Foreign Direct Investment In Dominican Republic Contact Center Finance Essay

The Dominican Republic has done a major displacement in its economic system, coming from an agricultural economic system, to one based on services. An estimation of the sectors part to the state are, 60.2 % in services ( touristry, transit, communications, fundss, others ) , 15.5 % in industry ( fabricating ) , 11.5 % in building, 11.3 % in agribusiness, and 1.5 % in excavation ( CIA fact book ) . As of right now merely touristry leads the service industry, but is shortly to be challenged by the investing of contact centres. Because of this displacement in its economic system the Dominican Republic has become place to assorted foreign investings, but the one this survey will concentrate on is on the foreign direct investing in contact centres, or call centres as they are besides known. It is of import to research the advantages the Dominican Republic offers to pull such foreign investing, every bit good as to analyse the fact that although there are benefits, it could besides miss the necessary substructure to prolong this quickly turning industry.

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Due to the on-going universe fiscal crisis, many international companies are fighting to maintain their concern afloat and looking to set up their contact centres outside of their place based states. Salvaging money and cut downing operational cost are some of the chief ground companies move and do foreign direct investing ( FDI ) abroad. Investing and carry oning operations overseas seems to be the reply that foreign contact centres are looking for in order to run into such ends. It can be said that the Dominican Republic offers an reply to the troubles contact centres companies are sing and go on to face back at place. Some of the solutions given to these companies are a great concern clime for foreign direct investing ( FDI ) , inducements and good geographical location, among other compensations. As a consequence of traveling abroad contact centres gain a peculiar advantage over their rivals. These advantages can run from cheaper operational cost, strategic location and skilled forces, to a assortment of options which may or may non be available in the Dominican Republic. But like everything in life non everything is perfect, the state besides needs to face a sad world, which is that although it offers “ good things ” to investors, it besides lacks of other “ good things ” .

This survey will supply the cardinal facets of contact centre FDI in the Dominican Republic in order to show some of the weak and strong points the state has on this industry. By making this the study looks at what the state has to offer to current and future investors in the contact centre industry. It will besides provide-from the investors ‘ point of view-what makes the Dominican Republic an attractive topographic point to put foreign capital in contact centres, every bit good as some of the jobs encountered throughout the concern venture. Although information provided by the governmental establishments in charge of distributing information about this industry say “ the state is capable, suited and ready to run into all the demands of international investors ” , it is a fact that no system is perfect. This is where facts will be laid down in order to demo what genuinely attracts, maintain or loses these investings on the island. Based on those antecedently mentioned facts the survey will look at what betterments can be made by the state in order to maintain a competitory border on the rapid turning industry.

With this information the reader will grok the defects in the system, and what steps are needed in order to rectify them and bring forth a more positive investing clime. Along with this positive investing clime the survey will demo the impact call centre FDI has had in the state. An efficient and effectual investing clime can merely be produced by indicating out the pros and cons of what the Dominican Republic has to offer to its investors. The decision of the survey wishes to convey that these betterments can be achieved by taking action upon the recommendations given. Bing that this survey is based largely on empirical cognition, some of the observations made will be presented based on the industry expertness of the author of over 7 old ages or working experience in this field.

Research inquiries

Is the Dominican Republic a good topographic point for FDI?

Have contact centres FDI created a existent impact in the Dominican Republic?

Research methodological analysis

In order to reply the inquiries mentioned supra, this paper we will utilize a mixture of methodological analysiss in order to analyse if the state is genuinely a good topographic point for contact centre FDI and if the industry has had an impact in the Dominican Republic. These methodological analysiss include interviews, qualitative research and quantitative informations.

Organization of paper

This papers will be composed of four chapters, the first one being its introductory portion. The first chapter will supply a brief debut and background of the Dominican Republic and what sectors comprise the FDI in the state, along with the research inquiries and research methodological analysis. The 2nd chapter will show an overview of foreign direct investing, influxs, tendencies, public presentations and investing clime that pertains the state, every bit good as the publicity bureau in charge of FDI in the state. This information will be in comparing with selected economic systems from the Caribbean, Latin America and others. The 3rd chapter will cover a more in-depth analysis of contact centres in the Dominican Republic, defects and investor position. The survey will besides look at a specific company from which the survey will picture the impact this particular centre has had in the state. The concluding and 4th chapter will supply cardinal findings from the survey and urge hereafter betterments based on those findings.

Overview of FDI in the Dominican Republic

FDI tendencies and public presentation in Dominican Republic

The Dominican Republic, like many other developing states, is actively seeking to pull FDI. They are non merely seeking FDI as an of import factor in making employment chances and extra beginning of income, but instead for the ground of possible spillovers of cognition and engineering. The strong public support for FDI in the Dominican Republic is expressed through the creative activity of the Center for Exports and Investment of the Dominican Republic, establishment in charge of all exports and investing, along with other steps taken by the authorities. Some of these steps include simplification of administrative processs, assistance from the CEI-RD in logistics and information, subsidies, revenue enhancement interruptions, freedoms and other instruments that facilitate FDI. Before turn toing the inquiry of whether FDI in the Dominican Republic has led to development, spillovers of cognition and engineering, every bit good as, if it is a good topographic point for contact centres to set up and put, the survey will supply an overview of FDI influxs and tendencies in the Dominican Republic.

FDI influxs in the Dominican Republic have made a marvelous recovery from 2004 to 2008 harmonizing to the informations by the World Bank ( World Bank, World Development Indicators ) . As any other developing state, the influx of foreign capital was affected by the political environment, which reflected in an mean loss of about 200 million dollars per twelvemonth during the 2000-2004 governmental period. During this period the prostration of a major bank caused fiscal convulsion and many investors were forced to go forth the state. After a alteration of authorities and the macro stableness was placed back in path by the new governments, the state received an mean foreign capital influx of 450 million dollars a twelvemonth, to gain a sum of over two billion dollars in FDI influxs ( See figure below ) . This great recovery happened during the 2004-2008 period, as it was foremost mentioned, and it is still bettering as the state keeps positioning itself as a preferable finish for FDI. Although contact centres are non the chief ground for this fast recovery in the FDI, the new rapid industry of contact centres are playing a really of import function as it continues to germinate into a taking industry in the service field.

In President Fernandez first governmental period ( 2004-2008 ) the state recovered from the worst fiscal crisis in many old ages. During 2005 the state predicted a GDP growing of 9.3 % and rising prices to be brought under control at 7.3 % throughout the 2004-2008 old ages. By pull offing these issues President Fernandez said “ We have rescued the assurance of investors by accomplishing macroeconomic stableness ” ( Leonel Fernandez, 2004 ) . Having achieved macroeconomic stableness, the Dominican Republic received US $ 1 billion worth of foreign direct investing ( FDI ) in 2005, up 40 % from 2004, and U.S. investing accounted for around 40 % of the entire ( CEI-RD, 2006 ) . This led to an betterment of FDI influxs and mechanisms to go on pulling and prolonging this freshly found investings. Below are the net influxs of FDI for assorted Latin American and the Caribbean states, including the Dominican Republic.

Investing clime

When one thinks of the Dominican Republic, images of tropical beaches and across-the-board resorts may come to mind, but this 10 million-strong state, busying two tierces of the Caribbean island of Hispaniola, besides has one of the Americas ‘ fastest turning economic systems and diverse scenery in the Caribbean ( BusinessWeek, 2006 ) . The briefing paper “ Foreign Investment in Latin America and the Caribbean ” , 2008 is one of the latest editions of a series issued yearly by the Unit of Investment and Corporate Schemes of the Economic Commission for Latin America and the Caribbean ( ECLAC ) Division of Production, Productivity and Management. This study presents-in a really detail manner-the foreign investing done in Latin American and Caribbean states, demoing their comparative differences and investing clime among other indexs. This study besides touches on the contact centre industry, which has contributed greatly to the of all time increasing FDI influx of the Dominican Republic. Comparing to other states the Dominican Republic shows one of the best FDI influxs by reflecting a comparative difference of 83 % . What this means is that FDI activities has been invariably turning in the state, therefore reflecting good enterprises from the state and a positive improving investing clime ( see image below ) .

A good investing clime is non created by simple selling ; it takes difficult work, good economic policies and excellent administration on behalf of the authorities and its Head of State. Because many states offer desirable investing conditions companies often ask themselves, where they should put their capital. The reply needs to be provided by the state that wishes to be the host of the foreign investings these companies wish to do. The Dominican Republic has features that make it a desirable topographic point to do an investing of any sort, but the inquiry that still lingers around is if the state can truly prolong an investing of great magnitude. Offering the right investing clime in the Caribbean is something that the state wishes to accomplish, but is non ever successful on making so. With a long history of pulling considerable FDI in a assortment of sectors, the Dominican Republic is a regional leader in pulling contact centre foreign investing. Longstanding political stableness and a diversifying economic system have led many foreign houses to take the Dominican Republic as an investing finish. Recent success in pulling FDI is due to the state ‘s investor-friendly legal government, generous inducements, and substructure capable of back uping new engineerings, including information engineering ( FDI Magazine. Financial Times Magazine. August 2005 ) . As mentioned earlier, this success is reasonably new and the Dominican Republic still faces the challenge of keeping and pulling this foreign investings.

A great manner to see how good positioned is the state and the investing clime it offers is to make a comparing of economic systems. “ Making Business 2010: Reforming Through Difficult Times ” is the 7th in a series of one-year studies look intoing ordinances that enhance concern activity and those that constrain it. The study presents quantitative indexs on concern ordinances and the protection of belongings rights that can be compared across 183 economic systems, from Afghanistan to Zimbabwe, over clip ( Making concern, 2010 ) . Looking at this specialize study the Dominican Republic reflects its ranking in easiness of making concern and other of import universe ranking standards ‘s that foreign investors consider necessary to cognize before puting in any. Although this study is utilizing specific economic systems, the information compares the Dominican Republic to the economic systems of states around its part, every bit good as others from a distant hemisphere and much more developed than the island.

One basic standard for investing is the easiness of making concern, the chart below reflects a clear failing for the Dominican Republic in this country by ranking lower than a Puerto Rico and Jamaica. Puerto Rico and Jamaica are much smaller states, which may lend to more nimble procedures, but the fact that they are neighbouring states there should be a bigger likeness among them in footings of how concern is handle. This is a clear mark that depending on how a state handles its concern will reflect how efficient their mechanisms are, hence supplying a bigger easiness of making concern. Another factor that should non be of much importance is the fact that Jamaica and Puerto Rico receive aid, counsel and at times are regulated by developed states. This should non be an alibi for why the Dominican Republic is falling behind in such a basic and of import rule.

( Making concern, 2010 ) .

The chart below, which has besides been extracted from the “ Doing Business 2010: Reforming Through Difficult Times ” Report, touches on another really of import factor for investors when they consider doing an investing abroad. The superior given in this chart is compared to the selected economic systems of Haiti, Puerto Rico, Singapore, Rwanda and others. This comparing is done one time once more in order to demo how the Dominican Republic presents itself as a favourable investing location. Yet once more this favourable clime for investors is non supplying the best clime because is falling behind to neighbouring economic systems which merely advantage seems to be a more organize and efficient system. The Dominican Republic continues to better, but is weak in its bureaucratic procedure, which as a consequence continues to decelerate down its advancement.

Dominican Republic ‘s ranking in making concern

( Making concern, 2010 )

Once an investing is done, one of the biggest-if non the chief concern of any investor-is how secure is their investing in a foreign state, intending how are they protected from any unwanted state of affairs. The Dominican Republic has late passed a new statute law which provides a greater protection to its investors, therefore supplying investors with a eventuality program if anything happens. The graph below shows the planetary ranking of the Dominican Republic in footings or protecting its investors, which is a great betterment from other countries already mentioned. Although this is a really of import concern for investors, it still addresses a post-investment state of affairs. What this mean is that it does non truly supply an immediate impact in pulling a foreign investing if the other factors are encouraging, but it does hike investors assurance in the state they plan to put every bit good as adding to a better investing clime.

( Making concern, 2010 )

In an interview to CEI-RD Minister Eddy Martinez in the celebrated Dominican daily show “ Hoy Mismo ” , transmitted by channel 9, he talks about the investing clime in the Dominican Republic and references cardinal factors that make the state a great topographic point to invest-compared to other states in the part. He talks about set uping incentive mechanisms in order to pull those capitals which appraise the value of the investing non merely for the sum, but for the impact these investings will hold in footings of engineering transportation, creative activity of employment, type of employment, quality of merchandises produced in the state and if they will transport out Research & A ; Development activities. Although this mechanism is something the state whishes to implement, it is still non to the full incorporated, therefore go forthing room for mistake. The establishment is still seeking to educate and incorporate the contact centre community so they can portion these inducements and ends with other investors who want to make hereafter concern based on the state inducement construction.

To circulate this information the CEI-RD has done seminars refering these inducements, and is traveling frontward to the execution of those incentive policies. During the interview CEI-RD Minister mentioned that many investings come through different ministries, hence many investors are non certain who and how their investing are handle. This reflects a clear disorganisation in the governmental mechanisms, which translates into a failing. Minister Martinez suggests the authorities creates an “ incorporate mechanism of investing ” . What this means is that no affair the beginning of the investing or ministry, it will stop up in a individual topographic point. This will let proper follow up of the investing, and in instance a undertaking gets stuck, the establishment can find where being detained due to bureaucratism or deficiency of undertaking managing. Based on that integrated mechanism the state can increase its FDI influxs by holding all undertakings in a individual topographic point, therefore supplying one more ground to put in the Dominican Republic.

Promotion bureau ( CEI-RD ) and inducements offered

The Dominican Republic ‘s authorities has implemented a broad model for pulling FDI. It makes no differentiation between foreign and local companies in footings of ownership limitations and ability to measure up for investing inducements. Foreign investing is permitted in all sectors except those related to public wellness and the environment ( such as storage and disposal of risky or radioactive waste ) , every bit good as national security. The Dominican Republic authorities besides offers full freedom from all revenue enhancements, responsibilities, charges, and fees that affect production and export activities in free trade zones, which it introduced in 1969. The free trade zones aim to pull hi-tech fabrication ( including electronics and electrical constituents ) every bit good as more traditional manufacturing-such as of automotive parts, medical devices and pharmaceuticals, plastics, metals, injection casting, fabrics and footwear, jewellery, baccy and of class contact centres. The inducements offered last up to 25 old ages for zones on the Haitian boundary line, and up to 15 old ages for all other zones. In May 2006 there were 59 industrial Parkss and free trade zones in the Dominican Republic, hosting more than 600 companies, supplying over 190,000 direct occupations, and busying 2.1 million square metres. Although there are no public presentation demands for foreign investors, few sector-specific inducements are offered to them. ( World Bank Group, MIGA, Snapshot of the Caribbean, 2007 )

All of the benefits mentioned above and the go oning influx of investing is go oning thanks to attempts from the authorities and the establishment in charge of transporting out FDI publicity. The establishment transporting out this really of import undertaking is the Dominican Republic ‘s Export and Investment Center ( CEI-RD ) , which is headed by Eddy Martinez, as the Minister and Executive Director of this authorities establishment that promotes national strategic export and foreign investing chances and works hands-on with local and foreign endeavor to ease concern activity. Because the establishment knows the importance of investing they are sharply aiming investors through offices in New York, Miami and California, and because of the state ‘s entry into the Cardinal American Free Trade Agreement, or CAFTA-DR. The Centro de Exportacion e Inversion de la Republica Dominicana ( CEI-RD ) as it is called in Spanish, is the state ‘s one-stop investing publicity intermediary. It has three chief sections: Export Promotion, Investment Promotion, and a Training Center. The CEI-RD purposes to strategically advance the valuable conditions that the Dominican Republic offers as an investing finish and foreign trade developer, by prosecuting precedence countries as defined by the Government, to increase employment, technological transportation and the societal public assistance of the Nation. The bureau organizes and participates in trade missions both overseas and locally every bit good as provides tools to help investors, such as an export directory. ( World Bank Group, MIGA, Snapshot of the Caribbean )

The CEI-RD is the official organisation responsible for the publicity of international trade and Foreign Direct Investment ( FDI ) . It was created as a merchandise of the merger of the Center for the Promotion of Exports of the Dominican Republic ( CEDOPEX ) and the Office for the Promotion of Investments of the Dominican Republic ( OPI-RD ) , harmonizing to Law 98-03, effectual on June 17, 2003. The CEI-RD is comprised of two chief operational countries, export publicity and foreign investing publicity and its maps include many publicities, but some of the more relevant to this survey are publicity of the state ‘s advantages to pull foreign investing, coordination with other authorities establishment related to foreign trade in the involvement of accomplishing an expedient and efficient flow of exports and investings in the state, publicity and development of FDI and concern from the CEI-RD offices abroad, presently in Miami, New York and Chicago, take parting actively in trade dialogues and disposal of ensuing understandings, contribute to the betterment of the legal model and its proper application. Besides throughout the Foreign Service web, new offices will be opening shortly in Puerto Rico and Silicon Valley

The establishment services are available for local and foreign companies to ease the exports and investings of the state which is an advantage to any investor. Among the services the CEI-RD offers, and which are relevant to this survey, they have specialized consulting, proficient aid in run intoing the ordinances and norms required for the export of goods and services, which is helpful to new investor who are non familiar with the legal model. They besides have proof of certifications of beginning, proficient aid associating to merchandise understandings, recommendations for bettering the production procedure and benefiting from duty penchants. The new investor can besides profit from visits on behalf of the CEI-RD specialised staff to their companies in order to measure the production procedure under trade understandings and discriminatory plans. One really of import service the CEI-RD offers is that they guarantee the right application of norms associating to export and investing processs by administering Law 84-99 on the reactivation and publicity of exports and Law 16-95 on foreign investing. Other services, although non specific to the industry, offered by the CEI-RD and from which investors could profit are merchandise profiles and market analysis, concern intelligence, legal and economic information, enrollment of exports and foreign direct investing, facilitation of a web of representatives abroad and foreign trade certification centre.

As any other publicity bureau the CEI-RD has several publicity plans that make the Dominican Republic attractive for FDI. These plans include National and International Trade shows and exhibition where it presents companies, local and foreign, can showcase their merchandises. The CEI-RD besides coordinates trade missions in order to guarantee a successful dealing every bit good as preparation plans associating to international trade. In these specific programs-relating to international trade-local companies can acquire educated and larn how to export their merchandises and foreign investors can larn about the local market and chances. Another really of import publicity program-and the one of the most significant-is the coordination of concern meetings to show what the state ‘s has to offer, every bit good as to reach possible investors and exporters. With this bipartisan plan, foreign and local investors will hold a common addition by doing the necessary contacts to acquire their concern started, therefore bring forthing future FDI. ( CEI-RD, 2010 )

Contact centre FDI in Dominican Republic

Overview of contact centre FDI

As it was antecedently mentioned, this survey looks at the pros and cons of contact centre FDI from assorted angles, one been from the host state point of position and the other the investor ‘s point of position. From the host state the survey takes into consideration a study created by the economic expert Jonathan Aragonez, from the Center of Export and Investment of the Dominican Republic ( CEI-RD ) , every bit good as other certification of contact centres from the CEI-RD. These paperss will supply the necessary informations to indicate out the state ‘s benefit and disadvantages. Do to the deficiency of published documents that genuinely knock or analyse the contact centre industry, this survey will back up many of its facts on three things. These three key parts are empirical cognition of the author, interview conducted to the economic expert antecedently mentioned, and interview with a contact centre proprietor who is making FDI in the Dominican Republic.

The Dominican Republic has had strong export services for many old ages, and as a consequence there are 40 to 50 call centres registered with the Dominican Call Center Association. Investors presently runing in the state cited skilled workers, most of whom are bilingual, as their chief ground for taking it as their investing location ( Dominican Republic Contact Center Association, 2010 ) . The state has a big, well-trained labour force and although Spanish is the state ‘s official linguistic communication, investors can happen workers that besides speak English.

“ Apart from the stable, fast turning economic system, attractive cost construction and “ near shore ” location, it can be said that people are the primary competitory advantage in the Dominican Republic. Investors in the Dominican Republic ever emphasize the Dominicans high larning ability and proficiency in English ” . ( Eddy Martinez, 2006 ) .

The state ‘s big size means that land is available for green field investment-if one was to be done-although most investors opt to lease or rent a work infinite for their operations. The state besides offers great entree to all markets being that is one of the six states in the universe that has a free trade understanding with the U.S. and Europe. Some of the other states that have such a privilege are Israel, Jordan, Chile and Mexico ( Office of the United States Trade Representative, 2010 ) . Other favourable investing factors included the state ‘s well-developed, low-cost telecommunications substructure which is the lone 1 in the Caribbean with entree four international overseas telegrams through the Americas Region Caribbean Optical-Ring System Cable ( ARCOS-1 ) . What this means is that the Dominican Republic connexion to the U.S. or any other state is excess, therefore guaranting contact centre concerns to ever be connected.

Contact centres in the Dominican Republic generate 25,000 direct occupations, from the 57 companies registered and runing in the state. In the following two old ages those centres are expected to make 30,000 extra occupations, which when added to the indirect 1s are more than 150,000 in. This information comes from the CEI-RD, which besides says about all of the informations and information engineering centres have been installed in the state in the past three old ages, intending this great advancement has been done in record clip. This twelvemonth alone-and non including centres outside of free trade zones-Contact Centers constituted 15 % of sanctioned companies in the free trade zones of the Dominican Republic, being matched merely by fabric companies ( Approved companies by the Free Trade Zone and Export Committee, 2010 ) . In old studies the commission besides shows how these companies add to the state ‘s GDP twelvemonth after twelvemonth, reflecting in a steady and unafraid growing of this industry.

Companies approved in 2010

Free Trade Zone and Export Committee, 2010 )

The contact centre industry in the Dominican Republic is one that has maintained a steady and important growing. By making so it has provided a great trade of occupations in the Dominican labour market, mentioning that for the twelvemonth 2009 the industry counted with 22,000 occupations. Taking into consideration that the growing of this industry will be of approximately 27 % and 36 % one-year growing during the following five old ages, it means that by 2014 the figure of occupations can turn to an amazing 150,000 occupations if the mean one-year growing rate is of merely 27 % . If the industry grows at an norm of 37 % yearly, we are speaking about holding 250,000 occupations, which is about dual of the old projection. ( Jonathan Aragonez, 2010 )

Strengths, failings and investors perspective of contact centres FDI

Deciding whether to put or non in a state is a determination which is influenced by what the state has offered and showed you, and what other investors say their experience has been. Investors will most likely take other investors input as the world of how concern works in a state. With that being said, one of the biggest disadvantages mentioned by investors is that the Dominican Republic does n’t number with a big adequate English talking community to keep turning operations. This statement comes from the interview with Mr. Blake Janover, contact centre proprietor who has experienced the deficiency of English talking representatives. He mentions that the Dominican Republic is a great topographic point to put, but non the best in the universe due to some more of import defects than non adequate English forces. The chief failings mentioned by this contact centre proprietor are banking, finance, and overall substructure, which is why he runs everything through an external company abroad alternatively of lawfully representing a Dominican company. He besides says that it takes clip to acquire things turn overing in the state, but he likes the Dominican Republic because “ it offers a immense revenue enhancement benefit, as the US offers about none ” ( Blake Janover, 2010 ) . Further inside informations given by Mr. Janover can be seen in the Appendix.

As for the interview with Mr. Jonathan Aragonez, an economic expert for the Center of Export and Investment of the Dominican Republic, he explains that the Dominican Republic offers contact centre investors a great trade of benefits. In his interview he mentions some of the exclusivity of Dominican Republic, its pact and skilled labour force. The most important reading I could garner organize the interview was that an investor is normally winning when puting in a contact centre.

“ This is an industry that is expected to turn at a steady 27 to 36 per centum in norm in the following 5 old ages, so the investor is bound to do a great net income in the concern ” . ( Jonathan Aragonez, 2010 )

Both the investor and the host state hold in one thing, the Dominican Republic offers advantages that many other states do n’t hold, and that is why the state is going a leader in the industry. These advantages are non merely extended to the state and the investor, but are besides movable to the work force. The mean starting wages in the contact centres are between RD $ 18,000 to RD $ 22,000 pesos. This sum is three times more than the mean wage of RD $ 6,000 pesos-established by law-for people working office occupations such as jurisprudence clerk, helper or fiscal analyst ( Ministry of Labor of the Dominican Republic, 2007 ) . The contact centre wages are merely matched by those of Doctors or Engineers in production workss, which is really demanding professional field in comparing with being a contact centre agent. Although this is good for an person whose merely accomplishment may be to talk English, it affects other labour markets due to the fact that the wage is so much more attractive than about any other field. This disparity causes a deficit of much needed attorneies, comptrollers and other professionals in the state. Although the industry strong growing in the state progressively requires more staff, there is still the issue of neglecting to procure a supply of skilled work force, which causes higher costs and affects fight by holding such abrasion.

Impact analysis of Nearshore Call Center Services FDI

In order to demo the impact of contact centres FDI in the Dominican Republic this survey will look at “ Nearshore Call Center Services ” . Based on this company we will be able to measure the impact of FDI by carry oning a instance survey. The survey will exemplify the impact this endeavor has had in the state such as spillover effects, engineering transportation and capacitating human resource.

Nearshore Call Center Services ( NCCS ) is a contact centre established in 2006, which started with less than 100 seats as a music director of FDI. The ground is referred as a music director of FDI is because the company handles foreign histories although it is constituted by local capital. Today NCCS has become a prima contact centre in the Dominican Republic, touting over 1800 seats across three locations and offering direct and indirect employment to many Dominicans. Because of its attending to detail, executing and direction that rivals any call centre in the USA, NCCS is having uninterrupted investing from its foreign patronage. Nearshore has achieved its outlook thanks to the development of an experient international direction squad that boasts persons from the USA, Britain, Canada, Italy, France and the Dominican Republic, doing it a transverse cultural company that non merely receives foreign currency, but it besides brings a new civilization. As a consequence of holding such a diverse work force it has given employees new organisational civilization and transportation of cognition in footings of direction.

Besides the transportation of cognition there was besides technological transportation. Due to the type of clients NCCS was managing state-of-the-art installations are built to the highest criterions, following Cisco endeavor solutions and N+1 redundancy across all possible points of failure. Bing that clients do n’t desire to hold their information via media they have besides brought their ain experts to supply specific security audience and gained their experience. These clients have besides brought into the company/country its package which manages clients ‘ demands, giving the Dominican work force new cognition on Customer Relationship Management ( CRM ) tools. Another great benefit Nearshore has received indirectly is the duty to follow with international criterions such as PCI and HIPPA enfranchisement, which clearly exemplifies security of informations. With these international certifications-which are required by international clients-Nearshore exposes its Dominican employees to international criterions, therefore supplying them with more transportation of cognition.

NCCS has besides provided an chance non merely for pupils to pay for their surveies but besides for grownups to back up their households. Most of the agents in contact centres are grownups with households who consider this their lasting occupation. Is non the same for pupils who see their occupation as a mean for acquiring an instruction and fostering their calling in some cases-as it should be. Not many other occupations in the Dominican Republic wage RD $ 18,000 to RD $ 22,000 pesos to person who has no High School sheepskin or College Degree and whose lone making is that they speak English. There is non much chance for growing and development in contact centres, and many immature people merely take the occupation to be able to pay for their instruction, but that in itself means that call centres have an impact in the states youth. However, there are many cases where agents have become supervisors or QA analysts and have even become directors or opened their ain call centre.

NCCS is an entity based on foreign capital that non merely provides direct occupations to the people mentioned above, but it besides provides indirect employment to over 80 other persons. For the indirect occupations, NCCS installations outsource their security, care and legal staff along with other minor catching services. Security entirely provides over 50 occupations, care provides 25 occupations and a legal staff is composed of 4 attorneies. All of this can be said to be an indirect consequence of FDI in the state thanks to NCCS.

Decision and recommendations

Key findings

With the uninterrupted betterments being done by the Dominican authorities, it can be said that the state is going a great topographic point to make FDI. A really of import affair among the legion others mentioned is security, which is something every investor will inquire for. The Dominican Republic needs to keep macroeconomic stableness and security, which is duty of all establishments of the province. At this minute there is deficiency of coordination within governmental entities and there needs to be support from all of them. Another support that needs to be given is within society itself. Recent surveies measure the impact a state ‘s general civilization has when pulling foreign investing. These surveies have found out that there is correlativity between greater cultural background in the state including museums, universities, historical centres and amusement, and the sum of investing a state receives. Aside from these inducements, all the substructure and human resources-which is the most of import asset-the state counts with, are of import factors when it comes to pulling foreign investing in the contact centre industry. In respects to those facets Dominican Republic is making really good in the part and still bettering, but it can non be satisfied with mensurating itself within the part. The Dominican Republic is greatly placed in comparing with Haiti or Cuba, but that ‘s non the measuring they should be looking for, which is why in a recent survey done by South Korea, the state is mensurating itself against Ireland, Singapore, Mauritius and South Korea. The state needs to go on garnering the standard ‘s of great companies like those on the Fortune 500 list or great European and Asiatic states who are now looking at other states within the Latin America part other than Mexico and Brazil. Becoming a leader in the universe of contact centres is something that many states are seeking to accomplish and the Dominican Republic is one that is making such a thing. Although it still lacks in certain countries, it offers greater advantages to investors over other states in the part and the local work force.

As for the impact contact centres have had in the state, is clear it has helped more than any other industry by supplying occupations to a great sum of persons. Most of the clip these contact centre workers have no accomplishments, and are professionals with no experience or late graduated with no concern contacts in their field. Those persons will most likely start out doing RD 8,000 a month on other occupations, if they are lucky plenty to acquire a occupation on their field or something related to it. Contact centres hire comptrollers, physicians, attorneies, and other professionals who can non happen a better paying business in their field, therefore holding to take a occupation in a contact centre. In the instance of tenured professionals is to do ends meet until they find something better. Around 90 % of contact centre workers at the agent/operator degree have no marketable accomplishments or occupation experience, aside from being bilingual ( Dominican Today, 2008 ) . With that being said is clear that contact centres are a beginning of income to those who are in demand.

Recommendations for future betterment

The state needs to recognize the possible it has on this industry and get down taking actions and making steps that will let it to go a leader for FDI in the contact centre industry. Although the industry is using professional from different countries, it should besides get down believing about engaging professionals in the field of “ call centres ” . Having professionals from different Fieldss does non supply security to this industry. A physician, comptroller, attorney or any other profession will ever look for something in their field of survey, hence doing a high turnover and abrasion rate in the centres. The province needs to set in topographic point preparation installations that create supply trained professionals in the country. There should besides assist facilitate trained personal to assist capacitate the workers already in topographic point since there are many whose lone ability is to talk English. At a bigger graduated table the authorities needs to implement the incorporate mechanism of investing. By seting this system into topographic point investing will happen its manner to the right topographic point and individual to help in this affair.

A topic that was non straight addressed in the survey and which is really of import is to account for all contact centres in the Dominican Republic. Although the CEI-RD and the Call Center Association histories for officially registered contact centres, there are 100s of informal centres in the Dominican Republic. Accounting and registering the existent figure of centres will supply more accurate figures, possible pudding stones and creative activity of incorporate schemes in the state. Another suggestion for the development of this sector is to supply smaller centres with better inducements in order to turn. Small call centre operations do non number with the necessary capital to supply or keep major operations. With an active development program which includes low involvement rate loans, preparation, aid and workshops these centres could easy pull a great sum of foreign investing, hence doing a greater impact in the state. With these tools-which are available to bigger enterprises-many of these minor companies wo n’t be left out and can go portion of these industry. Last but non least is the importance of circulating all the benefits this industry receives and offers so that more people can be motivated to fall in into these ventures. If these recommendations are to be taken into consideration the state can easy place itself as the hereafter investing finish for FDI in the lifting sector of contact centres.

Bibliography

Call Centers, FDI Global Market Intelligence and Foresight, CEI-RD Jonathan Aragonez, Economist for the Investment Foresight Center, 2010

Center for Export and Investment of the Dominican Republic – CEI-RD – www.cei-rd.gov.do

Central Bank of the Dominican Republic – www.bancentral.gov.do

CIA fact book – hypertext transfer protocol: //www.cia.gov/library/publications/the-world-factbook/

Making Business 2010: Reforming Through Difficult Times, The International Bank for Reconstruction and Development / The World Bank

Dominican Republic Contact Center Association – hypertext transfer protocol: //w2.acc-rd.org/index.php? lang=en

Foreign Direct Investment in Latin America and the Caribbean, 2008

FDI Magazine. “ A Caribbean Gem. ” Financial Times Magazine. August 2005

Interview to Minister Eddy Martinez, Director of the CEI-RD in the day-to-day show “ Hoy Mismo ” , transmitted in channel 9. ( hypertext transfer protocol: //www.youtube.com/watch? v=ip82PT_Qj0M & A ; feature=related )

Ministry of Labor of the Dominican Republic – Document about minimal rewards in the state assigned by the National Wage Committee, 2007. www.ste.gov.do

Nearshore Call Center Services – www.nearshore.cc

Newspaper Dominican Today, Economy session, May 2008 www.dominicantoday.com/dr/economy/2008/5/13/27963/Dominican-Republics-57-Call-Centers-account-for-25000-jobs

Office of the United States Trade Representative www.ustr.gov/trade-agreements/free-trade-agreements

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