Latino Talent Pinch Hobbling U.S. Firms’ Expansion Plans

Internet entrepreneur Ignacio Kleiman of Miami has plenty of cash, big plans and wide-open market opportunities across Latin America. But he’s short on the resource that matters most to his fledgling Internet company: Latino management and technical talent.

Like hundreds of other U.S. businesses targeting Latin America, Kleiman’s company, I-Network.com, has openings for bilingual executives he can’t fill. And efforts to import them have been frustrated by the scarcity of visas and work permits.

It is testimony to the increasing economic integration of the hemisphere--and to such rapid growth south of the border--that corporate America is changing its ways. As recently as 10 years ago, U.S. firms typically sent English speakers to run Latin operations.

“It’s globalization,” said Kleiman, a native Argentine who left an investment banking career in New York last year to help start his new company, which places advertising on Latin American Web sites.

Countless U.S. companies are feeling the Latino talent pinch, not only to staff their operations in Mexico and Central and South America, but to serve the 35-million-strong Latino market at home, a sector whose population, purchasing power and businesses are growing faster than that of the U.S. as a whole.

Companies large and small, from Compaq and Citibank to Internet start-ups, are scouring the universities for Spanish-speaking MBA students and pleading for help from executive search firms such as Heidrick & Struggles and Korn/Ferry International. Each reported a 30% increase in Latino headhunting commissions last year.

These companies are looking for U.S. Latinos and native Latin Americans who can operate in Mexico, Brazil or other countries in a dual mode, combining U.S. efficiency and business culture with the Latin way of doing things, which is more personal and requires knowledge of Spanish or Portuguese.

“Americans might try to close a deal over the phone, but the Latin style is to take a plane ride down there, have lunch and talk about soccer and the family. Afterward, that Latin businessman is going to feel closer to you,” Kleiman said. “If there is no personal chemistry, there is likely going to be no business.”

It’s only logical that foreign companies--having spent billions on new factories in Latin America and in buying former state-run companies via privatization auctions--would need people to run their new businesses. The need has been especially strong in Mexico since the 1994 North American Free Trade Agreement took effect, opening trade and investment doors there.

“As the world of business becomes more competitive, the talent shortage is likely to get worse,” said Gustavo Eichelmann, a native Mexican who is vice president at Compaq in Houston.

Said Horacio McCoy, Mexico City-based head of Korn/Ferry International’s Latin America operations, “Eventually we’ll have one big trade region from Alaska to the Falkland Islands. That’s where it’s headed; you can’t stop it. With more and more trade, North America is becoming deeply involved in Latin America, business-wise. The barriers are coming down.”

The demand for talent flows directly from the dramatic surge in U.S.-Latin America trade, which last year reached a staggering $310 billion, nearly double the $170 billion in 1994. Direct investment by U.S. firms in Latin America was $18 billion in 1998, three times the levels of 1990.

“In this global expansion of the world economy, one of our primary targets is Latin America. So that equals more opportunities for bilingual individuals,” said Jose R. Gomez, spokesman for Bentonville, Ark.-based Wal-Mart, which operates 500 stores in Latin America and has plans to open at least 10 more units by the end of 2001.

Latin America isn’t the only part of the developing world that is generating demand for people. But the gap between its rapid economic growth and the supply of trained, educated talent is arguably greater here than in Asia.

There are also cultural demands peculiar to doing business in Latin America.

Lily Arteaga, vice president of Coral Gables, Fla.-based Foodtrader.com, an online international food exchange, said business relationships in Latin America are “forged by establishing the familiar connection. Once you break the ‘I’m only here for business’ ice, the informality makes it far more comfortable and productive.”

Jorge Arce, a Deutsche Bank managing director in investment banking, said, “It used to be just gringos managing [U.S. firms’ operations] in Latin America. But there is a new side to the economy that didn’t exist five years ago. Now everyone is scrambling for people.”

The shortage of talent is especially acute among the 200 Internet companies that have launched operations in Latin American online markets. Competition for prospective employees among the firms, many of which are based in the Miami area, is intense and costly.

“We’re in competition with 200 companies. Anyone who is bilingual, it’s a nightmare to get them. And when you do get someone, you don’t know how many times a day they are being prospected by others,” said Donald McIntyre, chairman of Dinero.net, a personal finance Web site based in Miami and Buenos Aires.

Emilio Romano, president of Miami-based SportsYa.com, said putting together a staff last year was “crazy” because so many companies were getting established at the same time, spawning cutthroat competition. “World-class management takes time to form but we didn’t have that much time,” Romano said.

To attract executives, companies in high-tech fields have raised salaries for upper-management job candidates by 50% in the last two years, said Marco Munoz of executive headhunter Heidrick & Struggles in Santiago, Chile. Regional executives who once were paid less than their counterparts in Europe or the United States have reached parity, he said.

Companies trying to recruit in Latin America often run up against fierce competition from multinational companies in Europe and elsewhere.

Spain, whose companies invested more than any Latin American nation last year, will be shy 100,000 people in high-tech fields in the next three to four years, according to the Klein Institute, a Madrid think tank. Nortel Networks of Canada recently offered $1 million in bounties to employees who could help lure talent to the fold.

An even tougher obstacle can be U.S. immigration policy. Even if companies can find prospective hires, they are often unable to get U.S. visas or work permits.

The U.S. quota of work permits issued to highly trained foreign workers is exhausted this year. Though much attention has been focused on Silicon Valley’s inability to import enough software engineers and other high-tech specialists because of the visa situation, it goes beyond the technology realm.

“We have four or five positions we could fill, all of them for Latin America, and we’re not even looking,” said Rissig Licha, general manager of Fleishmann-Hillard’s Miami-based Latin America public relations operation. “We’re waiting for October.”

That’s when the U.S. Immigration and Naturalization Service begins doling out the next fiscal year’s work visa quota, he said.