The World is Flat!

“In 2005, Thomas L. Friedman in his New York Times bestseller declared that the world was flat. The Flat world was a metaphor for the astonishing changes and progress that had been generated through the use of Information and Communication Technologies (ICT)……Fast forward to 2017 and we will see that the rate, scope and depth of disruption as a consequence of the unrelenting march of ICT would suggest that Friedman underestimated the transformative power of technology.

.…We are now living in an era where knowledge, product, manufacturing, love, sex and virtually anything can be digitized.” (Golding, 2017 – The

Role of ICT in Jamaica’s Economic Growth Strategy)

Ladies and Gentlemen, Welcome to the ICT/BPO sector.

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The Jamaican Outsourcing

Sector &

The DBJ

Intervention

~Dianna DaCosta~

5 Year National Strategy for the Development of Jamaica’s Outsourcing

Industry

• According to the 5 Year National Strategy

– We need to craft a holistic approach to develop the outsourcing sector based on the following pillars:

Policy

Infrastructure

Training

Marketing

– Expected Outcome: Between 2015 and 2020, increase Jobs in sector from 14,000 to 32,000.

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Contribution to GDP – 2015 year

It is estimated that during the 2015 year, ICT/BPO had the second lowest contribution to

GDP, ahead of Mining & Quarrying. Considering ICT/BPO is still a sector in its early

growth stage, this contribution is commendable.

Pre-2000 there were only 3,000 jobs and six(6) companies in Jamaica, all of which were

located in Montego Bay(1) and the most recent reports from JAMPRO state there are 62

companies and approximately 22,000 jobs.

1.8% 2.3% 2.9%3.9%

6.3% 6.6% 7.0%8.2% 8.5%

9.6%10.8%

16.4%

Mining &

Quarrying

ICT/BPO Electricity &

Water Supply

Hotels &

Restaurants

Agriculture

Forestry &

Fishing

Construction Transport

Storage &

Communication

Manufacture Finance &

Insurance

Services

Real Estate

Renting &

Business

Activities

Producers of

Government

Services

Wholesale &

Retail Trade;

Repairs ,

Machinery &

Equipment

411/24/2017

11/24/2017 5

Job Creation

12,000 12,625 13,250 14,000

18,000

22,000

2011 2012 2013 2014 2015 2016

The ICT/BPO Sector

has produced 10,000

additional jobs over the

last 5 years, with

continued year over year

growth. This was

facilitated by the

establishment of 45

ICT/BPO companies.

The ICT/BPO Sector

has had the most

significant growth in

Jobs, when compared to

the Industries reported

on by STATIN. None of

the Industries shown has

had consistent year over

year job growth over the

last 3 years.

5% 6%

29%

22%

-10%

0%

10%

20%

30%

40%

2013 2014 2015 2016

Manufacturing Construction

Real Estate Renting & Business Activities Private Households with Employed Persons

Financial Intermediation Hotels & Restaurants Services

Other Community Social and Personal Service Activities Public Administration & Defence; Compulsory Social Security

Wholesale & Retail Repair of Motor Vehicle & Equipment Agriculture Hunting Forestry & Fishing

ICT/BPO

26 32 36 41 45Total

ICT/BPOs

11/24/2017 6

Monthly Base Salary Comparison

ICT/BPO salaries were significantly higher than minimum wage.

Additional salary data for comparable jobs in different sectors is required

to improve robustness of analysis.

48,00057,600

91,200

142,500

200,000

24,80035,416

101,918

140,356

Entry Level Call

Centre Agent /

Customer Service

Rep.

Entry Level

Technical

Support Agent

Team Lead/

Supervisor

Business

Unit/Account

Manager

Operations

Manager/Director

Minimum Wage Security Guards Accounting Clerk Administrative

Assistant

Salaries

ICT/BPO Jobs

Transition from BPO to KPO

Business Process Outsourcing

• HR & Payroll

• Insurance Processing

• Health Customer care

• Receivables & Debt Collection

Information Technology Outsourcing

• Network Administration

• Tech Support

• Web Development

• IT Consultancy

• Data Entry Services

Knowledge Process Outsourcing

• Professional Services

• Software Development

• Legal Process Outsourcing

• Financial Analysis

• Business and Market Research

11/24/2017 7Sources: JAMPRO, 2015 and State of Business Operations, 2017

Growth of BPOs in certain areas has been slowing down -Finance and Accounting (-4%) and -Human Resource (-3%)

Growth in Knowledge-based aspects of outsourcing (KPOs) have been growing significantly

• Type of Services Offered by BPOs

in the Sample (2017):

• Consulting

• Contact Centre

• Data Support

• Financial & Accounting

• Health Care Outsourcing

• Legal Processing Outsourcing

• Software Development

• Tech Support

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Linkage Effect – currently

the BPOs are linked with:

Hospitality

Telecommunication

Marketing

Technology

Hardware

Media

Cloud Service Provider

DBJ’S CURRENT PORTFOLIO OF BPO PROJECTS

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DBJ’s ICT Infrastructure Loan Facility

Features:

Objectives:

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14projects island

wide

702,000 sq. ft.

17,000 potential jobs

5,200 actual jobs

So then, have we then fulfilled our objectives?

Development of at least 350,000sq.ft of ICT SpaceAddition of at least 10,000 new ICT jobs in Jamaica

US$5M or 70% of project cost

4.5% interest rate12 years18 month moratorium

DBJ’s contribution to ICT/BPOs

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24% of all ICT/BPO jobs were created by DBJ facilitated projects

DBJ’s AFI window for ICT Infrastructure Loans

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US$18M3 AFI funded loans over 3 years (2015-17)

What is preventing the AFIs from funding more loans?

• Terms of the loan• Lack of Information about

the sector

Descriptive Statistics

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

NCBProfit 6 -0.277 0.437 0.073 0.265

FCIBCProfit 6 -6.408 1.326 -1.296 2.674

DBJDirLoans_BPO 6 -0.714 1.556 0.205 0.755

BPOJobs 6 0.050 0.286 0.134 0.101

R 6 -0.153 0.030 -0.044 0.070

LBPO 6 0 1 0.500 0.548

Valid N (listwise) 6

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CorrelationsNCBProfit (X1) FCIBCProfit (X1a) DBJDirLoans_BPO(X2) BPOJobs(X3) R(X4) L_BPO

NCBProfit (X1) 1

FCIBCProfit (X1a) 0.05 1

DBJDirLoans_BPO(X2) 0.67 0.43 1

BPOJobs(X3) 0.60 -0.52 0.46 1

R(X4) -0.01 -0.09 0.17 0.45 1

L_BPO 0.54 -0.37 0.31 0.88 0.50 1

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Loans to the BPO sector from commercial banks is positively affected by:

-changes in NCB’s profits-DBJ’s direct loans to the BPO sector-changes in the number of jobs in the BPO sector -changes in Commercial credit rates (interest rate)

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R² = 0.9856

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2010 2012 2014 2016 2018 2020 2022

BPOJobs

BPOJobs

Poly. (BPOJobs)

Forecast for BPO jobs to be created in the next 3 years

Concluding Thoughts

The sector’s contribution to our GDP and job creation is increasing and important

AFIs are still reluctant to provide the type of financing required for outsourcing projects

Information about the sector’s performance outside of its job creation impact is limited

The talent required to move the industry from BPO to KPO is limited/untapped

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Concluding Thoughts

With the DBJ’s intervention in 2011, other banks started lending to the sector years later.It is expected that the jobs provided by the BPO sector will exceed 32,000 if current conditions remain or improve in the next three years.

ICT/BPO – Main Contributions:

Increased employment of persons in the 18-37 age group

Increase in entry level salaries - Wage of Production line employees: J$350 – 1,040 per hour

Rural area upliftment - 40%-60% of staff are from rural areas

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THANK YOU11/24/2017 18