Nearshore Americas

Alignment with Labor Market Realities is Critical to Global Location Strategies

Identifying labor markets with the right volume and quality of talent is a critical element in location selection for nearly all companies. However, fully understanding a market’s ability to supply the requisite volume and quality of talent is a complex process that is fundamentally tied to understanding the three main characteristics of the local labor pool – foreign language capability, level of educational attainment, and level of experience.
Local labor markets have varying capacities to supply talent with an intersection across all three characteristics. The extent to which a labor market can supply the qualified candidates in sufficient scale typically becomes a key determinant for whether a location is selected by a company to support its operations.
The “Talent Triad”
When investigating a labor market to determine the merits for new operations, think about the “Talent Triad”. We use this term to reflect a labor market’s ability to supply labor with an intersection of the required experience, education and language. Experience demonstrates that a location performs best for a company when the labor market can accommodate the unique point of intersection across these dimensions of capability:

  • Experience – The volume of candidates with the required level of experience, industry knowledge, and specialized skills to support an operation.
  • Education – The volume of candidates with the required level of educational attainment. Ranging from a high school diploma to advanced degrees, each country can have a unique education system and different levels of rigor and training at each stage of completion.
  • Language – The volume of candidates with the required foreign language proficiency (reading, writing, and speaking) to support an operation.figure-1

The Intersection of Skills Rather than Gross Volume
Uncovering the potential of a labor market is understanding the extent to which candidates can be sourced across all three qualification areas. In an ideal world, there would be a constant supply of talent that possesses the required experience, educational attainment and foreign language proficiency. This would make the recruitment of talent relatively easy.
Unfortunately, most labor markets are not able to supply large quantities of talent with capabilities across the three dimensions of desirability/performance, and in reality there tends to be limited overlap of all three considerations, making the ability to recruit talent more difficult and/or requiring the company establishing the operation to invest in training the workforce to improve on the areas of weakness.figure-2
Different Needs for Different Operations
Each type of operation tends to have different requirements of the Talent Triad. The real art in analyzing labor markets is understanding the volume and degree of intersection required to support an operation and the ability of the labor market to supply that talent. For example, call center operations tend to require a large volume of talent, with strong verbal language skills, but with lower levels of experience and/or educational attainment. In contrast, headquarter operations tend to require fewer people, but the talent typically must possess notable experience, education, and foreign language proficiency.figure-3
City Illustrations
Labor markets have different profiles of the Talent Triad.  For a location selection decision to be successful, it is necessary to align an operation’s labor requirements with a matching labor market profile. When cities are evaluated against the Talent Triad, each city has a unique character. Even within a single region it is possible to find a very large degree of divergence between cities.
For example, some cities, like San Jose, Costa Rica, have a very small overall labor force, but the majority of that population tends to be skilled, educated, and multilingual. In contrast, other cities, like Lima, Peru, have a very large overall labor force, but a small percentage of the population has a high level of multinational experience and educational attainment – and an even smaller percentage has multilingual abilities.
The graphic below illustrates a sample of Latin American cities against the Talent Triad (assuming English is the required language proficiency).figure-4
Flexibility in Talent Profiles
Often, job requirements are created in the context of the company’s origin country. For example, a job description that requires a foreign language proficiency may also require a university bachelors’ degree, since most multilingual talent originates from the university system in that particular country. Or, in another example, a job description may require 2-3 years of prior work experience as there is an ample pool of this experiential level to recruit from in the origin country.
Yet labor markets have different talent profiles. Understanding the profiles in the context of the Talent Triad can help develop the overall human resource strategy for a city. In some markets, foreign languages may be learned outside of the education system and in other markets there may be limited pools of experienced talent but massive university graduate output into the labor market each year. Understanding what qualifications are actually required for an operation and “who” in the local labor market has those qualifications will ultimately yield greater recruitment success.figure-5
The Talent Triad, the intersection of experience, education, and language, is an important framework for aligning corporate objectives with local labor markets. Understanding a market’s overall alignment (or lack thereof) serves as a critical step in building a successful recruitment strategy.

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Matt Jackson & Shannon Curley

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