CEO View: AN Global Eyeballing NASDAQ to Alter US Perception of LatAm Innovation

Federico Tagliani, CEO of AN Global, explains how he intends to leverage a NASDAQ listing in order to alter how the US market views Latin American technology companies.

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If there’s one way for a Latin American technology firm to get the attention of US clients, it’s by opening stock on one of the three most-followed indices in country’s stock markets, something that Mexico-headquartered AN Global intends to achieve by year’s end.

Based in Mexico City and with presence in Guadalajara, AN Global has a network of more than 2,500 employees in the USA, Costa Rica, Brazil, Argentina, UK, Spain, Portugal, and Mexico, where almost 1,800 people are situated.

We chatted with Federico Tagliani, CEO of AN Global, to find out how he intends to make some real waves in the US market, as well as exploring some of his top-level observations about the Nearshore IT services industry.

Nearshore Americas: Despite flying relatively under the radar, AN Global has some grand plans for attacking the US market. Can you tell us about your strategy to put the company on the map in terms of Latin American IT services?

Federico Tagliani: We have two operations in the US: one in San Diego and one in Boston. While we closed 2017 with an average of 12-13% of our business coming from the US, that increased to a 25% average in January, mainly through analytics offerings. In next 12-15 months, we want the US to be supplying at least 50% of our business in terms of revenue generation. The idea is to use Latin American talent to do this.

At the end of last year we acquired Factus, which is specialized in analytics, big data, and business intelligence. The company works in Mexico and focuses on serving US clients, like Merck & Co., Merrill Lynch, and Coca Cola. Our organic growth has become part of our DNA, so this is giving us the right to compete in the market, but we need more muscle to complete against the global vendors for the kind of engagements that we aspire to, so growing more aggressively than our organic growth is the strategy.

In Latin American countries, the financial markets are too distant from our industry, so the idea is to open our stock in NASDAQ, which means we need more exposure and revenue generation in the US market. For this, we have two acquisitions identified there: one in the analytics space, and one in digital transformation for healthcare clients in Florida. If we can execute both M&As, we will end 2018 with around 50% of our business coming from the States and a floor of US$30 million EBITDA, giving us the technical size to open stock in NASDAQ.

Nearshore Americas: These ambitions must expose the company to a broader US client base, so what shifting client concerns and demands are shaping your forward-momentum and changing the company internally?

Federico Tagliani: Digital transformation is imperative for US clients, because the sense that any industry or any company of any size could be ‘Amazonised’ at any moment is creating paranoia in the country. In our vision, there are two forces appearing as strong demand that are not just the fashion for next season, but structural demands for the next three to five years.

The first is analytics, gaining the ability to identify future things, induce behaviours, to better understand clients, and structure channels with business partners. In the States, B2B commerce is growing at five to six times the rate of B2C, and we feel this deeply across the board. Analytics and data management, in general terms, is helping to understand those clients so is one of the strongest forces for demand right now.

The other force is related to commerce platforms. We offer SAP hybrids and Magento, for which we have 80-90 consultants – it’s not many, but makes us one of the bigger Magento supporters in the Americas. This is an explosion crossing all industries and companies, because they are being disrupted and pressed. For example, each announcement that Amazon makes is resulting in lost market value for whichever industry it impacts. For us, we have been inspired by the US demand for commerce platforms.

Nearshore Americas: How does An Global face the hurdle of educating clients in certain new technologies?

Federico Tagliani: Even in highly visible companies with strong brands, there is an identifiable gap between some generic concepts and the specific paths they must take to execute this. Everybody has read studies about digital transformation, but the real meaning of this is in a specific industry or competitive situation is not clear enough for most companies. It is typical that one of our initial engagements is used to talk about and educate them on new discoveries in transformation.

Nearshore Americas: In order to support those client demands, you need talent, which is globally scarce. How are you finding and retaining people in your Nearshore locations?

Federico Tagliani: We tend to look for young professionals coming from the best universities and offer them challenging career paths before they leave. For analytics, we offer them exposure to AAA clients in the US market, which gives them a valuable cultural and professional experience.

We have a program in which we transfer people from Mexico to the US from time to time. That was historically a tremendous incentive for our people. What happened in 2017 was good news for us in terms of Mexican technology talent, because the first and worst impact of the new US presidency was with the Indian players with H1B visas, and players that couldn’t have the chance to participate in a project because of logistics. There wasn’t much of an impact for us and we don’t foresee difficulties in the way we work with the US from Mexico.

There is a window of opportunity as the US market offers more of these competencies, and if our Indian competitors will not be able to provide for this demand, the window will widen even more.

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Nearshore Americas: How has Mexico’s IT sector coming to terms with becoming a key player in the industry? Is it able to keep up with its own reputation and evolution?

Federico Tagliani: Without a doubt, Mexico has been delayed in the industry compared to the US or Europe, but several segments are pushing technology closer to the level of state-of-the-art. For instance, Mexico has had tremendous opportunities around manufacturing with its modern facilities.

The country still needs certain structural changes in financial services. The unbanked population of Mexico creates an enormous opportunity for IT services, for example, allowing Mexico to get closer to the northern hemisphere in the industry.

Bilingual competences in the market are another challenge, because Mexico is not creating enough professionals to be 100% connected with what is happening in the world. At AN Global we have English teachers on our payroll, because certain services need teams with native level English, so it’s a permanent challenge.

On a personal basis, those of us at AN Global believe we have the motherlode offer for new digital transformation demands, from advanced analytics to digital marketing and Cloud, as well as the capacity to leverage the previous investments of our clients. In Mexico, if you consider the whole cycle of DevOps and Agile, especially with financial institutions and telcos, we have more than 600 people working on that. Even Deloitte doesn’t have this critical mass to execute those kinds of projects.

Last year, we implemented the most sophisticated and complex e-procurement project in Mexico for Grupo LaLa, and Ninety days after the platform was implemented, MX$1 billion was measured in returns. With Mabe, a Mexican appliances company, we secured a nine-digit project – beating out Accenture, IBM, and Capgemini – to support the company’s digital transformation for the next three years. This is proof that Mexican companies can compete and are already securing some big transformational projects.

Nearshore Americas: You mentioned DevOps. Where does the methodology stand these days? What has changed for DevOps and the way clients with it?

Federico Tagliani: We have hundreds of consultants working in institutions like Santander and Citibank on this, as well as some retailers. The financial companies have evolved past the conceptual phase, past the framework and some of the original ideas. They are executing and leaving the initial perceived security of the branded tools, such as Microsoft, and moving their demands toward open stack, with names like Jenkins.

While these huge clients in sensible industries are embracing the open stacks, we don’t not see strong differences in maturity in these companies in Mexico, especially compared to Brazil, where things are much more sophisticated. However, with a more granular evaluation into the state of DevOps, Mexico is still ahead of Brazil.

Nearshore Americas: What are your personal executive challenges as CEO? What gets you out of bed in the morning?

Federico Tagliani: The main one is culture and creating a common purpose and identity within the company. Our branding change last year to AN or AN Global from AGS NASOFT, was not just a cosmetic transformation; it was a new umbrella to embrace diversity and create a collaborative purpose for every type of person in the company. So, my first priority is to bring together diverse talent in terms of their heritage, competencies, and geographies.

The second one is to be relevant with our clients, which comes from putting together each of our components to create value in our clients’ minds. We work with a small list of clients but with a dep relationship, trying to connect with them on today’s most relevant issues.

Also as we have been mainly under the radar as a company, we notice that American investors are not used to seeing Latin American companies as sources of innovation, which is a huge challenge for us. Companies like Globant are a good exception to the rule, but we all still have a lot of benchmarking to do to change the perception.

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