Aegis Builds Latin America Strategy By Targeting Tier Two Locations

By Patrick HallerMaking 18 acquisitions in five years poses several challenges, not the least of which is how to integrate the companies into an existing corporate fabric. Following …

Sandip Sen: Argentina inflation a problem

By Patrick HallerMaking 18 acquisitions in five years poses several challenges, not the least of which is how to integrate the companies into an existing corporate fabric. Following a comprehensive acquisition model that includes keeping as many of the existing employees as possible, Aegis, a subsidiary of Essar Global Limited, has been expanding steadily into new markets over its thirty years of operation. Aegis acquired the Costa Rican company People Support in 2005, and Action Line in Argentina in 2010.

 

With locations on every continent, the global outsourcing services provider has close to 3,000 seats in facilities throughout Argentina, and over 800 seats in San Jose, Costa Rica. With plans to hire 400 more employees in Costa Rica, Aegis is positioning itself to extend its footprint across Latin America.

Serving clients in the Banking, Insurance, Telecom, Travel & Hospitality and Health sectors from Latin America has proven to be a successful proposition for Aegis, and they have encountered little problems there. Their strategy, according to Sandip Sen, President Americas and Global Chief Marketing Officer, has been one of acquisition which leads to organic growth. This can be seen in the way they have established operations in Costa Rica, where a commitment to retaining, recruiting and training local talent is a model that has worked well.

“We have grown successfully and the attrition rate in Costa Rica very encouraging,” said Sen. “We are looking at setting up something in the interior of Costa Rica, and we are talking to the government to find out where we can offer Spanish language services.” This would add another level to the current operations, where they employ an estimated 600 bilingual staff members to take care of US customers. “Cost Rica has been encouraging us to offer employment in the interior where we would receive Infrastructure and training grants; particularly in areas that are not economically developed.” Sen told us. “Primarily we recruit local people, but bring in supervisors or managers from established areas to help kick start the operations.” Aegis offers a robust training program in both Spanish and English, depending on the client needs and the level of bilingualism in a given territory. In Costa Rica one of their clients is a top US bank who has been “very happy” with the level of care its customers have been given. There is a challenge that will be hard to overcome, Sen observed, that “Costa Rica is small, and growth beyond a point can be a challenge. At some point we will hit a ceiling.” Although, for right now, they are far below that, he said.

After entering Argentina a year ago, Aegis determined that having decentralized centers across the country would be the best strategy, as opposed to having a large center in a Tier I city like Buenos Aires (where they have two, smaller centers). They have spread-out to Tier II cities across different regions, such as Cordoba and Tucuman, allowing them to increase attrition rate and lower overall costs. Additionally, local and federal governments provide grants for core elements like training and locations. “For example,” said Sen, “the government in Tucuman offers some budgetary support for employment.”

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In 2008 the government of Tucuman initiated an official program to attract the big players in the domestic contact centers market to the province, with the purpose of reducing unemployment and enabling young people to get their first formal employment. Aegis received subsidies based on a government decree that provided:

  • Salary Subsidy: For each new employee the government reimburses 30% of the full salary during the first year, and 20% from second to the fourth year.
  • Property Lease Subsidy: The government covers the full cost of the rent value. Aegis is in the process of renegotiating it since they extended the amount of square meters rented.

“In Argentina integration is not a challenge but, high inflation and costs are a problem,” clarified Sen. This has a direct impact on domestic business, and Sen expects it to effect international clients, including US clients that want to enter Argentina. “Labor costs are rising and we will need to increase costs, and US clients might find other countries to be more cost effective.” To mitigate any losses, Aegis is looking at other Latin American countries as lower-cost options, where they can get a foothold and offer alternatives to Argentina, while maintaining an Argentinean client base. This will also enable them to offer a broader portfolio of services at varied price-points. Despite the inflationary problems, Aegis continues to ramp up business in Argentina, and Sen reports that clients are happy with the types of services the company is providing. “We are committed to adding jobs in each geographic location,” he added.

With a measured and strategic growth plan, the application of proven methodologies and a commitment to a burgeoning region, Aegis has taken root in Latin America.

 

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