Nearshoring market trends with Plugg technologies

Foreign.

Welcome, everyone, to another episode of the Nearshore Cafe podcast. I'm Brian Sampson, your host, and today you're in for a treat because we have a new series called Inside Nearshore and we're going to make this a monthly series because I think the world of Nearshore has changed a lot and it's changing fast. Economic impact, labor nuances, politics, all sorts of stuff really has an influence on this. So today we're going to have two people from our sponsor, Plug Technologies. That's Plug Tech. P L U G G Tech. Plug provides software engineers and all sorts of labor from Latin America for growing US Companies. And I wanted to welcome Ruben Santana, plug's president, and Fede Giovannici, the lead recruiter for Plug, based in Argentina. Welcome, guys. Great to have you.

Hey, Brian, welcome. Thank you. Thank you.

Thank you, Brian, for having us.

Absolutely. So I think I'd mentioned at the intro, Fede is in Argentina. Ruben, you're in Atlanta.

Yeah, in Atlanta. That's right, yeah.

So we've got people on all sides of the equator today. What's the weather like for both of you guys?

You first, Fede.

It's kind of hard right now. You know, we go by Celsius rather than Fahrenheit. It's 33 Celsius right now. Woo.

Okay, what is that, like 80? Probably in the 80s. Yeah, nice and warm.

Yeah, yeah, it's kind of.

We're at, we're at a balmy 58 here in Atlanta.

Yeah, yeah, yeah, I like it, I like it. Well, I think a good place to lead off is just to talk about your recent travels, Ruben. So, Reuben, you know, for, for those that don't know, Ruben, you know, based in Atlanta, had, has been an expat in Mexico before. And Reuben, from my understanding, you went on a little bit of an odyssey, travel adventure all throughout Mexico. Tell us, tell us more about that. Where did you go? Where did you stop?

Yeah, you're right, Brian. We had a. We had a great, great, great travel through Mexico. As you know, my wife is from Mexico. I lived in Monterey for two years, over two years, and really fell in love with the city, the country. So many different things, so many different aspects of Mexico, Mexican life that are very interesting. Of course, being a Latin myself, being down there wasn't a huge difference, but still very different in the sense of culturally, food, things like that, that are, that are different. So we went to Monterey, went back home to Monterey. We went from there to a place called Merida, which is in the Yucatan Peninsula. Very interesting. Very Nice, beautiful place. And, and keep in mind. And in these travels, I was able to also meet some of our consultants that we've placed in with our clients here in the US So that was really a fun aspect of the whole trip. From Merida, we went to Mexico City. Wow. I can tell you this, that we didn't spend enough time there, but we loved it. We absolutely loved Mexico City. Full of culture, you know, places to visit, things to do. Almost like a mini New York City, which is where I'm from. So really, really loved it there. The food, obviously is amazing. We met with our. Had lunch with our salesforce team that we have, one of the salesforce teams we have down in Mexico City. And then we went down to the water, to the beaches, and visited Tulum, Cancun, Isla Mujeres, and a very unique place, place called Holbox. H O L B O X. Really nice trip. The, the interesting thing is no matter where we went, no matter where we went, we found software engineers. So even in Cancun and in Holbox, and I mean, there were people there that are also software engineers, many of them working for US Companies remotely, which we know that that's. That's been going on for a while since, since the pandemic. Great trip, though.

Yeah. How do you pack for something like that?

Yeah, I tell you, it was difficult. We were living out of suitcases for a while, which wasn't very comfortable. We definitely plan on doing something a little bit different in the future.

Yeah. Now, from my understanding, Monterey is known for steak, Mexico City, tacos. Any other culinary experiences you want to share?

Yeah, I mean, as we were down on the coastline, whether it was Tulum or even Holbox, the fish was amazing. Some, some of the fish we ate there was really, really good. And of course, the prices are so cheap comparatively to. To. To someplace in the US Here in Atlanta. But yeah, that was, that's what I would say was really the highlight was the fish that we were eating along the way.

Yeah, yeah. Feria, for those that, that haven't had a chance to, to meet you yet, could you just share a little bit about your background? How long have you been in recruiting? What kind of roles do you work on?

Yeah, sure. So as Brian said, as you said, I'm based in Argentina. I'm an engineer, I'm an industrial engineer. So nothing related to it, nor human resources. I started working as a sourcer back when I was at university, just as a side job, you know, have a little bit of like, extra cash for the weekend to spend with my friends. And then I started moving more into like full cycle recruitment in IBM. You probably everyone knows that company started as a junior recruiter, moved to a mid level and then as time went by I moved to other bigger companies. Well, not bigger but other recruitment agencies. Ended up working in one company based in the uk. It was a semiconductor stuff augmentation. So they were only doing semiconductor related requirements which was very interesting because I, you know, I learned a lot about semiconductors and it's a great industry. There are certainly like brilliant people working for that industry as you can imagine, like people working in like very, very small microscopic chips. And then I had the opportunity to start working with Ruben. So I joined PLAG and we've been working in IT for a while. I think what's good about this is that I always had a passion for IT and for computer science. So I was always doing something like side projects with either Python, TypeScript, JavaScript. So it's like I can combine my passion to code with my work and hire people that obviously have the same passion as I do, but they are professionals.

Awesome. Amazing. So you guys have been in the space for a couple years now. Let's just start broadly. This is the inside Nearshore edition. We're looking at trends, shifts, things like that. What did the landscape look like maybe this time last year? So think early 2023 companies, awareness of nearshore, the labor pockets, you know, anything you can think about that reflects this time last year.

Yeah, I think it's, it's been interesting the, you know, last year this time certainly as we all know, the pandemic and the idea of remote workers has certainly opened up Latin America like nothing before. Not to mention the talented engineers that are there living in so many different countries. But we saw a lot of demand, a lot of demand for software engineers, a lot of demand, a lot of interest in Mexico. Many of our clients specifically asked to have engineers in Mexico. Although we have today we have engineers in 10 different countries in Latin America. But the demand was certainly there. And what was interesting I thought Brian was, you know, we saw a lot of a number of consulting companies, even staffing companies that came to us because of our expertise and being able to recruit and find and the fact that we're networked with people all over Latin America, software engineers that are very talented came to us for help and that certainly has been a growth opportunity for us. But even with some of our other clients, direct clients that we work with the same type of demand. So it's been it's been definitely increasing the interest for a number of reasons, which I'm sure we can, we can talk about a little bit later.

Yeah, yeah. What would you say are the, the reasons that Mexico tends to come up, at least in the last year?

I would say, you know, one of the biggest, the biggest things that we saw in 23 and still today is time zone alignment. So that's been a big driver in terms of where companies would like to find or have their engineers living and working out of time zone alignment. I think it's a, it's a familiarity with Mexico, the US And Mexico that makes people very comfortable with the talent there. And then of course, you know, other reasons, such as, you know, cultural affinity, English, things like that, that have made a difference in why companies feel comfortable in asking for Mexico.

Yeah. And maybe one or two of the, just the size, the sheer size of Mexico probably makes a difference. You know, many other countries share those attributes, but like you said, everywhere you went, you saw software engineers on your trip.

I think at the same time they, they have well known universities in Mexico and people in the US know that those are great universities. I mean, Technico de Monterrey is rated as one of the best engineering universities in the world. So I think that's another reason for it.

Yeah, maybe even before I ask you about Argentina, Fede, and what you've seen in the shifts just with, with Mexico in general, as there's been more demand now for engineers in Mexico, how has that impacted the recruiting market? You know, are there, are costs going up? Is it, is there still enough supply? What does that look like?

Yes, I think, I think it made recruitment a little bit harder, to be honest, because as some of you may know, the Mexican peso gained more and more power against the dollar last year. So people started asking themselves, I don't want to work for a company that is paying me in dollars. I would rather just keep my job in Mexican pesos because the Mexican peso is doing better than the dollar and I'm also getting a lot of benefits. So now it's not only that you were constrained to recruit out of Mexico, but you also have to deal with a lot of people that like, are asking them themselves those questions.

Yeah, yeah. And, and I, I'm especially interested in your perspective from a country like Argentina, which sometimes has the inverse effect of how can I, how can I get dollars? How can I hoard dollars? Restaurant prices are in chalk. You never know what's going to happen. Tell me how you know what's maybe similar and what's different, Mexico versus Argentina the last year?

Well, I don't know if you'll know, but Argentina is not, it's not certainly not doing as good as Mexico economically. Our, our last inflation, monthly inflation was almost 26 points. So you can imagine how that is. I think we almost all we ended as the country with the biggest inflation of the world in 2023. So people certainly look for alternatives. They need to earn compensation in a stable currency. The Argentine and Pest is certainly not stable. So everybody that doesn't have a job in US dollars, you're looking for one and they are desperately looking for one. We recently placed someone in Argentina and you can tell by his voice, his attitude, he was so thankful that we offered him that opportunity. It was like it was an entire change in his life. So I think that there's still a lot of potential in Argentina. A lot of people that don't have a remote job for a US based company. And those people, those consultants will thank you forever if you offer them an opportunity for a US Company.

Yeah, that's, and again a very talented population of engineers in Argentina for sure. Right. So great, great place to find people.

Yeah. Often, you know, no fault of their own.

Right.

Like they're just, you know, just, just like us in, you know, in Mexico, I was curious maybe some of the trends that you've seen with certain. Are certain cities getting more expensive but, but wages remain flat outside of the cities. You know, anything you could share there?

I mean I would say some of the larger cities, I mean Monterey for sure being closer to the US border, we see definitely higher rates there from, from the people we're talking to. We've seen some of that in Mexico City and Guadalajara, the bigger cities. We see that. And then also skill sets, you know, in Mexico, finding certain skill sets we seem to find and of course the population a lot of times dictates this, but in Mexico City we're seeing a lot more of a variety of skill sets and people that are interested in working for US based companies.

Yeah, yeah. Staying on the economy. Big news in Argentina recently. Fede, can I ask you to give your, your perspective on what happened? Especially you know, for, for listeners that might not know, know so much about this.

Yes, sure. So we, our precedent has been I'd say like, like trending to the left for the past 12 years and like all of a sudden the Argentinian population decided to like FL an extremist right person got elected. Aside from all the changes that that brings, of course the biggest concern for A staff augmentation company like us is something he proposed, which is dollarizing the economy. So one of his ideas is that he wants to just turn all the salaries in dollars similar to what Ecuador did not long ago. So that would be. I would say that would be a big change for us because obviously those consultants that were eager to get compensation in dollars would no longer desire that because they would get it here in Argentina on top of the benefits that they would get. But if you ask me, I don't, I don't see that happening anytime soon. It's one of of those things that presidents tend to say just to get elected and to get like population excited and say, hey, I'm going to earn like 10 times more than what I'm getting right now. But obviously that, that is like a difficult decision. There are a lot of implications, economical financial implications, and I don't think that. I don't see that happening anytime soon, at least not in the next year and a half.

Yeah, just for my curiosity, what's the relationship to cryptocurrency from, from those in Argentina?

I think I saw some statistics about it. We were, we're really like, related to cryptocurrency. Like, there's a strong bond between cryptocurrency and Argentinians, especially because of the exchange rate. I don't know if all of you know, but Argentina has an official exchange rate, which is what it's used normally for imports. And then we have the real exchange rate, which is the one that is like the inflation dictates and the trust in the peso dictates and that is higher. So one way of acquiring, like legally acquiring that or getting dollars with, with that exchange rate is through cryptocurrency. So I think that that grew a lot as time went by because it was an alternative for people to get like dollars just from their homes. Right. You don't need to go anywhere. You just transfer money from your bank account to another P2P and that's it.

Yeah, yeah. Super interesting. Thanks. I wanted to just get a feel for like, what's trending today. You know, it's early 2024 from a role standpoint. And maybe I'll even lead in with. The tech economy in the US is a lot different than it was even 24 months ago. Right. January 2022 was probably the peak of the bubble, I'd say. You know, it was. Everything was overheated. Labor supply in the US was drying up. Wages were going through the roof. I'd never seen compensation packages this high. There was a mad dash for however we can find software developers.

Right.

There's a lot less money allocated today, fundraising rounds, there's bigger gaps between rounds. There's more startups that I think are dissolving, you know, studies by Carta than ever before. And the biggest impact to all this is not only valuations, which of course have been corrected, but how companies are valued has flipped entirely. And what I mean by that is especially SAS companies, you know, the dominant type of tech company, SAS companies used to be valued at a multiple of revenue, top line revenue, nobody cared how much money you lost, just top line revenue valuation. Right. And often, you know, a conservative seven times revenue, sometimes up to 15, 20, even, even higher, you know, in like really, really juicy times. I think that's over today. I think the party's over for top line revenue valuations. There's really a push towards profitability and I'm just really curious. Here we are in 2024 with a push towards profitability and how that has impacted the near shoring market.

Yeah, there's still, you know, going back to some of your earlier comments there, Brian, there's still a big demand for IT talent, there's no doubt, right? I mean Gartner says I think 8% more this in 2024 growth in it. So there's certainly a lot of demand for it. I think there's a lot of different factors. What we're seeing over the past year and even into this year now has been companies that have been working offshore are wanting to move nearshore. We're seeing a lot of that happening and everybody thinks about price reduction, cost reduction, and obviously we all know that that's certainly going to be a factor that that's going to be. There's going to be an interest there. Yes, near shore prices are lower than onshore US pricing. But what I think is surprising so many is the fact that the time zone difference for sure, there's no doubt the English proficiency by so many that are living in Latin America and then the cultural affinity, I think that gets overlooked by so many because we're talking about people that are talented individuals that are listening to the same shows we're listening to, they're watching the same movies we're watching, they're interested in the super bowl just as much as we are. And so all of that creates that cultural affinity, that ability to work together, that communication, the collaboration that needs to happen in these IT organizations. And we're seeing so much of that. And the interest there is is peaking there's no doubt.

Yeah, it sounds like there you can cut and cut and cut to profitability. But there is another side of that coin where if you cut too much, you penny pinch, you offshore, you pay the price later. Is that maybe what's driving your shore is you're getting a discount, but you're not. Your, your discount is bigger than what you're trading. Is that maybe a way, a way you guys look at it?

Yeah, yeah, I think that, I think so. For sure, sure. Just, just an example in terms of what we've seen and one of the larger projects that we've worked on over the last year and a half has been, has been a large healthcare company that wanted to move their resources from Manila, from the Philippines to, to specifically Mexico. And we, we moved two large salesforce teams, QA team and a front end development team to Mexico to help them. And, and a lot of, I mean the cost difference was there but, but mostly it was at times in alignment and that they can pick up the phone and talk to people on their same time zone and have good communications and not be up till 10 o' clock at night or whenever it was or later than that to be able to speak to the developers that they need to correspond with every day.

Yeah, yes.

Or even what you did last month, Ruben, which is flying over there, meeting them in person, having on site meetings, which is most of the time is needed at least a couple of times per year.

I think a lot of our audience is still maybe what I call nearshore curious. They hear a lot about this stuff and sometimes data and stats, you know, it can be overwhelming and just anecdotes and stories, you know, help, help make this a little more relatable. Fede, is there maybe a recent placement you wouldn't mind talking about and you know, share what you're comfortable with but you know, help us think through like what the client was trying to hire for, where you found the person, like start to finish, what that process looked like. I think that'd be really interesting.

Yeah, sure. So I think the one that I was talking before in Argentina is, is a great example of that. That is a client that recently acquired a company here in Argentina as part of their expansion strategy and they, they wanted to see that just what kind of resources they could get in Argentina. What was the cost for it, what was the quality of the talent, how fast we could deliver consultants to them. And obviously since the situation in Argentina is that a lot of people are seeking for us or jobs paid in US dollars, we were Able to find really, really talented people pretty fast. Within I would say 24 to 36 hours. We had two to three consultants in front of the client. Great quality consultants, very good English. And they were surprised. They were really surprised about this. Obviously they ended hiring this person. The cost was perfect for them because there was a huge cost reduction even from Europe. This is a European based company, so not even talking about the US it was a cost reduction compared to European talent. And they like this so much and they were so surprised by the swiftness of delivery that they are considering opening new pots here in Argentina or Chile. So yeah, the process normally depends on the location, depends on the stack, but it's really fast and people are thankful for us giving them the opportunity to work for US based companies.

Yeah. And then for you, Ruben, long career in US contract staffing. A lot of people have hired US contractors before. What's the, like what, what's the difference and what's the same for a company that maybe two years ago was hiring a Java developer in, in California, but now you're introducing them to a Java developer in, in Mexico. Like how is that different for them?

Right? Yeah, I mean obviously there's, there's great talent here in the US there's, but also equally, I think so many companies are finding out that there's great talent in, in Latin America as well. But it's been a real pleasure, Brian. And you know this with working in Latin America, the type of people we're talking to every day are just so, so amazing, so committed to their work, their work ethic, the way they, the way they do things and is, and I hear it every day from our clients. I'll give you an example. We're speaking to one of our clients just the other day and here's a quick sound bite. He said that, you know, one of the, he, they had the company actually hired some people in Per. And one of the things he mentions at one of our meetings, like these consultants are coming to us with new ideas. They're challenging, they're challenging our ways of thinking in our legacy systems that we're trying to update. And we're getting so much more out of it than we have in the past using Offshore. So that to me just says a lot. Obviously. I mean I think a lot of US companies are experiencing probably a 40% discount in terms of difference between the rate and the US but, but I think more importantly what they're seeing is the value that's coming from these, these software engineers that not only cost less but they bring so much to their organization in so many different facets. So yeah, it's, it's a, it's a big, big difference.

That's a really great point. I think, you know, I've been in the, the tech space now for over a decade and sometimes there can be a little arrogance in the US of, you know, our engineers are the creative ones and then outside the US it's, you know, maintenance work, integration work, you know, like the stuff that I don't want to do because I want to design and create an architect. Right. And I think that it sounds like that's really changed. Like, like the, especially the devs in Latin America are, they're bringing ideas, they're thinking through the design, the trade offs, the architecture. It's not just the grunt work.

Right, right, right. And it's something to, what Fede said earlier is that these guys are going to some amazing universities. They're talented and many of them have worked for US companies already. Some of them have even lived here in the US and gone back to their countries. So that kind of experience really does heighten their ability to work with U.S. companies and provide some real value.

Yeah, this has all been great. As we start to wind up the show, I'm really just interested in what's to come. What are we seeing? Maybe we'll start with you first, Ruben. What do you think is, is coming up over the next month or so in the world and Nearshore?

Yeah, good crush question. Yeah, I mean, I'm really optimistic, really optimistic about what we're going to see whether it's, you know, the next month or even over the next, the rest of this year. Just to give you an example, as we look at some different conferences that involve, you know, whether it's staffing or whether it's it and tech conferences. You know, three years ago, nearshore wasn't on the agenda. It was never on there. Right. I mean, sure, people knew about offshore, they knew about nearshore, but nearshore never appeared as a line item on an agenda. Today as I look at some of these conferences, it's there, it's absolutely there. The interest is there. And so many companies you mentioned, nearshore curious are just that, they're near shore curious. They want to know about it, they want to know how do, how do we use the talent that's just, just right here, you know, right next to us. And so there's a particular conference that was going on this week and I've probably received two or three LinkedIn messages regarding, you know, appointments or asking me a couple of different questions. So that's, that's what I mean about optimism. I see so many people that perhaps wouldn't be asking me questions being a staffing person for so many years, but now because of the interest in Nearshore, I'm getting the questions almost on a regular basis.

Yeah. And then, you know, maybe I'll ask you, Fede, with, with more of the understanding of the labor market and, and trends you're starting to see coming up in, in February, are there any positions that are hotter than others that, that you're starting to see?

Oh, yeah, certainly a lot of Salesforce everywhere. So everyone seems to be integrating with Salesforce at some point. So.

Yeah.

Yeah, a lot of Salesforce, a lot of QA as well. So seems like developers weren't testing enough. Like, you got to start testing your stuff, otherwise it's going to break at runtime. So, yeah, I would say those are the two most requested vacancies right now.

That's great. Well, guys, this has been insightful, informative, a lot of fun as well. So thank you for, for making time. Thanks for, for Plug being a sponsor to the show. We really appreciate that. So again, inside Nearshore, we'll do this on a monthly basis. Hopefully we'll, we'll have Fede and Reuben back multiple times this year, share what's going on, economic trends, positions, companies, all sorts of fun stuff. Fede Rubin, thanks again. And if you're interested in Plug Fetty, what's the website for?

Plug. It's Plug Tech.

Cool. Plugg Tech. Excellent. Thanks again, guys, for joining us.

Thank you, Brian. Appreciate it. Thank you.

Thank you, Brian, for having us.

All right, we'll see you the next time on the Nearshore Cafe podcast. I'm Brian Sampson. Have a great week.