Obama's Missed Opportunity with a Nearshore Neighbor

Cuba_chevyPresident Obama had an opportunity at the Summit of the Americas in Cartagena last week to bestow some of that trademark "hope and change." Instead of shunning Cuba, he could've welcomed the island nation to the meeting of Latin American states. He could've effectively said "Welcome to the Nearshore." But no. He opted to continue with the Cold War approach, causing a bit of a dustup preceding the summit.

Cuba has not shown sufficient interest in becoming a democratic republic, Obama said, "no interest whatsoever" in improving relations with the U.S., and "no disposition to respecting the democratic and human rights of the Cuban people."


Obama said during a news conference last weekend: "I want to look at these issues in a new and fresh way." Apparently this "new and fresh" way involves "not meeting with you." To try something really new and fresh, the U.S. might consider helping Cuba develop trade and business, maybe something like an outsourcing industry.

This is no attempt to defend the government of Cuba, and let's assume everything Obama says about Cuba is true. His Cuba snub is still misguided. If your goal is to get the autocrats of a country to be more democratic (you could start with Washington, DC!), you might try some enticements. Everyone who has followed the growth of Nearshore outsourcing knows what a growing economy can sometimes do to democratize a society. "A rising tide…"

By opening up to Cuba, the U.S. would be in a position to demonstrate the free-market benefits the government and U.S. Chamber of Commerce love to talk about. Why not help Cuba develop an outsourcing industry? Not impose an outsourcing industry, but give Cubans a chance to explore the possibilities of BPO and contact centers for starters. Work with the government to create incentives and set up education programs.

Cuba as an outsourcing destination is not far-fetched. As Ovum analyst Peter Ryan points out:

"One of the most compelling reasons why an outsourcing player may take an interest in Cuba relates to the proportion of the population that works in services, which according to the CIA WorldFactbook amounts to 61%, roughly the same as Mexico & Chile, and only somewhat smaller than Argentina.

"However, the most intriguing thing about the Cuban services workforce is the growing proportion that works in international tourism. This has led many individuals to take on significant training by foreign hotel operators and tour companies in order to bring their service skills to western standards. Such a segment of the Cuban workforce would be an ideal pool to draw from when recruiting for nearshore delivery contact centers."

Ryan acknowledges the concerns about building a call center in Havana, but astutely notes that similar fears were felt toward Eastern Europe 20 years ago, and today that region is a hotbed of IT sourcing.

Cuba's potential was also signaled by president Raul Castro's inclusion on the Nearshore Americas Power 50 list.

Obama's fear of Cuba is ridiculous enough that it can only be politically motivated. He showed no concern about signing a trade pact with Colombia over the objections of U.S. labor unions, who pointed out that Colombia is a most dangerous place for trade union activists.

Now, admission of Cuba to this summit circle is not the biggest issue facing the hemisphere. But it reflects antique policy. It reflects backward thinking, and the antithesis of the spirit that has made every successful IT services company successful: let's try something different, let's do that instead, let's innovate.

Instead, the Obama administration is acting as if the Cuban Missile Crisis happened last week. It's the opposite of the open-minded approach Obama showed during the early days of his presidency.

One last thing about the U.S. and Cuba. We talk about cultural affinity as one reason Nearshoring works for U.S. businesses. Cuba is 90 miles from Florida, and millions of TV-watching Americans grew up with a positive view of Cuba because that's where Ricky Ricardo came from. From the 1940s through '60s, many major league baseball teams had a Cuban star or two. According to legend, Fidel himself had dreams of becoming a major league pitcher – talk about cultural affinity. Imagine if the Yankees had drafted him.

Topics: IT services, Nearshore Outsourcing, U.S.-Cuba policy, Barack Obama, U.S. policy, Cuba

What is Nearshore?

Nearshore is "the transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country", where both parties expect to benefit from one or more of the following dimensions of proximity: geographic, temporal (time zone), cultural, linguistic, economic, political, or historical linkages.

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