Kirk Laughlin
By Luke Bujarski
California-based technology and back office provider UST Global has selected León, Mexico as the official ‘offbeat’ location for its Latin America delivery hub. With two U.S. clients already committed to Mexico, the company aims to be the first global outsourcer to set foot in Leon. Top leadership hopes to have 750 full-time employees in León by end of 2012. The company has even more aggressive long-term plans for both León and Latin America.
Global services vendors often point to the major metro areas in Mexico including Guadalajara, Monterrey, and Mexico City. According to Sudhir Nair, UST Global Chief Delivery Officer, the company chose León precisely because of its low profile. With this strategic move to bypass mainstream talent pools, UST Global has affirmed a major commitment to the region. The decision will also test Mexico’s ability to rapidly scale high-end global IT/BPO services.
From Leather to IT
León is the largest city in the state of Guanajuato with just over two million inhabitants. Traditionally recognized as the capital of Mexico’s footwear & leather goods industry, the region could quickly step into 21st century global services. “We’ve already scaled to 150 people in León and hope to reach 750 by the end of this year – two of our large U.S. clients [one in retail; one health care] will be managed completely out of León”, explained Sudhir in a recent interview with Nearshore Americas. If all goes according to plan, UST Global anticipates reaching 10,000 heads over the next 5 to 10 years.
We would rather make the investment upfront to become the employer of choice, rather than compete for talent in the mainstream markets.”
“We are currently in phase I of our Latin America hub-and-spoke expansion strategy which puts León in the center.” When asked ‘why León’, Sudhir said that the decision was “a reflection of how we [UST Global] operate globally”.
According to Sudhir, UST Global targets low-profile second-tier locations when setting up their primary delivery centers. “We would rather make the investment upfront to become the employer of choice, rather than compete for talent in the mainstream markets.” Sudhir recognized that establishing a seasoned talent base in the region will require bringing in outside managerial and technical talent, as well as considerable investment in training. He also noted the importance of teleconferencing and proximity to their California headquarters, which will both facilitate the build-out. “We took the same approach in India with our decision on Trivandrum ruling out Chennai and Bangalore as our India hub.”
Talent Focus
“We looked at other cities including Mexico City and Monterrey and heard quite a lot about Guadalajara, but for us we had to look at the supply/demand ratio [for talent] since we wanted to expand our operations considerably.” The company will also deploy sales and delivery centers in strategic cities throughout LatAm as ‘spoke’ offices – which will likely include Guadalajara. “Mexico’s strategic position between the United States and the rest of Latin America was also very attractive to us – it brings us closer to our clients in both markets.”
“We see this as an opportunity to transform Leon and to become the employer of choice for those wanting to stay closer to their families, but also to work for a global company. We visited the universities in León and were very impressed with the talent base.” Within León there are six major educational institutions including a Tech de Monterrey campus and two other technology-focused universities. The city of Guanajuato is also home to a number of well-regarded universities including the University of Guanajuato. Recent geographic data on educational attainment supports Sudhir’s assertion about talent availability in the region (see figure). While K-12 schools underperformed in León compared to the national average, the region maintains a high concentration of advanced degree graduates – indicative of large university student populations.
LABOR MARKET STATISTICS ON METROPOLITAN AREAS IN MEXICO – 2010
Data Source: INEGI; Graphic developed by author
UST Global will provide both back office outsourcing and technology services out of Latin America. From their León center, the company will funnel a third of their operations to nearshore clients, a third for domestic market clients, and the rest to global clientele including Europe and Asia. “We have operations in the Philippines and India but our clients are extremely excited to hear about our recent move to León”, explained Sudhir.
Transforming León
UST Global recently announced an ‘exclusive’ partnership with former Mexican President Vincente Fox and his Guanajuato-based leadership training center Centro Fox. The organization grooms future business and public sector leaders of Mexico and Latin America. The partnership will act as the company’s platform for entry into Mexico. The President is a Guanajuato native and continues to work as the company’s ‘ambassador’ to Mexico and to Latin America. “Mr. Fox is extremely knowledgeable and a respected presence in the market so we are thrilled to have his support,” explained Sudhir.
Kudos to UST Global for trying something new. From their perspective of a company that wants to be a "big fish" in a labor market in Mexico, Leon is a very logical choice. The graph tells a very interesting story. The other good choice would be Puebla.