Riding the Wave of Offshore Software Development
Avantica Technologies is riding the wave of interest in offshore
software development that has boosted the economies of India, Ireland
and some parts of Eastern Europe. "While not as far along as
those countries, Costa Rica's software development culture is beginning
to mature, supported by a program to promote the country as an emerging
software development zone," Mario said.
That support is funneled through the Costa Rican Investment Board
or CINDE (www.cinde.org), a
20 year old, private, non-profit and non political organization,
which was declared by the Government as the official Investment
Promotion Agency in the country. CINDE provides a single point of
contact for companies setting up operations in Costa Rica, providing
all the assistance needed to successfully establish a direct investment
into the country.
Jorge Morales, investment promotion director for CINDE's office
in San Jose, Calif.,
emphasizes that there are several advantages that Costa Rica provides
companies seeking to establish business operations there. First
and foremost, Morales points out, is a skilled and well-educated
labor force -a direct result of the government's emphasis on education.
In 1870, Costa Rica was the first country in Latin America to make
education compulsory. In 1948, the Army was abolished and more effort
was put into education. Today, the oldest and most stable democracy
in Latin America invests 6.5 percent of its GDP to an educational
system, which includes over 50 universities. English is taught in
the schools as the main second language.
As an incentive to investment, the Costa Rican government provides
foreign companies with several tax incentives. For service companies,
which includes software development, customer care call centers
and back office/shared service centers, the incentives include a
100 percent income tax exemption for the first eight years doing
business in the country, plus an additional four years at a 50 percent
rate. The country is friendly in terms of labor regulations and
there are no restrictions on foreign corporations owning property.
The fact that Costa Rica is only three hours from Miami and in
the US central time zone facilitates communications with the US
corporate headquarters, another plus, Morales added.
As a result of these advantages, not only emerging companies like
Avantica, but also many leading US companies have established some
of their operations in Costa Rica. Most notably, Intel built a $420
million semiconductor assembling and testing facility in San Jose.
Operations involve packaging microchips and testing them under various
conditions. Intel also established its Latin American Engineering
Services Headquarters (LAES) in Costa Rica, where Costa Rican engineers
are also fully involved in the design of the latest products, processes
and software.
Other industry heavyweights with operations in Costa Rica include
Procter & Gamble who maintains a global business services facility
in San Jose from which it provides a range of services - from finances,
accounting, logistics and customer service - to all P&G business
unit in the Americas, plus technology services worldwide.
In the Medical sector, Costa Rica successfully fosters big companies,
such as Abbot Labs and Baxter Healthcare and some fast growing companies
from Silicon Valley, such as Arthrocare and Align Technologies,
to name just a few.
Part 3 of this column: Knowing
the Ropes
"Across the Pond - A Transatlantic CEO's Perspective on Establishing
A Global Business" is a monthly column that takes a look at
an emerging technology company whose business needs require establishing
operations in some other part of the world. Whether it's a Silicon
Valley company setting up operations Europe, Asia or Latin America
or an overseas company establishing a presence in Silicon Valley
-- Barbara Kohn in SV and Jeffrey Peel in Northern Island -- look
at the steps - and missteps - companies make when going global.
More about Barbara & Jeff...
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