Exclusive: Why Did ThoughtWorks Seize on Ecuador While So Many Others Passed?

Latin America has no shortage of Nearshore options, with smaller markets jostling to distinguish themselves from their bigger neighbors. Ecuador, which has a population of over 15 million, …

Latin America has no shortage of Nearshore options, with smaller markets jostling to distinguish themselves from their bigger neighbors. Ecuador, which has a population of over 15 million, is one example: years ago it caught the eye of global giant Tata Consultancy Services (TCS), and most recently the Andean country has become the destination of choice for Chicago-headquartered ThoughtWorks.

“The country only has 15 million people, but the engineers down there are really good,” says Francisco Martin, Operations Manager at ThoughtWorks. “They know how we do software, and are familiar with Agile methodologies.”

Martin, a Spaniard, was working out of ThoughtWorks Chicago office during the assessment phase, which lasted over a year, but has since moved to Quito, Ecuador’s capital. Quito is over nine thousand feet in the air – it is the world’s highest capital – with a time zone that aligns with Chicago. (NSAM’s Country Profile of Ecuador explores some of its biggest hurdles.)

“Quito and Ecuador have some of the best universities, with the best computer science programs, in all of Latin America,” says Martin. “We want to employ local employees and keep it as Ecuadorean as possible.”

ThoughtWorks’ bread and butter is custom open source software and tools, with the company offering consulting services out of 29 offices in 11 countries. The company had previously set up operations in Brazil, and was looking to expand its footprint in Latin America. “We looked at Mexico – and we feel we will definitely open a center in Mexico at some point – but Ecuador was more aligned with what we wanted to do,” says Martin. “We have a very good relationship with the people down there.”

“We can accomplish things in Ecuador, because the government is interested in technology. We can collaborate in a way that will benefit the country”

A Different Approach

ThoughtWorks could take comfort in trailblazers like TCS, which in 2007 announced one of Latin America’s largest outsourcing deals in Ecuador, a $140 million engagement with Ecuador’s largest private bank, Banco Pichincha. When the five year deal was signed, TCS set up a new 500-person company in Ecuador, supported by its offshore BPO center in Chile. The center has since expanded to include over 1,350 employees. But for ThoughtWorks, the appeal moves beyond Ecuador’s business track record: the company’s mandate is to ‘revolutionize software design, creation and delivery, while advocating for positive social change.’

“We were also interested in Ecuador because it is a progressive country, and we are a progressive company,” says Martin. “We care about society and we want to do good.”

That message comes loud and clear when looking at ThoughtWorks client sector base, which not only includes traditional verticals such as Retail and Healthcare, but also covers Global Development and Government & Activism. In large part, ThoughtWorks’ interest in being socially relevant stems from the values of its founder, chairman, and owner, Neville Roy Singham, an IT guru who believes strongly in the Agile methodology for software development – which is collaborative, team-based, and ongoing – as well as in lean business models.

“Our founder wants to use software for social change,” says Martin. “We can accomplish things in Ecuador, because the government is interested in technology. We can collaborate in a way that will benefit the country. We expect to explore this market in partnership with the Ecuadorean government, by using open-source technology, which is something we really believe in.”

ThoughtWorks, which often does pro bono work for Non Governmental Organizations (NGOs), is nonetheless a highly successful commercial enterprise.  Now 20 years old, the company has been on a growth mode of late. That shows no signs of abating, in large part because ThoughtWorks has had a successful track record with well-paying clients.

“We have customers from airlines to banks,” says Martin. “We are not the cheapest shop, but we work on one-on-one relationships and Agile practices, which results in continuous delivery and integration.”

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Ecuador in the Puzzle

ThoughtWorks’ operations in Brazil have grown to include a presence in Recife, Porto Alegre, and São Paulo. However, Brazil’s domestic growth, and strong external demand, made a move to Ecuador viable.

“The local Brazilian market is really hot,” says Martin. “They can’t grow fast enough for the Nearshore work coming out of North America, which made a second site seem reasonable.”

Part of Ecuador’s appeal to ThoughtWorks is its commitment to open source software – the federal government is by far the biggest IT contractor in Ecuador, and it is heavily reliant on open source. Earlier this year ThoughtWorks promoted an event called Café Ágil Ecuador, in which local engineers familiar with open source technology were invited to come and get to know more about the company. “That event was really successful,” says Martin. “About 120 people attended, and 60 of them were brought into the hiring process, which is intense and quite exclusive. Of those, we hired six.”

Ecuador has strict labor laws intended to protect contract labor in the outsourcing industry and to ensure companies pay into social security. As a result, foreign outsourcing companies will often incorporate in Ecuador and rely on full-time employees. ThoughtWorks, like TCS, has created a company in Ecuador and is establishing formal employee relationships. The company will also have a strong management presence.

“I have moved to Ecuador along with a lead developer,” says Martin. “When combined with a managing director and an operations manager we expect that, by mid-August, we will have about 15 or 16 people active in Quito.”

Martin says that English is not a requirement for all positions, though most employees speak English to “some degree” and bilingualism would be a necessity for project managers working with clients.

“We will be offering English classes to all our employees,” he says “because communicating with our clients is important. However, we want this to be an Ecuadorean company.”

At present, there are over 200 companies in Ecuador engaged in outsourcing. As technical, project management, and language skills develop, Ecuador will be an exciting market to watch, particularly if it maintains its commitment to open source, which will then represent opportunity – particularly for public sector providers like ThoughtWorks – for many years to come.

 

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