Costa Rica free zones shed 2,205 jobs as strong colón hits BPO
- Costa Rica’s free zones had 200,203 salaried workers as of July.
- That is 2,205 fewer than a year earlier, a 1.1% drop.
- Currency appreciation raised multinationals’ payroll costs by 35% to 40%.
- BPO firms may consider Guatemala, Mexico, the Philippines and India.
SAN JOSE, COSTA RICA — Companies in Costa Rica’s free zones employed 2,205 fewer salaried workers in July than a year earlier, and business process outsourcing (BPO) firms are the most exposed to further losses. A stronger colón has raised multinationals’ payroll costs by 35% to 40%, putting standardized services work at the greatest risk.
Payroll costs up as much as 40%
Free zone companies registered 200,203 salaried workers as of July, down 1.1% from 202,408 a year earlier, according to Caja Costarricense de Seguro Social (CCSS) data prepared for La Nación.
Daniel Álvarez, executive president for Latin America and the Caribbean at Cushman & Wakefield/AB Advisory, said currency appreciation has made free zone operations significantly more expensive, especially for BPO companies. He put the increase in multinationals’ payroll costs at 35% to 40%.
Álvarez said he sees no recovery from job losses in the services sector and described the outlook for new jobs as challenging and complicated. He expects the trend of companies leaving the country to continue.
Standardized work most exposed
Speaking at a BAC Credomatic workshop on the state of Costa Rica’s free zones, Álvarez said the most standardized free zone activities face the highest risk of job losses. BPO services take a heavy hit because their cost structures make them more sensitive to currency appreciation.
He said BPO companies are considering more competitive markets for their investments, such as Guatemala, Mexico, the Philippines and India. Life sciences, advanced manufacturing and research and development firms face less impact because of their high investment in assets.
Álvarez also cited information he attributed to the World Bank that artificial intelligence (AI) threatens 67% to 70% of BPO jobs. Cushman & Wakefield/AB Advisory is a real estate specialist headquartered in Chicago.
Who feels the squeeze
BPO work in Costa Rica spans human resources, accounting, payroll, financial analysis and billing, as well as contact centers, technical support, sales and collections. Those are the standardized services Álvarez described as most exposed to the stronger colón.
For companies with back office or contact center teams in Costa Rica, the cost squeeze is likely to surface first in contract pricing. Buyers can ask providers how much of the increase they plan to pass through and whether delivery could shift to a second site, and can compare nearshore outsourcing options on the top BPO companies worldwide list.
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