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Yankee expat in Chile with a thing for small business and empanadas.

Outsourcing and Sourcing News

Monday, March 2, 2009

Launching a New Brand in an Emerging Market

Ki Teknology, the result of a merger between Intermedia and Kepler Tech Inc., is currently in the process of launching its new brand. Designers recently presented the following two designs for the new company’s logo, and management ultimately decided to move forward with the black logo in lieu of the blue. Here’s how we got there:

Going through the exercise of creating a new brand forced management to take a second look at what Ki Teknology means to its customers. Surveys, customer questionnaires, and outside-consultants were all used as part of the process of reexamining what meanings consumers have traditionally associated with Intermedia and Kepler Technology, and what meanings management ideally would like the new brand of the merged entity Ki Teknology to inspire.

Consumer preference in software and web development is largely determined according to rational elements, such as quality of end-product, customer service availability, and ability to consistently meet project deadlines, -but with the ocean of developers out there currently servicing international markets the emotional elements that influence customer preference cannot be underestimated when it comes to differentiation.

Ki Teknology, the result of a merger of two companies well known in Latin America for extremely rigorous development and testing processes, needs a brand that reflects the gravity of this process and the emphasis on the quality end-product this process consistently creates.

Ultimately, the consensus was that the black logo best reflects the emotional elements of professionalism and dependability, - critical factors in any cross-border business relationship. The brand logo is meant to help create loyalty and preference amongst international consumers, and to help promise international markets the dependability of product and service for which the company is already so well known within domestic markets of Latin America.

Monday, February 2, 2009

Managing Change in an Emerging Market


Carlos Lewit, CEO of Ki Teknology, was nice enough to take the time answer some questions for me the other day on his perspective regarding some of the unique challenges a growing company in an emerging market faces in today’s economic environment. -Interview follows:

1)      What international markets does the company have experience in so far?

KI Teknology was created by the merger of two companies: InterMedia and KEPLER Technology. The founders of KEPLER Technology have been working throughout Latin America and the Caribbean since 1987. Today we are primarily selling in Chile but last year we did projects in USA and Mexico.

2)      What are some of the international companies you’ve been working with?

Some of the international companies we’ve been working with lately are Principal (Chile and Mexico), ING, Bankboston, Budget, LAN, and D&S which was just recently taken over by Walmart.

3)      How do you feel about the current economic fallout? Do you think the company is prepared to weather the storm?

At the start of this period of planning we are in the midst of a turbulent economic, political and social situation that we can define as the most important we have experienced in decades and in which it is not clear where it is or how deep this will go... 

Focusing on our situation, the merger of both companies and the adjustments we have made have been successful over the past year showing substantial progress, and the synergies are clear and concrete. The image of the new company has been consolidated and there have been several instances of new projects that we would have not won on an individual basis, activities that we could not face…. In short, today leaves little doubt that the combination of communication and technology has benefited both companies and has allowed us to neutralize the weaknesses of each and build on and enhance respective strengths…

Last year we said that having adequate financial resources following the merger would be essential to achieve our objectives. -Finish the year with a strong liquidity position and hope that it will help us through the economic crisis, coupled with a significant increase in maintenance contracts. This was probably the most important part of the year, because even though obviously we are not exempt from the problems of the crisis, we can enter it in a better position and even think about opportunities that may arise.


4)      In terms of working internationally, are you focused on providing services in one particular area? What’s your approach to this?

Primarily right now we are committed to serving the Boston market because we have a good network there after more than two years working with Babson consulting and incubator programs. Even today we have the support of Babson consultants to guide our business plan and consult on finances and strategy to help support our growth.

5)      Things have been changing pretty quickly around here over the past couple years, what has been the toughest challenge for you managing the growth?

The merger created an enormous challenge in terms of doubling our size, so outside support has been needed with professional management in certain areas as well as focus on a strong system of corporate governance.  The merger was intended to accelerate growth and better prepare us to expand geographically, and through 2008 we were still growing at 26%, so I think this shows that we have handled this particular challenge properly. Finishing 2008 with financial resources and a high liquidity situation was critical to achieve these goals and we did. 

Sunday, February 1, 2009

Prudent Chile Thrives Amid Downturn

Wall Street Journal gave another nod yesterday to Chile's fiscal management throughout the economic crisis. The article does a great job of describing the optimisim that continues to exist down here amongst the general populace through the downturn. I've posted relevant sections below as well as link to the article in its entirety. Slds.

SANTIAGO, Chile -- During the emerging economies' commodities boom a few years back, Chilean Finance Minister Andrés Velasco was a wet blanket at the fiesta. Chile, the world's largest copper producer, was reaping a bonanza from the quadrupling in the metal's price. Mr. Velasco insisted on squirreling away a large chunk in a rainy-day fund.

As the savings swelled above $20 billion -- more than 15% of Chile's economic output -- Mr. Velasco faced growing pressure to break open the piggy bank. In September, protesters barged into a presentation by Mr. Velasco, carrying an effigy of him and shouting, "The copper money is for the poor people."

The 48-year-old Mr. Velasco, wary that a flood of copper income could generate lending and consumption bubbles, stood his ground, even as the popularity of the center-left government withered. Latin American history, he cautioned, was full of "booms that had been mismanaged and ended badly."

Finance minister Andres Velasco
Associated Press

Finance Minister Andrés Velasco built Chile's rainy-day fund.

Today Mr. Velasco looks like a prophet. Since the onset of the global economic crisis, copper prices have fallen by 50%, in line with the sharp decline in other commodities. Emerging economies that got too giddy in the good years are now coping with nasty hangovers. Soybean-dependent Argentina is facing a possible debt default while oil-rich Russia has been stuck bailing out banks and companies that got in over their heads in debt.

Thanks to Mr. Velasco's caution, Chile is now in a position to try to bootstrap its own recovery from the global recession. Mr. Velasco's preemptive moves have kept Chile's government from having to spend a single peso on bank bailouts. Having paid down foreign debt during the fat years, Chile is now a net creditor nation, with a debt rating that was upgraded by Moody's Investors Service in March.

And now Chile is pouring some of its copper savings into a massive stimulus plan, consisting of job-creating public-works projects, tax breaks for business, investments to keep mines operating and other goodies. Chile's plan is one of the largest stimulus packages in the world relative to the size of its economy. The Chilean program is the equivalent of 2.8% of gross domestic product, versus 2% in the U.S.

As a result, economists expect the nation's annual economic output to decline a very slight 0.5% this year, compared with much steeper declines elsewhere.

Juan Carlos Huaiquimil, who sells soft drinks from a pushcart, is the head of one of 1.7 million Chilean families, the poorest 40% of the population, which received cash stipends from the government in March. He says the money, equivalent to $70, was a godsend, helping pay for school supplies and uniforms for his three children. Last week, Chile announced another stipend will be paid in August.

"How many countries are in a position to give away money today?" he asks."........

...."Maligned for being passive during the boom, Mr. Velasco suddenly seemed to be everywhere all at once amid the bust. He flew to the U.S. in September to assess the financial damage first-hand. Then he began a series of meetings at home with leaders of big businesses and residents of small towns. And the tightfisted finance minister started singing a new tune about the copper savings. "The savings aren't to keep behind a window but to spend if necessary," he said.

Mr. Velasco, who had problems in Congress in the past, was able to get the $4 billion stimulus package through both houses of Congress, with unanimous approval, in just nine days in January. Chile will endure a mild recession this year, economists say. But the effects will be eased by a stimulus representing two to three times the amount most other Latin American governments are enacting, relative to GDP.

The package offers subsidies for businesses that hire younger workers, the group most hard-hit by unemployment.

To prod Chilean banks to lend money, Mr. Velasco pumped $500 million into state-owned BancoEstado, Chile's third-largest bank. Bulked up financially, BancoEstado nearly halved its consumer-lending rates and then broke with standard practice and stayed open for business one Saturday in March. The bank got so many customers that day its computer system was temporarily overwhelmed.

Chile is putting $700 million into a huge infrastructure program designed to create at least 60,000 jobs in road paving, airport upgrades and housing construction. The home-building plan, which features subsidies for middle- and low-income buyers, has prompted developers to start clearing land for a 400-unit development called Western Gardens not far from Santiago's airport.

One of the workers on the site is Roberto Urrutia. He had been unemployed since December, and had been so strapped for cash he'd had to cancel his telephone lines and borrow money for his children's schooling. "Putting my hard hat on is the greatest feeling in the world right now," he says.

Read the full article

Saturday, January 31, 2009

WSJ describes Chile as a model for the region

-Came across an interesting article by Stephen Haber on Latin America's economic transformation in today's Wall Street Journal. Chile is described as a model for economic stability and growth in the region. I’ve pasted relevant sections below along with a link to the article in its entirety. –Saludos...

“Chile provides perhaps the most obvious example of a country that has been undergoing dramatic changes -- and its success has served as a model for the rest of the region. Beginning in the 1970s, a series of reforms reshaped the economic playing field. Analysts often point to Chile's sound macroeconomic policies -- and rightly so. But these policies are the result of parliamentary rules that create incentives for legislators to converge on balanced budgets and of electoral rules that favor the two largest parties -- one of which is center-right and the other center-left, thereby minimizing the probability of a return to populist economic policies.

Other institutional reforms changed the nature of regulation and the enforceability of property rights. Under the Chilean constitution, the government can only expropriate private property if Congress enacts a specific law, and even then compensation must be paid in cash at market prices; all economic activities are legal, unless Congress passes specific laws regulating them; and citizens can protect themselves from arbitrary government actions that reduce their rights to life, liberty and property by obtaining an injunction from an appellate court -- in which they need not be represented by legal counsel. Chilean gross domestic product per capita has doubled over the past 18 years, the fastest sustained expansion in the country's history. Poverty rates have fallen precipitously. Young Chileans from humble families are attending college and buying homes. Indeed, Chile has a homeownership rate roughly equal to that of the United States, about 70%.”

Read the full article

Thursday, January 22, 2009

American entrepreneur finds solution in Ki Teknology

Jeff Takle, owner and founder of rentingyourhome.com based in Boston, MA, recently recapped his experience with Ki Teknology throughout the development of his site. The project covered new ground for both parties involved, as Jeff was under strict time deadlines to launch his new business and website and the Ki Teknology team quickly worked to adapt development processes typically suited to larger, transactional based projects to this entrepreneurial American project. In the end, Jeff was able to find a high-quality solution at competitive cost for the development of his site. Jeff’s comments follow:

“In the beginning, I have to admit, there were some frustrations. Ki Teknology is much more process-oriented than I am used to and it was an adjustment on both our parts. We settled on an agile development methodology that met both our needs, however, and the result was that I got the benefits of a flexible design staff, as well as the benefits of their systematic approach to project management. They included me early in the user testing phases and our dialogue evolved to a give and take, back and forth, that suited my personality well. In the end, they met every deadline.

In our later meetings, the communication with Ki Teknology improved substantially. It was previously hampered by the language barrier and some cultural differences.  But Ki Teknology adapted immediately and within 1 or 2 meetings, we were absolutely back on track.

On December 11, 2008,  Renting Your Home was featured in an article about entrepreneurs in the New York Times Magazine, and the site received a high volume of traffic. The work Ki Teknology had completed just 7 days earlier proved critical for converting that traffic into paying customers. If they’d overrun the deadlines, I would have missed that upsurge in customer traffic.

In the end, I’m happy with the decision to work with Ki Teknology. I was able to manage costs, deliver the product on time, and dramatically improve the quality of our product line.”

Jeff Takle


Touchdown in Chile and getting to know Ki Teknology

In Spring, 2008, I completed the two-year full time MBA program at Babson College F.W. Olin Graduate School of Business in Wellesley, MA and accepted a consulting position in Santiago, Chile working with the Economic Development Agency and Ki Teknology, a newly formed entity resulting from the merger of two established Chilean firms: Kepler Tech, specializing in software development and maintenance, and Intermedia, specializing in web development, design, and digital marketing.

The nature of the job allows me to wear a variety of professional hats, and my contract is mainly divided between strategy, finance and operational related responsibilities. The main theme of my job is to help a growing firm in a growing Chilean economy compete with established international development players throughout India, Latin America and Eastern Europe.

 Understandably, I was initially somewhat intimidated by the prospect of moving 5,000 miles to a country where I had no established contacts, and a Spanish competency level that at the time could best be described as “Gringo,” but the people at Ki Teknology welcomed me with open arms and helped me to quickly settle into my new life in Chile.

From the beginning, I was amazed at the hospitality of Chilean culture. Whether it’s the CFO inviting me out for some skiing or surfing (both doable in the same day here), the CEO opening his family’s home to me in Buenos Aires, or management and staff sharing their lives with me on a daily basis the transition from life in the United States to life in Chile has been amazingly easy.

Working with the staff at Ki Teknology has been impressive. The standard working day in Chile is 9am to 8pm, and the company is laser focused on mitigating any cultural differences that could potentially disrupt professional relationships with international clients. Key staff is forced to endure regular English lessons with Hill, the resident professor who will have absolutely no problem dragging you out of a café if you’re late for a class or if he suspects you may have had some outside help on last night’s homework assignment.

All in all the experience thus far has been fast, productive and amazing to witness firsthand. Despite the global economic downturn Chile policy makers have managed public finances efficiently and the country now finds itself sitting on a cushion of reserves which puts it in great position to weather the storm through the foreseeable future. Every morning I walk four blocks to work and I pass six cranes, continuing the building that has completely transformed Santiago in recent years. In the four months that I have been working with Ki Teknology I have seen the company’s office space double as work with international clients continues to keep pace, and I’m excited about the long-term prospects of the company and the country.