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Shared Services Centers Costa Rica: a preferred location

by | Aug 11, 2023

Shared service centers in Costa Rica seek to manage and consolidate transactional or routine processes in a central organization. Around 70 Shared Services Centers in Costa Rica have generated more than 30,000 direct jobs.

The ecosystem for shared service centers in Costa Rica is mature. The sector hosts a range of multinational companies across industries such as finance, healthcare, technology, and manufacturing. This ecosystem provides networking opportunities, access to best practices, and a talent pool with shared services experience, further enhancing the viability of establishing a shared service center in Costa Rica.

A Deloitte study evaluates shared service centers in Costa Rica

Recently, Deloitte launched the first study on the state of maturity of the shared services centers in Costa Rica, yielding very promising results for the country. This study was carried out with the objective of obtaining a current overview of the degree of maturity enjoyed at present.

Establishing a shared service center in Costa Rica can significantly reduce a business’s cost through various operational and strategic mechanisms. Here’s how:

  1. Economies of Scale:

By consolidating certain back-office functions, such as HR, finance, IT, and customer support, into a shared services center, a business can benefit from economies of scale. Operating these functions centrally for multiple business units or locations enables the organization to take advantage of bulk purchasing, standardized processes, and optimized resource allocation. Shared service centers in Costa Rica reduce duplicative efforts, minimizes excess capacity, and lead to cost savings.

  1. Resource Optimization:

In a shared services model in Costa Rica, resources like skilled personnel, technology infrastructure, and office space are utilized more efficiently. Instead of each department or location having its own separate team and infrastructure. Shared services concentrate resources, enabling better resource allocation, reduced redundancy, and cost-effective utilization of facilities and equipment

  1. Process Standardization and Efficiency:

Shared services centers in Costa Rica often implement standardized processes and best practices across the organization. This leads to streamlined operations, reduced errors, and faster processing times. As processes become more efficient and consistent, employees spend less time on repetitive tasks, allowing them to focus on higher-value activities. This increased efficiency directly translates into cost savings.

  1. Labor Cost Arbitration:

Shared services centers can be established in Costa Rica with lower labor costs. This is often referred to as labor cost arbitration. This means that companies can hire skilled Costa Rican talent at a reduced cost compared to regions with higher wage levels. This arbitration potential is especially significant when it comes to functions like customer support, data entry, and routine administrative tasks.

  1. Reduced Overhead:

A shared services center in Costa Rica consolidates administrative and support functions into a single location. This consolidation reduces overhead costs associated with maintaining separate administrative teams, offices, and infrastructure across multiple business units or locations. This includes savings in rent, utilities, office supplies, and other administrative expenses.

  1. Technology and Automation:

Shared services facilities in Costa Rica often leverage technology and automation solutions to further streamline processes. By implementing digital tools, robotic process automation (RPA), and other technology-driven solutions, companies can optimize workflows, eliminate manual tasks, and reduce the need for extensive manual intervention, leading to both time and cost savings.

  1. Expertise and Training:

Shared services centers in Costa Rica bring together specialized expertise and knowledge in various domains. This centralization allows for focused employee training and development programs, enhancing their skills and making them more efficient in their roles. Better-trained employees lead to fewer errors, faster resolution of issues, and improved overall productivity, all of which contribute to cost reduction.

  1. Enhanced Supplier Negotiations:

A shared services center can also centralize procurement activities, enabling better negotiation with suppliers due to higher purchasing volumes. This can lead to favorable contract terms, discounts, and cost savings on supplies and services

Because of increased control, efficiency, standardization, and significantly reduced costs, Costa Rica has established itself in the region as a “preferred” country for the establishment of a company of this type, ahead of Colombia, Mexico, and Uruguay.

In Costa Rica, around 70 Shared Service Centers have generated more than 30,000 direct jobs and countless indirect jobs around their operating ecosystem.

The survey that Deloitte recently completed applied to 37 of these companies yielded promising results that indicate that the shared service centers in Costa Rica are at an important level of maturity and ready to evolve in their maturity model towards higher-end services and processes.

The study determined that 70% of those surveyed confirm that their current processes are robust and strong and that they are ready to expand their operations, be it via greater geographical reach or by increasing the capacity of the processes it supports; This translates into an increase in qualified and well-paid jobs for Costa Rican workers.

A digital transformation is taking place in Costa Rican shared services centers

The study’s other results are related to digital transformation and the application of new technologies in shared services centers in Costa Rica.

Most of the respondents recognize that digital transformation will be a fundamental and strategic pillar in the next three to five years. Although practically half of the companies surveyed acknowledge that they have already implemented some process automation through Robotics (RPA), at the same time, 47% acknowledge that the efforts are still isolated or limited and that they should seek to integrate a robust digital strategy to the service center as the natural incubator to permeate this new way of thinking throughout the organization and internal customers.

Costa Rica has the workforce

One of the most important issues in the establishment of shared service centers in Costa Rica has to do with the employability of the country’s workforce. The shared service centers are creators par excellence of jobs for qualified personnel. They have very robust training processes, teaching their employees new skills that allow them to carry out more complex tasks.

In conclusion, establishing shared services centers in Costa Rica can help reduce costs for a business by capitalizing on economies of scale, optimizing resources,  increasing process efficiency, reducing labor costs, reducing overhead, using technology and automation, developing expertise, and improving supplier negotiations. By strategically centralizing certain functions in a Costa Rican shared services facility businesses can achieve significant financial benefits while simultaneously enhancing operational effectiveness and service quality.

 

Contact LATAM FDI to discuss your foreign direct investment plans in Latin America.

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