Service Sector in Costa Rica

The Central American Group:  Hello, welcome to another episode in the Central American Groups continuing series of podcasts in these recordings. We try to bring together individuals that are external and internal to the organization to have conversations about doing business in Central America. Today, we’re speaking to Pilar Madrigal.  She is with the Costa Rican Investment Promotion Agency. You may know it by the acronym CINDE. She’s going to speak with me today about the service sector in Costa Rica. Hello, Pilar. Could you please introduce yourself and your organization to our listeners?

Pilar Madrigal: Absolutely. Thank you so much for having me here today.  I am happy to share with you as much information as possible and to have a nice conversation. It seemed as you mentioned and thank you. It is, in fact, the Costa Rican Investment Promotion Agency (CINDE). We are a private not for profit organization that was set up about 36 years ago.   Ever since then, we have had the sole focus of promoting foreign direct investment into Costa Rica.

Over the last several decades, we’ve actually been, or I believe we’ve been, a very successful investment promotion agency. We are ranked number one globally. One of the most well-known investment promotion agencies around the world. We’ve proved our success through the attraction of over 300 multinationals that have set up operations in our country, which in turn have provided jobs to thousands and thousands to people throughout Costa Rica. So that’s a little bit about us. I am actually incredibly happy to represent the organization.

The Central American Group: Well, thank you for that overview. We’ll start out with some of the questions we have to move our conversation along today. One thing that has been quite visible is that the services sector in Costa Rica has had a great degree of business continuity during this coronavirus epidemic that’s affecting nations over the world. Statistics that have been released recently indicate that 90 percent of the companies in this sector in Costa Rica are working from home and they’ve been able to continue to provide 100 percent of the services that they offer. Maybe you can tell us how this has been possible?

Pilar Madrigal:  Yes, and thank you. Let me tell you the percentage of companies that have continued to offer their services is more. Ninety-eight percent of the companies in the service sector in Costa Rica is implementing this work from home strategy.

I can also say that we were actually able to implement this for these companies in a period of fewer than two weeks from the first day that we saw the first case in Costa Rica. Some of them within a week. They had all their workforce working from home. This, needless to say, was an extremely focused task that was undertaken in a particularly good way.   It was an effort that involved government organizations, and investment promotion agency, and private companies. It took a high level of organization and coordination to tackle and resolve any issues or problems that would prevent these companies from moving quickly into this modality.  Our experience is that, if we hadn’t had close coordination with the three different actors, this achievement would have not been possible. But it was in Costa Rica. The effort was carried out by a very strong task force and they had a clear objective.  It was to help companies in the service sector in Costa Rica continue running their businesses.

The Central American Group: Well, that’s great to hear.

It’s been a difficult situation for workers all over the world. It’s wonderful that you were able to keep people up and running during this tough time.  Let’s talk a little bit more about information on the service sector in Costa Rica. The country is a leader in value-added service exports in the region. Can you tell us a bit more about that?

Pilar Madrigal:  The annual growth of the service sector in Costa Rica has been nine percent annually since 2015.  This means that, in terms of employment, that back in 2015 we had approximately, I would say, about thirty thousand people working in the services sector, and fifty thousand people were working in the services sector by the end of 2019. This is extremely healthy growth.  And more importantly, the workforce is providing more of a complex value-added type of service. These companies provide services globally to their headquarters, to their clients, in different languages and in, as you know, very sophisticated processes.  We believe that the service sector in Costa Rica is a success story.

The Central American Group:  What type of processes do the service sector companies provide to customers all over the world? How many countries do they export services to?

Well, as I mentioned, they actually export services globally. We have companies that some redundancy. They have centers, let’s say, in Asia or in Europe, but they follow the sun. Right.  These services have to be provided 24 hours a day. They can from Costa Rica, at some point, provide services to Europe, to the Americas, and in some cases, particularly in some of the engineering services, they actually work hand-in-hand with companies in Asia.  It is a global service now. It has transitioned then.

Now, let me go back to 2000. It has transitioned from a simple, I would say, a shared services model in which it was just maybe a financial accounting or human resources department to what we call now a multi-functional center. These multi-functional centers hold up to probably in some of them, up to 10 different processes from H.R. to finance and accounting to data analysis to forecasting, to supply chain management. More and more, these are services that at the end of the day are focusing on the bottom line of their headquarters. Right. They provide a wide breadth of services, which has been amazing because the service sector in Costa Rica is the source of many jobs.

The Central American Group: I understand that the workforce in Costa Rica is able to deliver multilingual services. Can you expand on that?

Pilar Madrigal:  Yes, yes, absolutely. I would like us to be clear that most of these centers are at least bilingual. The main focus is, and most of the services are at least provided in English. That’s pretty much the majority of the workforce. Nevertheless, companies have needed to try to provide services, take care of their customers in other places in the world. Some of them in Brazil, for instance. So, we have that Portuguese ability. Some of these centers have people that speak English, Portuguese, and Spanish.  They provide services in at least three languages. Some of them in French because of the French-Canadian population in North America. We even have companies providing services in Japanese.   I do want to be clear, however, the majority of them are bilingual. Ten percent of the entire workforce of these shared services are trilingual. They speak at least three languages and service different geographies with different languages around the world.

One of the things that is noteworthy about the service sector in Costa Rica is its ability to adapt to change.

The Central American Group: There’s obviously an evolution towards delivering increasingly sophisticated services. Could you tell us a bit about that?

Pilar Madrigal:  Yes and thank you for this question. I actually think this is something that is it’s worth talking about for us and for anybody in this field. To adapt to change you have to have a certain skill set.  You have to engage people into understanding that change can happen and to prepare themselves for that change. In that sense, we have for now over a decade or so focused on thinking about not what the companies in the service sector in Costa Rica are doing today, but what they will be doing in two, three, five, or 10 years. We have to ask ourselves what do we need to do to do that and be able to adapt to this change? Preparing the workforce is what is necessary. So through creating a scenario of collaboration between the private sector, academia, and, clearly, the government, we’ve been able to start developing the skills both technical and soft for people to adapt to the change of the services sector. This is an ongoing task particularly for the services sector in Costa Rica, which changes very rapidly. The basis of adapting to change is to prepare the workforce. We have an entire department that collaborates and engages all the companies and academia.  In that way, we believe that that’s how we’ve been able to adapt and to grow with the changes that have taken place in the sector.  It’s a journey. It’s a partnership journey. I think that we’ve been very focused on making sure that that happens.

The Central American Group: Given the coronavirus challenges that we’re all facing, what are CINDE‘s and Costa Rica’s goals in this environment?

Pilar Madrigal:  That well, and this is not only Costa Rica’s goal. I think that as we have spoken to many of the companies, both the local site managers as well as to their headquarters, Clearly the main focus is keeping all their employees healthy. Right? So, health is the number one concern and enabling the infrastructure, enabling the ability for these people to not have to work in a traditional work environment to keep them healthy. That is the number one priority and it should be for everybody else. I think that this should be something that everybody around the world should be focused on.

Understand that we need to keep them healthy, but also understand that this has been an inflection point for a lot of these companies. Right. It is all of a sudden that they need to think about the future. They need to think about the future in a vastly different way than they were thinking before. And our goal is to understand the companies, understand them under the circumstances of the pandemic, but understand and listen to what they want and how they’re reinventing themselves. So, I believe, is the key. It’s our goal to overcome any challenges, thinking that this might not be the only disruption to their everyday work. Right. There might be others. And this might be a scenario which we learn from and we prepare for anything else that might happen in the future.

The Central American Group:  Thanks a lot for answering the questions that we had prepared for you today. We’ve covered a lot of information in a very short amount of time.

What we find is that after listeners hear these conversations, they often have follow-up questions that they’d like to be able to direct towards the experts with whom we speak.  Let’s see if I got this e-mail address correct? As far as I know, if they want to contact you, believe the individual is a question. Can e-mail a message using the address investincostarica@cinde.org.

Pilar Madrigal.  Yes, absolutely. And please, you know, feel free to look at www.cinde.org.  We have a lot of information there as well. And from every front will be we’ll be happy to answer any questions and engage with you and help your listeners in any way we can.

The Central American Group: Thanks for joining us. Good luck in your efforts and we hope that this pandemic thing is a thing of the past very soon.

Pilar Madrigal:  Yes, Steve, I wish. And I’m hoping for the same thing. So. So thank you for the time. And I look forward to speaking to you in the future.