By Andre Griffith
Information technology systems made their mark as vehicles of efficiency. From the early days, the so called “killer applications” that is, those applications that caught on like fire, were those that contributed to vast increases in efficiency. Visi-calc, one of the first spreadsheets, was one such “killer” application making scenario analysis that formerly took days, a task that could be accomplished in hours and computers became highly sought after by bean counters. From automating tedious tasks, software systems began to reap such efficiencies that whole classes of jobs such as clerical work became largely obsolete. Ford reportedly cut its purchasing staff from 250 down to less than 10 with the implementation of a computerized purchasing system. The potential for IT to give us these latter kinds of economies is a double edged sword in our circumstances. On the one hand, we all want to see our public agencies and private enterprises become more efficient. On the other hand people need jobs. As we employ information technology to become efficient, we must at the same time look to ways in which we can absorb those persons displaced by the technology and fortunately the technology itself offers some hope for compensatory measures. Information Technology can also be leveraged for job creation and it is this other side of the coin that we examine today.
Reports of a growing ICT sector in Guyana have always struck me as odd, since as a person in the business so to speak, I have not independently come across that many new ICT companies. Attendance at the seminar on taxation and investment however opened my eyes and helped to resolve my confusion. Perusal of the list of investment in what was called the ICT sector revealed that apart from the telecommunications companies, many of the other investments were in call/contact centers, thus my confusion. Is a call center that performs back office processing for insurance claims in the IT business or in the insurance business? Similarly, in what business would you say is a company that performs medical transcription services? These outsourced service centres are perfect examples of firms that are not in the IT business per se, but whose operations in their current form would be impossible without information and communications technologies. We would say that they are ICT enabled businesses rather than ICT businesses except of course, when the services that they provide are true IT services such as the call centers that provide technical support for firms like Hewlett Packard, Microsoft, Citrix Systems etc.
An interesting point that we can ponder is, are our local insurance companies, health services institutions and professional services firms better placed than anyone else to take advantage of these opportunities?
Semantics aside, then, what are the elements needed to compete in this sector? The first element required is access. By access we mean the communications services that enable contact between the providers and customers. The quality of access must be such that it is operationally feasible to offer the service, and cost of such access must be such that it is financially feasible to offer it after other costs are taken into account. This then is one of the reasons that Government of Guyana is rightly concerned with the price of access offered by our exclusive carrier and is also the reason why as a policy measure, licenses to operate satellite communications equipment are granted to call center operators.
The second factor that is important in our context is labour. Guyana is said to be reasonably cost competitive to serve the North American market for contact center services and two other commonly cited advantages are our physical location (in approximately the same time zones) and our English language capability. We can examine each of these sources of competitive advantage. The first and easiest to deal with is our physical location because there is not much that one can do to add to or take away from this. It just is an unchangeable characteristic of our environment. We just have to take cognizance of the fact that much of the Caribbean shares this characteristic in common with us, and are therefore competitors to our firms in this sector. Additionally, while we often focus on the North American market, there is the example of a multinational which adopts what it calls a “follow the sun” policy with respect to its customer support services. Because its customers are all over the world, many of them may be calling the helpdesk when the home office in the US is not operating. Technical support is therefore spread over contact centers in different countries and the call centers that are operating at any moment in time, are those in the countries experiencing daylight hours. This just goes to illustrate that being located in the same time zone is not necessarily either an advantage or a disadvantage dependent on the situation.
The second oft-cited source of competitive advantage for us in Guyana is our English language capability. I may be excused for taking the line that the less said about this alleged advantage the better and the late Walter Jordan would probably have agreed with me. We should be aware that this capability is eroded daily and we only need listen to radio, look at the television, or even read the newspapers to be convinced of this. As part of a coherent and cross-cutting strategy to develop this sector, the Ministry of Education should be tasked with defending the breach in the area of English Language capability and fighting painstakingly inch by inch toward the high ground. We should note here as well, that what is called for is not mere literacy, but a high degree of facility with the language by way of the spoken word. In direct marketing (one of the prime areas in which contact centers operate) when you have just invaded someone’s privacy to try to sell them something (that they probably don’t need), you had better be fluent! If we wish to become serious players in the sector, we need to ensure that we are developing all the factors that we can in order to facilitate this, and I would urge along with greater concentration of the fundamentals, many more debating competitions, impromptu speaking competitions, spelling bees and similar activities in pursuit of greater facility with the spoken word. Finally, I would note that the same argument about competitors in the Caribbean also applies in this instance as indeed in any English speaking parts of the world. Another interesting development to watch, is that as North America becomes more cosmopolitan, the absolute relevance of English alone goes into decline. The third commonly held advantage is the level of wages and we really need to be careful here. From a traditional economic point of view of cost of inputs, the level of wages may be seen as attractive. We however know that the level of wages in our country more than infrequently has been an occasion for various disturbances ranging from your run of the mill protest, to outright riot and public disorder. This is not to suggest that the wages payable in contact centers would be the cause of such problems, but merely to make the point that low wages are not an end in themselves.
We all aspire to a higher standard of living and the name of the game after all and overall is the rising tide that lifts all ships including the ships of the contact centers. This rising tide must by definition, continually erode the advantage that we enjoy from low wage competition. The economic theory of “factor price equalisation” also predicts that eventually, the prices of factors of production (in this case labour) in two trading countries will tend to approach each other over time. The point is, that in the long term, if we do it right, then our wage levels must eventually increase to the point where we see contact center jobs shifting to other locations that have lower wages. The question is, what do we do then? Some options on this next week.
