Nearshore Call Center Expansion: The Pros and Cons of the Latin America & Caribbean Region

by King White, on Apr 19, 2022 10:29:04 AM

Site Selection Group estimates there are approximately 1.3 million call center workers now employed across the nearshore region that encompasses Latin America and the Caribbean (LACA). With continued year-over-year growth, the LACA region’s call center industry employment now rivals the offshore giants of the Philippines and India. May factors have led to the success of the region which is starting to incur growing pains across many of the labor markets. To help understand why the region has been so successful, Site Selection Group has summarized the pros and cons of expanding your call center operations into this nearshore region.

LACA growth accelerated during the pandemic

The COVID-19 pandemic caused a significant amount of disruption in the call center industry as companies had to quickly figure out how to manage increased call volume, government regulations, work-from-home, wage inflation and very tight labor market conditions. The LACA region was probably the biggest beneficiary of these changes in the industry as the Philippines and India struggled to transition to work-from-home. The following graph shows the spike in job creation across the region which appears to not be slowing going into 2022.

LACA Region Job Creation

(Jobs Created Per Year)


Positive attributes of the LACA Region

There are many advantages to locating in the LACA region that range from low labor costs to accessibility. The following provides a summary of some of the key advantages.

  1. Labor costs - You will typically find labor to be 50% to 75% lower than wages in the United States especially as U.S. wage inflation increased wages by over 20% over the last couple of years. For example, a bilingual call center worker earns between $3 and $6 per hour depending on the city in which you locate. The comparable employee cost is now $15 to $17 per hour in the United States.
  2. English skills - Access to English-speaking labor is one of the main factors for the region’s success. In Central America, English skills will vary greatly; however, the Caribbean offers English as the primary language in most of the islands. You can also find a lot of European languages throughout the region.
  3. Employee skillsets - There are a handful of cities that have the capability to perform higher-end activities such as software development and shared service functions such as finance and accounting. San Jose, Costa Rica, is probably the leading advanced location that has been very successful in attracting a diverse group of companies including HP, IBM, Oracle, and P&G. While cities like Bogotá, Colombia, are becoming a hub for software development.
  4. Time zone differential - The time zones of the region will vary up to four hours depending on the time of the year and where you locate. This is much more attractive than the 12 hours or more time differential in places like India, the Philippines, or South Africa.
  5. Cultural affinity - The region is generally more closely aligned to the U.S. in most of the region. You will find people growing up watching U.S. television shows, as well as many people that have lived in the U.S. Places like the Dominican Republic and Costa Rica, have a lot of call center workers who have lived in the U.S.
  6. Accessibility - The ability to get direct, short flights from major hubs in the United States has become a very important factor as companies realize the time and expense required to run nearshore geography versus an offshore location like India or the Philippines. Some of the best entry points to the Caribbean are Miami, Atlanta, and Charlotte, North Carolina, while Central America is most accessible via Dallas, Houston, and Miami.

Challenges of the LACA Region

There are many roadblocks that companies face when trying to expand into nearshore geographies. These challenges may be isolated to one country or city; however, they can present significant challenges when trying to get a call center operation successfully launched. Some of the challenges include the following:

  1. Labor market scalability – Scalability can be an issue in many nearshore labor markets. Due to the low population levels in many of the cities, it can be very difficult to find workers with the required skills. You must carefully evaluate your ability to scale and maintain workers. It is very important to realize that it might take two to three times longer to scale at the same level as other geographies with larger populations.
  2. Call center saturation – As outlined above, the LACA region has been the fastest-growing region of the world for call centers. Most of the tier 1 cities have been picked over and face market saturation. Most of the large BPOs and captives are well established which creates a lot of challenges when entering the market as a smaller player. The critical saturation rate in the U.S. to avoid is between 3% and 5% while in nearshore locations it can be much higher depending on the depth of the bilingual labor market.
  3. Wage inflation – Similar to the U.S., wage inflation in the LACA region has been increasing at a rapid rate which can quickly diminish the savings of locating to nearshore and offshore geographies. We have seen wage inflation of 10% to 20% in many of the high-growth markets like Jamaica and Colombia.
  4. Geopolitical risks - Corruption, and crime continue to be a problem in Mexico and Central America. You will need to be prepared to deal with corruption within the local governments and by the various suppliers in order to get up and running in many of these locations. In addition, drug smuggling is prevalent in the region, which can also influence crime and corruption. In addition, you need to closely monitor politically unstable countries like Nicaragua.
  5. Weather risks – It seems like bad weather continues to escalate each year. There is a constant threat of hurricanes in many of the nearshore locations, especially in the Caribbean. These natural disasters can shut a call center site down for months so it is critical to have a disaster recovery plan.
  6. Up-front capital investment – The cost to open facilities within the region can be extremely expensive with little to no support from landlords or the governments to help offset the startup expenses. Even though real estate costs are similar to the United States, there typically will not be any tenant improvements provided by the landlords and the governments don’t provide economic incentives to offset those costs. These high costs have created a huge opportunity for seat leasing providers who have been expanding across the region.
  7. Real estate constraints - Real estate availability is very limited in most locations. Some call centers are choosing the central business districts where high-rise office buildings are converted into call centers, creating its own set of challenges. Others are picking suburban locations that are less competitive for labor; however, they are having to convert retail space which is expensive. Once again, seat leasing providers have emerged to take advantage of market conditions.
  8. Time – You often find yourself on “Island Time” when trying to expand into the LACA region. You need to be prepared for everything to take longer than expected. You will need to set up a corporation, which can take some time. However, the biggest delays occur in the construction schedule due to a less advanced approach to construction. In addition, the lead time for furniture and equipment will typically take much longer since you will likely have to get it shipped in via a container.


As companies continue to try and find that hidden gem of a location to locate their call center, there appear to be fewer and fewer options every day. The LACA region’s growth has been truly amazing to watch. However, it is unknown how long this growth can be sustained as markets become more saturated. If you need help finding the best location in the region, our experts at Site Selection Group can help you navigate over 50 metro areas spread across 20 countries to find your next call center location.

Topics:Call CenterSite SelectionLatin America



Blog Posts →


News →


Success Stories →