Spain’s Grupo Konecta Assesses Latin America for Both Spanish and English Call Center Upside

By Patrick Haller

Earning a reputation as a strong leader with an ability to motivate teams with his positive energy, Sergio Canales, Country Manager – Chile for the international contact center operation Grupo Konecta, spoke with Nearshore Americas about the company’s operations, the challenges that exist in Latin America, and why Chile’s English-language call center services are at risk of stagnating.

NSAM: What is Konecta’s history?

Canales: Konecta was originally created in Madrid, Spain in 1999. Today we have operations in 13 countries. In South America we are in Colombia, Peru, Argentina, Chile and Mexico. We need to establish offshore operations in English and are looking for a place to do that in. Honduras is a good place to work but security is a problem. HR team, recruitment and economic teams need to travel to Honduras to study. It is like a grocery – best fruits are in front, but reality is in back. A decision was made to look for more information.

We are currently buying a company in San Diego and will grow from 300 people to 600 people there.

NSAM: How did the group grow so quickly?

Canales: We had the money and we are buying several operations in the countries where we are operating. Mostly in the banking, telecommunications and utilities industries. In 2010 we started operations in Colombia and Mexico, and in 2011 we started operations in Peru. We have agreements with existing clients about opening in new places and we offer lower prices.

Buying call centers that already servicing these types of clients and retain employees with the know-how. We buy company, have a contract for three years to establish relationship with the client and earn the next extension of the contract.

NSAM: What is size of typical company Konecta is buying?

Canales: There is no model for the size of company they are acquiring. But it is easier to buy an existing company than starting from scratch. The call center business is 80% – 85% of the total company, but there are other services.

We are finding places to make more money. For example the company in the USA earns 4% or 6% of income – if you move to cheaper countries, you charge less but the margin is bigger.

NSAM: What countries present the most challenges?

Canales: Argentina – no company trusts the legal environment after the absorption of YPF. You can get into the country, buy a public company and they can steal it from you. Also, the salaries have to be raised at least 25% a year, and there is a dichotomy between the inflation that we are told and the reality. The prices of the contract are adjusted using the legal inflation, not what is made public. If you arrange a price, you don’t know if you are making money that year, or the next one. It is very complicated.

Konecta is trying to buy a company in Brazil to start operations there. Brazil is a huge country – a small call center has to be at least 3,000 to 4,000 seats to have some respect. Some operators have 60,000 seats. In Chile I have 1,400 and that is a huge contact center in Chile. Brazil is difficult because people cannot work more than 30 hours in call centers, so people are working one shift at one contact center, then a shift at another one. Then you don’t have productive people because they are tired.

In every country you can find talented people. It is unfair if I say Chilean people are better than Colombians or Peruvians.

Peru right now is difficult because we are experiencing some absenteeism. Peru is growing fast now and the salary has to be very competitive because they can change where they work regularly. You have people to work, but they don’t grow as much as the business needs. For example, a company starts from scratch and you have to pay more to compete for workers, in addition to training costs. They rotate fast and people don’t work two or three years in the same company.

Colombia is a good place to do business. The fear of insecurity is decreasing. The president made several changes and the perception is that it is more secure. If I want to open a contact center – and if the task is difficult – I will first go to Chile, then Colombia, then to Peru.

Uruguay is a small country and you don’t have the mass that is needed to make a good business case.

NSAM: What niche services exist in each of the countries?

Canales: In every country you can find talented people. It is unfair if I say Chilean people are better than Colombians or Peruvians. I am just talking about the average worker.

Our strategy is to add more value to the whole operation. Chile is suffering a migration of the services due to increased prices. Colombia and Peru appear to be interesting places for business. Chile has lost several positions because of this. Chile has to add more value. Tech support has more value than a request about billing.

NSAM: Are you familiar with Chilean laws that affect data privacy with regard to call center operations?

Canales: It is not going to happen right now. Same thing that happened is Spain 5 or 6 years ago to establish hours for telemarketing and sales. This will protect the right of people’s privacy. We can’t ask for the credit card number. In Chile there is too much plastic money. This has produced several scams. There is no law controlling the requirement for the credit card number. You can reserve your right not to give the number. In operations that need the credit card number, like telemarketing, you need to make a separate place in the call center where the agent cannot have pencils, notepads, cell phones, etc., but an agent with a good memory…

NSAM: What is the call center sector like in Chile? Saturated, competitive, open for more?

Canales: Positions are available because most of the simple offshore business like customer care or basic information services are moving to Colombia or Peru. Local markets are growing fast because of the country’s good economic footing. Unemployment –technically full employment– is at 6% because of the increased cost of recruitment and retention. It’s a competitive market because the actors are the same. We usually provide services in partnership with one or two other providers for the same client.

NSAM: Can the infrastructure support large centers?

Canales: The infrastructure is world class. Right now we are installing and centralizing our three operations into one location with 1100 seats. That´s our comfort number, but bigger centers can be built with no problems.

NSAM: What is the level of English language proficiency in Chile?

Canales: Pretty lame. Learning English in Chile is a privilege and it’s expensive to learn it in institutes. In our industry English is not necessary for the kind of clients we are serving. An English language offshore operation for the US market cannot be established since there isn’t the talent pool or a minimum number of workers.

NSAM: How is employee retention?

Canales: It’s getting difficult; people are moving jobs for a few bucks more. Retention management in Chile looks at facilities, the way to manage personnel, or other benefits beside salary.

NSAM: Are there programs to attract call centers to the country?

Canales: Right now are reduced, because these programs existed between 2005 and 2009, after that the incentives for investment were used only for other industries like manufacturing.

NSAM: What areas of the country are most attractive for call centers, and why?

Canales: You have to go to regions, because the costs are lower and people have less opportunities to change work than in the main city.

NSAM: What are the main challenges that a call center operation faces in Chile?

Canales: To get more volume at the offshore level but with added value work. And use lobbying to get more pro call center regulations, get more flexibility and stop escalating costs.