Geo-Political Risks & Business Climate Comparison of Nearshore and Offshore Call Center Locations
by King White, on Nov 16, 2021 9:11:15 AM
As companies continue to expand their call centers, shared-service, and back-office operations into nearshore and offshore locations, geopolitical risk and business climate conditions have become critical factors to evaluate during the site selection process. These are fundamental criteria that can often eliminate locations early during the site selection process before you even begin to consider other criteria such as labor availability, labor cost, real estate, and economic incentives.
Geopolitical risks include corruption, terrorism, security, and political stability
Companies seeking a new location to expand typically plan to make a significant capital investment in the geography in which they locate which makes it critical to assess the risks of losing that investment. Their assessment should include evaluating geopolitical factors such as corruption, terrorism, and political stability. It is important to review unbiased independent ranking data, like that included in the below table, as well as to conduct original market research when evaluating these factors.
Identify the business climate factors specific to your project
The business climate factors to consider can range broadly based on the type of project and company profile. It can include traditional factors such as labor laws and tax conditions to more complicated factors such as data security and patent rights. It is critical to identify these factors before embarking in the site selection process so you understand what data and information are needed to properly evaluate a location’s business climate.
Comparison of nearshore and offshore locations
The following table compares some of the hottest onshore, nearshore, and offshore locations based on several critical geopolitical risk factors that are often utilized when looking to open a new call center, shared-service center, or related back-office operation.
Geo-Political Risk & Business Climate Comparison
|City||Country||Terrorism incidence||Perceived Level of Public Corruption||Political Stability and Absence of Violence/ Terrorism||Safety & Security Index||Rigidity of Employment Index|
|San Jose||Costa Rica||100||57||2.96||77.12||45.8|
|Santo Domingo||Dominican Republic||99.9||28||2.52||60.92||23.6|
|San Pedro Sula||Honduras||99.9||24||1.95||56.54||66.6|
|Cape Town||South Africa||97||44||2.28||52.11||38|
Data Variable Definitions & Ranking Methodology
|Terrorism Incidence||Assesses the frequency and severity of terror attacks. The scale ranges from 0 (highest incidence) to 100 (no incidence)|
|Perceived level of public sector corruption||From the Corruption Perceptions Index. The Corruption Perceptions Index measures the perceived levels of public sector corruption in countries and territories around the world. Countries are scored on a scale of 0 (highly corrupt) to 100 (very clean).|
|Political Stability and Absence of Violence/Terrorism||The likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism. Estimate gives the country's score on the aggregate indicator ranging from 0 to 5 (originally collected on a scale of -2.5 to +2.5). Data values are rounded to two decimal places. Not every metro has a value.|
|Safety & Security Index||The Safety & Security Index measures countries' performance in three areas: national security, personal precariousness, and personal safety. The Index measures various safety and security factors within countries including; food availability, shelter availability, violence (war/murder), terrorism (violent/political), safety of property, road deaths and night time safety. The Safety and Security Index is a component pillar of the Legatum Prosperity Index.|
|Rigidity of Employment Index 1||Measures how difficult it is to hire a new worker, how rigid the restrictions are on expanding/contracting the number of working hours, and how difficult/costly it is to dismiss a worker. 0 to 100 scale, higher values indicate more rigid regulation.|
|Efficiency of legal framework||Efficiency of the legal framework for private businesses in settling disputes (1= extremely inefficient; 7= highly efficient)|
|Hiring and firing practices||Perceived difficulty in the hiring and firing of workers (1 = heavily impeded by regulations; 7 = extremely flexible).|
|Overall infrastructure quality||The Infrastructure pillar of the Global Competitiveness Index 4.0 assesses the quality and extension of transport infrastructure (road, rail, water and air) and utility infrastructure (electricity and water). The assessment is rated on a scale of 0 to 100 (best).|
|Quality of electricity supply||Doing Business uses the system average interruption duration index (SAIDI) and the system average interruption frequency index (SAIFI) to measure the duration and frequency of power outages in the largest business city of each economy. This index incorporates a number of indicators including the results from SAIDI and SAIFI and whether electricity tariffs are transparent and easily available. The index ranges from 0 to 8, with higher values indicating greater reliability of electricity supply and greater transparency of tariff|
|Electric power transmission and distribution losses 1||Electric power transmission and distribution losses include losses in transmission between sources of supply and points of distribution and in the distribution to consumers, including pilferage.|
Sources: Legatum Prosperity Index, Transparency International, World Bank Doing Business, World Economic Forum