When Citigroup set up its finance captive in Costa Rica in 2007, the company started with 25 positions, growing quickly to 200 employees. Over time, that core group has blossomed to 1,100, with the global financial services firm still in growth mode and anticipating an addition of another 200 employees in 2014.
“It will keep growing,” says Francisco Camargo, head of Citi Shared Services in Costa Rica. “In May we are officially opening a new campus. This is a big project – a state-of-the-art LEED certified building that will be able to accommodate our ongoing expansion plans.”
Camargo is referring to Citi’s $35 million dollar investment in a new center in Costa Rica’s capital city, San Jose. Called Campus Citi, the new facility will be able to absorb the anticipated expansion to 1700 employees in the next two years. “We started in Costa Rica with financial reporting operations,” says Camargo. “Over time we have added accounts payable, procurement, HR services. We now also support seven financial products.”
In looking for a location for its shared services captive, Citi assessed Argentina, Brazil, Mexico, the Dominican Republic, and Brazil, which at the time had a favorable exchange rate and, of course, a large talent pool.
“Brazil was considered because we had to support it, and we needed a talent base of Portuguese speakers,” says Camargo, who is from Brazil. “But our reviews focussed on the fact that the shared service support was specific to finance, and here Costa Rica really shone.”
Proactive Government and Policy
Central to the appeal was a proactive government with a tightly integrated education policy, and the presence of large multinationals with a keen interest in the long-term development of a deep talent pool.
“In Costa Rica there are about 200 companies in the services industry, and 40 or 50 are doing some type of shared services processing, including big players like Procter & Gamble and Intel,” says Camargo.“There is also strong government support for education directed at industry.”
The presence of other large organizations has resulted in a community of outsourcers that can work for mutual benefit. Rather than have scenarios where poaching is an issue, Citi has found that its fellow providers are interested in working for mutual benefit.
“If you look at our presence from a productivity perspective, we have been able to move fast from leveraging the simple benefits of salary arbitrage to having the ability to reengineer financial processes,” says Camargo. “A lot of credit has to go to companies like Procter & Gamble and Intel. They have embraced lean practices, with Six Sigma Green Belt and Black Belt certifications. That has increased the expertise in the market. As well, Procter & Gamble and Citi are in the same industrial park – we meet frequently and discuss shared issues such as transportation and infrastructure. It works quite well.”
Citi’s operations in Costa Rica support English, Spanish, and Brazilian Portuguese. Importantly, the company also services the operations of its subsidiary Banamex in Mexico, helping to standardize processes and enhance controls.
“We are doing a good job on that front,” says Camargo. “We are also partnering with Amba Investment Services, which was recently bought by Moody’s, to develop specific educational programs that support finance in the shared services industry.”
Camargo says that Citi not only learns from the multinationals active in Costs Rica like HP, Intel, and P&G, but also from its own employees. This helps as the company continues its financial transformation based on three pillars: standards; common processes; and a common platform.
“We have been doing a lot of reengineering in the context of productivity and automated systems,” says Camargo. “Our employees generate ideas – you can’t imagine how many process improvement ideas they come up with. This is improving our workflow.”
Moving Up the Value Chain
Though Costa Rica might be defined as a mid-cost area, the added expertise and cross-enterprise fertilization move the value well beyond anything as simple as labor arbitrage. It helps too that shared services organizations have frank discussions with the government, and can integrate their requirements with educational initiatives.
“We have worked with the Costa Rican Investment Promotion Agency, known as CINDE, to create educational programs at different levels,” says Camargo. “At the entry level, there are now technical high schools that are training students for US GAAP accounting and in English.”
Citi helps out with scholarships, and then has access to the young graduates, which it can groom onto a longer-term career path.
“When we first get them they are perfect for lower level work such as accounts payable or financial reporting,” says Camargo. “That then helps us have a flow of talent on a yearly basis.”
This didn’t happen overnight. Camargo says that when Citi first set up shop in Costa Rica there was a challenge resourcing talent with GAAP and English-language skills. Now, the company is benefiting from strong training processes and a young, eager talent pool, crucial given that Citi is consolidating more shared services functions into fewer locations with enhanced capabilities.