Jamaica: The near sure thing

FROM GLOBAL TECHNOLOGY FORUM

By Adam Lincoln

Public and private sector efforts are helping Jamaica seize a share of the lucrative US ‘near-shoring’ market. But success has not been without growing pains

Government-backed IT schemes are often viewed with skepticism at launch and a degree of schadenfreude when they fail to deliver. A case in point is Jamaica’s Intec Project, a public-private initiative funded by the sale of cellular licences and designed to help the country make up lost ground in the technology stakes. Among the goals was the creation of 40,000 jobs by 2003 by developing the use of information and communications technologies (ICT) in business.

Well meaning, yes. But a success? Depends on who you ask. Over the past five years the project has disbursed J$700m (US$10.6m) in loans to ICT start-ups and some J$240m (US$3.6m) in training grants. In particular, there were high hopes a liberalised telecommunications sector, previously dominated by Cable & Wireless, would drive down fibre-optic line charges and boost the international prospects of a new breed of call centres.

Costs did indeed come down, and the country’s communications infrastructure was improved, but several call centres set up with Intec seed money failed. The critics flocked, but last month Jamaica’s government insisted Intec had performed well against international benchmarks. “The international experience is that a failure rate of investment projects in new industries in a competitive market is very high,” said the technology ministry report. “The statistics seem to suggest that you should not be looking for success rates of greater than 10 per cent.”

A reality check was probably due. But while call centres will continue to play a key role in the country’s development, the focus now is on software development and lucrative back office operations, which make for better paying jobs, as countries like India have learnt. The main prize is the massive North American market: According to consulting firm AT Kearney, US financial services firms plan to relocate more than 500,000 jobs overseas over the next five years – more than 8% of their workforce. Deloitte and Touche has estimated this market will be worth US$365bn.

Cultural affinity

As a provider of ‘near-shoring’ services Jamaica certainly has a lot going for it, not least a cost-efficient, English-speaking workforce. More than 10,000 people have benefited from ICT training in recent years, the government says, and most have been absorbed into the workforce. The Caribbean Institute of Technology (CIT), set up in 1998, has so far produced more than 500 software developers. The private sector has chipped in as well. Notable is the Cisco Regional Academy, which was set up by the Silicon Valley giant in 2002, in concert with the Jamaican government and the United Nations Development Programme, and trains technicians to design, build and maintain computer networks.

And the ICT sector has tasted real success, with call centres and more ‘high-end’ activity. Texas and Montego Bay-based e-Services Group International (e-SGI) boasts several Fortune 500 clients – including Delta Air Lines, for which it handles reservations – and processes more than 30m transactions annually for overseas companies. With nearly 3,000 employees, part of the company’s appeal, says CEO Patrick Casserly, is its attention to inhouse training. He points to a staff attrition rate of less than 10 per cent, which is far better than the norm and means skill-sets have a chance to mature: “In a back office processing business unit that commenced operations in June 2001, of the initial 40 new hires, 33 remain,” he says.

Foreign investment has come too. Fortune 500-ranked Affiliated Computer Services Inc (ACS), which set up its first Montego Bay facility, a 45,000 square-foot site, in August 2001, currently employs more than 1,400 people. Last October the company, which was the first in the Caribbean to do payroll processing for North American clients, announced plans to build a second, 65,000 square-foot facility nearby, with a view to creating 600 new jobs. "Jamaica is a key part of ACS' global delivery strategy," says Lyn Langford, ACS' site operations manager. "If we hadn't proven ourselves here this opportunity would not have arisen."

Hot for the wrong reason

Indeed, the ability to build trust is key to the success of outsourcing ventures. But Montego Bay’s near-shoring luminaries were dealt a blow at the end of January when the Jamaica Constabulary Force’s Department of Serious and Organized Crime announced that ‘MoBay’ was top of its list of criminal scam hotspots, ahead of the town of St Catherine and the capital, Kingston.

Montego Bay’s reputation as a business haven has been marred by a lottery scam that has earned the perpetrators millions of dollars – and allegedly resulted in the deaths of six people. Investigators say the culprits have been gaining access to personal data about potential victims, most of them in the US, and contacting these people to tell them they have won $2.5m in a lottery they entered. The victims are then asked to send money so that their fictitious cheque can be processed; one, a retiree, was last year reportedly stripped of US$127,000.

The assistant commissioner of police dealing in the matter, Leslie Green, told the local press that the personal data used in the scam was being gathered from the Internet, from overseas – and from call centres.

Determined not to let this setback ruin the nascent and increasingly lucrative near-shoring sector, Jamaica’s Bureau of Special Investigations, Operation Kingfish and other police instruments have joined forces to nip the problem in the bud. Arrests have been made in relation to the lottery scam, but investigators say legislative reform is needed. Existing laws do not provide for e-fraud, making it hard for prosecutors to gain convictions. The government is said to be in talks on the matter – while the country’s shooting ICT stars take a cold hard look at their security strategies.

SOURCE: GLOBAL TECHNOLOGY FORUM