Executive Search in Costa Rica – 2021 Outlook
Costa Rica Builds Strong Internet-based Future
Although Costa Rica had been seeing stable growth for the past few years, the country’s GDP contracted by an estimated -5.5% in 2020, due to the COVID-19 outbreak. According to the IMF, however, growth is expected to pick up to 2.3% in 2021 and 3.4% in 2022, subject to the post-pandemic global economic recovery.
Thanks to the establishment of a welfare state 60 years ago, the country has managed to greatly reduce poverty and has some of the best social indicators in its region. Although the poverty rate is low, it increased in 2020 due to the COVID-19 pandemic, reaching the highest level in 30 years – 26.2%.
The pandemic also had a negative impact on the unemployment rate, which increase from 12.4% in 2019 to 22% in 2020. However, the IMF expects this rate to decrease to 18.5% in 2021 and 15.5% in 2022. Unemployment is the government’s main economic concern, and even though rates are not particularly high, 46.3% of those who are employed work informally.
According to the National Institute of Statistics and Census (INEC), 24.6% of women are considered unemployed, compared to 15.2% for men. Likewise, women are more likely to be underemployed — working fewer than 40 hours a week and wishing to work more — at 21.6% of the workforce, compared to 17.5% for men. And women have a lower rate of labor force participation (50%) compared to men (72%).
Costa Rica’s high jobless figures are largely a product of the pandemic, which provoked a record unemployment rate of 24% in mid-2020. At that point, unemployment among women was even more elevated, at 30.4%. These data are not unique to Costa Rica. According to the International Labor Organization (ILO), women across the region have been more impacted by the pandemic than men.
Connectivity ensures a successful Costa Rica outsourcing
Costa Rica is one of the countries with the biggest number of connected homes, with a 36% increase between 2010 and 2015, the greatest growth experienced by a Latin America in that timeframe, according to the Economic Commission for Latin America and the Caribbean (CEPAL).
In addition, out of 61 countries analyzed by the Alliance for Affordable Internet in their most recent report, Costa Rica is the 4th country with the most affordable internet. According to the National Telecommunications Fund (FONATEL) in 2018, 89% of the districts in the country had internet access.
Currently, almost 350,000 Costa Rican homes have fiber to the home connections and an additional 100,000 more will be added soon. Costa Rica has also started looking into 5g networks and began a few trial stages, according to the Costa Rican Electricity Institute (ICE).
English is an essential part of outsourcing. Costa Rica has what it takes in this department. According to the EF English Proficiency Index, Costa Rica is #2 in Latin America in terms of English proficiency and #30 worldwide. It scored higher than countries such as France, Spain, Italy, Russia, and Mexico.
Costa Rica IT Industry in 2021
San José, the capital, is at the center of software outsourcing in Costa Rica and of the IT industry in general. In fact, the Inter-American Development Bank expects San José to become one of the five most important poles for software industries and ITC development by 2025.
Currently, more than 20 Fortune 100 companies and over 250 multinationals have chosen Costa Rica as an outsourcing destination, including Microsoft, Intel, Hewlett Packard, IBM, NBC, Google, Amazon, and Sykes.
To continue growing in IT leadership, Costa Rica has established a series of programs aimed at encouraging women in STEM fields, and the San José Tech Pole Project aimed at renovating old buildings and turning them into tech poles.
Also, there are several free zones and technical parks to help expand the IT industry and IT outsourcing in Costa Rica, such as America Free Zone, Ultrapark, Escazú Village, Free Hold Free Zone, AAA Top Talent Free Trade Zone, La Ceiba Business Park, and San Antonio Business Park. In addition, the government is currently looking to create a Tech City where more tech and outsourcing companies can be housed.
Why nearshoring in Costa Rica?
Aside from all the different sections mentioned above, a big opportunity for Costa Rica lies in the nearshore outsourcing industry, where Costa Rica offers several additional benefits for U.S. companies, including:
- Cultural compatibility: with excellent global workplace skills, Costa Ricans are perfectly capable of living up to the expectations of U.S. workplace demands.
- Cost benefits: Costa Rican professionals provide great service at an affordable price. Rates are extremely cost-effective and depending on the level of expertise, rates per hour range between $25 and $50 per hour.
- Convenient time zone: U.S. companies can have up to 4-hour overlaps with Costa Rica. Plus, the country is a short flight away and it can be reached from virtually any major U.S. city.
- Stable business environment: one of the few countries in the world with no army, Costa Rica is a beacon of peace and is one of the most politically and economically stable countries in the region.
- Tax incentive package: Costa Rica offers an attractive tax relief package for foreign companies.
- Prosperous entrepreneurial country: According to the Global Institute of Entrepreneurship and Developments, the country provides the best conditions to start a business from scratch in Central America.
As with most developing countries, Costa Rica still has a long road ahead, but it offers some of the best conditions in the region to any company looking to expand and grow internationally.
For information on executive search services, visit Cornerstone Costa Rica