Caribbean Region: Review of Economic Growth and ... - USITC

(CDS), was established in 1983 to provide services to American Airlines. 119 Operations wereso successful that CDS began selling its services to other large U.S. companies such asAT&T and Blue Cross/Blue Shield. CDS went on to establish subsidiaries of its own in theDominican Republic and Jamaica, with total employment rising to more than 3,500 by theend of the 1990s. The rise of the Internet, however, intensified competition in these servicesfrom much-lower-wage companies in India, China, and the Philippines. Unable to make thetransition to higher-value-added services, operations eventually closed. 120A very different experience in the call center industry is shown in box 3.4, which discussesthe call center industry in the non-OECS country of Barbados. Barbados has seen an increasein call center employment from 500 in 2003 to 1,500 in 2007, with plans for furtherexpansion. Growth of the industry is attributed to workforce development programssponsored by the government, to foreign investment incentives, and to decliningtelecommunications rates.Initial efforts at call centers in the 1980s and 1990s (exemplified by CDS above) emphasizedtelemarketing and low-end customer service. Because of the low wages and commissionbasedcompensation structure, most workers saw these jobs only as temporary employmentand an opportunity to gain some level of IT experience. High employee turnover was, as aresult, increasing training costs, undermining customer relationships and offsetting anysavings from lower wages in the Caribbean. Relatively high telecommunications rates at thetime also contributed to the failure of this industry. 121 Recent experience in Barbados showsthat addressing training issues, infrastructure, and telecommunication costs can indeed makecall centers viable in the region.Policies identified in the literatureThe World Bank analysis suggests that ICT could be successful in the Caribbean, but thatthe focus should be put on the high end of customer service for larger U.S. companies, andavoiding the lower end of the market, such as telemarketing. 122 Three particular advantagesto shifting the focus are given. First, contracts for higher-end customer service tend to belonger term (two years or more). Longer contracts are common because of the greatercommitment necessary in training to provide these kinds of services. This training andtechnology could generate positive spillovers for the hospitality industry and the broadereconomy. Second, call center employees often become employed by the outsourcingcompany, reducing turnover and improving motivation. Third, the proximity of theCaribbean countries to the United States can act as a comparative advantage as compared tothe Philippines, India, or China, since, according to the World Bank, large companies tendto have more direct contact with their customer service operations offshore and thus visitmore often. 123119 Hamilton, “A Bit Player Buys Into the Computer Age,” 1989.120 World Bank, “Towards a New Agenda for Growth,” 2005, 127, box 7.2.121Ibid., 128.122Ibid., 128–29.123 Ibid., 128.3-28