Nearshoring in Argentina and Mexico: Managing Inflation and Talent Shortages

Welcome everyone to another episode of the Nearshore Cafe podcast. I'm Brian Samson, your host. We're going to get into some cool stuff today. We have a guest who's lived in Buenos Aires and Mexico City, and he's also done it from a nearshoring tint and angle. Uh, we'll welcome Jonathan Reutemann in just a second. Let me first thank our sponsor, Plug Technologies. Plugg.tech. Great way to connect talent from all over Latin America with US companies. John, so nice to have you today.

Thanks, Brian. I'm happy to be here, so let's get to it. But really excited to be here.

John, you're, you're a global guy. Where in the world are you today?

Right now I'm in Mexico City for more than over a year now, so It has been quite a ride because for 30 years in a row I've been living in Buenos Aires, Argentina. I have had my share of travel to the US as well, but Mexico has, you know, caught me right now. This is where I am right now.

Well, we're going to get a lot more into that in just a minute. What I really enjoyed about your background, John, is how diverse it is. You've touched a lot of different pieces of the business. And I know you always lead with, I'm not a technical guy, but you, you know a lot of technical stuff. Um, so maybe, uh, if you could just take a few minutes and walk us through your career so the listener has a, a sense of, um, the context you're coming with.

Sure. So I would say, as, uh, you just mentioned perfectly, that I'm not a technical guy, haven't touched a single line of code in my life other than trying to learn Hello World, kind of like coding, but it was too much for me. So I come from a very multinational kind of world in which I have been like a financial analyst. I have been an auditor even in my earliest days, but then my career started to take, you know, some sort of meaningful trajectory into what is now called product management. But within product management, and I think a lot of people that are going to hear this conversation can relate, the fact is that product management can mean a lot and can be, it can mean nothing at the same time. So in those, in like, let's say 6 years that I have been performing this kind of role as a product manager, I've also been called and doing the role that you usually listen as a project manager, business analyst, Scrum Master, product owner, program manager, and of course product manager or product delivery manager. And it is quite funny because these days, since people just don't know what the role is all about, what you end up doing is the job of more than 2 or 3 people at the same time. That is for the product management side. Then I have the opportunity to transition from product manager into a more managerial role in operations and delivery. That's what I have been doing until this point in which I have been part of a company that was, let's say, thanks to the pandemic, because we have to be honest about it, it had excessive and uncontrolled growth, which is a very nice problem to have. But with that, there was a need to put the house in order. That is, set up processes, define metrics for a lot of departments, improve communication, and make sure that people are not working in silos or overlapping with overlapping responsibilities. And last, and last but not least, sorry, to prepare the organization for sustainable growth. Because you grow too much and then at the end of the day, you need to iterate and make sure that what you are doing is making sense. Finally, I think I'm going too far with this, but I have the opportunity to lead the technology delivery team of our company. Ensuring delivery excellence, improving customer satisfaction, developing our talent, and professionalizing our organization.

Yeah, that's super interesting, John, and I love how you've touched so many different pieces. I think a lot of times American companies, you know, as they think about nearshoring, they're not quite sure like what is what's done the same way and, you know, what's different. Um, from your experience, maybe we'll even talk about things like Scrum meetings and, you know, like kind of the Agile framework and sprints and so forth. Um, from your perspective, like, what feels the same, what feels different, you know, and how does that work with like two teams in two different time zones?

There's no really much of a difference when it comes to who are you working with. If there's something that the pandemic taught us, is that we can all work from Qatar, China, Kuala Lumpur, Mexico, Alaska at the same time. Of course, if you are in timezone alignment, but you can work remotely and there's not really a difference with what you are doing remotely against what we— you are doing in the office. Actually, if I may, uh, people are now so used to the fact that they need to be working remotely that maybe the working dynamic, uh, working on-site has been kind of like broken a little bit because people are not used to work like that. There's a whole generation of new developers that have been educated in boot camps or Not sure universities are what I'm aiming at, but there are a lot of new generation of developers that don't know how to work in an office. And that is global. It's not delimited to a certain region, if that makes sense.

Interesting. Interesting. So with Argentina, when people look on the map and they see, okay, that's not a straight line south. The continent kind of butts out. What does that mean, you know, for time zone if you're working with Argentina? And then maybe you could even shed a little bit on the culture and like eating times and how all this, you know, impacts the workday.

I would say that Argentina is pretty aligned to the US and to Latin America in general. We share a lot of working hours. I'm actually right now in Mexico, 3 hours behind Argentina. So of course you need to take that into account. But for example, in the US, you can either work from Central Time, which is where I am right now, or Pacific Time or Eastern Time. And depending on where you are, maybe it's more advantageous to work with Argentina, maybe with Mexico, maybe with Colombia. So that is something that you always need to consider. But at the end of the day, people in Latin America are very manageable. They adapt. They are very flexible. That's what I'm trying to say. So if they have to, let's say, move their working hours a little bit, they will most likely do it. Not sure about the other question that you was just mentioning.

Yeah, you know, it was more like Mealtimes and stuff like, you know, people eat very late in Argentina. Does that have an impact on the workday or do they still kind of wrap up at normal hours?

Well, that is a very interesting question, mostly because I'm a foodie myself and I come from one of the best places in which you can get something to eat. People in Argentina, when they have dinner time, which is very different from Mexico and the US, they have dinner at 10 PM. That's like the average hour. Whilst in Mexico or in the US, 7 PM, 8 PM tops, which is a far better practice, if I may. That's what I'm currently adapting to because it's— in terms of health, that's way better. But what that means is that activity in Argentina goes up until sometimes midnight. So people are very aware and they are very trained in the art of, you know, working maybe in different hours, maybe starting later and then finishing later. It's about every single person's commitment and situation.

So, John, you've led engineering teams. You've got a good sense of how to make them happy, productive. What are some of your tips and best practices for that?

So I would say working with Latin American people, colleagues for over a decade while also working with US companies that value different things, I would say that for Latin American people, I would say best practices are transparency and candor are highly valued. You need to foster communication and share the good and the bad news. You need to be very wary about your corporate communications and ensure everyone from top to bottom understand the context and business status because they're going, let's say, to put the shirt on if they understand where the company is and they are not considering you, the company, like this. Evil corporate fat guys who are taking all the decisions against the people's will. They will be aligned to you if they, if they think and if they are communicated properly that, you know, they are part of that organization. You also need to aspire, in my opinion, to long-term, so tenured teams that fosters a strong company culture. At the end of the day, every single leader will understand, every leader, let's say, in middle management will understand how you work. That is the style you have, communication processes, and your problem-solving skills. And at the end of the day, also you get granularity. So you get to know every single person in your organization because your middle managers are already there. They know how to make sure that no one gets through the cracks during an onboarding process.

Yeah, you hit on something interesting about, you know, just like culture and style. And considering you've worked in Mexico, you've worked in Argentina, and probably interacted with engineers in other countries as well. And I know, John, everybody's different and everybody's a unique snowflake, but are there patterns you've seen, like stylistically, this is a good way to communicate with devs in Mexico versus Argentina versus other, other countries you've worked with?

I have worked mostly with Mexican people and Argentinian people. I would say the main difference is how Argentinians and Mexicans talk directly to someone else. For example, Argentinians are very direct and vocal. So if you're unfamiliar with that, you need to make sure that you understand it's not defiance that you're getting from that people. An Argentinian, and I'm speaking for myself here as well, we tend to challenge opinions with proper support, with proper justification. Um, but that directness can be seen as daunting and could create friction if expectations are not aligned into this. I would say Mexicans are more reserved. I think historically, maybe I'm wrong here, but there has been a lot of workplace abuse, and Mexicans are highly perceptive of red flags. However, they won't voice their concerns out loud, but rather might organize collectively. Or in some extreme cases, which I have been witness of, they can take on multiple jobs, mostly because of the lack of control that the remote setting can bring. So it's a side effect that you need to be able to handle properly there. Or they could just take a disengaged hands-off approach. Um, I would say that's the main difference, but one important thing that you need to consider here is that this is not about just people, it's just about products or services that you offer. There's no way in which you can copy-paste a solution that works in one place into another. Let's give an example here. You have a very good product or service that is, uh, doing great in Argentina. And because of that, you feel that in Mexico it's going to have a better effect. That's a bias. I'm not sure what's the actual name for that bias, but, uh, you need to be humble and make sure that you hire local talent wherever it is that you are going, because at the end of the day, they're going to be the ones who raise their concerns if you are coming in too hot and if you are like thinking that in your prior success, you're attempting something that is not going to be properly received in the other country.

Interesting. John, going back to what you said before about Mexicans maybe not feeling as confident or comfortable voicing concerns. And, you know, I've spent a lot of time in Argentina, and I could validate that. And, you know, maybe the first time you hear complaints, like, oh my gosh, what am I doing? And then you just realize that it's cultural and it's just very, very common. But because it's more quiet and reserved in Mexico, it's like you don't know how they're really thinking What are some maybe tips and advice to elicit that and, you know, get more feedback from the team?

That's a very good question, Brian. I would say ensure transparency and be open in your communication. So that's one. Then you need to provide stability in the job perspective, right? That is clear rules about what you are expecting from them. And what they can expect from you. And make sure that you make them feel a part of your team, regardless if they are coming from a vendor or if they are on your payroll. They always need to be treated the same and make sure they feel part of something bigger. It's not just themselves in a desk working against a computer. They are part of a company. That's one of actually the biggest challenges with remote work these days. And I think it applies perfectly to this question that you had.

Yeah, absolutely. I could see a lot of applications for that. Thank you. Let's just take a little detour on work and talk about living. So maybe to set the scene in Buenos Aires, like what neighborhoods were you living? You know, where did you grow up?

So I grew up in Buenos Aires, Argentina, like Ciudad Autónoma de Buenos Aires, which is the capital city of the country, and have moved around in between neighborhoods over there, not really to other places like right now in Mexico. So I have lived pretty much all my life in Buenos Aires.

Yeah. And which, which neighborhoods, John?

I have lived in Villa Urquiza, Ezeiza, or Canning for someone who knows better, Palermo, and Belgrano.

Got it. Got it. And where do— if a software company were looking to establish offices in Buenos Aires, Are there areas or neighborhoods that you would suggest that they look more closely at?

Depends on what you're looking after. Um, there are many neighborhoods who are tech hubs, for example, Parque Patricios, which is kind of south part of the, of the city, and it's not really that good of commute for a lot of people. Then we have Palermo and you have Belgrano. Are also, let's say, more trendy, more fancy, more full of tourists, I can say. The commute, depending on where you live, can also be a pain. But the good thing about that is that you have a lot of bars, pubs, restaurants, and green places that you can go in a very short distance. What I previously said about Parque Patricios is mostly because the government has issued tax exemptions for a lot of companies establishing there because they wanted to make a tech hub there. So I would say those are the two main places. There are some companies who are going beyond the city borders, just up north to Vicente López or Olivos, and there's like a small tech hub for some companies. But at the end of the day, Parque Patricios and Palermo for me are the two main spots.

Yeah. As companies start to scale, is Palermo still usually the right place, or is that like something they should think about maybe for smaller companies?

That is a good question. I mean, a lot of offices have been emptied because of the pandemic. I mean, this is worldwide, right? There was like this, the city center more towards 9 de Julio, this huge and famous avenue in which the obelisco is. That was the original place in which all multinational companies and offices were set. So a lot of people, or sorry, a lot of companies have withdrawn from those places and they are trying to incentivize their use once again. So if you are a multinational company, that's your spot. If you are a smaller company that can leverage coworking spaces or smaller venues, then you should go more for Palermo. In that matter.

Got it. Got it. Uh, how, like, what's, what's the right way to go about recruiting if you are not in Argentina and you're trying to recruit people in Argentina? Are there, you know, should they go right away to an agency or their job boards or, you know, other ways like they could kind of infiltrate and get their, their first couple team members?

Well, right now I would say it's easier than ever to recruit people from other parts of the world because of globalization, remote work. Everyone now knows the rules of the game. They're used to them. There are many ways in which you can recruit people from abroad. You can either do it yourself if you somehow know the rules of the country you're trying to hire people from. You can also hire an agency that can collect Uh, sorry, that can, um, earn their paycheck by providing you with the best talent and grab a commission out of that. Or you can go through to a company that provides us, for example, nearshore companies, um, a huge structure that not will only provide you with a recruiter or a tech developer, but also support for ongoing, uh, labor. They're not just going to hand over the resource to you, but rather handle the resource, equip them, pay them, manage their payroll, and make sure that they are well taken care of. So there are many ways in which you can do that. There are a lot of pros and cons in each of them. So you need to make sure that you analyze the situation and how much are you willing to spend in terms of money and effort to actually deliver on that.

Yeah, John, a topic that comes up a lot in the show is inflation. Um, for, for, and it's, it sounds intimidating, you know, like when we're, we're in the States and, you know, we get all bent out of shape because our egg prices, you know, have gone up, you know, by 30 cents or something. But this is a, a, a challenge for the population of Argentina and Could you share a little more about like maybe how companies are addressing this and, and, you know, what should a new entrant to Argentina be considering as they have to deal with inflation, which is just a reality?

Yeah. So that's a very complex topic. I will try to break it down for you to the best of my abilities. So bear with me here. Um, first and foremost, Argentina has been in a political crisis cycle, an economic crisis cycle for two decades, uh, pretty much since I was born. I am 32 right now, but I have lived my own share of economic and cyclic crisis. In that sense, uh, inflation has been triggered exponentially in the last couple of years up until 2023, in which there was this government change from a party that was governing for almost 20 years to a more, which is like more left wing to another new government, more right wing in that case. Up until 2023, Because of these high inflation constant cycles, we also had another thing coming, which was high devaluation. So, the peso, when the Argentinian peso has gone from, since I can remember, let's call it 2018, in which one US dollar could earn you 20 Argentinian pesos to a maximum point in which by 2023, if I'm not mistaken, $1 was worth 1,300 pesos. Maybe I am missing by a margin there. It could have been higher. But I, I can say that in the meantime, in Mexico in 2018, that was the same exchange rate that they have today, which is 1 to 20. They haven't moved, but Argentina has had this enormous percentage of inflation and devaluation, right? Trying to go more for the dollar because that's how when a company comes to Argentina, they need to consider this. Up until 2023, there was a dollar fever. That means the Argentinian peso had no value for its people. Actually, not really a fun fact, but a curious one, is that people, whenever they had some cash to spare, they would rather burn it in activities, in going out for dinner. And that's why you saw a lot of restaurants packed, even though the country was in crisis, because saving that money meant like maybe in a week it would lose 50% of its value. And that is really hard to swallow if you are not from Argentina and you're not used to that. So when you earned in US dollars, this is up until 2023, of course, but earning in dollars could literally change your life. Considering this new administration change up from 2024 and onwards, the economy had to really adjust. Prices doubled or tripled because they were like very far behind market prices internationally. And now Argentina is actually more expensive in general than Mexico. People are starting to value job stability, health insurance, and benefits once again because they stopped having that when they became contractors in order to earn in US dollars. However, this, let's say, new trend is in its early stages. People are still valuing US dollars because this, let's say, new built trust on the Argentinian peso is weak, to say the least, because it's really starting just now.

Got it. Got it. Complicated issue, but thanks for laying it out. That cleanly. A couple of fun questions, John, as we start to wrap up. Your top 1 or 2 favorite restaurants in Buenos Aires. Oh, I've not prepared this question for you, but it might be the hardest one of the episode.

I would say, well, I cannot— whenever I go to Argentina, I cannot not go to Guerrín, which is one of the most famous pizzerias in Argentina. And in a very short distance, you have one of the greatest ice cream shops of Argentina, which is Heladerías Cadore. It has actually earned a lot of prizes, uh, being named as one of the best ice cream shops in the world. Um, and then depends of course on your taste. If you like pasta, I really like Aparoláquia. If you like burgers, man, you have a lot of options. So I would say that I don't want to risk by giving you one answer because I am going to insult so many people that are going to be trying to enjoy this episode and then started to hate me because of this.

That's funny. Same question, John, but Mexico City. Favorite couple restaurants there?

I cannot answer that, Brian, really. This is just between you and me, so please delete this. I'm not usually going out to eat outside and try to cook a lot. I don't like spicy food. Maybe I can answer that, but it's going to be really hurting if you're starting to say things like that.

That's okay. I think, I think we'll keep this in here for fun. Um, but I, but I, I do, I do want to, uh, leave it with this, this last point, which I think is really funny, um, because you're, uh, one of many, many, many people from Argentina that have said this. Um, you don't like spicy food, so going to a country that thrives off of spice. How do you, how do you manage that?

I really gave it a chance, Brian. I have to be honest, I really tried. Uh, at the end of the day, I can excuse myself saying that I have a very Argentinian palate, which is mostly true for a lot of Argentinians who are, you know, being expatriated to Mexico. Um, the fact is that here You know, spicy food attacks your tongue. You know, it overwhelms your senses. I am just more— I am really sensitive to that. And I have tried, I have given that a lot of chances. I really like tacos, pambazos, not from any specific place because I am really tempted when I go out to the street. You have taco post like every 1 or 2 blocks. It's like the density is overwhelming. I really like them, but I tend to leave the spicy things out of that equation. And because of that, the things that you end up— the remaining things that you can add to the taco are really dull. There are really very few things that you can add to a taco that are not spicy. So it shortens your options.

This is why people listen to this podcast, John, is the true authentic good, bad of the different cultures. I love it. So amazing answer. And like I said, not the first time I've heard this from someone in Argentina. And funny enough, the inverse happens too. You know, I'll get people from Mexico come to Argentina and say There's no flavor here.

That is actually true. I have had my share of experiences in which I, of course, try to bring my culture to them because I like to share. And you are not as Argentinian as you can be after you leave the country. That's when you get the most Argentinian possible. I try to share dulce de leche. I've tried to share alfajores. They are too sweet for people here in Mexico. They are not used to that. Like, it's a lot. And I, maybe for me it's not a lot because I come from there. I have eaten it that all my life. Yeah. With mate, for example, which is our herbal drink of excellence, non-alcoholic, of course, there's a 50-50 there. People either love it or hate it, but it's an acquired taste because whenever you first got into beer, Whenever that was, you of course didn't like it. You actually like, what is that that you're giving me? You end up growing into it. And because the meat, of course, whenever someone goes to Argentina and I give them directions, sometimes they say, I would like to put some sauce in it, some spice on it, but whatever you guys have in Argentina is really not good. But there are a lot of people who actually enjoy the taste of the meat itself because we just don't add anything else to it.

Yeah, you can count me in that group, John. When I go to Argentina, it is the best steak in the world and just a little salt. That's all I need. It's amazing.

Thank you for that.

Maybe a little chimichurri every once in a while, but nothing crazy. But I think this is a great place to end the show. John, great tips on managing inflation, thinking through best practices, building your culture, and who could forget our, our food conversation. Um, you've listened to the Nearshore Cafe podcast sponsored by Plug Technologies, plugg.tech. Great way to connect talent from all over Latin America with growing U.S. companies. Thanks so much, John. Great to have you.

Thanks for having me, Brian. Have a great rest of the week, and hope you guys have enjoyed this conversation.

Thank you. We'll see you again next time.