Cultural alignment has its advantages in any external resourcing partnership, but are some nearshore countries really as aligned as we thought, and what else is still holding them back?
According to Alfonso Perez, Co-founder and COO of Shopperception and long-time technology entrepreneur, the “Mexico factor” is playing the cultural second fiddle in comparison to other Latin American sourcing hubs.
“Argentinians are more aligned with the U.S. culture and tend to be more neutral,” he said. “Brazilians are kind of in between New York and Mexico–very much on the polite side and more concerned about the relationship, as well as avoiding conflict.”
As a long-term client of Harvey Nash, Perez and his company feel that cultural alignment issues have not been too disruptive, but have always been a challenge.
“If you’re managing a team in Mexico, you have to be prepared to anticipate issues, whereas New Yorkers are much more direct and will tell you if something is wrong, of even if they disagree with something,” he said. “The key to outsourcing successfully has been finding people who are culturally aware and can work with the teams to bridge those gaps.”
Alongside culture, the primary hurdles in this region still come down to maturity, with political stability, government alignment to outsourcing, and flexibility issues, particularly when attempting to retrieve currency that clients have invested into certain countries, as an example.
“There has to be certain changes at a governmental level, such as changes to policies that support intellectual property theft,” said Anna Frazzetto, Chief Digital Officer & SVP/Global IT Solutions & Outsourcing Strategist for Harvey Nash, a global recruitment consultancy and IT outsourcing service provider. “If you are offshoring application development, you want to have government backing that prevents IP theft. This might not be the case in Latin America today, but it’s going to get there–it’s only a matter of time.”
Harvey Nash still comes across issues with the internal decisions that organizations make when they want to outsource of offshore part of their operation. “Some companies in the U.S., especially smaller ones, are still concerned about taking something that is core to their business and then outsourcing it,” said Frazzetto.
Having spent a lot of time in the APAC region, Frazzetto has found that some companies there are more comfortable in jumping forward in the outsourcing space, but this is usually tied to company size. “With Fortune 1,000 companies, the outsourcing decision-making process may take longer internally, but a new company starting in the U.S. will more likely just dip their toes in the water before actually engaging,” she said.
To get around this challenge with Shopperception, Perez focused on transparency to build trust from the beginning of the relationship with Harvey Nash. He had no problem sharing strategic plans to make the team aware of the challenges they were facing and the technologies they were considering, as well as using Harvey Nash to test possible strategic changes in platform technology and approach.
“They were willing to risk things with us because of the relationship we have built,” he said. “If you plan on a long-term relationship with a supplier or vendor, you must treat them as part of the team. To do that, you have to find a provider that can align with your company style, your speed of change, and the right level of communication to understand your business and be effective without you needing to micromanage the process.”
Perez has been leveraging Harvey Nash’s services for many of the startups he has helped to create. “The industry has evolved a lot,” he said. “It used to be hard to communicate with the main providers in India and China, and it was difficult to align teams, so there was some overlap of overseas and local teams. In my experience with outsourcing in general, the industry has started to get better, particularly at engaging with local management and empowering them, which has helped most of these original challenges to fade away.”
Education and Talent
Educational structure is also a strong factor in the region’s advancement in maturity, as it has a way to go before it can compete on a technical competency level. This also includes having more universities that can be more flexible in working with certain organizations, while developing curricula that can produce the necessary talent for those companies.
“We’ve spoken with one company that has faced challenges in scalability of talent,” said Frazzetto. “Firstly, facing difficulties in achieving the right level of technical competency, and then struggling to find multiples of that in order to ramp up fast enough.”
Scalability and technical competency are the top two requirements of today’s clients, and costing comes third of fourth, according to Frazzetto. “I would encourage outsourcing organizations in Latin America to look at how services are packaged and delivered, not just the dollar-for-dollar ratio,” she said. “Providers need to be malleable in how they deliver services, but they also can’t be everything to everybody, because there is no standardized approach to delivery.”
Furthermore, companies are apparently slowing down on their approach to bleeding edge tech, because of the concern of where the talent is going to come from. “This is where outsourcing needs to come out strong—we have the available talent and we have to remain one step ahead of the technology curve,” concluded Frazzetto.