Q: Everscale helps companies establish a subsidiary in Mexico. What advantages do you offer compared to going it alone?
A: We offer two main advantages. The first is that any foreigner is always going to have concerns about moving into a new region, either because of the risks they may face because they are not familiar with the local labor laws or because they do not understand the business culture in that country. We make it easier for them to enter gradually, safe in the knowledge that Everscale is backed by a group that has been supporting companies in this process since the 1980s. Our economies of scale allow our customers to start with one temporary employee or to launch a 500-person delivery center. They decide how big and how fast they want to be when they establish here. We currently have coverage in Guadalajara, Monterrey, Tijuana, Hermosillo and Ciudad Obregon in several industries. We offer our clients an integral solution, from running their payroll to offices and customer acquisition.
The second big advantage is that we are specialized by industry. The group behind Everscale is focused on manufacturing, but Everscale specializes in the enterprise software sector, which is crucial for this industry. Our customers can scale quickly, a SAP implementation team can be ready to go in a couple of weeks, for instance. We also have customers coming from Europe that require local support because they do not have the local know-how. In the past, these companies would look for an alliance with a local competitor, but the problem was that that partner never stopped being a competitor. In this case, we would help our client set up that operation on a temporary basis and if they attract more customers, they can make it permanent.
For example, we have a client that had rollout projects that needed to be implemented in Mexico, Brazil, Chile, Argentina, Uruguay and Colombia. We helped them set up the project with experts in those countries. Everscale handles everything related to compliance and human resources, which is not just payroll management but finding the right people for each project, as every worker is in a customer facing position and their expertise play a key role in business critical projects.
Q: What is your view of the nearshoring developments that are resulting from the pandemic-induced supply-chain disruptions?
A: In the past, manufacturing supply chains relied heavily on the Asian market. The problem was that they were putting all their eggs in one basket. When the pandemic hit, however, companies learned that they had to diversify their supply chain. That is why we are seeing this remarkable growth of companies that were in China or Japan and now have hubs in Coahuila or Monterrey. This has affected all industries, but mainly manufacturing.
The trend has also had a big impact in the enterprise software sector. The industry was already accustomed to deliver their services to their customers by flying their consultants from cities close by. Now, with the trend of remote work, companies are no longer limited to hiring people in one country. They are now looking to hire people within a short distance of where their customers are. For companies doing business in North America, this is a huge opportunity for Canada and Mexico.
Now that the remote workforce trend is booming, tech companies are extending their hiring radius to cities located a short flight away from their HQ and customer sites. Where? You’ve guessed it, Canada and Mexico.
Q: What are the main challenges companies face when looking to set up operations in Mexico?
A: First of all, when you talk to a European or an Asian, they think Mexico is too risky. They are too unfamiliar with the business climate here that the research, development and commitment is not worth it for them. One thing that helps, in this case, is that we have been helping companies in this process and we know their industry. For example, Microsoft has their Geo-Expansion program where they help their partners around the world learn about each region for expansion purposes. Microsoft has published white papers on what a company should look for when planning their market entry and available alternatives for starting operations in another country. They recently released a white paper on expanding into Latin America and we helped them write it based on our experiences. In it, we try to summarize the best strategies to enter this region and why it is so attractive and important for foreign companies.
We are still an emerging market, so when a new technology comes out in the US or Germany, the first companies to adopt it are there. But emerging economies like Mexico are the ones that start embracing it. One advantage is that in Latin America, Mexico is always one of the early adopters, possibly because of its proximity to the US. Partners that master a solution in the robotics industry, for example, can be among the first players in the country. Because of the pandemic, it is easier for companies to expand their operations because delivery and sales can now be done remotely. They do not need to have as much human capital in the regions where they open operations.
Everscale Group enables the enterprise software ecosystem to run their own temporary or permanent operations in Mexico. Their Subsidiary-as-a-service can be used to deliver nearshoring services for North America, or to access new customers in Latin America without the risk and high cost of a standalone operation