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Central America and the Caribbean / Costa Rica

A technology paradise: How Costa Rica is embracing and delivering digital transformation

Leaders from the Institute for the Future, VMware and Akamai outline what makes Costa Rica – and its workforce – such a high-value investment proposal in a fast-evolving digital space.

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Costa Rica has around 7,000 science, technology, engineering and mathematics graduates per year – 37% of whom are women. (Image courtesy of CINDE)

A recent report from McKinsey & Company found that global consumer and business digital adoption jumped ahead five years within the first two months of the pandemic. The share of employees working remotely in information services rose by an incredible 75%. Professional and financial services witnessed spikes of well over 60%, with manufacturing only a few percentage points behind.

These developments may have been a response to a sudden and dramatic change in operating conditions, but they also reflected a wider shift towards greater digital dependence, innovation and transformation. Changing customer behaviours, unpredictable demand recovery, an increased willingness to identify and leverage global talent, and the appetite for new solutions are all factors influencing business and investment decisions like never before. Economies that have long recognised these shifting and evolving requirements look set to take full advantage.

Costa Rica has established itself as the leading nation in Latin America in terms of digital readiness and the adoption of new technologies. Information and communications technology services accounted for US$4.7bn in 2019, representing 49% of the country’s exports. This was far and away the highest levels regionally – and twice the average found across the Organisation for Economic Co-operation and Development (OECD) – and the country has long been at the forefront of emerging trends in the new global, digitalised economy.

Digital readiness

“Costa Rica has been preparing for the future of digital technology work for decades – well ahead of many of its neighbours – building on its stable workforce and nearly fossil-free electricity,” says Daria Lamb, director of partnerships and ambassador to the future at the Institute for the Future, the US-based non-profit founded in 1968 to help organisations manage long-term strategic planning. “In the Covid-19 era – where the demand for digital services is skyrocketing – Costa Rica has an edge as it has already been developing unique and localised efforts to transform its society to be ready for the global growth of knowledge work.”

The country has a proven commitment to building up its knowledge services sector, establishing technology clusters that excel in an array of areas, including engineering support, software development, legacy system support, cloud and cybersecurity. Costa Rican tech firms have also displayed market-leading R&D capabilities in content development, engineering and design, and embedded software.

From software alone, a plethora of international companies have a presence in the country, including Microsoft, Amazon, Dell, Oracle, Intel, Hewlett Packard Enterprise, VMware and Akamai. The country’s digital technologies labour force has a compound annual growth rate of 17% and grew by 23,900 workers in 2019.

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Information and communications technology services accounted for US$4.7bn in Costa Rica in 2019, representing 49% of the country’s exports. (Image courtesy of CINDE)

Last year, IBM embarked upon the $21m expansion of its Global Security Services Center, the largest facility of its kind in Latin America, tripling operating capacity and underscoring Costa Rica’s strength in the cybersecurity sector. In July 2020, the company announced that its service centre would begin providing multi-cloud management platform services to meet growing demand among its international clients, further growing the reach of its Costa Rican operations.

Human capital

All this success is built upon a skilled, educated, experienced and multi-lingual workforce. In 2019, Costa Rica was ranked number one in Latin America in terms of Test of English as a Foreign Language (TOEFL) and Test of English for International Communication (TOEIC) proficiency. Almost 80% of the customer services offered in software development, tech support and customer service can be provided in the English language.

“Costa Rica has proven to be a solid case for investment given its highly-educated and multilingual population, stable business and political landscape, and a welcoming approach to foreign investment,” says Daniel Bolaños, finance director and site leader at VMware Costa Rica, a company that provides cloud computing and virtualisation software and services.

“The VMware operation in Costa Rica has demonstrated talent is available in different verticals in the organisation, from technical and information technology perspectives to other areas such as finance, human resources and compliance.

“Our operation in Costa Rica is projected to continue its growth, surpassing 1,000 local collaborators serving both regional and global functions. Local talent has proven to be studious, passionate about growth, leverages all learning opportunities and is entirely engaged in thought processes. Further, business affinity and adaptability to work with different cultures and backgrounds presents itself as a value-added workforce.”

Engineered for success

Costa Rica has a particularly high number of university engineering graduates to call upon, with more than 3,500 entering the workforce annually from a spectrum of disciplines, including industrial engineering, agro-industrial, agricultural, food engineering, architecture and industrial design. Furthermore, the country has around 7,000 science, technology, engineering and mathematics graduates per year – 37% of whom are women, according to the Costa Rican Investment Promotion Agency (CINDE). The country is also blessed with a young population, with 32% aged between 15 and 34 years of age.

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Costa Rica’s digital technologies labour force has a compound annual growth rate of 17% and grew by 23,900 workers in 2019. (Image courtesy of CINDE)

“Akamai found in Costa Rica a proud, educated people who embrace challenges, learn rapidly and welcome opportunities,” says David Cruz, human resources director of Akamai Costa Rica, a global content delivery network, cybersecurity and cloud service provider. “It is a nation governed in peace with a solid long-standing democracy that stands behind health, education and the pursuit of self-development.

“Costa Rica’s investment in technical and higher education is yielding substantial benefits. Universities and training institutes produce highly trained individuals, who are sought by high-tech multinational companies as their demand grows.

“At the same time, with this strong focus in education, the languages development has provided Costa Rica with a big competitive advantage, focusing not only on English, but multiple languages to support customers all over the world. The Costa Rican workforce stands out for its high educational standards and outstanding productivity levels, and at the same time has a high level of language dominance in both written and verbal skills.”

Costa Rica has been at the vanguard of digital transformation in Latin America for the past decade. In the wake of an unprecedented acceleration in the speed and scale of digital adoption, its technology companies – and its workforce – find themselves in an exceptionally strong position to attract further investment in the digital sphere and build upon a track record of success.