Creative tools to address the talent shortage and shrinking EBITDA

To add to this, talent shortage has also impacted the industry’s EBITDA significantly. Lack of engineers, project managers, and field manpower resulted in increased wages to be able to hold on to your talent or to capture the attention of other SIs talent. This is currently starting to become less of a problem.

The Supply Chain shortage has created a very challenging scenario for SIs, consuming their working capital to support the company’s structure, while accumulating backlog that would get converted to cash in unknown long periods of time.

Companies in these positions are an easy target for a lowballing offer to buy them out of the industry. To all of those who were able to adapt and survive, congratulations! Way to go. Those are the people I’ll like to talk to.

We are currently facing a recession, high inflation rates, and pricing pressure from the end users, and the lack of talent will not always allow us to provide the best experience to our customers.

So if your margins are shrinking, reducing your structure costs might be one of the first ideas to defend your company from that problem, but then what will happen to the customer’s experience? Will it be the same? We are a human-intensive industry, we need people to provide good service. As an entrepreneur, I’m always building MVPs (minimum viable products) so my mindset is always on: How can I get this done with the only few resources that I can afford?

It is time to get creative and think outside the box.

I’m originally from Argentina, and I have seen for the last 15 years, how many companies from different industries have open Talent Hubs in the Latin American region. And I always wondered why in the AV world, this was not seen. Software Developers, UX, Project Managers, Admins, Account Executives, and Customer Success Managers. So much money has been saved for US employers by implementing these practices, and so many companies have been created around this business model, staff augmentation companies, fintech, and software factories to name a few. This makes these companies extremely successful and there’s so much that could be done remotely.

Today there are only a few companies implementing these practices, usually global companies. They hire in Latin America, India, and the Philippines. I have witnessed extremely successful results, as well as big-time cost savings.

The only thing that a company needs is 2 things: a local network and a facilitator. Someone that could take on all the red tape, and find you that talent.

 

Case Studies:

 

1. 1. During my first entrepreneurial chapter, I built an AV Integrator in Argentina. Expanded this company to 6 countries and opened HQs in Silicon Valley in 2015. We had a team of 6 engineers in Argentina, doing pre-sales, programming, CAD engineering, and supporting the field crew. Hiring a US Engineer was still out of reach for us, not doing enough business to support that. We had a larger team than we needed but still kept our healthy margins. Our customers loved the experience. We were an Integrator that was not burning out engineers, or PMs, trying to squeeze profitability. We were doing 4M USD a year in projects, but we had 3 Project Managers. Our EBITDA was above 15%.

2. 2. Another case study was a project with a US customer. For 6 months we provided full-time Project Managers and Engineers. All of them were in Latin America and performed their duties remotely. The customer never felt any pain. We performed over 270 service calls in over 45 cities. Not a single service call required us to travel. Our profit margins for that project were very healthy (above 35%), and our performance was outstanding.

3. 3. A third success story was my passing through a Global System Integration firm. I built a 22 people team in Latin America, with Finaces, Project Management, Procurement, and Sales. The Finance Team and the Project Management ended up reporting to the US HQs. Why? The Finance Team in Latin America learned how to deal with the complexities of very challenging scenarios, co-existing with inflation on a daily basis. They were extremely savvy, so they started to help with audits during the acquisition phase. The Project Management team started to help the US Team to deal with Global Project Deliveries since Latin America is also very challenging for project delivery, international logistics, and dealing with construction delays.

4. 4. Last but not least, today I help run a boutique subcontractor in California. Not a single subcontractor of our size is able to afford a marketing team, nor to have project coordinators, account executives, a part-time CFO, and a finance team. We have them all. And we have been born a profitable company and are being used by the top integrators in the country.

 

How big is the cost difference? Some examples follow. All the rates are average across the region.

 

AV Project Manager: 

• 125K + Benefits in the US.
• 45K + Benefits in Latin America. 64% of savings.

 

AV Engineer: 

• 130K in the US.
• 45K + Benefits in Latin America. 66% of savings.

 

AV Project Coordinator: 

• 95K + Benefits in the US.
• 35K + Benefits in Latin America. 64% of savings.

 

Conclusion:

We have all done our jobs remotely. It can be done. The idea of this presentation is to put a very valuable tool on the table to help integrators think outside their frontiers, it’s easier than they think it is. If someone wants to choose us to help with this, that’s awesome. If someone wants to do this some other way, the market is full of companies doing staff augmentation from Latin America and I’m sure that they will find a way.

I’m sure that this could give a second chance to integrators that are struggling these days and not push them into selling the companies that they built for a lifetime to lowballers.

Let’s get creative together.

 

Luis Schilling

Co-Founder

408 239 7556

Luis@weinstall.it

WeInstall.IT