Raul Larios

Want to Invest in Honduras? Tread Carefully!

Honduras map 7Part 1 — The Sales Pitch… I recently accompanied a client to a sales and marketing presentation by a leading Business Process Outsourcing (BPO) provider in the United States extolling the benefits of outsourcing to San Pedro Sula, Honduras.  The sales team talked about how this Central American city offers just about everything that a light manufacturer or outsourcer could want, and even more.  Chief among them is the abundant supply, quality and stability of an inexpensive bilingual labor force.

With over 400 bilingual schools and 7 universities, Honduras graduates thousands of English-speaking high school and university students every year — far more than all other Central American countries combined!  Not only are they well educated, but their English is generally considered to be “accent neutral”, meaning that it cannot be recognized by the average American as being from any particular region of the world (as in the case with India or the Philippines).

Tragically, the underemployment rate in Honduras is crushingly high (58% in 2012 according to the National Institute of Statistics or INE in the Spanish acronym), but this offers significant opportunities to potential employers.  There’s a deep pool of inexpensive talent from which to choose, and once hired, most Hondurans hang on to their jobs for dear life.  Job hopping is not very common, so attrition is quite low (under 20% by several accounts).

Other advantages include a phenomenal information and communications technology (ICT) infrastructure with three fiber optic cable networks to ensure less than 80 milliseconds latency.  In addition, San Pedro is only an hour’s drive from the largest and deepest seaport in Central America.  In fact, Puerto Cortes is 1 of only 6 seaports in the world that have been certified under the U.S. government’s “Megaport Initiative” that scans for radiation and other risk factors prior to shipment.  When combined with the presence of a local U.S. Customs and Border Protection office that inspects all containers prior to departure, it means that your cargo will unload much faster upon arrival in the U.S., avoiding your company the slow, time-consuming process of customs paperwork and inspections.

Finally, San Pedro Sula is an economic powerhouse, producing two thirds of Honduras’ entire GDP.  Business is the name of the game in San Pedro, and the local business community is highly professional, efficient and competitive — very important factors to consider for your supply chain.

It’s no wonder then that these unique features have persuaded dozens of textile manufacturers over the last 20 years, and a half dozen BPO outsourcers in the last 18 months, to set up shop in San Pedro Sula — including the one whose presentation I alluded to at the beginning of this blog post.

What surprised me was their response to the questions on crime, violence and general insecurity.  They explained it away as mere petty street crime and gang turf fights over territory: “you avoid it as you would in any other big U.S. city — simply stay away from the low-income, high-crime neighborhoods and you’ll be fine…”

The BPO sales team made San Pedro Sula sound so attractive that my client wanted to move forward with several projects.  However, I was highly skeptical. And it breaks my heart to say it because this is where I grew up.  This is where I learned my English; the land of my childhood memories…

Maybe things have improved, I thought to myself.  After all, I stopped following local events after the signing of the National Reconciliation Agreement of October 2009 that sort-of resolved the pseudo-military coup d’état and subsequent constitutional crisis that erupted earlier that year.  But from what I knew just prior to the coup, I could not in good conscious recommend Honduras to my clients as a “safe” country to invest — notwithstanding my personal feelings.

Since I was going down there anyways on a family matter, I offered to research the issue of violence.  With my client’s permission, I’m sharing some of my findings and recommendations in this series of blog posts I’m entitling “Want to Invest in Honduras? Tread carefully!”

Part 2 — The Reality… 2012 was a Record Year for Murders in Honduras and they were not merely gang-related.  Moreover, Honduras now ranks as the country with the highest number of murders per 100,000 residents in the world, and San Pedro Sula replaces Ciudad Juarez, Mexico as the most violent city…  To be continued next month.

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June 8, 2013 - Posted by | New York | , , , , , , , , , , , ,

2 Comments »

  1. Thank you for sharing, very interesting.

    Comment by Yolanda Alba | June 23, 2013 | Reply

    • You’re quite welcome, Yolanda. I’m glad you found it interesting. I’ll be posting part 2 in early July.

      Comment by Raul Larios | June 24, 2013 | Reply


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