within Latin America for
political stability.
• The country has had no terror
attacks, social unrests/strikes
and is the greenest country in
the world.
• Costa Rica has low trade deficit
and low payment risk which is
the best among the Latin
American countries.
© 2011 Neo Group
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Infrastructure Attractiveness
Parameters
Attractiveness
Government support
FDI attractiveness
Power supply
Transportation
Software parks/SEZ’s
Very Low
•
i
•
•
•
•
•
10
Low
Medium
High
Very High
Very good government support, good power supply, good transportation and with a good support from the
Foreign Direct Investments (FDI’s).
Internet services are the most readily available and sophisticated in Central America.
Extensive highway system, two major international airports and two seaports. All major U.S., European,
and Latin American passenger and cargo carriers
The government fosters growth with incentives, which finds favor with the FDI’s and increases the private
participation.
The power supply situation is one of the best in the world with renewable sources of energy being used
wherever possible and Costa Rica has a surplus of Power which it exports to the other Latin American
power deprived countries.
Abundant water supply, reliable hydroelectric power and an advanced telecommunications system.
© 2011 Neo Group
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Human Resources Attractiveness
Parameters
Attractiveness
Attrition – Overall
# of offshore/outsourcing
Services Sector
employees
~32,000
Scalability Attractiveness
Very Low
i
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Low
Medium
High
Very High
• Attrition in the offshore/outsourcing Services Sector is lower than Asian locations
• Costa Rica offers a good human resource pool in the Latin American region, especially with
the bilingual skills (English, Portuguese, Spanish, etc.) and good educational background (6%
of GDP is allocated for education).
• According to the fdimagazine, Costa Rica has the best in the category of availability and
quality of human resources, with scores higher than major competitors like the Dominican
Republic, Panama and Puerto Rico.
• Costa Rica has one of the highest literacy rates (95.9%) of the American Continent. Education
is mandatory until the 9th grade.
• Around 35.6% of the total population are between 15 – 35 years (annual growth rate of 2.1%).
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An Attractive Location: San José
i
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• Ranked 3rd in the world on “Environmental Performance Index”.
• The city has well-educated, creative, innovative, English-speaking and highly productive
human resource. San Jose has technical and superior education institutions that generate
qualified human resource, such as: Technical high-schools, Private and public universities,
National Learning Institute, CEFOF, CENFOTEC.
• 50% of the elementary schools and all high-schools have computer labs and receive
English lessons. This allows children and teenagers to learn the language and computer
skills at a very early age.
• Great location for expatriates. Ranks first in the Happy Planet Index.
• 62% of the employable workforce lives in the greater metropolitan area where San Jose is
located.
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Costa Rica: SWOT Analysis
Strengths
Weaknesses
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Salary levels for the ITO and BPO employees are
higher than other developing locations.
Costa Rica has a local software supportive business
park formed mainly by highly productive PYMES
(SMEs - small and medium sized enterprises). But not
enough software firms or human resources.
Smaller local ITO companies
Opportunities
Threats
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Excellent human resources
Quality education
Good business and support amenities
Conducive environment for doing business
No limitations on capital funds transfers associated
with an investment, regardless of the currency.
CINDE – Great support resources
Cultural compatibility for expats
Stable/pleasant climatic conditions
Access to good health care
Multi-functional capabilities for BPO, such as the case
of Align, P&G and Experian.
Deep call center experience, ie: Sykes, Aegis and
KPO such as Amba Research and WNS
Leverage same time zone coverage for USA and
Costa Rica, which has a long daytime working shift (5
am to 7 pm)
Leverage bi-lingual, with one of the highest gross
participation of population in labor pool (50%)
Leverage neutral accent
Close proximity to other larger centers such as Sao
Paolo

Smaller labor pool
Rising cost of labor (average less 3%/yr in US$)
Not enough resources in a specific area of expertise
or too high recruiting parameters
Payroll fringes (social security, pension plan, etc.)
account for a fixed percentage of the employees
salary – 34.5%
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Recommendations
• The population of the country is about 4.5 million people and the Services
Sector employment is around 32,000, which is 1.4% of the labor pool. This
makes it an ideal location for smaller centers (<1000), though it can support
larger call centers.
• English and Spanish language based processing of work can happen real
time in Costa Rica, whose time lines exactly match with U.S MDT timings.
• Government support can be leveraged to acquire tax benefits/concessions
as the Costa Rican government is promoting the offshore/outsourcing
industry with CINDE and Procomer serving as strong support organizations.
• Strong focus on education and good universities makes it an ideal center for
higher end multi-functional operations.
• Ideal place for companies with a large carbon foot print to start operations as
Costa Rica is the greenest country in the world and carbon foot prints can be
acquired with ease.
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© 2011 Neo Group
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Contact Information
Neo Group Global Headquarters
4000 Pimlico Drive, 114-108
Pleasanton, CA 94588.
Asia-Pacific Headquarters
No. 16 & 16/1 5th Floor
Phoenix Towers, Museum Road
Bangalore 560025, India.
Atul Vashistha
Amsterdam, Netherlands
Sao Paolo, Brazil
Chairman
atul@neogroup.com
Monterrey, Mexico
www.neogroup.com
Bogota, Colombia
© 2011 Neo Group
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