SoftServe’s 30th anniversary is a landmark achievement, to be sure. But as the company celebrates three decades since its launch in Lviv (Ukraine), it also looks back at the first 365 days of its most recent venture: Latin America.
SoftServe landed in the Nearshore in mid-2022. It opened its first Latin American offices in May, located in Guadalajara (Mexico) and Medellin (Colombia). Four months later, the trifecta was completed with an office in Santiago (Chile). The year that followed has been filled with both triumphs and challenges, and the company seems committed to push forward with its Latin American project.
In commemoration of that first Latin American year, NSAM spoke with Vladimir Mendoza, VP and Mexico Country Manager at SoftServe. Mendoza provides a frank assessment of the company’s fortunes in Mexico as of today, touching on topics such as its sourcing strategy in the country, the difficulties faced in a context of cost optimizations among major customers and the cities that it has been eyeing for expansion in the country.
NSAM: Tell us about SoftServe’s first year in Mexico.
Vladimir Mendoza: In this first year, we surpassed 200 hirings; our headcount now hovers around the 200 collaborators mark. Same thing goes for Colombia. In Chile we did start a bit later; our headcount there is around 50 collaborators.
I think that last year was excellent for us. We’re working with 34 global clients. We’re also working with several technologies, such as Java, .NET, DevOps and other solutions we’re offering now. It was quite a year.
In 2023, we’ve felt the impact of macroeconomic factors suffered by all Nearshore consulting firms. Cost optimization trends among our main US and Canadian clients have cut down on the potential for growth that we saw at the start [of our LATAM arrival].
Nevertheless, SoftServe keeps showing organic growth in its projects. We’re still growing; not at the same rate as last year, but there is growth. We’ve focused this year on capitalizing on internal engagement and regional consolidation.
NSAM: Specifically, how are macroeconomic factors affecting SoftServe’s business in Mexico?
Vladimir Mendoza: Our customers are doing what they can to soften the impact [of a potential economic downturn], which translates into cost optimization strategies in their companies. That usually means, for us, smaller projects, with a stronger focus on critical ones. Some of our clients had layoffs; there were restructurings, as well as budget cuts for 2023.
There were projects scheduled for this year which had to be moved to 2024. In some cases, our clients had projects assigned to Latin America and decided to send them to India in order to cut costs.
“Our customers are doing what they can to soften the impact [of a potential economic downturn]. That usually means, for us, smaller projects, with a stronger focus on critical ones”—Vladimir Mendoza, VP and Mexico Country Manager at SoftServe
This situation might sort itself out in the third or fourth quarter of this year. By 2024, definitely.
NSAM: Is SoftServe giving thought to lowering its prices?
Vladimir Mendoza: Of course. It’s a market issue. That’s how SoftServe launched with a competitive edge: through a series of benchmarks in several areas.
We do that year after year; we’ve definitely done it this year. We’ve done adjustments [to our prices] to remain competitive. SoftServe has had no layoffs, while our competitors have. And that’s resulting in a market with an oversupply of specialized issues, in which not all of the skills available mesh with customer demand.
NSAM: What do you mean by an “oversupply of specialized issues”?
Vladimir Mendoza: We’re seeing too many senior and technical lead profiles out there. We’ve even noticed a downward trend in salaries [for those profiles] due to the amount of people available in the market, which was caused by the layoffs.
Not everyone has the same level of specialization, of course, and that’s when the market begins to adjust according to its needs. Some colleagues of mine are now considering lower salary offerings to find employment in the short term.
NSAM: Some IT service providers have told us that, due to the lower availability of projects, a good portion of their staff remains “benched”, specially those with more sophisticated or niche skills (AI, cloud, data science). Is this happening at SoftServe too? If so, how are you dealing with the situation?
Vladimir Mendoza: It is happening. But we have a global CTO area, with R&D departments. Those have specific, tech-oriented lines of work in which our collaborators, during those pauses, can contribute with demos or product segments with client-specific information.
This year has pushed everyone into working differently, that’s for sure.
NSAM: In Mexico, have you encountered any trouble when searching for specific profiles to fill job positions?
Vladimir Mendoza: Yes, we have. Anything related to cloud specialization; we’ve been having trouble there. Same thing goes for ML, for data science. We have good numbers at the junior and intermediate levels, but leaders, tech leads and even architects, there’s a deficit there, for certain. And it’s not only about technical skills. We have trouble finding business-friendly profiles too, which would allow us to build strong, service-oriented talents.
“I think Mexico is still the country with the highest availability for these sorts of [highly-specialized] skills”—Vladimir Mendoza, VP and Mexico Country Manager at SoftServe
What we’ve done to solve this is leverage the capabilities of SoftServe’s university. That allows us to professionalize roles. For new technologies with high customer demand, we are the ones generating the talent.
But even then, Mexico has high talent availability for these technologies. I think Mexico is still the country with the highest availability for these sorts of skills. Even when we are having some difficulties, what’s out there has proven enough to allow us to grow the company.
NSAM: Would you say that the Mexican higher-education system is failing the IT industry?
Vladimir Mendoza: If we look at the glass half-full, I would say that our industry is moving at a pace that is too fast for the higher-education system, which can’t keep up with the speed of change.
Today’s education systems require a process which does not allow them to move at the same pace as our industry. There’s indeed a gap that we, as Nearshore consulting firms, must try to close in order to make the leap.
But I must clarify: SoftServe has encountered this gap globally. It’s not a problem unique to Mexico. It happens in several latitudes; on different scales, of course.
NSAM: When SoftServe arrived in Latin America, the company mentioned plans to hire 3,000 engineers by 2025. With the numbers that you mentioned for Mexico, Colombia and Chile, I wonder if you can reach that goal in the next couple years.
Vladimir Mendoza: No. Our pace of onboarding has slowed down a bit. We updated our goal, actually. SoftServe is still aiming for 3,000 engineers, but now we hope to reach that number over a period of five to seven years [between 2027 and 2030].
At first, we thought that we could make it in three to five years, due to the high volume of projects in our pipeline, but that has changed.
NSAM: Your Mexican offices are located in Guadalajara. Why choose that city instead of another?
Vladimir Mendoza: We opened our Mexican HQ in Guadalajara just last week, and we plan to expand the available office space for our people here in Guadalajara. We’re not seeking a return to the office; our working model is 100% remote. Nevertheless, the concept of HQ has changed: it’s more about collaborative work, team building, company events and customer tours, to show off our infrastructure.
Our HQ in Guadalajara will meet the needs of our growth over the next three to five years, without issue. About 29% of our collaborators [in Guadalajara] are coming to the office under a hybrid model. That’s why we think this HQ will be enough.
Besides, having an actual office in the city underscores the fact that Jalisco is our biggest talent hub. Around 45% of our staff [in Mexico] is sourced from Guadalajara, even though we didn’t intend it to be that way. We hire nationally, but the levels of specialization and the tech available in Guadalajara have led to a stronger growth in our projects here than anywhere else.
Following Guadalajara, our biggest talent sources are Mexico City, followed by the cities of Leon [Guanajuato], Aguascalientes,Tijuana [Baja California] and also smaller geos, like Merida [Yucatan], Sonora and Saltillo [Coahuila].
Although our HQ is in Guadalajara, we’re evaluating the possibility of acquiring more office space through co-working partnerships, like WeWork and IOS. We’re actually looking into a proposal from a global provider who would supply us with spaces for single workers in any given location.
We’re not interested in opening actual offices in other states, but we do want to expand our infrastructure to meet the needs of our collaborators.
NSAM: If you were to expand to another location in Mexico now, where would you begin?
Vladimir Mendoza: We’re starting to expand in Mexico City. It’s not official yet, but we are adding working infrastructure there through co-working spaces. We have staff there.
A third step would have us evaluate the same process in mid-sized cities like Leon, Aguascalientes or Queretaro.
NSAM: In your various IT hubs, do you tend to hire talent from within the main area of operations or do you source from beyond your main cities?
Vladimir Mendoza: Let’s say that our sourcing network is completely open. If candidates match our requirements, they will be hired, no matter where they’re located. There are no limits, in that sense. These IT hubs allow us to build internal strategies to satisfy the needs of our growing pools of talent.
“Jalisco is our biggest talent hub. Around 45% of our staff [in Mexico] is sourced from Guadalajara, even though we didn’t intend it to be that way”—Vladimir Mendoza, VP and Mexico Country Manager at SoftServe
We map these IT hubs because we see how the pools grow, but there are no territorial limits for sourcing. You’ll find [SoftServe engineers] working in other municipalities, in small towns, places with a population of less than a million. And that’s fine, as long as they have an Internet connection strong enough for working with customers online.
NSAM: We’ve been told that US clients, even when they are satisfied with Nearshore talent, would rather keep those particular hiring strategies on the low. Have you seen this attitude towards nearshoring? If you have, what’s your take on it?
Vladimir Mendoza: I’ve seen that, yes, but I don’t think it has anything to do with pushing their nearshoring activities under the rug. Our clients are proud of working with Latin American talents. That, in our company, is seen as a positive. For most of our history, our operations have been located in Europe and Asia. Several of our clients see the move into Latin America as a very positive point.
I think that it is more related to issues of confidentiality and competition. In the end, nearshoring is part of a competitive strategy in the industry.
But I think this is becoming less of an issue. There are more and more Nearshore consulting firms. It’s more common for customers to share their business relationship with this or that Nearshore company.