El Salvador has successfully positioned itself as one of the most appealing platforms for companies looking to establish their outsourcing service centers in Central America, like the technology services and software development industry.
The country has a solid and consolidated position in the Business Process Outsourcing sector (BPO). More than 70 companies and several of the largest firms in the world have offices in El Salvador. The industry employs more than 30,000 people and has enjoyed steady growth.
El Salvador’s advantages for the industry translate into the confidence shown by companies that, year after year, execute expansion and diversification projects in the country. It is also becoming an attractive location for the software development and IT (ITO) industries.
Many foreign and local companies are launching their operations in El Salvador, and local stakeholders in the BPO sector are adding ITO activities to their businesses.
Advantages of investing in the digital technology services industry in El Salvador
The attractiveness that El Salvador offers to investors in the technology services industry is based on the following:
1. Productivity of human resources
Investors consistently praise the attributes of the Salvadoran workforce:
✅Commitment and productivity
✅Specialized and bilingual workforce
✅Outstanding work ethics compared to other countries in the region
✅Loyalty, drive, and warmth are essential values for the people of El Salvador
Companies that operate in the BPO industry also praise Salvadoran talent because of their neutral accent in Spanish and English and the country’s affinity with the United States and Latin American markets.
Industry leaders highlight excellent performance on KPIs, such as:
?Customer Satisfaction (C-SAT)
?First Call Resolution (FCR)
Government, private sector, and international organizations are working together to develop and implement technical and linguistic training programs that seek to increase the availability of specialized talent and improve the qualification of human resources.
2. Competitive Costs
El Salvador’s labor and operating costs (connectivity, electricity, and office space) are competitive with other places in the region. Also, its labor laws are very attractive.
The average salary of technical employees with 2 to 5 years of experience is highly competitive in relation to other countries in the region. See the following table.
Average salaries in BPO and software sectors
Source: PROESA´S digital strategy assessment and https://www.salaryexplorer.com/
3. Attractive tax incentives
El Salvador offers a “business-friendly” tax environment, with the lowest employer social contributions and competitive labor practices.
✅Exemption from customs duties and other import taxes on machinery and equipment necessary for exportable production while having their operations in the country.
✅Exemption from customs duties and other taxes on the import of raw materials and other items necessary to execute the incentivized activity while having their operations in the country.
✅Exemption from customs duties and other taxes on lubricants, fuels, and substances necessary for their productive activity while having their operations in the country.
✅Total exemption from the tax on real estate transfer for acquiring those properties to be used in the incentivized activity.
4. Ideal infrastructure for the investor
The World Economic Forum places El Salvador’s infrastructure among the most competitive in Latin America. Local and international communications companies provide a broad spectrum of services at competitive costs.
In addition, the telecommunications infrastructure provides:
?An open and competitive market.
?Wide range of services at competitive costs.
5. Convenient location in the Americas
El Salvador’s geographic and cultural proximity to the US and Latin American markets make it a natural choice for multinational companies to restructure their global footprint and reduce logistics risk.
El Salvador has a strategic geographical location. It is a bridge between North and South America that allows air travel to major cities in less than 5 hours.
It has direct flights to 23 other countries, thus making it a convenient and attractive location in the region.
This is enhanced by El Salvador’s time zone, which is aligned with the United States Central Time Zone (CMT).
Also, the country is well-positioned as a nearshoring/reshoring option for global companies.
6. Monetary stability:
The dollarization of the Salvadoran economy has eliminated exchange risk, generating confidence in investors and creating a stable economy with the lowest inflation in the region.
7. A dynamic and growing industrial ecosystem
A growing and dynamic group of companies have established and expanded in El Salvador, along with supporting industries, skills development initiatives, business associations, and government entities. Altogether they represent a favorable ecosystem for the investor.
Some of the recent success stories in the information technology-enabled service industry in El Salvador are:
“The best place to code”, is their slogan. This company provides complete Software Development services, creating new products and effective solutions.
They implement Pega software for organizations in the financial services, healthcare, insurance, and manufacturing sectors. They have offices in the US, Mexico, and El Salvador and more than 230 people on their staff.
With over 16 years in the market, Telus leads the digital customer experience (CX) in El Salvador, designing, building, and delivering digital solutions.
With offices in the US since 2007, they are now in San Salvador to build and develop software and digital solutions.
Invest in El Salvador
Investors interested in assessing the attractiveness of locating or expanding their business in El Salvador can contact PROESA, the Salvadoran investment promotion agency.
PROESA is an autonomous government institution whose mission is to promote and facilitate investments to contribute to the economic growth of the country and the creation of more and better jobs.
PROESA has identified investment opportunities in the following sectors:
Information technology services:
? Software Development
?UX / UI Design
Business Processing Services:
?Fixed Asset Accounting
?Data Entry and Transcription
?Human Resource Management
?”Cross sales & Up sales”
?Customer Relationship Management
?Technical Support for Guarantees
?Customer Retention and Acquisition
?Incoming or outgoing call handling
For more information on how to invest in El Salvador or to receive specialized assistance, don’t hesitate to get in touch with us.