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Summary

The announcement that the US aims to normalize relations with Cuba has generated significant discussion, and has not gone unnoticed by outsourcing professionals. In Ovum’s view, Cuba is still some distance from being a usable location for any type of contact center delivery for offshore consumers, at least in the near-to-medium term.

Significant due diligence needed to ascertain infrastructure

Outsourcers interested in Cuba will need to analyze the country’s physical infrastructure, particularly the reliability of its electricity and transportation networks, both of which are antiquated by western standards. Vendors could face added costs to ensure seamless power to a contact center facility and low levels of agent absenteeism.

Cuba’s communications network will also be contentious. With robust digital networks across most of Latin America, a major question will be the extent to which Cuba can be readily connected to the rest of the world, relative to major nearshore delivery centers such as Honduras and Colombia.

Western business culture development will be crucial

A lack of western commercial culture will prove problematic for Cuba given its half century of communist rule. For example, Cuba is near the bottom of the most recent Index of Economic Freedom in terms of competitiveness, while the country is not even included in the World Bank Ease of Doing Business. Fostering a business environment is likely to be challenging initially, and will remain an obstacle for outsourcers until a proper market-driven economic structure is established.

At an agent level, outsourcers need to be wary of customer service sophistication. Significant investments will need to be made to raise the standards of the agent pool to anything close to the levels in other nearshore hotspots, where US commercial and cultural exposure is pervasive. This could prove challenging for non-voice delivery, given that according to the CIA World Factbook, Internet access is relatively low and cellular telephone penetration rates are poor.

However, Cuba’s long-term potential shouldn’t be discounted

It would be foolish for outsourcers to discount Cuba as a delivery center over the longer term, as it already carries latent value. Cuba’s level of transparency (as tracked by 2014 Transparency International’s Corruption Perceptions Index) is superior to that of Nicaragua, El Salvador, and Mexico (among others). Equally, the concept of western-standard customer service has been germinating for some time, given the push by Cuba’s government to entice foreign investment from European and Canadian tourism providers. This has also helped to develop foreign language skills in Cuba.

Smart outsourcers will keep Cuba in mind for potential deployments, but this will require a long-term strategy based on the development of human resources, business culture, and infrastructure. Comparatively, it took less than a decade after the fall of the Berlin Wall for Poland and Hungary to emerge as European nearshore contact center powerhouses. With some work, Cuba has the potential to achieve the same. One important factor will be the development of dedicated economic zones/business parks in Cuba, in which the BPO sector can begin incubating. Such a move would be immeasurably helpful in generating a contact center services industry.

Appendix

Author

Peter Ryan, Principal Analyst, IT Services

Peter.ryan@ovum.com

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