Stu Stern of Gorilla Logic talks nearshoring in Costa Rica

20 June 2018

Gorilla Logic began with their first nearshore contractors in Costa Rica as a way to solve the shortage of software engineers in the US. After only five years, the majority of the firm’s staff are located in Costa Rica,and the majority of growth is happening outside of the US in what some refer to as the Silicon Valley of Latin America.

Gorilla Logic is an agile software development and IT consulting firm which operates in the United States and in Costa Rica. The firm has grown exponentially in the past few years from a small start-up based out of Boulder, Colorado in 2002 and now employs over 300 people.

“In 2013, we opened up there and hired the first couple of folks. It was really an experiment to see how it goes. We grew to 20 people, then 120. Now we have about 300 people in the company – and that will be closer to 350 by July – and a quarter of those are in the U.S. We are growing much more rapidly in Costa Rica.”

The firm was looking for an option that would provide their developers and clients with a logistical benefit whilst residing within the same timezone. “In places like Costa Rica, Brazil, Mexico, Chile, Argentina, there's lots of software engineers. So we had a choice and shopped around. We liked Costa Rica because of the close proximity – it's just a couple of hours from Houston if you get on plane,” said Stu Stern, co-founder and CEO of Gorilla Logic.

The firm delivers nearshoring capabilities and promises quality talent. Built out of a lack of software engineers in the US, Gorilla Logic aims to provide a full-stack of development capabilities which leverages agile processes – a global phenomenon in project management that focuses on task prioritization, communication, transparency and flexibility which delivers periodical results and enables smarter development.

Using Costa Rica’s proximity and highly educated workforce, Gorilla Logic has grown its nearshoring capabilities. Nearshoring in North America has taken off as a viable software development process which allows companies to outsource their business affordably whilst maintaining cultural, linguistic and physical proximity.

Stu Stern, CEO - Gorilla Logic

“Over the last 20 years or so, offshoring of software development has become more popular. It started mostly in India – people realized there were a lot of computer engineers in India and they were a lot cheaper than American engineers,” said Stern.

“But over the past 10 years or so, there has really been a rise in what's called agile methodology for software development. It's really transformed the industry in many ways. It's a highly collaborative process and you really need real-time communication throughout the day with all the members of the team,” Stern continued.

“It's really hard to do that real-time communication if your team is India and is asleep during the workday in the U.S. It's the same for places like Eastern Europe or any other far-flung geography. So people have started to look for places in the same time zone – like Central or South America – where you can also get some cost-savings advantages,” said Stern.

Stern also mentions the way in which Costa Ricans share similar cultural traits with those in the US. “There's a cultural aspect of it as well. In Costa Rica, they, of course, have their own unique culture, but we very much get each other. They watch American television, we get the same jokes. There's also this level of optimism and positivity that's pervasive there.”

However, the most important issue which caused Stern and his co-founder Ed Schwarz to look nearshore for their development necessities was a talent shortage. “There just aren't enough engineers here. So even if there wasn't a cost advantage to operating in a place like Costa Rica, we would still need to go offshore to get the talent we need. It's really just supply and demand – there isn't the supply here in this country. They have an amazing education system in Costa Rica. The quality of engineers there is absolutely the same as it is here in the U.S.”

Other consulting firms including McKinsey & Company, IBM, Mott MacDonald, BDO, Kreston and Accenture have all opened or acquired offices in the country. The country has been named the number one destination for nearshoring by A.T. Kearney and is said to have the highest educated workforce in the region, up to 50% lower labour costs than in the US, and the highest level of security in Latin America.

Sven Smit of McKinsey & Company on Argentina’s potential

11 October 2018

The financial crisis which has sent shock waves through Argentina in the past year is due to a national ‘reset’ and subsequent transition period between two economic systems, according to McKinsey & Company’s Sven Smit.

While McKinsey Amsterdam’s Senior Partner Sven Smit was in Buenos Aires for the Business 20 2018 summit, he spoke to local newspaper La Nacion about Argentina’s financial crisis and growth potential. Smit attended the summit – which addressed pressing questions on the future of work, sustainability and international trade – and sat as an expert on the panel of the discussion about Infrastructure and Energy: the two powerhouses for development.

Smit believes that Argentina is the land of opportunities. “You just need to be connected to those opportunities. It has a culture of creation that is found in multiple sectors, but the whole system must be taken to a place where it can be captured financially. Now the country is going through a process of transition from one financial model to another.”

“There are many emerging markets which have a lot of potential. But here [in Argentina] there are opportunities in infrastructure, energy, banks, digitization. The issue is not the opportunities, but putting the whole system in the right place so that the opportunity can be unleashed,” said the consultant. 

The Argentinian currency has stabilised at roughly 37 pesos per US$1 after having reached a low in early September. The peso’s recent gains of 11% show that the Argentinian government’s fiscal measures are beginning to take hold of the situation. With that said however, inflation is still above the 50% mark, leaving Argentinians considering their options. 

Sven Smit of McKinsey & Company on Argentina’s potential

Smit argues that whilst austerity measures and the high level of inflation are painful, they are signs that the country is heading in the right direction. The McKinsey partner urges Argentines who are feeling this stress not to leave the country but to instead wait out the crisis and use digital transition and innovation to drive the economy in the right direction.

“If you live in a tighter context, the answer is that you have to do more. You have to work to correct the negative issues. Create new strategies for example, the world is becoming digital. It is influenced by the digital. That game has to be played now. These sectors have to be looked at for investments.”

In particular, Smit finds that the Argentine market has entered into a process of rearrangement. “Countries like Turkey go through similar situations, all for different reasons. I do not think anyone doubts that here you can find opportunities. With time, confidence will come and they will all be more optimistic about the possibility of doing business.”

“It is difficult to see it now, but the problems are being addressed and the important thing is not to leave. I understand that for people, inflation matters and it will not be easy, but I think it is a moment of transition. I do not see a disconnection with what happens with the rest of the emerging markets.

The B20 summit took place at the beginning of this month bringing together business leaders from around the world. The event was sponsored by big names in the private sector including Accenture, Ernst Young, Unilever and BBVA. 

Related: Argentina crisis affects tourism across Latin America.