Qualfon’s expansion

Qualfon’s announcement on September 4 of a 3,500-person contact centre campus and the creation of 6,000 jobs over five years with an initial investment of US$4M is most welcome. The company must be applauded for showing faith in the country’s economy and direction after eight years of doing business here. The government must also be congratulated for enabling the investment.

Six thousand jobs over five years would be no small feat and it would undoubtedly be the single largest private sector creation of jobs in recent memory. The company is already reputedly the largest private employer in the country and has acquired this status quietly by just going about its business. It has also publicized some of the reasons why it is seen as a preferred employer: free training, free medical services, milk subsidies and a library exchange.

It would have been the icing on the cake had both the government and Qualfon made available to the public the terms of their agreement. Neither side has thus far shown an inclination in this direction. The Guyanese public is well aware that in the past, hard bargains have been driven by private investors with the government. The public is also aware that neither this government nor its predecessors have always made the best decisions in relation to investment concessions. One hopes that on the reconvening of Parliament, whatever agreement may have been reached in relation to incentives and tax concessions between the two sides will be tabled by the government for public examination.

While the majority of the 6,000 jobs are unlikely to be high-paying ones they will help to ease the patently troubling levels of unemployment and underemployment in the young cohort of the population and particularly those leaving high school and the university. Qualfon already has around 1500 employees and the pathway that these employees took would make an interesting case study for the government.

In its long occupation of office, this government has fallen far below expectations in job creation. The major industries have contracted severely and while the rice and mineral sectors are buoyant they are also volatile. The government has been unable to stimulate large amounts of new jobs in manufacturing and the services sector. The economy remains mostly one of primary products and an ever-growing distribution sector which will undoubtedly continue to create inflationary pressures. What other measures does the government envisage to stimulate job creation?

In his 2012 budget presentation, Minister of Finance, Dr Ashni Singh had homed in on the Information and Communication Technology Sector. He had said that there were already 3,000 jobs and that in the near to medium term another 21,000 jobs would be created. This was an ambitious and expansive projection that is far from being met. Even with Qualfon’s 6,000, the economy would still be far short of what the minister had envisaged.

The Minister and his government however now have an opening to build on what Qualfon has unveiled. Its investment here can certainly be advertised and played up to other companies which may be aiming in a similar direction. Qualfon has blazed a trail here that other venture capitalists in this sector may be prepared to pursue. This would be a good opportunity for the government and Go-Invest to test whether they can convince other business process outsourcers to set up shop here.
The competition in this arena is fierce but Qualfon has no doubt weighed the risks and believes that competitive pricing here makes it an alternative to India and a “strong complement” to the Philippines. While Guyanese might wince at and even deny it, Qualfon also cites Guyana’s “strong cultural affinity to the United States” as another reason for the setting up of the centre here.

It would help fulfil Minister Singh’s expectation for the sector – which has seen several failures over the years – if the government and Go-Invest were proactive in finding other investors. While the Philippines is clearly the major player along with India in outsourcing, other countries are making big inroads. Poland is increasingly a big player and has just over 110,000 people at 400 BPO centres. The sector has seen 20% growth there since 2008. Blue chip companies are also continuing to make substantial investments for their back office work. Just two weeks ago, technology giant IBM Corp opened up a BPO in Laguna, the Philippines and is contemplating others based on the talent pool, reliable telecom infrastructure, support facilities and the investment climate.

Qualfon has not only made a substantial foreign direct investment in the future of the company and Guyana it has also eased the door open for the government to make a serious effort at boosting job creation in the ICT sector.

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