Nicaragua might be among the poorest of countries in the western hemisphere, but that hasn’t stopped MDB Capital Group from ramping up an ambitious patents processing operation there. In fact, widespread underemployment is one secret to the success behind PatentVest, the knowledge process outsourcing subsidiary of MDB Capital Group, on the ground in Managua since 2007.
Driven by the solid results achieved thus far, PatentVest CEO and venture capitalist Chris Marlett says he hopes to expand operations to 1,000 engineers over the next five years.
Perhaps even more surprising has been the support Marlett’s group has received from a controversial Nicaraguan government. Nicaragua’s success in the KPO space (albeit nowhere near the scale seen in India) also echoes broader opportunities for KPO across Latin America – particularly in Central America.
At the core of the PatentVest story is how a California-based investment bank – MDB Capital – managed to leverage Nicaragua’s workforce to develop an innovative and sophisticated financial market research service (see story about early days). “We built PatentVest from the ground up covering over 4,000 public and private companies, unifying over four million US patents granted and over 2 million US patent applications on file. Over 75,000 man-hours and several million dollars were spent on its initial development,” Marlett said in a recent interview.
The resulting one-of-a-kind database and reporting tool can be used by subscribers to “research, analyze, search, score, rank and appraise” the equity value of companies based on their intellectual capital, in the form of patents and patents pending.
According to Marlett, the PatentVest analytics tool is due to hit Wall Street within the next 90 days.
Going beyond the initial PatentVest database build-out, MDB Capital is now flexing its operations in Nicaragua to service clients across all three of their key service offerings: Business and financing strategy development and IP strategy development for disruptive tech companies like Superconductor Technologies, Crossroads Systems, and Uni-Pixel.
“We are moving deeper into the knowledge process outsourcing space,” Marlett says. “We’re doing the IP strategy here [in the US], but much of the execution is done by our engineers in Nicaragua. We have about 20 people in the US, but the IP and patent processing is done by our 150+ staff in Nicaragua, which includes 50 engineers.”
Going forward, Marlett says there is potential to grow the business to over 1,000 engineers over the next five years.
Underemployment, Government Support Key to Success
Contrary to outsider perceptions, the Nicaragua government led by the Ortega administration has been an outspoken supporter of foreign investment in the country. For PatentVest, a proactive partnership with public officials is proving critical to fast-tracking permits as well as visas for engineering talent recruited abroad. Marlett said that the current government has an “open-door policy” when it comes to bringing in the necessary talent from nearby countries that have been more heavily affected by gang violence and crime. To date, Nicaragua has not suffered the same degree of social strife that continues to plague El Salvador, Honduras, and Guatemala.
When asked about the local labor pool, Marlett said there were “ample opportunities” to pick up underemployed and educated people that see little opportunity in other sectors. In markets like Nicaragua, it is common to see people with advanced technical and business degrees working in lower-skilled jobs. “We look for engineers and MBAs and often find them working for one of four main contact center operators in Managua,” noted Gustavo Mercado, Director of Operations for PatentVest S.A. in Managua.
Looking for KPO Opportunities in Latin America
Last December we reported that outsourced services such as business and financial research and data analytics have been slow to grow in Latin America.
Mohit Srivastava, Country Manager for EvalueServe Chile, said that while “we have successfully grown our office to 250 employees since opening in 2006, many of our competitors here [LatAm] have struggled to build up a staff of more than 100 people.”
The problem is a simple issue of supply and demand. “We need high-speed people and target candidates for higher-level positions with Master’s degrees and PhDs in economics, statistics, engineers, math sciences, and other technical fields.” However, in rapid-growth economies like Chile and Brazil, people with technical talent get consumed by domestic demand that might otherwise be available for offshore KPO operations.
Following in the footsteps of PatentVest, we question whether LatAm’s underdeveloped economies, particularly in Central America, are a better fit for certain KPO operations than their larger more developed neighbors.
Both Guatemala and Costa Rica have a proven bilingual workforce and a successful track record in BPO – which could be a strong source of labor for more advanced KPO projects. And, smaller more responsive national governments keen to capitalize on unique economic development projects could be a boon for those willing to invest the time and resources needed to grow from the ground up.