churros
Business Management

IT Advisory Firm Puts People over Profits in Argentina

Scattered throughout Cordoba are eight highly motivated employees. While some work from their kitchen table, others work from the cafe on the corner. Some dress for work and others punch the clock in tattered jeans and a T-shirt. While their working conditions vary, two things are constant with each. Their love of the work they do and their appreciation for the company they work for.

Their employer, Software Advice, a website that helps buyers find the right software, is located over 4,700 miles away in the Texan city of Austin.

Listed at #948 on the 2013 Inc. Magazine 5000 Top Businesses, Software Advice has come a long way in just eight years. Don Fornes, Founder and CEO, started the company in 2005 while living in Big Sky, Montana. One of the earliest discoveries Fornes made was that, given sufficient bandwidth, he could work from anywhere. Following that Eureka moment, Fornes, along with friend and co-founder Austin Merritt, moved to Argentina with Fornes' wife and a Bernese mountain dog named Stinson.

For the first few months, Buenos Aires was home and then they resettled in Bariloche, located high in the Patagonian Andes.

While they enjoyed the freedom to work from anywhere, they soon learned that working in isolated, international spots came with built-in challenges. Limited bandwidth in the coffee houses was eaten up by hardcore gamers and Argentine restrictions on American dollars constantly left the trio short of cash.

While the cash problem was temporarily relieved by having a new hire fly into Argentina with $6,000 in cash stuffed into his pants, the bandwidth problem wasn't as easily solved. Finding no easy solution to the bandwidth problem, they eventually made a tough decision. If the business was going to continue to grow, they would need to leave behind the romance of working in Patagonia and return to the US.

While they were busy establishing their headquarters in Austin, Texas, the flavour of their experience stayed with them. Their time in Argentina influenced a decision to establish a "Work Abroad Program" where employees can work anywhere in the world for an entire month. With the flavour of churros (sugar-coated cords of fried dough) still fresh on their mind, they built a development team in Cordoba.

Marcelo Soffredi, a developer with extensive offshore development experience, is the development manager for the Cordoba office. Managing a team of eight full-time developers who write PHP, HTML, CSS and JavaScript code, Marcelo has led the growth of the team since being hired in June 2012. Fornes and Soffredi have plans to grow the Cordoba office with an eye towards adding at least three more employees by the end of 2013.

While the bandwidth problem that originally drove the business to settle in Austin has largely been solved, a new and constant problem has arisen: inflation.

With the Argentine government insisting that the inflation rate is roughly 10%, private economists peg the rate at closer to 25%. Wages for the developers in Cordoba have remained steady although the value of their take-home has been reduced by about 15% over the past 12 months.

To address the problem, Fornes and his management team are exploring ways to get a better exchange rate. If that is unsuccessful, they are committed to increasing the employees’ pay - even if it means the company must absorb the added cost.

As for the future, Fornes says, "At the moment it's just a waiting game. We're evaluating different options as more details unfold."

"We've engaged a law firm in Argentina to help us understand what our options are and what payment models are within the bounds of the law. Right now we are focused on alternative payment channels that get them a better exchange rate," he said.

Low bandwidth and hyper-inflation aren't the only challenges Fornes has had to overcome. Back in 2007, the company's two-year anniversary was good news/bad news. While enjoying the feeling of having survived in a market where one misstep can mean doom, they realised they weren't generating enough revenue.

As with any online business, the website is the storefront. With a critical eye on their internet real estate, they decided a makeover was called for and decided to completely revamp their online presence. Following the extensive makeover and with high expectations of wild success they launched, only to find that they still had a flop on their hands.

Despondent, Fornes called his mom and told her, "I think it's over. I'll have to close the business and get a job." His mom gave him the best business advice he has received so far. Fornes shares what she said: "Well, that's a shame because you know somebody else will figure it out and be successful."

Realising that his mom had just called him a wimp, he was motivated by her words to persevere and the next version of the website worked. Matters have improved greatly, hence the Inc. Magazine recognition.

Fornes says that having an outsourced team comes with built-in challenges. Time differences, remote locations, the sketchy internet in Argentina and even the language can all present challenges. Despite these challenges, Fornes is quick to point out that "our Argentine team is very loyal and dedicated, in part because we've provided job security at a very uncertain time in Argentina and they don't have the same opportunities that we see in US. So for us, outsourcing in Argentina works for this particular function and we'll continue to hire there for the foreseeable future."

Fornes has his critics in the US who claim that while Software Advice is creating jobs; those jobs should be given to Americans. While he acknowledges the economic theory that says global hiring creates a rising tide that lifts all boats, the firm's policy about hiring in Argentina demonstrates a deep-seated belief in people over profits. Fornes reflects on the reality for a moment and says: "We find a more dedicated, loyal developer population in Argentina, while back in the US there is such a demand for developers that you can't get the 'A players' that you need."

Another problem with hiring Americans that Fornes points out is the scarcity of unemployed Americans who are skilled PHP engineers.

"Ideally we could draw some attention to the challenge. I don't know that the Argentine government knows how much they limit their economic potential through reckless policies," says Fornes. "They have a wonderfully creative and talented population that could thrive if given the opportunity."

 

Jerry Nelson is an American freelance photojournalist, based in Argentina, who covers politics and social justice issues that fly under the radar of mainstream media. His website is http://journeyamerica.org

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Jerry Nelson

Jerry Nelson is an American freelance photojournalist, based in Argentina, who covers politics and social justice issues that fly under the radar of mainstream media.  His website is http://journeyamerica.org

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