The New Contact Center, BPO and IT Hub in Central America

“…if the people are not trained and are not receiving the right kind of training, then we have to go elsewhere — either elsewhere in the United States or elsewhere in the world — because at the end of the day, we have to find the people.”

Business Lexington's interview with Tom Blodgett, ACS

But, do we have an opportunity?

Why is Latin America Growing?

What is the right question to ask about Honduras?

Honduras Business Case

Honduras - San Pedro Sula - Altia Business Park

Location Assessment Framework

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1. Scale and Quality

Labor Pool Skills Availability Graduate Output Cultural affinity

Skills and Scalability

http://en.wikipedia.org/wiki/List_of_schools_in_Honduras

Statistics: Honduras, 410 bilingual schools

Several associations: •  Asociacion de Escuelas Bilingues de Honduras •  AASCA - •  Asociacion Noroccidental de Escuelas Privadas Bilingues •  Part of SACS (Southern Association of Colleges and Schools)

English skills…bilingual schools are the source…

Sources: CINDE (CR), PROESA (ES), Invest in Guatemala (GUA), ProNicaragua (NI), FIDE (HN)

Important Data

• Largest English speaking population in Central America, 410 bilingual schools (Approximately 75,000-85,000 bilingual people in the country). Each year this number grows by 7,000 high school graduates.

•  We have more than 12,000 college graduates per year just in San Pedro Sula from 9 main universities. Currently there are almost 82,000 students enrolled in universities.

• Safe & Cost-Competitive Near Shore Location: Honduras offers the most cost competitive solution in the nearshore area in a safe, stable environment

• Positive Business Environment: Solid legal framework for investment ensure the safety and continuity of business relations.

•  Cultural affinity – more than 100 years with presence of U.S. companies successfully operating in Honduran territory •  Accent - even our accent and knowledge of what is happening in the U.S. are key factors • Same time zone – U.S. Central Time, just 2 hrs away from Miami •  Access to Hispanic market – “Se habla Español” •  Sufficient critical mass – sustained growth rates on the English speaking population and last years job fair are evidence of this

• Multinational carriers presence (Milicom – Navega, Multidata, Digicel (Irish),Telecorp, Cablecolor, Telcel (Mexican – Claro)

Important Data

What can we expect from Honduras? • Honduras will become the new hot spot for BPO and contact centers due to several factors: –  World financial crisis will keep on putting pressure for companies for

outsourcing services, and Latin America/Central America is a perfect nearshore location

–  Competitive labor costs will create an increasing interest in opening an operation in Honduras

–  U.S. Hispanic market will keep on boosting bilingual services

–  Honduras is able to supply the necessary labor pool, which will provide sustainability to the industry...

But specially, because of our human capital...

•  Hondurans have a deep desire to learn, we have an unbreakable determination to overcome difficulties... •  We are outspoken, cheerful and with a high work ethic...

•  We envision a better Honduras: we are not only dreamers but we also make things happen!

•  We are a humble country that passionately believes in peace and democracy!

•  We believe that Honduras is a land of opportunities...

2. Cost

Cost of Operations Cost of Training Cost of Real Estate & Energy

Cost of Bandwidth Cost of Living

Savings

Decision Matrix comparing Offshore Locations

CRITERIA

PHILLIPINES INDIA CANADA IRELAND PANAMA BRAZIL HONDURAS

AVERAGE AGENT SALARY PER YEAR

(US $) 4,000-6,000 3,500-5,000 25,000-40,000 25,000-40,000 6,500-8,500 7,500-10,000 4,000-6,000

REAL ESTATE COST (RENT PER SQUARE

METER) 26.00 18.00 35.00 38.00 26-28 40.00 18.00 REAL ESTATE COST (RENT PER SQUARE

FT/YR) 29.00 20.07 39.03 42.38 31.23 44.61 20.07 REAL ESTATE COST

(BUYOUT PER SQUARE METER) 3,000 2,000 3,800 4,000 3000-3500 4,000-4,500 1,800

TELECOMMUNICATION (E1) 1,000 - 1,400 1,100 - 1,500 650 - 800 1,300 - 1,700 1,200 - 1,500 1,000 - 1,500 900 - 1,200

Sources: AT Kearney report, information from Honduras collected by Ruben Sorto

We need to compare operating costs in Offshore/Nearshore locations...

•  In our financial and feasibility models we must include:

•  Direct salaries

•  Management costs

•  Support staff salaries

•  Training

•  Real estate

•  Technology and communication

Sources: Ministerio del Trabajo (HN), La Republica, online version (CR, Sept/09)

Sources: CEPAL Report 2008-09, La Nacion (www.nacion.com), CINDE, ProNicaragua,

53%

31%

28%

24% 11%

•  Obviously, the outsourcing business has grown in Central America, but it has experienced a slow down during the last 4-5 years, not only related to the world economical-financial crisis but to other factors as well, such as labor availability.

•  This slow down is linked to a market saturation, specially in the mature markets (Costa Rica and Panama) and labor shortage in developing markets (Guatemala and El Salvador)

•  In a region of about 45 M people (from Guatemala to Panama), the only country still unexplored is Honduras.

•  Each country is living a different stage in this industry; we may experience a “second wave” of growth via unexplored markets

•  The “returning” diaspora each country has is also a driving force for growth

Some conclusions...

Honduras

New entrants Under development Developed

Stages of Development of Contact Center and BPO in Central America

Location Maturity

Nicaragua

El Salvador

% of Savings Potential in Operating Costs

Guatemala

Labor Pool Availability

Costa Rica

Panama

Honduras

Nicaragua

El Salvador Guatemala Panama

Costa Rica

Sources: Model developed by Ruben Sorto using Thalons framework and report on “Outsourcing Cities”

Important Data

• Altia Business Park will become the most modern technology and business park in the region:

•  Energy redundant – Energy efficient: we have designed the park as energy self sufficient, but also interconnected to the national grid. We have designed all the buildings aimed to obtain the LEED certification. This will be translated to a cost competitive advantage on the power bill (20-30% lower than standard consumption)

•  Connectivity redundancy – high quality, cost effective telecommunication

•  World class environment – we can deliver turn key office space based on your requirements and needs

•  World class security

•  Fully 24/7/365 operational capability

3. Business Catalyst

Government Benefits Incentives

Competitive Landscape Untapped Labor Pool

Currently Employed

Business Environment

San Pedro Sula Business Case

• 70% of business visitors to Honduras arrive through San Pedro Sula’s airport

• San Pedro Sula is the motor of the Honduran economy, generating more than 60% of the national GDP

• San Pedro Sula has become a vibrant economic and industrial city (1.1 M people) with 9 main universities (total population of 82,000 students) and 70 bilingual schools in the urban area and 161 in Cortes, and a total of 410 in Honduras

• San Pedro Sula has daily/direct flights to New York, Atlanta, Houston, Miami and connected to Los Angeles, San Francisco, Mexico, Central and South America

Important Data

4. Infrastructure

Operational Environment

Connectivity Bandwidth availability Transportation

Fiber Optics Backbone and “Humid” Connectivity

Important Data

• Altia Business Park is based as a free zone, which means you are exempt of any local or national tax.

• Competitive real estate cost • We have in place a network of strategic partners and alliances to help you reduce your curve of experience costs and your time to have running an operation

• Any BPO or contact center will have at their service a multidisciplinary team aimed to help you have a successful operation: human resource, engineering, logistics, etc

Altia Business Park - Strategic Geographic Location (public transportation routes)

25 minutes, moderate traffic

Commercial Risk Political Risk Natural Risk Social Risk

5. Risk Profile

Democratic Elections since 1980

2010

2006

2002

1998

1994

1990

1986

Porfirio Lobo was elected for the 2010-2014 term

Ricardo Maduro was elected for President for the 2002-’06 term

Manuel Zelaya was elected for the 2006-’10, but due to his violation of the Constitution, he was removed from office. Roberto Micheletti finished the term

Carlos Roberto Reina elected for the 1994-’98 term

Rafael Callejas elected for the 1990-’94 term

Carlos Flores elected for the 1998-2002 term

Important Data

•  Honduras has recently designed a Nation Plan for the next 30 yrs. This was elaborated by leaders, academics, businessmen, social institutions and represents the vision of a better Honduras

•  On November ’09, we elected a new government and President Lobo has established as his priority to execute the Nation Plan

•  Altia Business Park spearheads the new and modern Honduras, focussed on developing a service industry based on our competitive advantages

Natural Risks

•  Honduras suffered the s t r i k e o f a m a j o r earthquake in 1998 by Hurricane Mitch; since then, the country has h e a v i l y i n v e s t e d i n designing infrastructure that can withstand this type of natural disasters, such as channel and river flow control systems.

•  Honduras is hit by a major hurricane every 25-30 years

6. Quality of Life

Social Infrastructure like Education institutions, hospitals Non work culture Availability of Recreation/

Leisure facilities

Quality of Life

Quality of Life

Value Proposition of Honduras • Honduras offers the largest bilingual labor pool in

Central America, as well as a college and technical graduate young population

• Our country offers a strategic geographic position

• Honduras offers the most competitive costs in labor, telecommunication, real estate

• Honduras offers the most complete incentive package for investment, including permanent tax exemption

• Honduras is a country where the rule of law prevails

Value Proposition of San Pedro Sula

• San Pedro Sula offers an adequate business environment and a history of success for companies that have made it their base of operations

• The city has become a hub for business, as well as a tourism destiny: amazing Mayan ruins, beautiful beaches just 30 mins away, great lifestyle and natural sightseeing

• San Pedro Sula offers the advantages of a cosmopolita city, with a slow pace of a small town. This is the perfect place to live and work!

Value Proposition of Altia Business Park

• Altia Business Park offers a full package: complete infrastructure at a competitive cost

• Altia Business Park offers a strategic partnership

• We offer a business model that is based in engineering and systems considering sustainable practices - we strive to obtain the LEED certification in all our buildings

• We are a team that envisions to create value to your operations, we strive to exceed your expectations!

Ruben Dario Sorto Corporate Marketing and New Projects Director

Altia Business Park www.altiabusinesspark.com

ruben.sorto@altiabusinesspark.com (504) 580-2015/16