RIO DE JANEIRO, BRAZIL – Entering the market with a view of global growth facilitates the expansion process. According to IEEM professor of business policy Pablo Regent, companies facing greater growth challenges are established with a successful management model in Uruguay, which is very different from the regional model and even more so from the global one.
“Larger markets are more sophisticated and tend to have management teams that work much more autonomously; with great independence of company ownership. The variables they look at as indicators to manage their strategy are different, and this change is not easy to make,” Regent said.
Infocorp (recently acquired by Canadian diversified software company Constellation) began as a Microsoft technology training and infrastructure implementation company in 1994 and grew rapidly. In 2000 it developed the first software for Banco Santander – a homebanking company – and took off.
The Uruguayan headquarters recommended the service to branches in other parts of the region and Infocorp began to sell its product in Latin America in 2002. Thus, the product area that became Infocorp’s current focus gained momentum: “We specialize in creating good digital experiences for bank users,” explained Infocorp CEO Ana Inés Echavarren. The company currently serves virtually all of Latin America, with the exception of Brazil and Mexico.
Overactive (recently acquired by leading global consulting firm Perficient) was founded in 2008 by Uruguayan Martín Troisi in Puerto Rico, and in 2010 it relocated to Uruguay. The company’s aim was to address a need by helping companies – mainly in the financial sector – to go digital. It began in two markets, and in 2014 began to expand to the United States, which later became its main source of revenue: “90% of Overactive’s business is in the United States, and its development center is in Latin America,” explained Perficient general manager Nicolás Chiappara. Today, it is also present in Argentina, Chile, Colombia and Puerto Rico.
Pyxis software development company emerged in 2009 with a human-centered proposal and, in its infancy, had an organic growth in Uruguay. That lasted until 2012, when the focus on e-commerce drove the leap to internationalization – especially to the U.S. market – which enabled the development of skills that helped forge the company’s successful future. Today it has offices in the United States, Mexico, Peru, Colombia, Chile and Spain, said Pyxis commercial director Nicolás Scaglione.
Switch also emerged in 2009 as a project among friends, all systems engineers working in established companies. “We felt that we had moved away from what we loved and knew how to do very well: look for solutions and develop software,” the company’s co-founder Nicolás Zangaro said. Thus, they decided to create a company focused on financial services.
At the start, growth was very slow but from 2015 the increase in turnover reached double digits, around 20% per year. The company maintained this growth in turnover through 2016, but that same year it decided to open the U.S. market and growth was fast: over the last year, Switch grew by over 100% in turnover. The technology company currently works only in the United States but has projects for the region, in countries such as Argentina and Chile.
THE UNITED STATES, THE CHOSEN ONE
The common denominator of almost all the companies’ expansions is their arrival in the United States, a market with ample room for growth. “Working in the North American market enables the commercialization of services at better prices, which makes it possible to maintain and develop better teams,” explained Pyxis’ Scaglione.
That is why it was the country that attracted its attention for the first expansion and re-expansion. Pyxis is working to reach out with new areas of expertise to the market where its services are most coveted.
For Switch, the decision to go to the United States was based on 3 factors: the country lacks talent, the time difference is not an issue because the time zone is close, and the language is not a problem because there is plenty of bilingual talent in Uruguay.
At Overactive, expansions are managed according to supply and demand. On the one hand, it searches where technical resources are available to meet the demand (Latin America). Then it finds clients who need it. The United States is the world’s largest technology market, where for many years talent has been in short supply. The demand is latent.
AN OPPORTUNITY WITH MANY CHALLENGES
The prospect of expanding into the global market does not mean that the process is free of obstacles. In fact, when a company operates in several countries, its work system substantially changes.
“The first few months of growth into other markets implied an increase in the volume of projects that required a structural reorganization,” said Echavarren. “It changed the company; from being all together to being distributed in offices in countries where we have an interesting volume of projects.”
When Infocorp started selling to the international market, it also began to increase the number of software factories; places to develop services with qualified talent. In Uruguay there are two facilities, one in Montevideo and the other in Colonia, but it was not enough. Infocorp established factories in Argentina, Chile and Colombia.
For Switch, expansion implied changes in mentality and cultural adaptation, as well as operational and structural changes. Regarding the first point, the main change was in the team structure: “We added native people from the United States to our staff to learn how they worked, and with what values; something fundamental to be able to successfully reach a new market,” explained Zangaro. As for the second point, commercial offices were opened in Austin, Denver and Chicago in a trial-and-error process.
FURTHER CHANGE AHEAD
Overactive doubles in size every 3 years, or even in shorter periods. That leads to an ongoing transformation of the company, which involves significant work in leadership positions. According to Chiappara, the formula for success in managing constant growth is to look at the business with two types of lenses: microscopic and telescopic.
“The first leads us to be close to customers and their daily needs. The second allows us to foresee what is coming, because the only way to be able to grow and meet customer expectations is to have the infrastructure to deliver the service,” he explained. This makes Overactive’s business model an innovative one, where entrepreneurial capabilities are constant.
Infocorp also highlights the entrepreneurial spirit as a key to handle the imminent changes of expansion: “Infocorp has changed many times over the years. It was possible to change quickly because we have very small section groups that are 99% independent. They are clear about the guidelines, core values and goals of the company and then we grant great independence to each area,” Echavarren said.
For Pyxis, the key to not losing the essence of the company – the importance of the human aspect – in the changes implied by growth is the dedication of senior management to work on the fundamental issues. According to Scaglione, the transfer of certain cultural pillars and organizational values is achieved by dedicating time and opening thematic spaces.
LOOKING TO THE FUTURE
Although all the companies are now consolidated in the regional market, the goal of continued growth remains. When asked about future expansion plans, they spoke of projects in the near future.
Pyxis initially expanded to the United States and now it is once again focusing on the North American country. The company also has an important presence in Colombia, where it is developing a team of over 40 people. In Latin America, it has projects in all countries except Bolivia. With the horizon a little clearer, it is also looking to Europe and Asia.
Switch’s business objectives are basically to increase its presence in the United States and to reach other markets at a regional level. By 2022, it has established the opening of a development headquarters in Colombia to expand access to talent, particularly for highly specialized profiles that are not found in Uruguay.
Infocorp – part of Constellation – is implementing an expansion plan to the United States, Canada and Europe. In parallel, it maintains its focus on Latin America, where it understands that there is still room for growth. “We have a very good value proposition and we have done very well. We are far from wanting to abandon Latin America or for it to be relegated to second place,” Echavarren explained.
Having two growth edges, Infocorp is setting up -now 90% ready – another team for the two new markets. They would be “two different companies” because the sales processes and ways of execution are different.
Overactive – acquired by Pacifcient – is present in the U.S. with its clients in Eastern Europe, India, China and is expanding in Latin America with development centers. Its place for development is the regional market: “We will obviously grow in Uruguay and we will continue to grow in Argentina, Colombia, Chile and Puerto Rico, where we currently operate,” Chiappara said.
With information from El Observador