The Software Outsourcing Show, Episode 11: What it Means to Outsource to Latin America

The Software Outsourcing Show is on a mission to explain best practices for strategies, partner selection and ongoing management of outsourcing your software outsourcing development. This episode of the Software Outsourcing Show features Katina Kenyon, VP of Sales and Marketing at Applaudo Studios, our Certified Partner in El Salvador.  

Katina and Bobby discuss what it really means to outsource to Latin America and how a long history of turbulence in El Salvador has transformed it into a great software outsourcing destination.

Transcript:

Bobby: Hello and welcome to "The Software Outsourcing Show." My name is Bobby Dewrell and I am your host. And I am excited to have you with us today so that we could talk about outsourcing to Latin America. Now, outsourcing to Latin America, just like, you know, most of the other subjects and regions that we talk to, we do have a bunch of assets out there. We've got the Latin American region guide that will be available in the show notes here, as well as it can be found at accelerance.com, where we cover things like what are the going hourly rates, what are the time zone differences, what you can expect from a socioeconomic standpoint.

Also, we've written a blog article, that blog post we'll have in the show notes as well, everything you need to know about outsourcing to Latin America. And, you know, kind of funny enough, we've got a lot of upcoming travel, it seems, to Latin America these days, with one of our teams going there to assess some of our potential partners, and as well as yours truly will be down in Costa Rica for an assignment with one of our clients coming up. So a lot of activity going on in Latin America. It's nearshoring, it's close to us, a lot of cultural affinity and that was really brought to us in part by the people that really kinda blazed some trails down there as they started coming into the mid to late '90s after there was peace, democracy in the area. A lot of the civil wars that we heard so much about during the '80s had settled down and come to end.

We are very blessed today to have in the studio with us one of those ladies that was on the forefront of making a lot of that happen, and that is Katina Kenyon. Now, she spent her 19-year career has been solely in technology. She had a 13-year stint with Dell Technologies where she was an international expat. So, that means she lived, she worked, and, by work, we mean leading sales, marketing, and operations for Dell in Latin America, actually on two different assignments, one in Brazil and one in Central America, specifically El Salvador, which is one of the places we'll talk more about today. Now, as an expat, she learned how to lead employees who have different value systems by speaking the literal and figurative language of her customers, her employees, and her stakeholders.

Her experience living and working in El Salvador led her to Applaudo Studios where she is today, which is a software development company focused on building high-quality web and mobile products. Now, Katina also serves on several privately held company boards and volunteers with some of Austin, Texas' finest business programs, including Techstars Austin, Techstars Impact, the International Accelerator, and the Kauffman Foundation's 1 Million Cups. Katina leads sales and marketing for Applaudo Studios, and we are excited to have her in the studio with us today.

Katina, good morning. How are you? Welcome to the Virtual Studio. Thanks for joining us today.

Katina: Good morning, Bobby. Thank you for having me.

Bobby: Now, I have to ask. I know you spent a lot of time in Central America and even down in Brazil. Can you tell me a little bit about that?

Katina: Yeah, I had a really great opportunity early in my career to travel and work in both Central America and Brazil on behalf of Dell Technologies. So we were opening call centers and tech centers around Latin America, specifically in El Salvador. It was the country that we selected for one of our call centers supporting the United States. So it was one of the early adopters of nearshoring. Fell in love with the country, what the country had to offer both in terms of talent but really people. So the people is what I fell in love with, being able to travel throughout Latin America and being able to come back home, and calling El Salvador home was really special. I actually had both of my children while we were in-country.

Bobby: Awesome.

Katina: So I have a very warm place in my heart for El Salvador.

Bobby: I can only imagine. I've got some family that had some property down in Nicaragua. So, you know, not too far, not necessarily close. And I know I've got some potential travel coming up to Costa Rica, and I'm looking forward. You know, the Latin American culture is just, it's amazing to be. It always has been. And I know that's...you know, one thing to talk about when we talk about outsourcing, you can't get around the culture aspect of it. It's understanding the people, the way of life, to understand better how to communicate and how to work together as a team, right?

Katina: Yeah, I would say, you know, I may come back to this theme often, but warmth, I mean, the warmth of the people, the warmth of the business culture, it's a warm culture all around. And it doesn't hurt to have vitamin D shooting out of the sky at you all the time.

Bobby: Right.

Katina: So, warmth, overall. I've found and continue to find that that is what draws me back, you know, as a leader, but also draws me back and seeing from our clients what is important to you when you're building something tends to come down to the humans that are doing it with you and for you. So, you know, warmth, I think, is really unique about the Latin culture in totality. And I think that it's something that continues to bring many of us who have different experiences in business cultures. It's nice to feel warm.

Bobby: Yeah, absolutely. And I think that's probably the best description that I've heard of it is to call it warm because the minute you said that, I was like, you know, that is absolutely right. Anytime I'm working with any of our Latin American partners, that's what I think of. Business and family are almost the same thing. Don't get me wrong. It's not, you know, the American notion where work evades every part of life. It's life is there, and it's lived through everything. I mean, it's family, it's friends. There's no separation of that's just a work colleague or that's a friend, right? It's, "I work with my friends," you know?

Katina: And having that level of trust coming into a business scenario, if that trust is there, I have found that, you know, Latins hold on to that. And so they're gonna build upon the trust that's already established or they're gonna work to get you there. So they're gonna work to get that trust built so that you can then go build and do innovative and challenging work with an established trust base. You know, for those of us who haven't worked in that value system, you know, it might stretch a bit to get out of your comfort to be open and willing to accept that warmth.

Bobby: Right.

Katina: But that is one that will yield really strong results in the long run. And we see it day in and day out.

Bobby: Yeah, absolutely. I could not agree more. And when we talk about outsourcing there, I think that's probably the best thing to talk about first and to throw out there, and I know we'll talk about a lot of different stuff, but it is just that culture and understanding the embrace of it all and where they come from. Go ahead, go ahead.

Katina: You know, this cultural affinity, you know, we talk about knowing the cultures that you're working in and that being critical. The geographic proximity of Latin America has to the United States is apparent, right. So they're gonna have the same kind of westernized and aspirational kind of life goals, as many of us do as Americans. But that cultural affinity when it ties to outsourcing and to software development, in particular, is really important to note because a lot of what companies and technology platforms that are being built in the United States, team members in Latin America are consumers of that technology. They are users of the applications that they're being asked to build. So, that cultural affinity is not just, you know, we watch the same TV shows or we jam out to the same music. It's the consumerization of the applications or the programs that we're being asked to build are ones that our team members know of.

Bobby: Right. And, you know, I think, too, it's...when we talk about that affinity in respect to it, I mean, when we look at universities in Latin America, I think the IT programs there are incredibly robust. I know there are some great programmers that are coming out and developers that are coming out that could take care of almost any commitments. Now, I know, when we look at that nearshore model, because there is the proximity, the ease of travel, you know, English is almost second nature, it seems, to almost everyone there. So the language skills and those cultural similarities are there. Now, I know the costs are a little bit higher, but really, when you gain that workday overlap because...I mean, what I think...when we talk about Latin America, it's mostly, what, like Mountain Pacific time? I don't think it's Central.

Katina: So, half of the year, it's Central Standard Time, depending on if the country recognizes daylight savings time. So Central Standard Time and Mountain Standard Time is the majority of the time zones throughout the calendar year. So, being able to be collaborative real-time, not just the real-time piece of the collaboration, right, it's avoiding the wear and tear of your product owners or your product managers, giving them a semblance of a real life, not having them up on calls at 4:00 a.m. or 2:00 a.m. Giving that avoidance of wear and tear on your in-house product owners I think is really critical in having that collaboration, but also avoiding their burnout, I think, is another critical piece to time zone.

Bobby: Right. And I think that's why we see so many global investors that are really starting to invest in Latin America, and I think the list that I saw included SoftBank, TPG's The Rise Fund, Telstra Ventures, Rethink Education. I know there were some others out there. But we are starting to see more and more people invest in that nearshore in Latin America, right?

Katina: And investment happens not just because they're seeing the time zone benefits, but having access to high-tech talent, you mentioned universities that are producing these, you know, students that are educated in a way that is primed to come into software development and technology fields. So, as industries have shifted over time in many of these countries throughout Latin America, even when I was there in the early 2000s, were focused on hospitality, tourism, and call centers. And so recognizing that the university systems were able to produce such high-level tech talent, we've seen that being able to shift into software development and engineering roles are game-changers in these countries. These are offering career paths for tech students that are far beyond what generations before them had access to.

Bobby: Yeah. I'm just surprised. And I know there was a lot of unrest in the region that a lot of people might remember that was really marked in the '80s, right? And I know El Salvador had some issues, I think Nicaragua had some issues, but those were all kind of 1980s era based things, if I recall correctly, right?

Katina: Yeah. And having the embrace of democracy and finding democracy has not always been the easiest path to take. But these countries are operating with the semblance in the most that they can in terms of giving their citizens a good life and being able to protect freedom. Now, of course, there's always gonna be, as democracies are established, there are challenges, much like, you know, we have all seen throughout the world. But the amount of focus that many of the investments that you mentioned earlier, some of the global investments coming into Latin America are recognizing that giving opportunity to a rising middle class changes the socioeconomic outlook of an entire country. And so these investments are smart ones, and we've done the same. And so we continue to double down on what we see the talent capabilities of this region being able to offer.

Bobby: Right. And when we talk about the region, too, I'd like to talk a little more specific about El Salvador as well, because I know that's where you have, you know, a lot of your time and your experience. And I believe El Salvador is like the most densely populated state. Is it not? I think it's like the most highly industrialized. And although it's small, it's like the most densely populated.

Katina: It is, and it has very strong ties to the United States, both from a government perspective and USAID investment in-country. The Salvadorian affinity to the United States has been one that has developed over time. But my own particular experience being there in the early 2000s, it really gave me a sense of what doing business in the country meant and being a leader in a different value system. And I quickly recognized that the Salvadorian workforce was one that had an unmatched work ethic. I come from a family of immigrants myself. And so growing up in the restaurant business, I thought that my Greek family, my Greek lineage, that no one could touch our work ethic, that we were untouched there.

But then I was able to work and live in El Salvador, and their work ethic is not just a "We're proud to do the work that we're doing, we will do our best," they do have a infused sense of urgency. They get that kind of U.S. focus on not just say yes, not just say yes and maybe go on to the next statement. The Salvadorian culture, from a business perspective, is really strong on understanding the ask and understanding the urgency as to why that ask is being made. So I really found that playing into and making sure that our team members could respond with authenticity, obviously, with truth, but being able to understand that a U.S. business owner, business client does have a heightened sense of urgency. And so we need to reflect that in response.

Bobby: Well, and I think, you know, and I don't mean to keep going political on this, but I think a lot of that has to do with really where, especially with El Salvador, where the state is, because I know, if we're talking to the listeners out there, the people that are listening and thinking about El Salvador that's, I'll say it, at my age or a little bit older is gonna remember all of the growing up around seeing the civil war. I think there was something like 70,000 people dead. But really that change, there was a UN-brokered peace agreement around '92, and I mean, in terms of those political and social developments, we're talking about the younger developers that are out there. I mean, they've grown up in a state of peace, they've grown up in this lack of inequality.

Just really, I think, the latest Gini coefficient I saw, which measures inequality, it declined by about 5 percentage points between 2007 and 2016, making El Salvador the most equal country in Latin America after Uruguay. And I think it's been, what now, five consecutive democratic presidential elections that have taken place with a peaceful transition of power. So, to me, when you start building your political and your social environment like that, you know, it's the Maslow's hierarchy of needs, right? There's a closer understanding to the states. When you have that stability, you get the little things that the people want and try to communicate in subtle ways, right?

Katina: Yeah. And I think your assessment is spot on. When you have that hierarchy of needs satisfied, it uplevels everything, right? It uplevels your ability to provide for your family. It uplevels your ability to excel in the professional work that you do. It uplevels your ability to be a community member. The community, going back to the vitamin D and having the sun shine on you 365 days a year, that warmth does something, and that upleveling of warmth and the ability to kind of serve professionally your family and your community, I've found the community piece to be one that I thought was very unique in El Salvador. It is a, "We will grow together." Even on the development communities that we support and that we see, these engineers want...it is not a competitive nature as if I will get this, that means you will not. It's, "If we can all uplevel because all of our basic needs are being met, let's uplevel the entire group, the entire community." And that's a really strong element in El Salvador, specifically.

Bobby: Absolutely. I mean, I think it's all of that added in, right? You've got a generation that's come up in peacetime, brought up by parents that really remember what it's like. And so it develops that, "Hey, we've got to work together. We've got to pull together to get to the better plane that we wanted to be at." And I think, too, when we look at the economic outlook for El Salvador, it's very positive. I think it's expected to hit about 2.3% in 2019, which is up. I know their deficit is down about 2% because of improved inflows of workers and observed growth, I think, mostly across agriculture and livestock. But still, restaurants and hotels accounted for about two-thirds of that growth. And just the commerce, I mean that's all things that we're seeing growing in El Salvador, correct?

Katina: Yeah. And outside of kind of industry-specific, economy is fueled by strong consumers. And tying us to the...you know, I mentioned earlier, a lot of the developers and engineers that we work with are consumers of the same goods and services that clients are asking us to build. So, having strong consumers and building that into the capability of the engineers and the software developers that are working on U.S. based projects I think is also another point. We see as we continue, and as you mentioned other investments into region, investing in a place that yields very strong talent, same time zone, who are culturally aware, who have a strong work ethic, and are smart communicators, I think that learning English as a second language is taught at very early ages, even in the public school systems throughout Latin America.

I specifically had a really great opportunity to work on behalf of Dell and the Dell Foundation to build technology programs within a few of the public school systems in the capital of El Salvador in San Salvador and seeing students and their technology and proficiency and English proficiency in the elementary ages was really promising to see, and that was over 10 years ago. So the investment in the public schooling and focus on English proficiency and technology proficiency is really prominent throughout Latin America. So I think that those investments are smart investments because when you are investing in a group that has that emphasis on English proficiency and technology, it will yield well.

Bobby: And too when we talk about English proficiency, you know, that's one of the things that we always rate and rank. And I know when we put out our region guides, we've got our Latin American region guide, we always talk about English proficiency and where it is. But, for me, the thing that I'm always amazed by is being a Southerner, originally. I mean, I'm from the south, so everything's a colloquialism, everything's an idiom for us. And I find that my Latin American partners usually get it. Now, you know, with some extent, I mean, I've got some great friends from up north that don't understand what I'm talking about sometimes. So I get that. But the proficiency is much more than just a textbook proficiency, it's an actual spoken proficiency.

Katina: So, Bobby, I, too, am from the south.

Bobby: Oh, okay.

Katina: So the southern roots and each of those colloquialisms. So I hear you. And, yes, culturally, you know, a lot of the technologists are millennials. So they've grown up watching the same TV shows that we watch, the same movies. Socially, we're very similar. I would put a Salvadorian millennial up against a New York millennial any day, right?

Bobby: Right.

Katina: They're very similar. And what they want out of life, what's important to them is largely community-based. It's less of a rat race than what you and I probably went through in our young careers. It's really refreshing. So I know we could probably spend a whole another podcast talking about millennials. But yes, the ability to understand context and language context is very strong.

Bobby: Yeah, it's unbelievable. Now, I know...talk about El Salvador, the IT sector. I'd like to get a little more specific on that. We've been talking a lot about, you know, just the culture, and I think that's always something very important to understand. But what's been the growth in the IT sector for the last couple years? And what does the future look like? Is it still a growing market there?

Katina: Yeah, we do. So we talked about early 2000s, this shift into kind of the call center industry and largely because of the English proficiency, so call centers supporting both Dell, Microsoft, big names in the U.S. So having English proficiency was critical in that. Recognizing though, as many of these companies did, that it was not just the English proficiency but the access to tech talent and university systems graduating students in degrees in computer science that had the basic understandings of technology were really critical to shift that industry into software development.

So software development has been a strong outsourcing option for many companies from the early adopters in Argentina and in Costa Rica, being some of the early adopted countries. We found that El Salvador having this equal access to technology and tech talent was really important to build a software development company. So our team is largely based in San Salvador, and we have, at any time, we're continuing to work with local communities and developer meetups to continue to infuse latest and greatest trends to make sure that we're keeping it fresh and exciting for future workers in IT. So we still see IT being, you know, a future economic investment and we'll continue to double down on it.

Bobby: And I think we've seen the hourly rates, they run, I think around the mid-40s to the mid-50s, in general, across the region and El Salvador, especially.

Katina: That's right. And that is on the higher end. It's on the higher end for a lot of the reasons we talked about.

Bobby: Right.

Katina: I would say that a lot of the clients I support appreciate the work ethic but largely that sense of urgency that the team member who's working across the aisle from you gets that you have a deadline, that you are delivering a product, that your future roadmap is something that probably your performance and your compensation is tied to, both at a very senior level but even down to product ownership. So, you know, those...while rates may be higher than globally, they come with that with high-quality, smart communication, the ability to collaborate and be curious and understand and be users of the applications that clients are asking us to build.

Bobby: Right. And, to me, that seems like a good transition. I can't bring you on the show and have you talk all this time and not talk a little bit about Applaudo, your company, where I believe it's sales and marketing, right?

Katina: Yeah.

Bobby: So let's talk a little bit about Applaudo. When was it founded? How long has it been around now?

Katina: So we've been in business for six years. We recognized the need for a demand for software developers in the U.S. And calling on our days at Dell, building out an outsourcing call center, we saw that tech talent. We were able to build really organically. And over time as we became trusted partners as software developers for our clients, they were able to share their roadmaps with us and we built and hired talent as demand was there. We are both mobile and web. On the mobile side, we actually started heavy on Android development. Our iOS and Android teams are strong and have always been a core competency for us at Applaudo. But on the web side, we double down in a lot of the mainstay technologies, from JavaScript, Ruby on Rails.

We really are comfortable in both back end and front end. The value proposition of us is that, you know, we understand and bring very skilled solutions architects to the table early on. In any conversation, we ensure that we really understand what the expectations of the project are and are architecting it in a way that's smart and future proofed. So we build across the spectrum from, you know, ideation to helping product companies bring that idea into a usable product all the way to developing through the life cycle of the software to having it launched in the stores and the cloud.

Bobby: So, how many employees do you have now?

Katina: We just hit 100. So we just celebrated our 100th.

Bobby: Congratulations.

Katina: Sweet. Thank you. Thank you. And we know that, obviously, because we're tracking. But we make a big deal out of birthdays. And so when our birthday tracker hit 100, it was a special day for us.

Bobby: Yeah, yeah, I can imagine. That's a great milestone. Can you talk a little bit about your recruitment process? I mean, do you have bench resources? Do you hire specific for work? I mean, can you talk a little bit about kind of your recruiting pipeline?

Katina: We do. We largely pull out of university systems. We have a standing bench at all times. We have a dedicated recruiter and HR team that focuses on keeping that bench warm. The process is not easy, as it shouldn't be. So the interview gauntlet, as we call it, you know, requires a developer to be proficient in English. They need to be good humans. We first do an assessment on them as a person and who and what they are. We take them through a series of technical testing to ensure that they meet the technical requirements. And then onboarding from there, should a decision be made, onboarding takes team members through an intensive training program. So we have a dedicated trainer who takes...typically our sized training class is 15 to 20.

We have the capacity to go up to 45 in our training facility, which is also on site in our facility in San Salvador. So the entire process keeps us true to what the standards that our clients are asking us to produce talent in. The onboarding and kind of post-training and graduation from training is supported in kind of a team and a buddy system. So new hires are assigned a buddy, and that person serves as a peer mentor, typically following projects together, but also just from kind of the soft skills of what it takes to be a software engineer and supporting U.S. clients.

Bobby: Well, that is...when someone gets onboarded, they get onboarded, huh? I mean, that is intense. I'm listening to you talk through it and I'm going like, "I don't think I would have made it."

Katina: I don't know. Do you have the technical chops? You know, once you join the familia, you're in the familia.

Bobby: That's right. No doubt. Well, listen, Katina, I have thoroughly enjoyed having you on the show today. I hope to have you back, and we can talk some more. You've been a great guest. Thank you so much.

Katina: Thank you for having me, Bobby.

Bobby: I can't do one of these shows without talking a little bit about the content that we put out there. We do have an article that we've written, a blog post that's out at Accelerance. We'll make sure that that article is in the show notes, as well as a link to the Latin American regional guide that we've done. As always, I'd like to thank you for listening to "The Software Outsourcing Show." Remind you that you can find the latest podcast episodes and show notes on iTunes, Spotify, or some of your favorite podcast aggregators out there, as well as it's always at the softwareoutsourcingshow.com. So, Katina, thank you again for joining and hope to have you back soon.

Katina: Thanks for having me, Bobby.