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Introduction: Discovering Costa Rica’s Talent Pool
Back in 1869, Costa Rica had the foresight to invest in its people: becoming one of the first countries in Latin America to universalise education, the country made education mandatory, and free, for all its citizens. When the army was abolished in 1948, Costa Rica diverted investment into education. Today, that investment amounts to an average of 7% of GDP.
Thanks to this forward-looking approach, Costa Rica is now the top Latin American country when it comes to skilled and educated workers (Source: World Economic Forum, 2019 Global Competitiveness Report). Given its plethora of quality talent, Costa Rica holds a regional competitive advantage for attracting foreign investment and for talent sourcing.
And there has been a global shift in the recognition of Costa Rica as a rich source of talent for global organisations. Today, the country’s labour force is a key differentiator in its value proposition for both creating and attracting talent. This has established the foundations of Costa Rica’s cutting-edge economy.
This economy has, over the past 20 years, been heavily tech-based. Throughout this time, the nation has established itself as a technological hub in Latin America, experiencing significant growth in IT infrastructure and foreign investments. The tech shift is commonly traced back to around 1997 when Intel established a microchip manufacturing plant in the country. Since then, numerous tech firms have chosen Costa Rica as a base for their operations including Microsoft, Hewlett Packard Enterprise, Amazon, Dell, and VMware, amongst many others.
But the tech legacy is just one of Costa Rica’s investment appeal.
Today, we’re looking at the multifaceted allure of Costa Rica as a talent source and global expansion location.
Core Advantages of Tapping into Costa Rican Talent
Education and Skill Development
A major advantage of tapping into Costa Rica’s talent, is the exemplary literacy rate. With over 7% of its GDP investment in education, the country’s literacy rate is 96%.
And as mentioned, Costa Rica has a rich history of prioritizing education. Despite this, the need for specialized skills has grown due to the evolving and intricate nature of industries investing in the country. While the conventional education system excels in imparting theoretical knowledge, it required development to align with the ever-changing demands of the job market.
The result is a dual education system which is an invaluable differentiator for grass roots talent. Dual education merges classroom teaching with practical training, giving students a comprehensive learning journey. It closes the divide between academic knowledge and real-world practice, allowing for students to experience continuous learning and adaptability to industry and global business needs.
Strategic Location and Time Zone Alignment
For American and European based organisations, Costa Rica offers immense nearshoring benefits. Given the country’s extensive bilingual and multilingual population, advantages for organisations looking to expand to the region, include:
- The opportunity for cultural adaptability. Multilingual abilities enable workers to adhere to the customs, regulations and nuances of companies entering from North American and European markets.
- Cost Rica allows for real-time collaboration with North America in the Central Time Zone.
- Costa Rica’s multilingual proficiency in French, German, and other European languages enables companies from Europe to easily expand into Latin American markets. This linguistic advantage provides businesses with the essential skills necessary to seize opportunities on a global scale.
Here’s a list of the top 10 exports and imports between Europe and Costa Rica. Source: European Trade Commission.
Economic and Political Stability
Costa Rica has a business-friendly environment and offers multiple tax incentives on foreign direct investment (FDI). Tax and state sanctioned incentives are standardized and therefore apply to all FDIs irrespective of size or industry, preventing the need for negotiations on a case-by-case basis.
CINDE, Costa Rica’s investment promotion agency, endorses the benefits of investing in the country, and directly engages with investors, to reduce information barriers.
Costa Rica’s hospitable business environment resulted in it attracting the highest number of greenfield investments globally in 2020, despite the Covid crisis. According to fDi Intelligence Magazine, which assessed 84 countries for this study, the nation is drawing in 11 times more greenfield FDI than would typically be anticipated based on its economic scale. The majority of the country’s incoming FDI projects, about 60%, were in the medical devices, software and IT, and business service sectors.
The Costa Rican government is also actively nurturing the tech industry to attract foreign companies. Technological parks have played a significant role in the increase of professionals and high-tech activities within the country. These tech parks host various free trade zones (FTZs) that offer incentives to companies operating within them.
Efforts are underway to establish a technological city in San José, intended to accommodate IT firms and technology universities. Numerous companies have expressed interest in relocating to this area upon the completion of construction.
Currently, San Jose hosts more than 800 local and international technology companies.
Here’s a snapshot of the Costa Rican market. Source: bizlatinhub.com
Costa Rica has […] had great success over the last several decades in attracting and retaining investment in specific areas, currently services, advanced manufacturing, life sciences, light manufacturing, and the food industry. In addition, the Tourism Institute (ICT) attends to potential investors in the tourism sector.
Source: US Department of State
With a culture that is very western-like, Costa Rica’s business practices and cultural adaptabilities provide for ease of integration for western organisations. With multilingual, tech-savvy talent pools, Costa Rica provides a business environment that foreign investment and global organisations see as the ideal landscape for global expansion.
Doing business in Costa Rica requires some assimilation for western organisations, but it’s generally considered a location where collaboration and integration isn’t complicated given Costa Ricans, or ‘Ticos’ are a peaceful, friendly and generally relaxed peoples. Other characteristics of doing business in Costa Rica include:
- Be patient when doing business in Costa Rica.
- When engaging with someone new, it’s important to focus on building a relationship first and having multiple interactions before finalizing a deal. In Costa Rica, like other Latin American countries, people value establishing a personal connection before entering into business transactions.
- Costa Rica’s small population of 5 million fosters a close-knit business community with strong connections, particularly in specific industries. It is important to maintain respectful and positive relationships due to the often-swift circulation of business reputations and information within these circles.
- Business attire is typically smart casual, with jackets or ties worn by men, in more formal business settings.
- Punctuality is not a strong suit of Ticos. While many operate true to an agreed business meeting time, others will see no issue in being delayed for 30 minutes. So, when your organisation is new to the Costa Rican business environment, it’s important to be patient, be flexible, be prepared to wait, and be prepared for meetings to run overtime.
Costa Rican´s live a ‘pura vida‘ lifestyle, which literally translates to a pure life, and is a slogan for a relaxed and peaceful society
Source: bizlatinhub.com
Competitive Cost Structures
Costa Rica’s political stability contributes to its business-friendly atmosphere. As foreign investments in Costa Rica increase, companies are more interested in recruiting their well-educated and skilled workforce.
Before hiring employees in Costa Rica, it is crucial to be familiar with the labour laws. On the positive side, there is a vast pool of skilled and bilingual workers available at more affordable rates compared to North America. For instance, the average monthly salary for a Costa Rican worker, ranges from US$500 to US$1,000. To compensate for this lower wage, the government guarantees certain benefits for employees.
(But if you have a global operation, instead of having to understand and apply the labour laws of Costa Rica (or any other global destination you’re located in or expanding to), you could instead opt to outsource your payroll, for workers based in the country. CXC offers Global Payroll, which involves withholding taxes, calculating benefits and bonuses, and transferring funds to your workers across a variety of countries in their local currencies.)
Other economic incentives for foreign businesses to operate in Costa Rica are considerable. These include:
- 100% exemption on importing raw materials, capital goods, and components.
- Companies are exempted from tax profits for 8 years, and a 50% exemption for the next 4 years.
- No export taxes, excise taxes and local sales, and profit repatriation taxes.
- Companies do not have to pay municipal and capital taxes.
- No capital repatriation or foreign currency management restrictions.
- On-site customer clearance is fully expedited.
- Selling to exports inside Costa Rica is allowed.
- Up to 40% selling in the local market is allowed.
Source: Venture Overseas
And finally, a further incentive for foreign business operations, Costa Rica has introduced a new digital nomad law aimed at attracting more professionals to this thriving population. This initiative not only benefits the economy but also offers perks such as exemption from income and import taxes on essential work equipment like computers, tablets, and cameras. The streamlined process enables foreign remote workers and their families to reside in the country for a year, with an option to apply for a one-year extension.
On the back of this law, several companies in Costa Rica have established remote roles beyond the Costa Rican Greater Metropolitan Area (GMA), opening up opportunities for remote talent in the digital age. Amazon serves as a prime example of a successful, 100% remote workforce outside the GMA, with 3,250 employees operating from ten diverse municipalities nationwide.
Leveraging Costa Rican Talent for Global Success
Without question, Costa Rica is a powerhouse opportunity for organisations looking to expand globally. With a highly literate workforce, a booming and advanced technology hub, a stable government and economy, and a strategic location, Costa Rica is an appealing solution for expanding, global organisations.
If your company is looking for a lucrative opportunity to expand globally, Costa Rica is the prime option for ease of integration for your business, access to a quality talent pool, significant business incentives and the potential for innovation and growth, in a booming and tech-savvy environment. Click here to learn more.
Source: European Trade Commission
