Costa Rica Leader in "Nearsourcing" in Central America
Touting themselves as the "new Asia," pro-business and investment organizations across Latin America are talking about the benefits of "nearsourcing."

It's sending jobs to lower-cost locations outside the US but closer to home: south, near and increasingly attractive to U.S. companies.

Latin American leaders are boosting nearsoucing as the region readies for the Jan. 1 start of the Central American Free Trade Agreement (CAFTA), which ends most tariffs on more than us$33 billion in goods traded between the United States and six Central American and Caribbean countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.

Costa Rica has yet to ratify the agreement, known locally as the Tratado Libre de Comercio (TLC).

Lured by the ease of working in the same time zone a mere three- or four-hour flight from U.S. headquarters, such companies as Dell, Procter & Gamble, Western Union, Sara Lee/Hanes and others have been moving business into the region.

Workers here are doing everything from reading X-rays to sewing jeans.

According to the U.N. Economic Commission, Central America received us$2 billion in foreign investment last year, up from an average of $633 million annually the region attracted in the 1990s.

The number of U.S. jobs, manufacturing and services alike, going to Central and South America is minuscule when compared with those being outsourced to Asia. Forrester Research, an independent research company, estimates the number of jobs outsourced to India ranges from 400,000 to 700,000. Still, the trend toward Central America is increasing, said Eric Jacobstein, a trade expert at the Inter-American Dialogue in Washington.

"The U.S. private sector will no doubt continue to look to China and India," Jacobstein said. "This is a phenomenon that cannot be stopped."

He added, "Geography does matter," and combined with locked-in trade preferences via CAFTA, more nearsourcing "is bound to occur. This will certainly help these Latin American countries."

As in India, Nicaragua, El Salvador and Costa Rica are embracing the trend with business-friendly policies and aggressive marketing.

ProNicaragua, an agency working to attract foreign investment, has, for example, put together a database of English speakers and is working with the government to establish programs to upgrade English skills. This, to fill what Juan Carlos Pereira, executive director of ProNicaragua, estimates will be 4,000 call-center jobs in the next three years.

"Over 400,000 of our people who fled conflicts of the 1980s moved to the U.S. and Canada," Pereira said. "Many, including myself, have returned with good education and English skills."

The leader in Central America in terms of attracting new outsourcing service business is Costa Rica, where 24,500 call-center and information technology jobs have been created, according to the non-profit Costa Rican Chamber of Information and Communication Technologies.

Last weekend, 15 multinational companies (mostly American) held a job fair in Costa Rica to attract English speaking workers, 6.200 applicants were on hand during the three day fair.

Throughout Latin America, call-center workstations will number 730,000 in 2008, from 336,000 in 2004, researcher Datamonitor reports.

Central Americans insist they can capture a growing share of the market, especially with CAFTA.

"There is a hunger here for having a job, and a highly motivated group of people," said Leonel Lacayo, a Nicaraguan who lived 23 years in the United States before returning and opening a call center.

Lacayo has 70 English-speaking employees who make calls to collect debts for clients such as telecom companies, hospitals and credit-card companies.

"It would be hard to find people in the U.S. who wanted this job because they have too many other options," he admitted. "Here, the pay ($400 a month plus incentives) is triple minimum wage."

Not everyone sees nearsourcing in a positive light.

"We are sorry about this phenomenon," said Thea Lee, the AFL-CIO's deputy director for public policy. "We are also sorry we did not succeed in yielding stronger protections for Central American workers in CAFTA."