One of the main casualties of the recent economic crisis was Spain, where a dramatic collapse of the economy led to spiraling unemployment, a debt disaster and a real estate crash. However, amidst the economic wreckage, one outsourcing visionary has forged a new business model based on the old adage that in crisis there is opportunity.
Puig rose to the position of Everis’ Chief Strategy Officer and dedicated himself to resolving one problem – how to ride out not only the economic crisis but also a demographic crisis that saw the number of newly-graduated young people drop to half the levels seen 20 years ago.
After spending three years studying the problem, Puig decided conditions were ripe to set up a new company based on a business model that had until then been snubbed by the Spanish market – offshore outsourcing. “Nobody had taken the offshoring option seriously because the economy was growing so fast that there was no need for adjusting costs, and there were no good experiences of offshoring services in Spain,” he said.
According to Puig, the first forays by Spanish companies into the world of outsourcing, mostly with Indian companies, had failed partly because of cultural and linguistic problems but mostly because the smaller Spanish economy was not offering the big multi-million dollar projects Indian outsourcing giants were used to dealing with.
However, when economic disaster hit there was a sudden opening for companies that could offer cost savings without sacrificing quality – the value proposition of Puig’s company, Newshore, which was launched in 2008.
Golden Rule of HR Management
“We designed a solution for a market that is in crisis,” he said. “We believe the golden rule in professional services is having the best people and what we did is show you can carry on recruiting the best people.”
Newshore’s solution was to begin offshoring work to Colombia, where labor costs are around a third of those in Spain. These savings not only manifest themselves in lower prices offered to squeezed clients, but crucially, are also reinvested in seeking out the best talent on both sides of the ocean. “With this mix of costs what you get at the end is best quality,” he said. “Otherwise we would be recruiting people that are average instead of excellent just to keep prices low enough for the crisis in Europe.”
Recruiting the top people is one of Newshore’s priorities, to the extent that they headhunt based on reputations and recommendations rather than throwing positions open to any applicants. “It doesn’t matter if they are working for another company, we will go and hire them because we want excellent people,” said Puig, whose centers in Colombia offer a mix of traditional BPO, software integration, testing and quality assurance.
Headhunting in Colombia
Puig’s years of experience in outsourcing gave him confidence that Colombia was the place to find that talent, offering the right balance of education, costs, attrition levels and working culture.
More importantly for Puig, it is also a Latin American destination with a growing middle class of educated people hungry for good jobs. “Our business is based on middle class people,” he said. “We train people that need to work to live and Colombia has that.”
Filling senior positions has not been the only bump on the road for Puig, they have also had to work with educational institutions and invest in staff to ensure Colombian workers meet the standards expected back in Europe.
However, instead of opting for the obvious choices of capital Bogota or second city Medellin, both thriving outsourcing destinations, Newshore instead plumped for cities in the less well-known Eje Cafetero (Coffee Zone), eventually settling on Manizales, and then expanding to nearby Armenia.
“We thought instead of setting up the office in Bogota or Medellin, where you will be competing against other companies, you go to a place where there are many people but less work,” said Puig.
The local authorities welcomed Newshore with open arms, helping them set up facilities and find premises. The company also established a close relationship with Manizales’ University of Caldas (Caldas is the department where Manizales is located).
The only concern in moving away from Colombia’s outsourcing hubs was sourcing talent for senior management positions, as anyone with the experience and qualifications for the roles would have to leave the smaller cities to search for work in Bogota or Medellin. The solution for Newshore has been to take the search to these exiles, tracking down those with the right background and a desire to move back home.
“It is not easy to find but when you find it, it’s like he or she needs us and we need him or her,” said Puig.
Filling senior positions has not been the only bump on the road for Puig, they have also had to work with educational institutions and invest in staff to ensure Colombian workers meet the standards expected back in Europe. “The level is not the same,” he said. “The first thing is you have to target the university you want, and then the second thing is you have to do an extra training process for one or two years until they are ready to work autonomously.”
However, Puig says, his Colombian teams have made up for the skills gap with hard work and determination to prove Colombians can match their European counterparts. “They are patriotic in a good way,” he said. “It is like playing soccer, you are representing your country and so it has to be done well.”
Tackling Suspicious Spanish
Back in Spain, Newshore’s Colombian venture was at first greeted by clients with suspicion, and the results were not what Puig had been hoping for.
“In the beginning they were like ‘don’t tell me that, I don’t like working with people I can’t see,’” he said.
Puig decided that while Colombia sufficed for standard BPO operations, for the higher end application development, clients would be better served by mixed Spanish-Colombian teams, and the combination has served the company well.
With the presence of a Spanish contingent to work with client, the unease around outsourcing began to fall away, especially as the crisis began to bite.
“When the crisis started to affect corporate budgets they were more open to new solutions and new proposals,” said Puig.
Since then, the company has flourished, at first growing rapidly, posting growth rates of around 60%, and now steadily – at around 7% – as Newshore takes a selective, safety first approach to taking on clients and projects.
And while the Spanish economy has continued to splutter, only recently stumbling out of recession, Puig feels that Newshore has led the way in adapting to these new, leaner times.
“The market has been almost dead for these five years but it if there was one thing companies needed at that moment was new ideas, which is what you need in a crisis,” he said.