How to grow your business in Latin America

As the developed economies crater, many vendors are looking beyond the borders of North America and Western Europe to grow into Asia-Pacific, Eastern Europe, and Latin America.

For open-source companies, in particular, Latin America shows a great deal of promise, as countries such as Brazil and Argentina deliver many leads--but to too few closed contracts.

Dorian Turner

Over the past three years, part of my role has included managing Alfresco's business in Latin America. In so doing, I have sought expert advice from Red Hat, which has a booming business in Latin America, and other trusted sources. This weekend, however, I was privileged to hear from an unexpected source: Dorian Turner, president and founder of Lingo Consulting, a firm that helps enterprises expand internationally.

Turner gave some excellent advice on the nuances of building a business in Latin America, which she has kindly allowed me to share here:

• Most Argentines do speak English, and certainly, (that includes) Argentines in IT and hard-science fields...The most common issue was not the language barrier, but a) understanding other employees with accents over the phone..., b) correctly understanding differences between American and British English..., and c) getting nervous when speaking with their English counterparts here in the USA or when they visit. The same is very true of Brazil.
• Understand that (Latin American) employees are in awe of how American business works (especially how we work as a "team" that even includes management, when they are so used to an "employees vs. the big, bad boss" kind of mentality). So if you are hiring there, and (your company) has one of those "we are all one" corporate cultures, this is something you will have to train new hires in, as it is not the norm culturally.
• When you don't have operations there, hire someone local to help with local hiring...Argentine and Brazilian people are accustomed to doing things in person. Of course, IT professionals and other corporate employees are typically very Web-savvy, but as a rule, they do everything face to face.
• In addition, (Argentines and Brazilians) are used to going through several grueling rounds in the hiring process...In both Argentina and Brazil, it is permissible to ask for photos, have age and gender requirements mentioned in job descriptions, and even to visit a potential employee's home during the hiring process. Unlike the U.S., it is not only legal, but acceptable that a potential employer also ask personal questions, such as marital status, as well.
• I highly recommend that you make sure to have a representative team from your company or a U.S. representative team to train and/or assist in recruiting. Argentines have a way of hiring friends and relatives that makes an objective eye (who has your company's interests at heart) essential when it comes to hiring decisions.

  This also helps to set the tone of inclusiveness, rather than that these new hires will simply be "cheap labor," even if that may be one of the perks of hiring there. Argentines have a complex about American businesses because of a past history of U.S. companies coming there and abusing employees.

• You should look at Uruguay as well. It is a small country wedged between both Argentina and Brazil. They are almost identical culturally to the Argentine people (sort of like how Canadians are similar to Americans), but with more flexible tax laws and reciprocal agreements with the USA that may make it worth your while to investigate.
• Ideally, (your company) would put a small or satellite office in either Argentina or Brazil (preferably both) as again, it has been my experience that this is best for everyone; these will be "full-time employees." The only other alternatives would be to either work with a partner firm or to have a designee fly there periodically to ensure that your company's goals are being met.

Great advice, and great insight into how to pragmatically grow in a growing, but sometimes difficult, market.

[CunhaFC]

Interesting post, but a North American opinion & point of view of Latin American markets & people sounds pretty much like imposing proprietary standards...
As I understand your compulsion to do it, I also think you're replicating the same scenario you fight against. Don't you think so ?

For example:

"Understand that (Latin American) employees are in awe of how American business works (especially how we work as a "team" that even includes management, when they are so used to an "employees vs. the big, bad boss" kind of mentality).

This is the most false.absurd and obnoxious statement of all. It seems to come from someone who really doesn't know how is the corporate work environment in São Paulo, Rio de Janeiro, Buenos Aires, Montevideo or Santiago. There is corporate intelligence and culture doing very well in Latin America using their own values and making profit. (If you need examples I'll be glad to share them).

Maybe because of this way of thinking that's this happens with you: "many leads--but to too few closed contracts".

[bb5999]

I am an American ex pat who has been living in Sao Paulo state, Brazil, for the past four years.

- Many Brazilians do have excellent command of the English language, but verbal communication, especially over the phone CAN prove challenging. Be wise to reinforce any communication with email more. Also, don't write off the value of a webcam conversation. Adding that personal connection can make a major difference, and Brazilians, in particular will find the aspect of video helpful, even entertaining.

- The comments about more "team" work in US business seem very misleading. Especially younger Brazilians, who are swamping the big employers down here with their talent, are going to be some of the most valuable "team" members you could ever find. They are personable, intelligent and quite able to work in groups, maybe even more so than their US counterparts.

- Do NOT treat Argentina and Brazil as one market, maybe consider Brazil as an individual territory and then lumping the rest of South America together as another area of focus. To combine Brazil and Argentina, in particular, can be a costly mistake. Separate offices, support staff, US contacts, I would consider a must

- Interview and choose wisely. In Brazil, once an employee is "yours" it can be hard to get rid of a bum. Brazilian labor laws are ancient and tilted towards worker rights. Putting faith in and providing extensive training to a recent graduate, more than likely, will give you much better results than hiring people with years of experience. Veterans of Sao Paulo business show up later and take many long lunches. This may sound like a stereo type, but it is well founded.

[bb5999]

I am an American ex pat who has been living in Sao Paulo state, Brazil, for the past four years.

- Many Brazilians do have excellent command of the English language, but verbal communication, especially over the phone CAN prove challenging. Be wise to reinforce any communication with email more often than you would in the US. Also, don't write off the value of a webcam conversation. Adding that personal connection can make a major difference, and Brazilians, in particular will find the aspect of video helpful, even entertaining.

- The comments about more "team" work in US business seem very misleading. Especially younger Brazilians, who are swamping the big employers down here with their talent, are going to be some of the most valuable "team" members you could ever find. They are personable, intelligent and quite able to work in groups, maybe even more so than their US counterparts.

- Do NOT treat Argentina and Brazil as one market, maybe consider Brazil as an individual territory and then lumping the rest of South America together as another area of focus. To combine Brazil and Argentina, in particular, can be a costly mistake. Separate offices, support staff, US contacts, I would consider a must

- Interview and choose wisely. In Brazil, once an employee is "yours" it can be hard to get rid of a bum. Brazilian labor laws are ancient and tilted towards worker rights. Putting faith in and providing extensive training to a recent graduate, more than likely, will give you much better results than hiring people with years of experience. Veterans of Sao Paulo business show up later and take many long lunches. This may sound like a stereo type, but it is well founded.

[moralesjj2]

Matt,

I am not sure if much of that original advice applies for you and your industry. If the main person you hire is in "awe of how American business works," you have probably hired the wrong person. That may be true in other industries and at lower levels. In software there are many experienced people who have worked for global software companies at some point in their career, so you should try to pick from the best that is available. Do not get snowed by big company guys who speak great English but who might not navigate a small start up environment well. Your initial guys will need to be hard workers who can deal with many issues with limited support and resources.

I have set up and managed software companies in Latin America and other geographies. The bottom line is that there is no "one way" for Latin America or any region. You really need to take into consideration your specific market and customers and your own appetite for investment. If you go indirect you need to chose your partners carefully (skills, access to markets, ability to invest) and make sure you have good controls in place. If you want to go direct, make sure you really understand the costs and the type of person you need. If relationship selling is key, getting a junior sales guy will probably not get you that far. Either way recognize that it takes a lot of support and effort from an HQ to help get things off the ground. Most companies get burned because they did not really understand the costs (taxes, HR, facilities, localization), requirements(localization, marketing products, etc) and challenge with setting up and selling in another country. Good luck.

[Matt Asay]

Good comments from all. It's clear that you have more experience with this than I, which is why I'm grateful for your comments here.

[Dorian_Turner]

I have enjoyed reading the comments, but I think that some assumptions have been made, and it would be helpful to supplement the article with some background. First, it might be helpful to know that the original email I wrote specifically addressed concerns with hiring in two countries (Argentina and Brazil) and thus was not intended to be a comprehensive description of business relations in all of Latin America. As for the mention of Latin American employees being "in awe of how American business works," I was NOT attacking their knowledge of business in the United States, but rather HOW business is conducted in the US, which refers more so to a cultural divide. This is a subtle distinction to make, but an important distinction nonetheless. Here?s an example:

One tech company employee I interviewed in Buenos Aires mentioned that he did not understand why his U.S. counterpart performed the exact same job functions, yet received such perks as paid pet sick leave and sports game tickets, while he was being paid much less and had to drive in "the worst conditions possible just to get to work each day.? Up until the recent economic downturn, such perks were commonplace in Corporate America (not so much now that employers are cutting back), and were used to promote a sense of loyalty or as a reward for a job well done. This is the "awe" that I was referring to--surprise at how differently employees are treated and compensated for the same jobs. I have found that employees in Latin America are incredibly aware of and sensitive about the differences.

In addition, while employees in Latin America do understand well the concept of teamwork and how to work as a team, I was addressing their understanding of the American style of team, not the Latin American one. What's the difference? Well, that would take longer than one article (given that most companies write entire employee manuals in an attempt to describe it), and the reason why I suggested training to introduce new employees to the team culture of that particular company.

The information in the article above cannot possibly depict all of the intricacies of inter-American business relations. That would not fill one book, let alone two. As the discussion here has illuminated, misunderstandings abound. I agree with the one comment that said that mentioned how different Brazil and Argentina are. I am indeed aware of this since I live in Buenos Aires, once lived in Brazil and have travelled extensively throughout the rest of Latin America over the past ten years. But again, my email addressed how an American company would go about hiring employees in Argentina and Brazil, not the differences between the two Latin American countries.

I am glad this article has generated debate. I know that people are usually especially motivated to make comments about the things they don?t like, and not mention the points in the article that they agree with. I would like to add that over ten years, my work has permitted me to personally interview hundreds of CEOs, business leaders and employees throughout Latin America. During those ten years there has certainly been healthy debate about the differences between us, much like what happened here. However, the main point of my email stands: there are an over-abundance of talented, brilliant people in Argentina and Brazil.

[marioltferreira]

Hi Matt,

If you allow me, I would like to disagree about the quality of the advise and insight.

I live in Brazil since the 70s. Despite some points that could be accepted, to not extend to much the comment, I will go to the more absurd ones.

First, make the same assumptions to Brazilian and Argentine people is the first tragic strategic error to anyone that wants to negotiate here.

Second, consider "employees are in awe of how American business works" would be a fatal mistake. The calibre of many Brazilian professionals could teach many American how to develop team work and how to do business worldwide.

Third, another misunderstanding, "Argentine and Brazilian people are accustomed to doing things in person". Brazilian people are extremely heavy users of internet and on-line systems. We have one of the most sofisticated internet banking systems, we are at top rate users of orkut, LinkedIn, we are also one of the countries that have largest average time of "staying connected on-line", and so on.

Just to finish, the unique "almost identical culturally" between Urugay and Argentina is the language.

Kind regards,

Mario Luis Tavares Ferreira