Costa Rica has transformed into a multifunctional business destination. Investment opportunities are present in service sectors such as outsourcing, technology, software development, among many others. Today, Costa Rica offers a strong business environment for companies that act in the service sector and stands at the top as an exporter of high value-added services in Latin America. Whether it is in outsourcing or software development, Costa Rica is recognized as a Tech Hub of untapped opportunities for 2019.
Learn why Costa Rica’s service economy is an ideal place to incorporate a local company, and where to find help to get started.
Numbers and attractiveness in the service sector
It is well-known people consider Costa Rica as the perfect retirement destination. However, little is known about more recent statistics concerning the attractiveness of Costa Rica’s service sector.
CINDE, the country’s investment promotions agency, shows that Costa Rica is home to 157 companies that offer services such as call centers, BPO, digital technology, and design services. As a result, service exports as a percentage of total country’s exports has exceeded 45% since 2015. This makes the Costa Rican service sector the most attractive in the Latin American region.
One of the drivers behind increased service exports is is the implementation of Robotics Process Automation (RPA) a form of business process automation technology. With this new technology, robots and human capital work together to potentially reduce costs and errors, whereas productivity and quality are improving.
However, so far only 30% of the operating companies in the service sector use this technology, which indicates a big opportunity for its implementation in other firms.
CINDE has also highlighted that over 10,000 new jobs were created in the sector between 2016 and 2017. More than 20 new projects are now in the implementation stage, including companies such as Amazon, Intel, and Walmart.
It offers, without doubt, the perfect conditions for companies operating in the service sector, also because the geographic location and a rich set of free trade agreements (FTAs) make it suitable for service exports.
Outsourcing makes company incorporation easier
Outsourcing on the other side of the world can be hard and challenging. However, recent outsourcing software developments make offshoring in Latin America an intriguing alternative.
As nobody wants to have business meetings at 6:00 am or 11:00 pm nor wait hours for responses concerning little matters, Costa Rica has an ideal central time zone for collaboration during work hours. For most countries, there is at least four hours overlap which improves the ease of communication.
A smooth outsourcing process is necessary for a highly educated workforce. The Global Competitiveness Report of 2017 lists Costa Rica as the leader in Latin America in the quality of the educational system. Costa Rica achieves this through increased educational innovation together with a focus on developing English language skills.
In the same vein, in terms of financial attractiveness, human capital, and business environment, Costa Rica ranks in the top 20 of A.T. Kearney’s Global Services Location Index of 2016. This makes Costa Rica a perfect fit for outsourcing activities.
Opportunities in the telecommunications and technology sector
If you’re considering a business expansion to Costa Rica, opportunities are the most prominent and lucrative in the technology sector. As the sector has been growing over the past couple of years, San José has become known as the Silicon Valley of Latin America.
Thanks to a large English-speaking population, highly-educated workforce, and various free trade agreements, San José, in particular, has put itself on the radar as a tech hub with significant investment opportunities, especially in high tech manufacturing. Some examples of this are:
- Microchip Manufacturing: ever since Intel installed its manufacturing plant near San José, microprocessors have expanded operations to Costa Rica, making microchips exports a high share of total exports.
- Telecommunications: telecommunication infrastructure provides 100% redundancy. Also, Costa Rica has one of the highest penetration of mobile devices in Latin America. This offers the perfect destination for call center operations, whereas the English language is highly adopted too.
A welcome environment for software development
European and US software development firms are looking for new ways to remain competitive, and the scarcity of software developers increases overhead costs. Costa Rica might be the perfect solution. In recent times, engineering talent is emerging in Costa Rica due to an increasing number of university graduates.
More prominent software firms plan to relocate to Costa Rica, including Microsoft. Microsoft announced plans to move to the technology hub in San José to unify its sales, customer service, and operations. In total, Costa Rica is home to over 20 of Fortune 100 companies and more than 250 multinational corporations.
The objective set by the local authority of San José is to create a Special Zone for Economic Development (ZEDE), through which it will boost value-added services and innovations. Hence, it seems Microsoft is leading the race to secure software development plants in Costa Rica.
Mature investment environment
Already obvious is the tremendous development of human capital and the favorable time zone in Costa Rica. Further reasons why companies wisely choose Costa Rica include:
- It’s the second most consolidated democracy and politically stable territory in the whole of Latin America.
- It offers an attractive tax incentives package.
- Various Free Trade Zones and tax exemptions apply to exports, sales, and capital.
- The Global Institute of Entrepreneurship and Developments reports Costa Rica is the most prosperous and entrepreneurial country in Central America.
- According to an InterNations study, Costa Rica is the sixth most attractive country in the world to expats.
Costa Rica therefore offers extremely attractive conditions for foreign investment, and multinational companies are scrambling to take advantage of what’s on offer in the country’s booming service sector.
Interested in the Costa Rican Service Sector?
Costa Rica is an ideal place to incorporate a local service company and, whether it is in outsourcing or software development, it is recognized as a Tech Hub full of untapped opportunities in 2019.
If you are ready and choose to do so, you should be aware of some key steps of the company formation process alongside the accounting and legal framework. Therefore, we offer professional and personalized services to set up your company within a few weeks. If you have any questions regarding the service sector and the incorporation process in Costa Rica, please don’t hesitate and reach out to our Country Coordinator, Josseline Campos, at [email protected] and see how her team can assist.