Co-Manage: The New Nearshore Model for IT Operations

Globalization has become a natural stage and accessible framework for entrepreneurs and corporate executives, who are increasingly seizing the advantages in foreign fields with regards to skilled sourcing, operative costs, time-to-market and risk mitigation. Some of them fail, not because of lack of knowledge in the business, but because of misconceptions about when and how to run business in a new environment.

Several strategies are available for firms depending on the risk and control they are willing to address, such as greenfield investment and import of services. The former implies the highest risk and control, while the latter is a straightforward modality, easy to run, that suggests lower control. Relying on its SWOT, each company decides which internationalization strategy fits best.

Low Risk, High Operative Control in a Foreign Market

There is an option in the middle of this scale, a type of joint venture called “Co-Manage”. It was designed by Colombian tech company, NativApps, and it allows it to build, run and transfer white-label operations in the country. As its name suggests, Co-Manage is an investment agreement between two companies, one which aims to establish an already standardized operation in a foreign country seizing favorable conditions for its incorporation while maneuvering the risks with a strong party, while the other is a local partner who is savvy on these conditions and is responsible for building, running and managing the mirror operation. This joint investment reduces to a settled agreement around the CAPEX and the OPEX of this endeavor within a stablished timeframe.

Under this model, the foreign firm focuses on its core business and it shares the risk of investment with a local partner, having a controlled framework for its total transfer and protection of both its Good Will and Know-How. The principal objective in committing to this form of internationalization is to effectively overcome the challenges involved in undergoing business in an unknown country while having the time necessary to learn about its macro-environmental factors (political, economic, social, technological, environmental and legal).

The Co-Manage Advantage

There are two noticeable advantages in the Co-Manage model. The first one is that the international partner will always have the support of its local partner throughout the building and running of the operation. The control of the latter is momentary and partial, until the operation center is fully established, becoming over time an only-owner investment.

The second main advantage is that the investor achieves a final operation in which he benefits from the local market, with a more solid operation, where the potential of his business is fully exploited. In addition, he will have the opportunity to learn new ways of doing business that may bring innovative ideas that can contribute to the improvement of its processes.

Jumio’s Co-Manage Success

The Co-Manage model is taking off in Colombia. There is no doubt that the country has become an attractive investment destination. According to the Bank of the Republic, FDI in the first quarter of 2019 was US $3,335 million, 23% more than in the same period of 2018.

One of the most emblematic cases of the Co-Manage model in the country is situated in Barranquilla, a coastal city in northern Colombia, with Jumio Corp, a multinational corporation that in 2018 opened the first identity verification center in Latin America with NativApps.

Jumio is recognized in the online identity verification market as the company with the largest global participation and has operations in India, Singapore, London, as well as in Palo Alto, in California and in New York.

One year after having established operations in Colombia, Jumio is a clear example of the strength of the Co-Manage model, being the only Jumio operation center with non-deep errors, expanding its physical plant and its operational staff, achieving the increase of benefits for its employees and being an attractive company in the Colombian labor market.