From BPO to KPO: how Saint Lucia can grab new opportunities in the outsourcing space

Over the past few years Saint Lucia has been quietly and successfully positioning itself as a Business Process Outsourcing (BPO) hub, encouraging firms such as OJO Labs, Digicel, Ark Teleservices and KM2 to house operations on the island. These providers employ hundreds of St Lucians and deliver a welcome boost to the domestic economy but as the BPO market grows both regionally and internationally so too does the competition and Saint Lucia must evolve to secure its foothold in the sector, exploring new opportunities in higher value niches.

Long-term growth

The global BPO market is predicted to reach US$343.2bn by 2025, according to analyst firm Grand View Research. This is a sector that is growing fast as companies realise the cost and time savings associated with parcelling out non-core competencies to other jurisdictions. The rise of BPO isn’t just a boon for corporations, it also provides plenty of opportunities for developing countries who can provide a large workforce in a low-tax environment. 

The Caribbean in particular is neatly suited to take advantage of the demand for BPO services, thanks to its ability to supply nearshore services for its largest neighbour, the US. Jamaica is the leader in the region, with over 36,000 employees servicing the BPO sector and sector growth of around 20 per cent each year, according to Caribbean Export. As the market heats up and looks forward to more growth over the long-term, competition is increasing. This year’s Outsource to the Caribbean conference, held in Curacao in May, welcomed delegates from around 23 Caribbean nations – all clamouring for a piece of the BPO pie.

“Jamaica has done really well,” says Kirk Laughlin, Founder and Managing Director of BPO research and analyst group Nearshore Americas. “They have a large population so that alone is a significant factor – companies want to be able to scale up. I think Jamaica will continue to grow [but] there is greater and greater competition and as a result, operators continue to ask where else they can get great talent, great workers and great output with a native English-speaking population Saint Lucia is high on that list.”

And thanks to a proactive approach from government and Invest Saint Lucia, buzz is building about the island. KM2 has expanded its facilities in the north and OJO Labs has significantly invested in its centre in the south. Laughlin says: “Saint Lucia has definitely been a success story. They have had a series of wins which demonstrate that [Invest Saint Lucia’s work] has paid off. There is a lot of potential there from the perspective of an investor.”

With service providers now casting an eye over the entire region, looking for the most advantageous fit for their firms, Laughlin believes that Saint Lucia can further distinguish itself in this crowded market by redefining its BPO proposition and targeting more niche sub-segments such as Knowledge Process Outsourcing (KPO).

What is KPO?

BPO is generally associated with call centres and consumer support i.e. basic activities that require minimal levels of training. But as the sector expands to encompass many different fields, providers are now looking to farm out more specialised activities. 

KPO involves information-related services that require skills and expertise, for example activities in fintech (financial technology), real estate, architecture, web services and the medical sector. Given the value of these tasks, KPO jobs typically come with higher wages and more educational opportunities. Over the long-term, small island nations can leverage KPO and BPO investment to uplift their people, economy and society as a whole.

“It is truly transformative,” says Laughlin. “People get into high-paying jobs and can go up the ladder and get promoted. It is an introduction to a lot of new skills that are useful and transferable in the knowledge economy. These workers are in a good position to go off and become entrepreneurs themselves, filling some gap in the services they’ve seen and the business they have learned. They end up being very productive and that helps the overall image of a country.”

Laughlin highlights fintech as an area to watch, given the high demand for more tech-oriented wealth management services, but warns jurisdictions against becoming too specialised, saying: “You are trying to introduce investment from the whole broad spectrum. It is great to be moving in a knowledge services direction but you have to be careful not to say you are just one thing and turn away other potential investors.”

Attracting investment

One thing all investors prize is certainty, and BPO/KPO firms are no exception. This is where Saint Lucia has excelled, according to Laughlin who says the government has been very adept in giving investors a ‘soft landing’.

“Investors want to go to a destination that is fluent in their industry. A destination that has thought of all the details [and] is clear about the red tape, making sure they can fulfill what they are offering and not abandoning companies after they invest. Saint Lucia has done that. There is a really welcoming attitude towards these industries by the government.”

Despite the country’s readiness, challenges remain. Laughlin, who has spoken extensively with firms in the field, says that while operators are warming up to the Caribbean, concerns remain about the high cost of electricity and the lack of available commercial space. Another off-putting factor for investors is the small size of the islands and their workforce. “At the surface level there are these perceptions [about the Caribbean] but investors have to go look and get the data, visit the places. Some do not do their homework and so they miss out. It boils down to how intrepid the investor is to seek it out.”

While size is an insurmountable obstacle for Saint Lucia, Laughlin remains confident that the island can still build on its momentum so far and play to its strengths, becoming a “smaller scale Jamaica”.

“I am bullish,” he adds. “I have plenty of firsthand insight into this industry and we are in the early innings of a huge global trend moving in the direction of tech-enabled services. This is an emerging market that is very strong. There are going to be lots of opportunities for countries that are paying attention.”