ISTHMUS, an upstart Costa Rican information technology outsourcing firm, hopes to take advantage of the opportunities being created by a growing trend among North American firms seeking to transfer – or outsource – parts of their operations abroad.
What is outsourcing?
Acompany conducts outsourcing when it acquires an essential product or service from a separate provider instead of providing it in-house. By outsourcing, companies can reduce operating costs and improve their efficiency by focusing on their core business, explained Andy Hilliard, Chief Operations Officer for IsThmus.
IsThmus aims to be a leader in Costa Rica’s growing outsourcing industry. “It’s something inevitable,” Hilliard said. “It can’t be stopped. We’re in the middle of the fastest growing part of the growth curve.”
COSTA Rica’s geographic location, educated workforce and competitive wages combine to create a favorable business climate for outsourcing from North America firms – particularly with the proposed Central America Free-Trade Agreement with the United States on the horizon.
Originally, firms outsourced services from their main headquarters to other parts of their home country. But in recent years, mainly as a result of improvements in global communications networks, companies have found it easier to transfer parts of their operations near-shore (to foreign countries close to their center of operations, such as Costa Rica for a U.S. company) or offshore (a foreign country located faraway, such as India), Hilliard explained.
TODAY, all kinds of services – technology development and maintenance, corporate accounting, customer service, technical support for products ranging from home appliances to software, translation services and even X-ray interpretation – can and are being outsourced from developed countries to more cost-efficient locations.
Costa Rica has benefited from the growing outsourcing trend. Today, the country is home to several large companies that provide outsourcing services, most notably Sykes Latin America and Procter & Gamble (TT, Jan. 30).
In 2001, the Wall Street Journal ranked Costa Rica the number one developing country to watch based on connectivity, information security, human capital, business climate proximity and priority given by government to high-tech business.
ISTHMUS was founded last year as a U.S.-market-oriented division of Costa Rican software developer Lidersoft. The company’s center of operations is located in San José, and it has U.S regional offices in California, New York and North Carolina.
The company’s main services are developing custom business and Web software applications for foreign companies, translating existing software into Spanish and adapting software designed to run on one platform to run other platforms.
“Essentially, we help businesses build and maintain custom applications or implement applications they buy from other companies,” Hilliard said. “Also, today, most U.S. companies need bilingual technology services to help them interact with their Hispanic customers.”
Isthmus, which employs 75 people and has plans to expand, also provides full support for the software it develops. This includes upgrading and modifying the software – everything needed to keep it up and running. Those are the company’s “coreservices,”
according to Hilliard.
HOWEVER, IsThmus also is attempting to branch out to other areas of outsourcing by offering additional services.
Many of these services are provided through strategic alliances with other companies.
Alliances with Costa Rican technology firms include the program eLearning with Aura Interactiva and application hosting via Inter@merica. Web-based application design and development is done in alliance with U.S.-based Vialogix.
IsThmus more recently set its sights on offering Business Process Outsourcing (BPO) services – assisting companies fulfill certain back-office technology processes, such as a Technical Help Desk for information technology personnel and the ongoing management of Web-based applications.
HILLIARD believes the country is in an excellent position to take advantage of growing technology-outsourcing opportunities.
For starters, he said, the country benefits from being located near the United States – between two and five hours from most big cities. Being in the same time zone as some parts of the United States makes it easier for companies in both countries to coordinate meetings, maintain communication and conduct joint projects. That’s not the case with offshore competitors in India and East Asia, he said.
Costa Rica also benefits from being a politically stable country with a large English-speaking population, he said.
“NO one can take away our competitive advantage,” Hilliard explained.
“Today’s market is hot. The sooner we deliver on our potential, the better it will be for the country. It’s time to take advantage of the opportunity.”
Hilliard said it’s imperative for the private sector and the government to work together to make the country more competitive as a technology destination.
“In order for Costa Rica to succeed, there has to be an absolute commitment and a proactive stance, not only in promoting the country as a technology destination, but also in taking the appropriate government, educational and company measures to achieve that potential,” he said.
“Costa Rica’s attributes and advantages are phenomenal. U.S. companies say time and time again: build it and we will come.”
HILLIARD said he is optimistic about the future of IsThmus and outsourcing in general, and he is unconcerned with the negative publicity outsourcing has been receiving in recent months, particularly in the United States.
“Every industry sees an evolution and migration of labor to its most effective source of production. Technology can now be done all over the world and there’s really no way to prevent that. For the world economy, this is good,” he added.
For more info about IsThmus, see www.isthmusit.com.