Nearshore Americas

Company Culture Has Become the Key Competitive Differentiator

With the economic fallout of the Covid-19 pandemic set to continue well into 2021, employers in most industries are facing tough decisions on how to cut costs and survive with strained budgets.

But minimizing the impact on employees should be the number one priority for forward-thinking executives. Nearshore IT providers who treat their staff as disposable during the pandemic will struggle to attract and retain software developers in the future.

Mario Chaves, CEO and co-Founder of Avantica Technologies

“If you lay people off, that creates a long-term issue of reputational damage,” said Mario Chaves, the CEO of the Nearshore provider Avantica. “We know some companies in our geographies that have been known for that. It is feast or famine. When everything is great, they will go out and hire 100 people and they will poach from anyone else around them and pay them more money… When the projects go away, they will just lay people off.”

However, Chaves warned that such mercenary tactics would have a negative impact on employee morale and loyalty.

“If your company has to do that to survive the pandemic it just reinforces a [negative] reputation,” he said.

According to Chaves, developing a strong company culture is essential for IT service providers. High turnover rates are a perennial problem for the tech sector, which has an average estimated employee tenure of only three years. While Covid-19 has slowed turnover rates across industries, that trend is temporary and will not endure post-pandemic.

With software developers already established as crucial assets to organizations in almost every sector, employers are already at constant risk of losing workers to another company offering greater flexibility, opportunities or pay. For every employee that leaves, the company loses its investment in hiring, onboarding and training. They also lose the skills and knowledge the individual brings to the table.

“Our view is that you should make the right calls now, so you prepare for the long term. We have been through two major downturns before. We know this is not easy. We are playing the long game here,” said Luis Carlos Chaves, the COO of Avantica.

Employees Crave Purpose

The disruption of the pandemic also represents a significant opportunity to refine the intangible elements of the organization. While salary and benefits packages are key to attracting talent, developing a healthy company culture is even more critical.

A recent Glassdoor multi-country survey showed that three in four employees pay close attention to company culture before applying to a job. More than half said that culture is more important than salary when it comes to their decision.

Clearly defining the mission and values of an organization is crucial to its success. When employees find meaning in their activity, they contribute to the overall momentum of the company.

Nearshore providers are already at risk of losing workers to international companies offering greater flexibility, opportunities or pay

Companies must also provide value to employees through opportunities for growth. Professional development is essential for a healthy modern enterprise. That could mean sponsoring formal higher education courses, or offering informal training in coding, design or artificial intelligence. By investing in their employees, organizations drive engagement.

Watching for Remote Burnout

Bismarck Lepe
Bismarck Lepe, the president and CEO of Wizeline.

Cultivating a purposeful company culture has become even more crucial following the shift to work-from-home arrangements. Poor management of a distributed workforce can contribute to burnout. New research on WFH indicates that employees are worker longer hours than before and are vulnerable to greater levels of work-related stress.

“We are going to see way more competition for the talent in Mexico and other regions in the Nearshore market,” said Bismarck Lepe.

The pandemic has also taken a significant emotional toll by itself, and young workers are bearing the brunt of that crisis. According to Gensler, a consultancy, more than half of knowledge workers are millennials in Latin America. As young workers are more likely to be sharing small living spaces with parents, roommates or young children, they are more likely to suffer from burnout.

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To cut staff attrition rates, executives must check up on their employees, communicate empathically and reinforce their company mission. Failure to do so will inevitably result in organizations losing their best people to competitors.

“We are going to see way more competition for the talent in Mexico and other regions in the Nearshore market,” said Bismarck Lepe, the president and CEO of the software and product delivery company Wizeline.

According to Lepe, company care has become a crucial, but often overlooked, competitive differentiator for attracting and retaining talent. Smaller Nearshore outsourcers and international companies are already poaching the best talent from incumbents, and the old guard software partners will have to work on strengthening their relationships with employees.

“The salaries may be the same… but they just have a really different way of working,” Lepe said. “As we think about the total compensation package for an engineer or for technical talent, it’s not just the salary. It is the salary plus how they’re treated – the benefits they receive, the projects they get to work on, all of that matters.”

What does it take achieve great outcomes in Nearshore services? If you would like to share an exciting case study or news story drop me a note — Steve Woodman, Managing Editor

Stephen Woodman

Stephen Woodman is an independent journalist based in the Mexican city of Guadalajara. He has six years’ experience covering business and culture in Latin America. Stephen has been published in numerous international media outlets, including The Financial Times, BBC News and Reuters. To share story ideas, drop him a note here

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