Latest / The Accounting Podcast / The Compelling Case for Nearshoring Accounting to Argentina
Transcript
- Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:09] Welcome back to the accounting Podcast. I'm Blake Oliver David Leary: [00:00:12] and I'm David Leary. Blake Oliver: [00:00:14] In today's episode, we're diving into the world of Nearshoring. Nearshoring offers compelling benefits like cost savings and access to skilled professionals, but it also comes with challenges around communication, cultural differences, and remote collaboration. To help us navigate this topic, we're joined today by Nicolás Villafane, partner at South Offices, a company that connects US businesses with accounting and finance talent in Argentina. In this episode, Nicolás is going to share his insights with us on the advantages of nearshoring in Argentina, overcoming common obstacles and what to look for in a nearshoring partner. And we'll also discuss how Argentina compares to other popular Nearshoring destinations. Nicolás, welcome to the show. Nicolás Villafañe: [00:00:55] Thank you very much, Heather. Blake Oliver: [00:00:56] So let's start with this whole concept of nearshoring versus offshoring, which is the term that I hear a lot, or outsourcing. Um, and when we think of offshoring, we think of typically in the US, Philippines and India, those are the two countries where accounting and finance work gets sent. But with Nearshoring, we're not going that far. We're going down to South America where you are. So let's talk about the differences. What are the what are the big differences between offshoring and nearshoring. Nicolás Villafañe: [00:01:27] So there's three main places that you go when offshoring or nearshoring. Uh, as you mentioned, it's India, Philippines or South America. Uh, I think that the, the main difference or the first that you're going to think about is, uh, timezone. Timezone is a very, very huge challenge when working with Philippines or India. Um, uh, in South America, you're mostly aligned. I mean, you can actually have people working on their daytime and the exact same time that as Americans. So that's a big, uh, advantage. Uh, also, you have the cultural differences. Latin America is closer in terms of of culture to the US. Uh, I mean, anyone that has tried working with India or Philippines knows that that's a big a big thing that comes up any any time that we have interviews with potential customers, they always, uh, mention that if they had experience, that was an issue. Uh, but I think that the main, main difference is, is actually time zone. Uh, if you work with Philippines, you're probably going to have people working on your night time. So working asynchronously, uh, is hard. It's hard to coordinate. And at some times maybe you, you are able to find people that actually want to work or say that they want to work, uh, at the same time that you're awake. But most of the times they are just taking the job that they find. Uh, so whenever they can find actually a job that allows them to have a normal life and work on, on their daytime, they're just going to, uh, move on. So rotation is an issue on those cases. Interesting. Uh, so yeah. Sorry. Go ahead. Blake Oliver: [00:03:18] Oh, no. That's all right. So so you can because it's the same time zone. What is the time zone in Argentina. Nicolás Villafañe: [00:03:23] Right now is well this is recorded but it's one hour ahead of eastern time. That's the difference. Blake Oliver: [00:03:29] Got it. So very close. Yeah. If you're if your firm is on the East Coast. Yeah it's. Nicolás Villafañe: [00:03:33] Almost. Yeah. Totally aligned. Yeah. Blake Oliver: [00:03:36] Got it. So we are on Pacific time right now David and me. So you'd be four hours ahead. Nicolás Villafañe: [00:03:41] That's it. Blake Oliver: [00:03:42] Got it. Okay. Nicolás Villafañe: [00:03:43] So, uh, the other issue, uh, that again, it pops pop ups a lot when when I'm interviewing people. Uh, um, is that, uh, India usually sells outsourcing. Not so much like offshoring. It's outsourcing. They sell you the whole package. Uh, so you just send work to be done and work comes, uh, already, uh, done by them. And the quality tends to be an issue on that. But but on their side, their prices are amazing. I mean, if you just want to, uh, cut costs, uh, the, the most you can, can cost is, is India. I mean, India is the cheaper way you can go, uh, of course quality issues, time zone, but but it's super cheap. And then, uh, Philippines comes after India. The quality is better, but still you have, uh, time, some issues and cultural differences. And Latin America is not so cheap. It's not that cheap as the other two alternatives, but you're relying on the time zone and the culture. So those will be like the alternatives depending on what you want is what you rather choose. It's not that, uh, the same, um, offer will fit everyone. You just have to choose, uh, what you want. More right is prices is culture is time zone. Wherever you want, you have an offer that's important. You can choose. Blake Oliver: [00:05:17] Quantify that difference for me. What what does it cost in India versus the Philippines versus Argentina? Nicolás Villafañe: [00:05:24] Make a comparison. Uh, regarding like American costs, if you hire someone in in the US and you want to hire the same guy working in India or Philippines or Argentina, let's call it uh, in hiring in Argentina will make you save around 30 to 40% of your costs. Doing that in Philippines will probably get you further. You will probably be saving like 50% of the cost that you're having in the US. And if you do that in India, it's probably going to be around 60%. So there's difference. You can hire three people in India by the same price that you hired someone in, in the US. Uh. It's, it's a, it's a big it's a big jump. Blake Oliver: [00:06:11] But there is that big trade off in terms of the overnight time difference with India. Yeah. Whereas yeah. Nicolás Villafañe: [00:06:17] Yeah. If, if, if you don't have an issue with the overnight the main difference will be the quality. I think if you don't mind people working at night, uh, I would say that maybe Philippines and India, the main difference between those is is the quality of the labor because of how they are organized. Right. They tend to have someone that's more trained directly more junior staff. They just make, uh, working groups or working teams, and they have one, one guy that actually might be good. And then they have a lot of junior and a lot of rotation. So the the quality of the labor tends to be not as good as maybe what you can find in Philippines. I think that the Philippines is a good alternative to. David Leary: [00:07:06] It's interesting how the time zone affects how firms think of their offshore relationships, because I feel like with the Philippines, a lot of accounting firm owners and modern firms that are in Australia and New Zealand, they utilize the Philippines a lot. And they it's almost like it's their team. It's they never really say they're outsourcing the Philippines. It's like I have I have staff in the Philippines and but I feel like here in the, in the US it's very out like, oh I outsource that to somebody in the Philippines. It's not like a teammate. But then I've talked to some firms that are doing some, um, you know, in Latin America, either they're doing, uh, Puerto Rico or they're, uh, you know, doing Argentina or Brazil. They're doing other work in South America. And they're they almost treat it more like a team. And I wonder how much of that time zone affects that versus this. Because if you're in the same time zone, you're it's you're not throwing it on the other side of the world. You're kind of working collaboratively more, I guess is the theory. Nicolás Villafañe: [00:08:02] Yeah. For the last couple of years, I mean, everyone went remote. So right now having someone working, I know in Phoenix or in Argentina, it kind of feels the same. Uh, the the thing is, you have to have overlapping on your working shifts, because if not, it's just like sending a work to be done to, I don't know, computer and receiving it back. The overlapping of the, the working time is what gives you that sensation that you actually are having are building a team the same as if you had them like two blocks away? Um, of course we have accents. It's not exactly the same, but it's that. So the same happens with Philippines. If you are working in Australia, uh, they're working on their daytime. So, uh, the, the entire shift that you're going to be working, they're going to be a phone call away. You don't have to just leave them an email and hope for them to read it when they wake up. I think that that's a huge difference. Blake Oliver: [00:09:05] What's the quality of the accounting talent pool in Argentina? Nicolás Villafañe: [00:09:09] Actually, I'm of course I'm biased, right, because I'm from here. Uh, I don't know if you know much about Argentina, but, uh, living in Argentina is quite a challenge regarding economics. Not just a struggle regarding the. The economic situation of each of us is a struggle because laws tend to change a lot in here. Uh, especially taxes and accounting. We have inflation, a lot of inflation. So all our accounting has to be adjusted by inflation, for example. So every accountant in Argentina is very well trained on reskilling themselves daily. So. What that causes is that the quality of the professionals in Argentina is actually quite high because of our problems. Right. It's not that something that we're proud of, but it's the outcome. The outcome is that if you if you learn how to navigate through Argentina's Argentinian economy, Argentinian accounting, uh, you tend to be very good because you're you have to reskill yourself every day. Blake Oliver: [00:10:16] You have to be adaptable just to get by. Interesting. Nicolás Villafañe: [00:10:19] So interesting that that tends to create, uh, very good professionals. The other thing is in Argentina, for example, we don't have a bookkeeping done by people that are not CPAs. So, uh, all the accounting is done actually by CPA. So sometimes we find ourselves sending CPAs to do bookkeeping, uh, and the quality of their labor tends to be very good because actually they, they, they've been doing that professionally for years in Argentina. And it's not, uh, it's not actually a labor opportunity in Argentina to do that if you're not a CPA. So that gives you also a good base of, of studies that are behind each people that you hire here. And A accounting is actually the second most popular, uh, profession, Argentina. The first is, is, is we have a lot of lawyers in here. And after that, uh, accountants are number two. Uh, so I think that you're facing right now a kind of a small crisis regarding the career choice. We don't have that here. Actually, we are producing accountants, uh, each year. So that's that's interesting. It's actually a very interesting trend that we have regarding you. Yeah. Blake Oliver: [00:11:42] Maybe we need to learn something from what Argentina is doing here in the States. Yeah. To what do you attribute this success? Why is accounting. Nicolás Villafañe: [00:11:50] Actually don't know because, uh, Argentinian accountants complain a lot about their job. Blake Oliver: [00:11:57] I mean, maybe that's just global. You know, we like to complain, so. Nicolás Villafañe: [00:12:00] But they are we we are always complaining because of new regulations and all that. So I don't know if it's if by seeing an Argentinian CPA is something that you you just want to be them. I don't know. I don't know if that's the case, but it's an interesting question. Actually. I don't have an answer for that. Blake Oliver: [00:12:20] Well, you said that bookkeeping is done. You have to be a CPA to do the bookkeeping. So I imagine there's strong protections around the work. Like you have to be licensed to do accounting work. Nicolás Villafañe: [00:12:33] Yeah, you have to be licensed to do anything that a CPA, uh, could do. But that's not only taxes. It includes accounting. So in here all the the accounting is signed by a CPA. So you had to have a legal signature to be able to prepare the, the, the accounting. And in order to have that signature you have to be a CPA. So, uh, there's I mean, you have you can have employees doing part of the, of the work, but most of the, the, the work is done actually by CPA, so or by CPA students. Blake Oliver: [00:13:08] So I think that's our answer, which is that to do accounting work in Argentina you have to be a licensed professional. Whereas here you don't you don't. And so a lot of people are choosing not to become CPAs in the US because of that. Because I could I could still be an accountant, even if I'm not a CPA. Nicolás Villafañe: [00:13:26] You can do. Yeah, you can do part of the the accounting work without being a CPA here. You just can't. And there's a lot of work. I mean, I don't know if that necessarily means that it's super profitable to be a CPA in Argentina, but you will never run out of work because job security. Yeah. Yeah. Yeah. Blake Oliver: [00:13:47] So go ahead, David I. David Leary: [00:13:49] Was going to ask about. So you keep throwing out the letters CPA. Yeah. So can you speak to like governing body is are they taking the same test like. Nicolás Villafañe: [00:13:58] Yeah you're talking about the same. It's not the same certification as the US. Uh it's different. But uh, you have to be certified in Argentina in order to be able to, uh, work as, as a, as an accountant. I mean, that's a legal requirement. Not everyone fulfills that requirement. But, uh, I would say that 90% of the people that are actually doing this profession are certified, uh, the rest of them maybe are part of, uh, a firm or something that they just make the work. They just take the work, but they don't sign anything. So maybe they're not certified. But for most of us, we are. We're all certified. In Argentina, the process is different. Uh, it's not that you need to give a different exam. Other than the one that you already made when leaving the university is is accounting is a five year career here. So once you you end up that career, you are allowed to just certify yourself. You don't have to give a different exam because you already did it. In the in the career there are three certifications, which means that you have to make courses and all that, or you can do post-graduated courses, but in order to just do the basic stuff with that certification, you are already ready to to start working. Blake Oliver: [00:15:32] So you were introduced to us by Michael Lee, the founder and CEO of reconciled, and he partners with your firm. Is it? It's south offices, right? Nicolás Villafañe: [00:15:45] Yeah. That's it. Blake Oliver: [00:15:46] He partners with your firm, South Offices, to do accounting work for his clients. Um, tell us about how you work with reconciled. Like, let's let's take it like a case study. How does it work? Nicolás Villafañe: [00:15:58] Okay. Uh, I met Michael, like, two years ago, two and a half years ago. Uh, he and I are both, uh, members of Vistage. That's, uh, like a kind of a networking, uh, company that is both in the US and in Argentina. So we met through the network that that that network. Um, and he wanted to start trying, uh. Uh near-shoring. So he he didn't went for offshoring at first. He just went to nearshore. So he was looking for alternatives. He hired us, and he hired, I think, like, five other companies all at the same time. Uh, so he really made a, uh, an investment on, on on searching. Which one was the best? Uh, or which one gave him the best outcome? Uh, that that's something that that was very interesting for me to know at first that he was like, just. He went all in. He just hired one from each and just let us all show our skills. Right. That sounds. Blake Oliver: [00:17:07] Like Michael. Yeah, yeah. That's smart. Nicolás Villafañe: [00:17:09] So, uh, at first we should send him, uh, we made the selection here in Argentina. Uh, we use, of course, our personal network. I've been an accountant for the last 20 something years, so I have a big network in Argentina and of course, other networks that we have access to. And we make the selection. I would say that we narrow the selection to 2 or 3 candidates. We don't want to send like ten, because on the other side. I think that at first, at least, we are most better qualified to know what you're looking for. If you if you never had an experience of nearshoring. So we we do want, uh, the candidates to be a fit with you culturally. So that's, uh, what you may select in the last interview, but we made the 97% of the process on our own. So once they start, once you make the selection, they start working for you. It's just like having someone working on your firm. It's the same time they usually work at the 9 to 5 eastern time, or maybe a little bit later if you're, uh, if you're in Pacific Pacific time, for example. But we try to keep most of our people working 9 to 5 eastern or maybe 10 to 6 eastern, because we we want to we want them to to be very happy with the place they're working with. We don't want rotation as we know. That's a big issue with Philippines, India. Nicolás Villafañe: [00:18:44] We don't we want to be different. So, uh, we want to respect the the time zone that we have here, which we think is very compatible with yours. And, uh, everyone works remotely. Uh, they work from home. They, we don't have a offices because that's another thing that we we we did a lot of benchmarking. I mean, we tried, uh, and learn how other companies were doing this and what things were working and what things weren't. So one thing that, uh, tends to increase a lot, uh, the rotation is having all the people in the same place, uh, because of commuting. People don't like being in a booth where a small booth, they want to work from home after 2020. They all want want to work from home. That's a big trend here. Um, so they start they started working for him, uh, after that selection, initial selection, um, from their own places at the same time as Michael's team. And once he tried everyone and started to just, uh, pick the the best companies, he decided to go, uh, all the way with us. Right now, we have, I think, like, seven, eight people working with him. Uh, so it's it's been a nice trip so far. Yeah. And they just work as anyone else in in their company. They have the same opportunities. They have the same, uh, career. Uh. Yeah. The same career path that the first, uh, the first hire he had two years ago is now a manager, for example. Nicolás Villafañe: [00:20:25] And he's hired her. Is is her name, uh, to be the lowest level. Then he he upgraded her to a senior CAS, and now she's a manager. And she has been a manager for quite a bit. And and there is making a successful career. We try to always to hire people that are a little bit above what you're looking for. Because if, if they are going to start to work for another country, that's, that has challenges itself. I mean, they probably need to, uh, retrain their English. Maybe they need to each each person is different, right. But you probably have some kind of pain point when when there's something that is going to be a small struggle for you at first. So we want that the technical stuff is there and that we want that not to be an issue. So we always hire a little bit bit above their what you're looking for. So the the transition at first is very smooth. But the problem with that is afterwards they want to grow because they are kind of overqualified. So it's always good to to have that conversation when you start working with a company. Hey do you want someone to be doing the same work for all their lives? Or you want someone, uh, that's going to want to grow? If so, yeah, sorry. Go ahead. David Leary: [00:21:55] It feels like more of a, uh, less outsourcing. It's really. I'm just hiring a remote employee. Nicolás Villafañe: [00:22:01] Yeah, it's most mostly the same. The idea is that both the company and the the employee don't feel the difference. Uh, on on terms of what they can actually get, uh, by hiring someone in the US or by hiring someone in Argentina. It has to be a seamless, uh, difference. I mean, I think that that's a better approach for us because, uh, and it's what makes all the parts of the conversation happier. You can have someone, you can train them. They're going to stick with you for a long time. Uh, the the employees are going to be happy because they have a career ahead. So that helps with the rotation, helps with training, helps us, uh, make a more tempting offer to the candidates and helps us get the best ones that are out there. Uh, we can compete with big companies from Argentina, uh, with our offers. So we're actually getting the best candidates out there. So it's it's interesting for everyone that that's the idea. Blake Oliver: [00:23:12] Nicolás, it's been great talking to you. Thank you so much for sharing your expertise and your time with us. For our listeners who want to learn more about South Offices, they can go to South Office.com. Nice easy URL there. That's South offices.com. Um, and, uh, I hope Nicolás to get to meet you one day. I told Michael that next time he goes to Argentina, he's got to bring me along. Nicolás Villafañe: [00:23:36] Yeah, yeah, it will be very, very nice to have you here. So, yeah, it. Blake Oliver: [00:23:39] Sounded like you had a lot of fun on his trip. Nicolás Villafañe: [00:23:41] Yeah, yeah, he did, he did awesome. Blake Oliver: [00:23:44] I look forward to it. Thanks. And, uh, we'll talk to you, uh, again soon. Nicolás Villafañe: [00:23:49] Thank you. Take care. Bye bye.