why iaop and why now?

1

Introduction

PRONicaragua is pursuing a proactive marketing strategy targeted to create awareness of the positive aspects of the country, which make it an attractive destination for establishing nearshore Business Process Outsourcing (BPO) operations.

Outsourcing and offshoring have become an excellent opportunity for companies to achieve higher levels of productivity while saving costs. Nicaragua is strategically located in the heart of Central America, and offers excellent investment opportunities for companies seeking to expand their operations and increase their global competitiveness.

The government seeks to develop the Business Process Outsourcing sector that is commonly used by Fortune 500 companies in the United States and in Europe.

Given the available talent and the continuous improvements in the country’s infrastructure and business climate, Nicaragua has become one of the most attractive nearshore/offshore destinations for Contact Center and BPO operations in the world. Aware of these factors, Sitel, a world renowned outsourcing company, has recently launched operations in Nicaragua to provide high-quality, multilingual customer care and technical support solutions to leading companies worldwide.

CONTACT CENTER AND BPO OPERATIONS

2

Contact Center & Business Process Outsourcing in Nicaragua

Nicaragua stands out as one of the top emerging BPO markets of the Central American region. There are currently 9 companies providing Contact Center and BPO services, altogether employing around 800 young and talented professionals. They are located in Managua, where there is a high concentration of university students.

“Several Latin American countries are already in the fray. However, there are many others that are developing into potentially ideal locations. One example of new BPO prospects for the U.S. English-speaking market is Nicaragua: Contrary to popular notions of a war-torn and dangerous country, Nicaragua is establishing itself as a safe and business-friendly nation. Thousands of citizens have returned since the political environment has stabilized. With a stable government and scores of U.S.-educated English speakers returning to the country, Nicaragua is poised to serve the U.S. English-speaking market, along with Mexico, Panama and other locations.”

Amit Shankardass, Senior Vice President of Global Marketing, Sitel“Latin America: The Next India?” September, 2007.

Sector Employment Growth

These figures do not include in-house call centersSource: PRONicaragua, 2006

20040

200

400

600

Num

ber

of E

mpl

oyee

s

800

2005 2006 2007

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Furthermore, this sector’s great potential has raised the interest of private developers of infrastructure. Some of these entrepreneurs have already developed infrastructure that meet international standards and corporate requirements.

Company Services

CONNECTINTERNATIONAL

1. Consumer and Commercial Collections2. Skiptracing Services3. Back Office Work4. Data Entry5. IT Support

PENTAFON 1. Customer Service2. Telemarketing3. Inbound Call4. Collections

PRESS TWO 1. Outbound BtC and BtB2. Inbound 24/73. Support Online, Web, Chat and Email4. Back Office

ALMORI 1. Customer Service2. Data Processing3. Business Intelligence and Data Analytics4. Softwarte Development5. Collections6. Sales Calling7. Back Office Processing8. Help Desk9. Consulting10. Process Mapping11. Six Sigma Certification

TELMARK 1. Customer Service2. Telemarketing

INTELLIGENTOUTSOURCING

1. Customer Service2. Data Processing3. Telemarketing

PATENTVEST S.A. 1. Data Processing2. Financial Coverage Reports3. Equity Sales Roadshows Coordination4. Outbound - Inbound

ATENTO SERVICES 1. Telemarketing

Source: PRONicaragua Survey, 2008

Services provided by BPO companies in Nicaragua


4

Competitive Advantages

Nicaragua offers unique advantages for companies in the Contact Center and BPO sector, as it provides opportunities to improve their competitiveness by increasing productivity as well as diversifying the service options for their clients. These are some of the competitive advantages offered by the country:

Strategic Location

As Nicaragua is on U.S. Central Standard Time Zone (GMT - 6:00. CST in U.S., Mexico and Central America), it can offer timely services to the United States without losing valuable working hours. Nicaragua is just 2.5 hours away from the southern cities of the United States by plane. American Airlines, Continental and Delta offer direct flights to Miami, Houston and Atlanta. Furthermore, Copa, Taca, and American Airlines offer flights to South America. The country’s privileged location facilitates the management for companies established in the U.S.

Strategic Location

Nicaragua

U.S. Central Time Zone

AmericanContinental

Delta

TACA

AeroMéxicoSpirit

American,TACA, Delta

COPA, TACA

2.52.53.56.02.56.02.52.5

MiamiHoustonAtlantaLos AngelesMiamiLos AngelesMéxico D.F.Fort Lauderdale

Airline DestinationTimeDistance (hr.)

Connecting Flights to Europe through Miami, Atlanta, Costa Rica and Panama

Connecting Flights to South America through Costa Rica, Panama andEl Salvador

5

Availability of Young, Vibrant and Talented Labor Force

The Nicaraguan population is very young. Out of the total population of 5.5 million people, 79 percent is under the age of 39. Population annual growth rate is 2.7 percent, one of the highest in the region.

Approximately 60 percent of the population is concentrated on the country’s western region and more than 64 percent is urban. Furthermore, Managua has been declared “the first Central American capital free of illiteracy,” as a result of a literacy campaign launched in 2005. The official certification from UNESCO (United Nations Educational, Scientific and Cultural Organization) to back up this achievement is already in process, and will be based on a survey undertaken in different districts of Managua by more than 2,000 college students.

Talent Pool

Our national university system is made up by 48 universities with approximately 116,000 students enrolled. Nicaraguan universities offer excellent Business Administration, Accounting, Finance, Law, and Engeneering programs, which are the most common undergraduate degrees pursued by students as shown in the following graph:

Population Age Breakdown

0 -19

30 - 39

40 - 49

50 + 11.5%

Source: National Census, 2005

49%

12.3%

8.7%

20 -29 18.5%


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Furthermore, there is great support from the government to foster higher level education as 6 percent of the national budget goes to public universities.

It is also important to mention that there is one US–accredited university, three bilingual (English – Spanish) university programs, five bilingual high schools, and a wide number of English institutes that provide a pool of educated candidates for English-speaking contact centers and BPO companies.

INCAE, a Nicaraguan Harvard-affiliated Bussiness School is ranked number one in Latin America and offers a pool of individuals with world class managerial skills.

“Since we started operations back in 2005, we’ve had successful experiences in our recruiting and hiring processes…Last year we received approximately double the amount of résumés compared to 2006 with high levels of English proficiency and set of abilities required for our company.”

Gustavo Mercado, PATENTVEST S.A.

Student Enrollment by Major Top Ten Universities

Source: PRONicaragua Survey 2006

34%

43%

13%

10%

Science/ Technology /EngneeringBusiness Administration and EconomyLawOthers

7

Proven Availability of English-Speaking Personnel

Two research activities carried out in the last four years demonstrate the availability of a bilingual labor pool in the country:

PRONicaragua has developed a wide data base of bilingual people and has pre-screened over 2,000 qualified, talented, young individuals by using proven methodologies in the Contact Center industry. Both, English and Spanish accents are soft and neutral, making Nicaragua an excellent location to service English and Spanish-speaking customers.

In addition, approximately 3,900 English speakers are produced annually at a variety of levels. The total current estimated number of adult English speakers is 115,000 people. Currently, the total number of highschool students that are taking English as one of the required courses mandated by the Ministry of Education in the public schools amounts to 555,532 for 2007.

ALMORI’s Offices in Managua, 2008

Nicasearch 2004 Job Fair 2007

4,500 people filled an online surveyin english

1,832 people filled in an application inenglish; either online or in-site

40% were certified by Berliz withadvanced or fluent English in face-to-faceinterviews

51% passed the written English test and43% passed both, written test& face-to-face interview


8

Labor Environment

Nicaragua provides an excellent labor environment for Contact Center and BPO operations. An employer may establish specific and variable work shifts based on agreement with the employee and may also establish predefined vacation schedules to reflect business needs. The labor code allows day, mixed and graveyard shifts (48, 45, and 42 hours per week, respectively).

Labor Market Risk

Labor Market Risk, published by the Economist Intelligence Unit, places Nicaragua as the second country in the Central American region with the lowest market risk. This report measures various indicators, such as: union strength, labor disputes, wage restrictions, and hiring and firing restrictions.

A study carried out among existing contact centers in Nicaragua shows that attrition and absenteeism rates are very low compared to those found in more mature markets.

According to an article published in FDI Magazine, “Central American Countries of the Future, 2006”, Nicaragua was ranked as the Runner-up Best Human Resources in Central America.

Labor Market Risk

HondurasGuatemalaMexicoEl SalvadorPanamáNicaraguaCosta Rica0

10

20

30

40

50

60

70

80

90

100

Source: Viewswire.com, EIU September 2007Lower rating indicates lower risk.

9

Advanced Telecommunications Infrastructure

Since the late 90’s, Nicaragua began a technological transformation that implemented the latest technologies to reinforce its telecommunications infrastructure. The telecommunication sector is fully privatized and is considered to be one of the most modern in Central America.

Nicaragua provides high quality, redundant fiber telecommunications connections via three international submarine fiber optic cable systems.

Eastern Route: This route connects the Pacific coast to the East coast of Nicaragua (servicing the city of Bluefields) and to the undersea cable network ARCOS-1. Arcos-1 connects Nicaragua to the world via Miami and with direct connection to Central American and Caribbean countries.

FiberHybrid Connection (Mwave, Copper, Fiber)

MADRIZ

CHINANDEGA

RIOSAN JUAN

BOACO

NUEVASEGOVIA

REGION AUTONOMAATLANTICO NORTE

(R.A.A.N.)

REGION AUTONOMAATLANTICO SUR

(R.A.A.S.)LEON

MASAYA

CARAZO

MANAGUA

MATAGALPA

ESTELI

JINOTEGA

GRANADA

RIVAS

CHONTALES

Nicaragua International WAN

El SalvadorEmergia via Guatemala(Amnet)

Puerto Cortés, HondurasMaya and ARCOS-1(Enitel)

Puerto CabezaARCOS-1

BluefieldsARCOS-1

Puerto Limón, Costa RicaMAYA 1(Enitel)


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North Route: This route connects Nicaragua to Honduras, El Salvador, Guatemala, Mexico and to the rest of the world via underwater cable systems ARCOS-1 and MAYA-1.

South Route: This route connects Nicaragua to Costa Rica, Panama and the rest of the world via MAYA-1 and multiple undersea cable systems available in Panama.

Nicaragua also has private connections to Emergia cable system via a hybrid connection.

The major players in the telecommunications industry in Nicaragua include:

The following services are available in Nicaragua:

Internet: Fractional to full E-1 service provided. Rates vary between national and/or international service.

Voice Network: Analogue and digital land line voice services are provided. Trunk lines between nodes run on fiber/copper/microwave networks. Service is offered from fractional to full E-1 service.

Technology Providers: All mayor technology brands (e.g. Dell, HP, IBM, Cisco, Microsoft, Oracle, Avaya, Nortel) are available through local authorized distributors.

11

Competitive Cost Structure

In addition to the large talented labor pool, Nicaragua’s average salary in this sector is the most competitive in the region, providing a great opportunity to operation cost reduction.

Average salary for Spanish-speaking and Bilingual (English and Spanish) customer service representatives (CSR) are as follow:

The private telecommunications market assures high quality services at very competitive prices that vary according to bandwidth requirements.

Average salary for Spanish-speaking and Bilingual CSR


Costa RicaPanamaEl SalvadorGuatemalaNicaragua0%

50%

100%

150%

200%

250%

Spanish-speaking CSR

PanamaCosta RicaEl SalvadorGuatemalaNicaragua0%

25%

50%

75%

100%

125%

150%

Bilingual CSR

Description Cost US$

Water Rate/m3

Electricity Rate KW/hr (US$)*Telecommnunications

E-1 IPLC Fiber (MGA-Miami)Installation Services E-1 IPLCVoice Local E-1Installation Services E-1Internet 1 megInternet 2 meg

0.480.1464

1,975 to 3,1151,820.001,000.001,000.001,500.002,200.00

* For detailed rates, please visit www.ine.gob.niSource: PRONicaragua Survey 2007

Telecommunications and Utilities Expenses


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Office space costs vary depending on the type of building:

Generous Tax Incentives

Nicaragua’s Free Zone Law has been extended to Contact Center and BPO operations. Under this incentive regime, companies exporting services enjoy a 100 percent tax holiday and full duty exemptions on imports of capital goods. Nicaragua’s free zones incentives are regulated by the National Free Zones Commission.

The Free Zone Law grants companies the following incentives for a 10-year period, renewable for an additional five years:

• 100 percent income tax exemption.• Full capital gains and property tax exemption.• Full municipal and VAT tax exemption.• Full exemption on import duty taxes, transport and support services for the free zone.

FZC Contact Center facilities in Managua, 2007


13

High Levels of Personal Safety

Security Risk Analysis, published by the Economist Intelligence Unit, places Nicaragua as the safest country in the Central American region. The report measures various factors, such as: armed conflict, unrest/demonstrations, crime, organized crime and kidnapping/extortion.

“– Nicaragua real estate represents the best deal on Coastal and Colonial Property offered today in the Americas… Over the next 5 years 80 million Americans will retire. A recent article in Forbes found that some 10 percent of these individuals plan to retire overseas. The top 5 destinations for this some 8 million, to-be expatriates include Costa Rica, Panama, Mexico, Brazil, and Nicaragua… What does Nicaragua offer that these others do not you might ask? The answer– a cheaper cost of living, beachfront and colonial real estate at a fraction of the price, the second lowest crime rate in the western hemisphere (second only to Canada), and the best tax incentives for both retirees and business owners in all of Central America!”

Real Estate along Nicaragua’s Pacific Coast Booming!PressMediaWire

Published 12/11/2007

The Safest Country in Central America

PhillipinesHondurasGuatemalaEl SalvadorIndiaBangladeshDominicanRep

ChinaPanamáCosta RicaNicaragua0

10

20

30

40

50

60

70

80

90

100

Source: Viewswire.com, EIU September 2007


14

Investment Climate

Over the past years, government policies have been addressed towards creating a better business environment. Opening a “one-stop shop” for foreign investors in the Ministry of Development, Industry, and Trade (MIFIC), the creation of an Investment Promotion Agency, PRONicaragua and the full privatization of many previously state-owned companies was just the beginning.

As a continuation of all these efforts, the government has made a high priority of attracting quality foreign direct investment and building a more supportive environment for existing investment.

The 2008 Doing Business Report, published by The World Bank Group, a report that benchmarks regulatory performance and reforms in 178 nations, ranked Nicaragua as one of the best locations in which to start a business in the Central American region.

Legal Framework

In addition, Nicaragua’s legal framework is pro-investment. Law No 344 of Foreign Investment guarantees:

• Full currency convertibility • Freedom to expatriate all capital and profits• Full international ownership • No discriminatory treatment for foreign investors• Full protection of intellectual property rights, patents, and brands

Arbitration Law No 540 is also enforced in our country. This Law allows third party involvement in international disagreements.

Country Ease of Doing Business (Rank out of 178 countries)

Source: World Bank 2008

Doing Business 2008

El Salvador� 69Nicaragua� 93Dominican Republic� 99Argentina � 109Guatemala � 114Costa Rica � 115India � 120Honduras� 121Phillipines� 133

15

Testimonials

PatentVest S.A.Where patent information becomes business intelligence

When PatentVest was looking to establish offshore operations, it spotted a unique business opportunity in Nicaragua. Com-petitive operating costs and the opportu-nity to hire smart ambitious people were some of the key factors that PatentVest considered before finally establishing operations in Nicaragua almost two years ago.

The opportunity to hire talented personnel to carry out tasks that are very difficult to find U.S. people to do at competitive cost enabled the company to carry out a busi-ness model that would not be possible if carried out solely in the U.S.

Some of the reasons Nicaragua is such an attractive destination for foreign invest-ment are its high levels of personal safety (ranked as the safest country in the Central American region according to the Econo-mist Intelligence Unit), highly qualified English-speaking population eager to work, competitive costs, proximity to the U.S. and being in the U.S. Central Time Zone.

Located within the higher levels of the BPO service pyramid, PatentVest is one of the top companies in this sector in Nicara-gua. It provides its employees a comfort-able and positive working environment, competitive salaries and the opportunity to provide services to very well known multinational companies from Nicaragua.

PatentVest has found the business climate in Nicaragua to be very accommodating and full of development opportunities. Despite some negative perception held of Nicaragua, the company has seen the

opposite; instead, their experience has been so positive that they are substantially increasing their investment in Nicaragua. The company launched operations with just 6 employees in March 2006, currently it employs 35 and has plans to continue expanding. The former building of the U.S. Embassy in Nicaragua was recently purchased by PatentVest as part of its business expansion plans.

Chris Marlett, CEO of PatentVest, considers “there are many bright and ambitious people in Nicara-gua that are hungry to learn and hungry to help you grow your business. You will find that Nicara-gua will exceed your expectations.”

Chris Marlett is the main shareholder and Chief Executive Officer of MDB Capital Group LLC, an investment bank-ing firm he co-founded in 1997. MDB Capital specializes in financing emerging growth companies in the U.S. Marlett also serves as Chairman of PatentVest, Inc. and PatentVest, S.A., which provides a select group of investors, corporate executives, and scientists with report on Microsoft Corporation (MSFT - NASDAQ). MDB's PatentVest reports provide an indication of the patent activ-ity and areas of innovation for a select company. PatentVest helps you find information on the most recent patent grants, applications, and licensed patents for Microsoft.


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Nicaragua’s Millennium Challenge Account

Background

As a result of Nicaragua’s commitment to economic freedom and development, the United States funded Millennium Challenge Corporation (MCC) awarded the country a US$175 million grant to invest in infrastructure and economic development initiatives. In making its selection, the MCC board considers candidate countries’ policy performance in three areas:

• Ruling justly • Investing in people • Encouraging economic freedom

Nicaragua’s investment program will be executed through the Millennium Challenge Account over a five-year period. The program will focus on one of the regions with the most potential for productivity and trade: West Nicaragua.

The execution of the program will focus on improvements of road infrastructure, property title regularization, and rural business development, which will be responsible for attracting investment and providing assistance to businesses operating in the area.

Northwest Nicaragua at a Glance

Northwest Nicaragua—known in Spanish as the “Occidente”—refers to the country’s Northwest Pacific zone, which includes the cities of León and Chinandega. The similarities in culture, traditions, economy, climate, and location merge these two neighboring areas into a vibrant zone, whose products and services reach markets all over the world. Rich in natural resources, colonial architecture, and a productive workforce, this region is one of the most dynamic in the country, contributing to more than 35 percent of Nicaragua’s total exports.

RegionAreaArable LandPopulationPopulation GrowthAgricultural Production

León and Chinandega9,960.40 Km2

7,000.00 Km2

734,749 (14.3% of the country’ total)1.30% annuallySugar, molasses, peanuts, bananas, shrimp,sorghum, sesame seeds, and soybeans

Northwest Nicaragua Facts

why iaop and why now?

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