The Journey of the Nearshore Entrepreneur
The contributions of the entrepreneur to the Nearshore services sector cannot be overstated. These founders – thousands of them – have given the Nearshore industry a real identity, bringing their own unique cultural styles and sense of quality and integrity into the wider ring of global technology commerce.
We wanted to recognize and amplify the role of these professionals by selecting five especially interesting entrepreneurs who have thrived under a variety of challenging conditions. We sought to undercover the ‘real experience’ of each of these individuals, helping us tell a story that can provide inspiration to other entrepreneurs and shine a light on the lessons they have applied and adaptions they and their business have had to make.
This report marks an important milestone for Nearshore Americas. We are embarking on a new style of industry reporting by selecting important topics and driving deep into those topics through visual, data-driven and old-fashioned writing and reporting. In short, we are adopting a new attitude – and look forward to hearing your views and comments in the months ahead. Now on with the show! – Diego Perez-Damasco, Managing Editor
Laying the First Stone
Starting a company requires capital. And the answer to our questions about funding were commonly answered with blunt language: It’s not easy. It is particularly hard for the businesses that start in Latin America and the Caribbean, where access to financial support is notoriously difficult.
Rudy Sanchez, Managing Partner at Beliveo Corporation, a Guadalajara-based contact center and tech services company, says that obtaining initial capital in Mexico was so complicated that he and his partners had to turn to the United States to improve their chances.
“The second part of the formula, once you already obtained initial capital and your company is operating, is getting financial funding. That is possible, but it’s hard. In our case, we ended up seeking funding from close, trusted sources, because it was hard to obtain from banks. So, it continues to be a challenge. And if you don’t have sponsors or mentors, it can be a barrier for many,” Sanchez said.
Adrian Collins, Co-Founder at contact center services firm Emerge BPO, based in Guyana, shares a similar story. “In the beginning, we had an angel investor because really nobody else -certainly not in this country- was interested in investing in a company in this industry. How has it changed over time? I don’t think that the banks in the country have gotten any different. I think, overall, our business is payroll intensive. So, I guess that’s the last thing that banks will want to fund, at least in the ‘normal’ industry,” Collins said.
Moreover, even in the US, access to credit is not distributed on an even playing field. Monica Hernandez, CEO at agile software development services company MAS Global Consulting, says that banks and investors still hold biases when evaluating women-owned initiatives for investment or credit. In her case, the company has been self-funded from the beginning.
But creating a new business is clearly much more than just getting a hold of big dollars. Laying the first stone also means making a set of choices that will define your company and the path that company takes. For Hernandez, her background and her personal story were crucial aspects, guiding how she thought about the initial foundation of her company.
“My background as a Latina in technology, coming from Colombia, and also my experience in global consulting were both significant,” said Hernandez. “I had the desire to show the world the talent we have in Colombia and Latin American.”
Nicolás Amarelle, CEO at the Uruguayan mobile app development company Código del Sur, followed a more horizontal and collaborative route. “We have few (hierarchical) ranks, lots of participation, and the junior teams express their view and have the same voice as the other teams,” Amarelle said.
On the other hand, coming from the US to found companies in Colombia, Michael Puscar, Founder at Oiga Technologies, had to adapt his way of working to the local culture. “I was like an American cowboy coming down saying: ‘All right, guys. We’re actually an American company, so this is how we’re going to do things.’ But I ran into problems really quick,” he said.
Pains, Shocks and Obstacles
At the beginning, infrastructural problems were a big obstacle for Collins and his company, particular around the stability of the Internet connection. “We have one service provider that will go down on a regular basis. And then when they went down, everything went down,” he said, noting that the problem has diminished (partly due to the arrival of alternative Internet provisioning), but the threat remains.
Another adjustment Collins had to make was when a client shut down a relationship that had grown, quite successful, over the previous four years. The loss forced the company to let hundreds of employees go, at a time when the firm was planning to expand operations in Georgetown.
Despite the blow, the company has forged ahead with preparations for a new delivery center, as new clients support a company resurgence. According to Collins, the group’s new strategy is to become more resilient, and also make significant technological changes.
Nicolás Amaralle meanwhile has a different kind of worry: the uncertainty of his clients’ future plans. Focusing on solutions for US start-ups, Código del Sur can never be completely sure that their clients will not fail in the near-term.
“We literally don’t know if next month we’ll have clients because we don’t know if they will obtain funding or if the market is responding to their products. It doesn’t matter if they are bigger or smaller start-ups, the risk is always there,” Amarelle said.
Handling this uncertainty has led Amarelle’s company to have a built-in sense of caution. “Our plans usually don’t change that much, because we don’t have much planned. We plan for the present, along the way. The company is constantly changing, adapting to new technology, clients, and the input of our employees,” he said.
Cultural shock was a defining experience for Puscar’s entrepreneurial journey, as his path led to Colombia. At first, he was surprised by the lack of a startup culture. When he first hired his development team he gave them the option of either earning a salary or accepting a compensation plan that included stock options. All of his developers choose the salary-only option.
At Beliveo, Sánchez and his fellow co-founders almost fell into the trap of not diversifying their client base. “We were a small company providing services to a huge client, who was also our first. A big client can easily absorb your growth planning, year after year,” he said.
In the end, Puscar thinks that the biggest pain for an entrepreneur is making payroll. “Once you start hiring you are responsible for those people, you’re responsible for their well-being and their families, their wives or their husbands and their children,” he said.
“I have lived on ramen noodle because that [making payroll] has to be above all. When you are first starting a company, it keeps you awake at night. You wake up at 2:00 in the morning and think ‘I’m a week and a half. I’m not going to make payroll. I’ve got 12 people who are relying on me.’ So that is an enormous amount of pressure,” Puscar said.
What About the Competition?
Virtually all of the entrepreneurs agreed that keeping an eye on the competition doesn’t hurt but listening to your clients is far more critical.
“In our field, where there is such a huge demand, I care more about clients and getting more clients. If you ask me who the competitors are, I don’t know. I don’t have a name to tell you ‘this company is my competitor,’” Amarelle said.
Puscar believes that even when it is necessary to be aware of the competition, you shouldn’t let it define what your company does. “You never talk badly about the competition to your customers. That’s the first thing. That’s always a big mistake. Instead, you talk positively about that, but you box them in: ‘Oh, yeah. Company A is a great company, and I love those guys. The founders are super smart. But you know, what they really do is ‘X’, and that’s kind of what they do well. But what we’re talking about here with you is ‘Y’, and it’s completely different,” he said.
Of course the Nearshore model requires that providers perform at a level of proficiency that is considered global-quality. As a result, you have to sell your location, city, and country in the same way you sell your company’s services. Entrepreneurs seem to handle this threat with a focus on differentiation.
“I would say that our focus has been around finding clients and having clients that match really well with the competencies we have as a company and the employees that we have,” Collins said. “We don’t see ourselves as much of sort of competing with other call centers or all the regions. We don’t think that all the work should come to us, come to Guyana. You don’t think work is sort of best suited in all regions and all companies. The challenge for us, as always, I think, is to be able to let people know that we’re here,” he added.
Puscar agrees, and he adds that in the Nearshore, as an entrepreneur, you have to make clear that your differentiation will not be exclusively the cost. “I don’t think you can worry about them. Costa Rica is a great example. It has one of the highest standards of living in all of Latin America. So, workers naturally get paid a lot of money. They’re not cheap. So, when someone comes up and says, hey, I should do this in China for cheaper, you would say, go ahead. You have to define yourself in different ways. OK, I’m not the cheapest, but do you want the cheapest? Do you want the Wal-Mart of outsourcing, or do you want the Neiman Marcus?” he said.
Leadership and Trust
The entrepreneur’s journey requires plenty of soft skills, with leadership and trust being at the core. Many of the entrepreneurs we spoke to have a technical background and adjusting to the role of the leader is often a work in progress.
“The biggest thing that I’m working on is becoming a better leader,” said Hernandez. “When I started my company seven years ago, I was a software engineer, very driven, with a desire to show the world the talent that we have to offer in Latin America and combine it with awesome talent in the US. But I was a software engineer. I was not a businesswoman, yet. I wanted to be one, I wanted to become an entrepreneur. After all these years, I’ve learned to become a more well-rounded leader, that understands that a business is built on great people and great teams and that I have to be a visionary, strategic leader with long-term thinking,” she added.
Leadership also means having the ability to let new leaders flourish within your company, as Sanchez has experienced at Beliveo. “In the beginning, you have this tendency to try and do everything by yourself. Our ability to grow is directly proportional to our ability to develop new leaders and empower them within our organization. That’s our challenge, and I keep learning how to work on that,” he said.
The building of that initial leadership ethic should never a ‘lone wolf’ exercise. The majority of entrepreneurs had some kind of help from their previous bosses or other industry players they met along their professional paths before deciding to launch their own operation.
They also had to trust their first clients. That very first relationship often determines the pace of company growth. Your first set of employees also need to be the right fit. “In the beginning, apart from me, my team was formed by very young junior people,” said Amarelle. “They had minimal experience, but I found they became valuable allies that took the company on their shoulders and who went beyond what they had learned at the time since most of them were students,” he added.
Puscar adds that in the process of making his first hires, he learned to look closely at their character. “What you really want as an option is a younger version of yourself. I want to hire people that – after we succeed with them here – they’re going to go off and start their own companies,” he said.
Family can also be a crucial source of support. For Hernandez, her husband was an indispensable advocate. “At that time -seven years ago- I had a very young daughter, she was less than one year old, and I was worried about that. That’s the concern, I think, of every mom that also has professional ambitions. And my husband said, ‘I’ll be in charge of our daughter, full-time. I’ll quit my job, you go ahead and do this. That was a great lift and motivation,” Hernandez said.
In the end, becoming an entrepreneur in the Nearshore IT and BPO industries, like in every other industry, is a journey that should lead to a certain type of self-realization. The reality, outside the walls of their companies, is that potential partners and allies are all ultimately seeking authenticity. If the entrepreneur is open to change, able to adjust, and maintains their vision, that truth, that authenticity often will shine through.
“It’s not just about the financial gain, which is important -we’re in business because we want to build wealth for us, for our employees. We also want to know that we are impactful, and so, what I leave behind is important as well, and that is part of the evolution. It’s about building a company that even if I’m gone later, it’s going to have some legacy,” Hernandez concluded.