News Home Page Costa Rica Latin America Sections Special Reports Travel/Tourism Real Estate Business Health The Internet Letters Opinion Colu millionists Leisure EroTica Entertainment The Take! Learn Spanish Photos Editorial Letters Opinion Columnists Public Forum Who We Are About Us Contact Us Advertise with us Subscribe to our Newsletter Links Page     BUSINESS - Monday 17 January 2005 < Back   Send this Page To a Friend Arizona chip, IT work outsourced to Costa Rica By Adam Kress The Business Journal of Phoenix Arizona firms are following the national trend of outsourcing manufacturing, information technology and back-office jobs overseas -- just not as far overseas as some might think. Costa Rica, about twice the size of Maricopa County in square miles, is a growing destination for companies looking to improve efficiency and cut costs by moving operations out of the United States and into areas where wages are dramatically lower. The Central American country, with ports on the Atlantic and Pacific oceans, a business-friendly government, favorable time zone and well-educated English-speaking work force, is the new "in" location for "near-shoring." As U.S. executives tire of long flights back and forth from India or China along with language barriers, Costa Rica and a few other nearby countries have grown more attractive over the past few years. A number of Arizona companies or firms that operate in the state, including Intel Corp., Motorola Inc., Microchip Technology and other smaller firms, currently have low-cost work being done for them in Costa Rica. A handful of Arizona firms have recognized the popularity of Costa Rica and, in part, built their businesses around helping companies do business there. Phoenix-based Intertec Consulting, an IT consulting firm, opened a San Jose, Costa Rica, facility about two years ago and has 10 high-level software developers employed there. George Teunissen, senior business development manager for Intertec, said that number could grow to 30 or 40 in the next 12 to 18 months. The company mostly does Web-based application development in Costa Rica and specializes in taking smaller jobs from larger firms and blending people working for the client company with those in Costa Rica on projects. Teunissen said work done in Costa Rica generally costs less than half of what it would cost in America. Wages in India, he said, are lower, but Costa Rica's advantages outweigh the slightly higher costs. "It makes sense for companies in the Southwest," he said. "I think outsourcing from Arizona to Costa Rica will continue to grow. India is still growing, but they also are pricing themselves out of the market. Wages are growing very quickly as the quality of life improves there." While Intertec does mainly IT work in Costa Rica, AeTec, another local firm, does technology manufacturing in a 25,000-square-foot facility there. AeTec founder and Chief Executive Dan Stuber said the company was forced to move some of its business offshore in 1998 because client companies, including Intel, had to cut costs by more than AeTec could by manufacturing in the United States. Stuber said the company didn't initially look at Costa Rica, but when it discovered the country's advantages, the decision was easy to make. "Shipping to both Europe and Asia is easy because of ports on both coasts, and the population has a very high literacy rate," he said. "The people are very loyal and hard-working, and they are excited to work in high-tech." AeTec employs more than 100 Costa Ricans at its facility there, and Stuber said that number could triple over the next year. The Costa Rica operation has been so popular, he said, it's causing company growth at AeTec's other location in Tempe. "We get companies started with design and prototype work here and then do the manufacturing in Costa Rica," he said. "It's creating more jobs for professionals here in Tempe (where about 30 people work for the firm). " Manufacturing and outsourcing experts agree that Costa Rica and the idea of "near-shoring" in places such as Costa Rica, Mexico and Canada will increase in popularity.     Come Fly With Us! Let the power of advertising work for you.  Click here! "India and Costa Rica are the hottest spots now," said Joanne Rainey, owner of Southwest Outsource Purchasing LLC, "China is getting a little saturated." Rainey used to work for a few major defense firms with a local presence, and her job was to determine where to outsource business. Her desire to help U.S. firms keep jobs in the country led her to start her business that helps companies improve their manufacturing processes and keep costs low. Frank Casale, chief executive of the New York-based Outsourcing Institute, agreed that "near-shoring is the hot new thing." The founder of the institute -- a professional association dedicated solely to outsourcing -- said Costa Rica is becoming more popular because high-profile companies such as Intel and Procter & Gamble have outsourced work there. "Awareness is increasing," Casale said. "Also, large corporations that have operations in India and China also want to diversify by doing work in Costa Rica." Casale mentioned Mexico, Brazil and Canada are other growing areas for near-shoring. The trend of moving technology work overseas doesn't seem to be slowing any time soon, but where it moves could be an increasingly important decision for businesses. As of now, Costa Rica is a top choice and only growing in popularity. "Ten years ago, it was virtually unknown and a scary place," AeTec's Stuber said. "It's totally different today."