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RE: Locations
March  2004

Puerto Rico

By Tim Parry, Associate Editor, Customer Inter@ction Solutions

A call center need not move out of the country if it wants the same cost-saving benefits of going offshore. Sound impossible? The Commonwealth of Puerto Rico, which offers a host of financial benefits and very low labor costs in the U.S., can provide your call center with the best of both worlds.
As a United States community with a foreign tax structure, Puerto Rico Industrial Development Company (PRIDCO) has said that the commonwealth offers a value that no other location can match. A business can have the benefits and protections of operating within a U.S. jurisdiction, with the added tax benefits of operating under a Controlled Foreign Corporation (CFC) structure. In addition, Puerto Rico's government offers a wealth of incentives and favorable tax laws combined with cash grants, tax credits and venture capital initiatives.
Miami-based Atento has selected Puerto Rico as the place to develop several call centers. Total Atento employment is expected to reach 1,500 jobs in two years, and 3,000 jobs within the next five years. Overall, the company will invest $25 million to establish its operations on the island. Atento manages call centers in 15 countries and has 55,000 agents worldwide.
In addition to Atento, American Airlines, AT&T, the Federal Emergency Management Agency (FEMA), the U.S. Social Security Administration and the U.S. Internal Revenue Service also operate call centers in Puerto Rico.
Although the U.S. federal minimum wage of $5.15 an hour applies, a favorable wage differential exists on the island. The average hourly compensation production cost in Puerto Rico, based on data from 2000, is $13.47 compared to $17.94 on the U.S. mainland. Hourly earnings in Puerto Rico's manufacturing sectors average between 65 and 80 percent of the overall U.S. figures. Labor costs are lower than most competing locations for high technology industries.

The labor climate in Puerto Rico combines a pool of bilingual workers with friendly labor relations and infrequent business disputes, making it extremely conducive to business. Late industrialization within equitable, democratic institutions has fostered a culture of excellence and cooperation in Puerto Rico's manufacturing labor force.
U.S. federal employment laws apply in Puerto Rico, including mandated benefits such as Social Security taxes. Employers are also subject to local laws and regulations. The law allows for flexible work schedules, continuous shifts and minimum breaks between shifts. The same collective bargaining laws govern organized labor as on the U.S. mainland. Only six percent of employees in private sector manufacturing are union members.

The Commonwealth also has an extensive transportation network that places virtually all companies within two hours of an airport or seaport. Transportation between Puerto Rico and the U.S. mainland is deemed domestic by the U.S.
The San Juan seaport, at the intersection of trade routes from North America and Europe to Latin America and the Caribbean, is the fourth largest port in the Western Hemisphere. San Juan's Luis Mu'oz Mar'n's International Airport also ranks 22nd among U.S. airports in cargo movements. It handles over 1,500 cargo flights weekly to and from worldwide destinations. FedEx, UPS, DHL, Airborne and the U.S. Postal Service provide airfreight services to the Commonwealth, including next-day door-to-door services.
Education is a constitutional right in Puerto Rico, and this ensures that employers have access to a large pool of qualified job candidates. In fact, Puerto Rico is ranked 6th in the world in higher education enrollment with over 22,000 higher education degrees awarded per year, including over 9,000 science and engineering degrees. In addition to the island's 19 public and 49 private institutions, many Puerto Rico residents obtain degrees from U.S. mainland and international colleges and universities. According to PRIDCO, more than two-thirds of Puerto Rico's workforce are high school graduates, and about one-third have one or more years of post-secondary education.

The Commonwealth has a state-of-the-art telecommunications system, allowing instant access to the U.S. mainland and international markets via high-speed, third-generation technologies. The island is linked to the United States, Europe, South America and the Caribbean by high-capacity undersea fiber optic cables and an extensive satellite network.
PRIDCO has noted that a self-healing fiber optic loop provides first-rate service around the island. Long distance voice, data and video services, as well as WATS lines, are offered by several providers, and wireless PCS is available from a number of local and national venders, using the latest digital protocols, including CDMA 2.5G, GSM and TDMA.
PRIDCO develops industrial parks and constructs and maintains factory buildings that are available for lease throughout the island. Over the last four decades, PRIDCO has built 139 industrial parks and acquired or constructed 31 million square feet of industrial space. Structures range from 4,000 to 100,000 square feet, with rentals ranging from $1.75 to $5.30 per square foot per year. PRIDCO can build structures of any size to fit call center specifications and provides assistance throughout the process. Other modern factory buildings ' many in private industrial parks ' are available for sale or lease through private industrial realtors. PRIDCO maintains a listing of these buildings and all pertinent descriptive data.
For more information, visit www.pridco.com.

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