Why Choose Nicaragua as a Platform to Export Knowledge Intensive Business Services?

Published by Connect Americas

April 27, 2013 - Christopher Marlett is the CEO and co-founder of MDB Capital Group, an investment bank in California, United States. He specializes in financing technology companies through capital markets and in capturing value from intangible assets (Intellectual Property). Currently, most of his services, which are knowledge intensive, are being delivered from Nicaragua.

Managua as a Global Service Platform
The real estate business for global service companies was one of the first opportunities that Marlett saw in Nicaragua. In 2008, he bought the building of the former U.S. Embassy in Managua and turned it into one of the largest outsourcing parks in the country. Its success, which came along with the help of the government of Nicaragua, was accomplished through the partnership with Sitel, a company that provides bilingual Business Process Outsourcing (BPO) services to top-tier customers in the United States, and which currently employs about 2,500 employees.

Working at the Top of the Value Chain, from Nicaragua
PatentVest is another of Marlett’s companies in Nicaragua. It has about forty employees and is dedicated to providing services to headquarters of companies in the USA. In particular, PatentVest provides services to MDB Capital, an investment and banking company, and to IP Development Services, which specializes in creating Intellectual Property portfolios for companies. In order to develop part of the activities related to the integration of IP in business strategies, PatentVest has a team of 20 engineers who write 70 patents per month, from Nicaragua.

The Bet is to go Further and Centralize all the Intellectual Capital in Nicaragua
MDB Capital Group has a comprehensive approach to financing technology companies: it creates the portfolio of IP assets, it identifies the management team, it supports the search for investors, and it even provides the business assistance for public relations and media.

Marlett’s objective is that most of the services, including promotion services, be delivered from Nicaragua. As a result, he is thinking of creating a media company in the country, to promote U.S. firms. This would allow employees to cross-reference all the information, interact with each other and understand where they fit in the value chain offered by the company.

Why Choose Nicaragua as a Platform to Deliver Global Services?
One of the most important reasons for choosing Nicaragua as a platform to export services is its security. "The interesting thing about Nicaragua is that it remains one of the poorest countries in the hemisphere but, as far as I know, it is also the safest. It has unique circumstances, a competitive workforce and excellent reliability. I don’t have to worry when I send my employees and my family there, because I know they will be safe. My wife can drive a car by herself, she doesn’t need a driver or a bodyguard to look after her", says Marlett.

The second point is related to the phenomenon of nearshoring, based on a geographical and time proximity to the United States.

Another reason has to do with education. Many years ago, a significant number of Nicaraguans ("half a million"), went to the United States, and had children who were educated there. Later, for reasons related to the quality of life, many of these people have returned to Nicaragua.

Stability in jobs is also an important factor, particularly for companies such as MDB Capital Group, who invests large amounts of money in training personnel, to retain them.

Cultural affinity also has an influence, because of the number of Nicaraguans who are living in the United States. What is more, many of the recruited people have been educated there and some of them are also American citizens. "We believe that the great advantage of Latin America, unlike other outsourcing destinations, is the interaction. Once people achieve that connection, the relationship changes dramatically; it makes the whole process of outsourcing much easier", says Marlett.

Government support is also of great importance. "Working with the government of Nicaragua has been fabulous. I do not like barriers, I do not like things that make me go slowly and the government of Nicaragua basically says "go as fast as you want to go." ProNicaragua has done a fantastic job trying to eliminate barriers, so an entrepreneur like me can come to the country and do things quickly."

Finally, as some authors point out, there are certain imponderables that also have an important influence for a company , when deciding where to invest. In this case, it is not trivial that the mother of the main character of this story is Nicaraguan. In addition, Marlett says: "I'm half ‘Gringo’ and half Nicaraguan, I am an ambassador for both sides. I had not realized how lucky I am being half Nicaraguan, because although I was born and grew up in the United States, all my life I have had this connection with Nicaragua. "

The Road to Success is Not Free of Thorns
One of the most important constraints to develop this kind of operation is that of making customers and employees understand that the work will be done from Nicaragua. "I had to be persistent, because my employees in the U.S. were not very happy with this; that is why I had to reorganize the company and to look for employees who saw the opportunity to work with a team in Nicaragua" (Marlett).

A second challenge is the availability of trained employees with an adequate level of English. It is precisely to correct these kinds of difficulties that the IDB is financing and promoting, in different Latin American countries, the implementation of the model of Finishing Schools, whose objective is to train individuals according to the needs of global companies.

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