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Exclusive: HP Expansion in Medellin Boosts Colombia as Services Hub

Exclusive: HP Expansion in Medellin Boosts Colombia as Services Hub

Andrew Lewis, Senior Strategic Locations Manager, discusses HP’s plans for its newest Nearshore captive

By Dennis Barker

HP has never been known as a company that makes quick and rash decisions. It’s the organization that in 1976 rejected a proposal by a junior employee named Steve Wozniak to build and market the microcomputer he’d designed. The Woz went on to engineer the ubiquitous Apple II, and it would be 1980 before Hewlett-Packard would announce a PC.

So, when HP decides to build a global services hub in Medellin, Colombia, that ought to tell us a little something about HP, and a lot about Medellin. The company has had a significant presence in Colombia for many years, mainly running call center and sales-support work in Bogota. But the new center in Medellin represents a bigger investment in the country and the Nearshore region, and it sends the message that the talent and infrastructure to serve global clientele is here.

We talked about the new facility in Medellin and expansion plans with Andrew Lewis, HP Senior Manager for Global Strategic Locations. His job is to lead implementation projects. Besides Medellin, he is also running a project in Vietnam. This gives him a unique global perspective. “It makes for an interesting day managing two time zones from a third time zone,” he says. “It’s early morning in Colombia and late evening in Vietnam.”

Safety first

“Medellin… Wasn’t that the name of a drug cartel?”

Face it, that’s how many people in the US react upon hearing the name of the city. Colombia still has a reputation for being dangerous, with a popular notion that revolutionaries, terrorists, and drug lords are everywhere and shootouts and kidnappings are routine events.

Most observers and statistics indicate that the security situation has improved dramatically the past few years. Search now and you’ll find stories about “criminal bands” being the nation’s biggest security threat, but according to the National Police these “neo-paramilitary groups” are the biggest threat to themselves.

The US State Department, in its Colombia report of Nov. 2010, acknowledges that “security has improved significantly in recent years,” but warns: “US citizens have been the victims of violent crime…. Firearms are prevalent … and altercations can often turn violent. Small towns and rural areas can still be extremely dangerous due to the presence of narco-terrorists.”

With a big team in Bogota, HP already had an on-the-ground awareness of the situation in Colombia, but worked with its own security teams and external sources to decide if Medellin is a safe location for expansion, Lewis says. “We determined that the city offers us what we’re looking for, which includes being safe.”

As for outsiders’ perceptions of the city, Lewis says: “The best approach we have found is to take people to Medellin so they can see for themselves. Within a few days their view of the city and of Colombia is transformed. What’s also helpful is that those visitors go back to the US and relay that experience to others, and so gradually the perception is changed.”

What’s HP’s plan in Medellin?

HP has had a small presence in Medellin, but after selecting it as a city for a global services center, launched a project to establish a new facility there — and eventually hire about 1,000 employees. “At first we will be operating in a temporary location at EAFIT University,” Lewis says. “The university is providing the space, and construction is under way to add three floors to the engineering building. HP will occupy those floors as the first phase of the expansion starting in April.”

HP has also broken ground on a ten-story building that will become its Medellin headquarters in mid-2012, “and that’s where the approximately 1,000 new people will be working when it’s ready,” Lewis says.

“It’s a global service center, so a number of functions can take place there. It will include back-office support, HR support, and a call center to support local customers. These are still the early days, so it’s hard to say exactly, but Medellin will mainly provide support for other HP groups. But it could become a sort of mini-HP as well. The group there will be providing services to other HP units, so there is definitely potential to add applications development or software testing capabilities at some point. They could certainly be provided from there.” Collaborating with other HP hubs is also possible.

“English speaking skills are very important to us. We believe we can find a large number of English speakers as we expand. We are also looking at Portuguese skills but are not sure we can find that in sufficient numbers.”

Will there be enough talent?

“Part of my role is working with other HP groups planning to expand in the region, assessing the talent capability and matching that with their hiring plan,” Lewis says. “We believe Colombia has untapped potential because of the legacy of violence in the country. That has deterred high-tech companies in recent years. As a result, there’s a high level of talent that has not been allowed to develop.”

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Finalizing expansion plans involves “finding the right talent at a reasonable cost,” Lewis says. “Based on our investigations so far, we think Medellin has the potential to provide high-capability talent. We’ve started our recruiting program in order to ramp up, and we’ll continue to add head count to the temporary site for the remainder of 2011. Major expansion will start next year when the new building is ready, and then we will see significant ramp-up in hiring.”

HP is also building a partnership with EAFIT University to “customize the curriculum to develop skills we need from graduates. That provides potential for a high level of technical talent we could tap into.”

The Spanish advantage

“Our language priorities are Spanish and English,” Lewis says. “The Spanish spoken in Colombia is considered a neutral form of Spanish. Local employees can thus work with Spanish speakers in the region as well as in Spain and Europe, and with Spanish speakers in the United States as well.”

“English speaking skills are very important to us. We believe we can find a large number of English speakers as we expand. We are also looking at Portuguese skills but are not sure we can find that in sufficient numbers.”

Public and private agencies played a major active part

“The thing we have noticed about working in Colombia and Medellin is the cooperation of public and private agencies,” Lewis says. “They all worked together to assure this would be an attractive location, but they have also continued to be involved during the implementation phase.”

The business development group ACI Medellin played a key role, including cutting through red tape and easing the way for HP to begin construction of its new facility. “They were instrumental in working with the local government and the mayor in crafting a package attractive to HP,” Lewis says. ACI provides a fulltime project manager in Medellin to support HP and coordinate the multitude of things that need to move forward. “Hugely helpful,” says Lewis.

“Colombia definitely wanted to see HP expand in the country, and they put together a package very attractive to us,” Lewis says. “We had access to the highest levels of government, both local and national. The city is very aggressive in going after deals, and they have been very helpful in addressing any issues we might have. Medellin wants to be a services hub in the region.”

Other data backs up HP’s experience. Last year the World Bank called Colombia the most business-friendly country in Latin America and rated it fifth in terms of protecting investors — that’s fifth in the world. Harvard Business Review called Colombia an “entrepreneurial breeding ground.” With US firms increasingly open to the location, we’ll be watching to see who else is eyeing Colombia.

To read Nearshore Americas’ Country Profile of Colombia, click here.

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