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What opportunities does the Mexican market offer to a company like SERVIAP?
A: We have found opportunities mainly among foreign companies that want to enter the national or Latin American market. These companies want to enter new countries, without necessarily having to create a legal entity in those regions. When entering a new market, international companies often hire multiple experts, such as lawyers or accountants. The problem is that all of those players need to coordinate to successfully start operations. This can cause massive delays or derail a project entirely. SERVIAP offers all necessary consultants, legal coverage and expertise as a turnkey service. Moreover, it offers access to value-driven remote hiring and local experts. As the legal employer, we are responsible for all compliance issues. From the client’s perspective, they simply have another great member of their team without the necessity of establishing a legal entity and all that this involves.
What are the advantages that the PEO model offers and how do you work to communicate these advantages to your potential clients?
A: PEO means Professional Employment Organization, which is the model in which we specialize. We basically hire in the name of our clients the personnel they require. This model is not so different from the outsourcing model that is used by several businesses. The main distinction is that we outsource the administration while daily operations, hiring decisions and performance review are in the hands of our clients. It is essentially like having another office in your home country, with even less paperwork.
We offer the means of expanding and reaching new markets. But above all, people need to save costs and manage risk. We offer the means to massively save traditional company management costs and risks, while letting clients do business whenever they need it. We also provide consultancy to clients when they need it regarding salary ranges for local markets. Some of them even ask us to make payments in US dollars to avoid having substantial variations in their payment estimations because of the fluctuating exchange rate.
SERVIAP has operations in Mexico, the US, Argentina and Chile. How do clients’ needs in these markets differ?
A: Some of the differences are that in Latin America payments are done once a month, while in Mexico payments are done twice a month. Social benefits vary in all Latin American countries. In general, Latin American countries offer more social benefits than Mexico. These are cultures that are fairly similar and place a lot of value in customer service, in which we excel.
In terms of social benefits, how competitive is Mexico against other Latin American markets?
A: It is somewhat similar in terms of costs related to salaries, since administrative positions in general do not imply a very elevated cost. The same goes for social benefits and employment taxes. What is different is the payment that companies must make when they decide to terminate the labor contract of a person in Mexico. When terminating an employee that has been in a company for some years, companies must pay a considerable amount. However, in the rest of Latin America this does not happen, since costs are not the same. Maybe in this area the rest of the continent has a competitive advantage against Mexico. However, in general, when it comes to salaries, Mexico is fairly competitive against the rest of the region, except Brazil that tends to have higher salaries.
What are the challenges in the Mexican market?
A: The main challenge for us is finding qualified labor that also speaks English. Since most of our clients are located in other countries, one of the main challenges for them is finding people who can communicate in English. The other element that can be a challenge in Mexico is the direct hiring of foreigners. However, this is necessary to achieve multiculturalism, which is a great help to companies and is helping to transform Mexican labor culture.
What are SERVIAP’s priorities for the next two years?
A: We are working on an app so our clients can visualize their information in real time, which is something that the market is demanding right now. That is our main challenge at the moment: letting clients visualize the information of all the workers they have hired through us in all the countries we cover, not only in Mexico.
We will be an integrated solution to manage all employees outside of the clients’ home country. Every incident or HR decision, every bonus or paycheck can be visualized and ultimately integrated into our clients’ home systems.
SERVIAP is an international PEO, payroll and logistics company founded in 2010. It provides technology-based HR solutions to aid in global expansion and remote hiring. Its service allows companies to expand into any country in the region without setting up a legal entity.