Expert Opinion: Silvestre Melo Discusses The Trinidad & Tobago Advantage For FP&A Outsourcing

Expert Opinion: Silvestre Melo Discusses The Trinidad & Tobago Advantage For FP&A Outsourcing

Silvestre Melo is an outsourcing professional with a career spanning over 20 years in the US and Latin America, leading teams from Nortel, PwC, Pepsico, and others, from Brazil to the USA and destinations in between. After recently visiting Trinidad & Tobago, Melo came away impressed with the Caribbean nation’s potential for high-value financial BPO and shared services.

Finance TnT’s editor Loren Moss was able to catch up with Melo for a candid conversation about his experience and takeaways. Spoiler alert: Melo says Trinidad & Tobago is a contender for Financial Analysis & Planning (FP&A), as well as more traditional high-value Finance & Accounting (FAO) outsourcing and shared services work.

Finance TnT: What is your background? Tell me what it is that you do.

Silvestre Melo: Sure, my background is in operations, mostly in sales and fulfillment kinds of roles, but if I go back to the past, in my prior life I also have a background in finance and accounting. I started working out of college for PwC, then after several years I moved to Pepsico and then Nortel Networks. I have been in the US for about 15 years so I spent I’d say 20% of my career in Brazil, 60% in the US. In the US I have been mostly focused on goals related to operations, sales operations roles, customer operations kind of roles and now I am a business development executive.

Finance TnT: What did you know about Trinidad & Tobago before going on that trip? What were your perceptions of the country and what was your awareness before you had the chance to visit?

Silvestre Melo: Well, I knew the name of the capital, that’s it. I didn’t know much about Trinidad & Tobago in those times, just one or two tips that I studied in geography, and I also had a colleague at Nortel who was born in Trinidad & Tobago. She was born in Port-of-Spain but we talked very little about Trinidad & Tobago.

International Finance & Outsourcing executive Silvestre Melo

International Finance & Outsourcing executive Silvestre Melo

Finance TnT: Tell me about your visit, tell me about when you arrived and your first impressions, especially from a business perspective, on the infrastructure that you saw coming in and then once you were able to tour the facilities and to see what other companies are able to do, and your impression about the capabilities and what the country can handle and where it is in terms of being ready to support the kind of shared services and outsourcing businesses that might want to consider that location.

Silvestre Melo: Sure, there is so much to talk about. But my first impression going there was, first: it is very close to the US. I mean, if you are in New York I think it`s about five hours, but I was flying from Miami so it was a very short flight, three hours or something around this,and that`s a good thing. But from the airport, very organized, going to Port-of-Spain, the downtown area, it seems organized, beautiful landscape. I had an opportunity to visit some buildings close to the coast, close to the beach, so it made a very good impression and since we`re talking about infrastructure—one thing that struck me was the fact that the rent cost per square foot was—I was talking to a realtor at the time who told us several statistics, I was given a number like $2.50, $2.30 a square foot. I thought that was pretty interesting from an infrastructure standpoint. I know here in the US depending on where you are, if you’re in Columbia, South Carolina, or Dallas, Texas, whatever, these numbers can go to $18, $25 per square foot, you know, it depends. So when I saw that $2 per square foot, I was very impressed at the infrastructure cost.

Finance TnT: What did you see in terms of human capital? Does it look like the labor pool and the workforce can support the kind of value added, high value outsourcing and global delivery  work that some of the firms you`ve worked with need to produce?

Silvestre Melo: That’s a very interesting question, an excellent question. Before talking about the value of the talent pool, let`s talk about the talent itself—so one of the things that struck me was that, talking to people at the university, I had the opportunity to visit a couple of universities, one was University of the West Indies, the largest in the area, so I learned that, you know, Graduate level ACCA (Association of Certified Chartered Accountants – CPA equivalent) kind of people, so that`s the  designation associated with the charter / certification of accountants.

So if you`re looking at Latin America specifically most of the countries have government accreditation per se, so if you go to Mexico, they`re going to have the certification that is recognized in that country. If you go to Brazil they will have the certification that`s required in that country. ACCA is a global body:  it is widely recognized, and knowing that you have these types of professionals coming from those graduate programs was really interesting because you can expect that the level of graduates is high, so that was interesting to me. And I know that they were going through some stats that we were given by the government, so we learned that about 6,000 accounting students are enrolled per year, most studying to achieve foundation professional level ACCA. So that`s only on the accounting side, because one of the things that I noticed in Trinidad & Tobago, the government wants to position the country as one that is specialized, that wants to focus, in international banking. One aspect is the financial services per-se: we`re talking about banking, about insurance companies, financial services and everything else, but number two is just the finance and accounting as a discipline that can go across all the verticals. So that seems to be the position that Trinidad & Tobago wants to have and I think they can get there.

So, back to the size (of the country). I thought we would look at, for example, Mexico or Colombia or Brazil: the penetration of tertiary college education into the population of those other countries overall is not very large. So a country is very large when it comes to population, but maybe you`re not going to have a lot of college degrees at the end of the day. On the other hand, what I think was interesting in Trinidad & Tobago was the fact that they have  a small population as a country, but out of that population, a high per-capita with tertiary education. The average of literacy is very high, I think it`s about 98% of the population or something like this. A lot of the population is educated, so most of these people can fill that BPO pipeline that is needed.  So you`re not talking about the AP anymore, which barely even counts. You`re talking about a highly skilled workforce in financial planning and management, a team that’s supporting budgeting, forecasting, perhaps functions like doing month-end close, perhaps supporting the unit leaders who will give more focused support on running the business, so that they can focus on the core. So if we`re talking about those activities, you’ve got a large company: maybe you’re going to outsource 50 or 100 people. It`s not going to be a lot. If you take those numbers and compare to the number of people who are coming into the market in Trinidad & Tobago, you can actually recruit those people, and fulfill your BPO activity there.

Finance TnT: It sounds like a prime location for a highly specialized, value added work, as opposed to something where you might need several hundred people just to go through the motions (of low-end BPO), but that high value shared services work and that high value outsourcing can find the specialized talent that they need there in Trinidad & Tobago.

Silvestre Melo: Correct. I think that`s the message. You don`t want to compete with India, for example. In India you have a huge population, a huge talent pool, and the language is English, and they can do AP, they can do HR; you can focus on those very labor intensive activities in financial accounting, but in Trinidad I think you can focus on those higher-level skills and then I think they can do better there. When you look at a few hundred people and another few hundred people when they are graduating about 1,000 per year, and we`re talking just about accredited accounting professionals, I think that`s a pity to use all those 1,000 people just to do accounts payable or accounts receivable work. You can take them to do some more skilled work suitable for ACCA kind of professionals.

Finance TnT: What can Trinidad & Tobago do to better share their value proposition with the rest of the world?

Silvestre Melo: I’ve been to certain conventions here in the US like shared services events. I just went to one that happened in Orlando about 3 weeks ago. It`s an annual event, one of the largest in the US. So I saw people from Uruguay, I saw people from other countries, and that brings some awareness, but I think more important than that; when I went to Trinidad& Tobago, I actually visited a shared services center for Scotiabank. They have 5approximately 500 people in their shared services center, and I think that there is another one which we could not visit because we didn’t have enough time: it was RBC, they have another 500, maybe a little more than that at the time. Those kinds of shared services centers are valuable in that sense. I think they just need to educate people about those center, so people see it`s not something they`re just starting today, it`s already there.

And I think that on the education side, one of the most important points in my view is to counter this notion that—you look at a country, you look at a population. For example you go to Mexico, and  Mexico`s  population is about, I don`t know exactly the population these days but I think it`s got to be something around 140 million people. If you go to Brazil, it’s going to be something around 180 million people. So you look at the population and you use that as a proxy for the talent pool, but sometimes they don’t have a lot of universities in these countries to fill the pipeline that you need. I think they are doing this work but probably they can contrast and emphasize that opportunity to do some decent-sized offers for BPO opportunities. And another thing that I see as an opportunity to explore is the fact that Trinidad & Tobago is part of the Caribbean Community, CARICOM. There are something like 15 Caribbean nations that belong to that organization, and they have an agreement that they can pool people from any of those countries, so in finance, Trinidad & Tobago is not restricted to the 1.4 million  population that they have, they can pool people from those other countries. I was given a statistic at the time that for those 15 nations, they have about 17 million English-speakers. That`s pretty decent.

Finance TnT: Yes, yes, that`s certainly true, the CARICOM & the Caribbean Common Market.

Silvestre Melo: And there was probably one other thing that`s important, at least to me. Many people think: ok, so I have some work, a company in the US wants to outsource. Where are we going to move the work? To a low cost country. English is required, so chances are a lot of times, you move the work to India. Then, if you have India why don’t you move to Trinidad? That is one of the questions. But Trinidad & Tobago is in the same time zone compared to the financial markets in the US and Canada, so if you`re doing work that requires a lot of interaction, for example I mentioned that I see finance and accounting outsourcing, FPA: financial planning and analysis, so that`s one of the opportunities for those types of activities, budget forecasting, etc. So if you`re doing these kinds of activities, you want to do things really quickly. A lot of times, people in a company in the US want to talk to the people, let`s say in Trinidad & Tobago who are supporting them, in the same time zone and they want to go back and forth relatively quickly. For this type of work, I think you are much better positioned if you place that work in a place like Trinidad & Tobago for example.

Finance TnT: Right, right, that`s certainly true, yes. Travel is 3 hours instead of 3 days for face to face visits…

Silvestre Melo: And you know Loren, another thing that I found very interesting, you look at a lot of the countries in Latin America and in the emerging world, they`re somewhat stable, sometimes controlled you know: it`s controlled for a few years and then after a few years inflation comes back. But one thing that was interesting: Trinidad & Tobago’s currency is stable, it`s managed  to the US dollar, but what I found  most interesting was the fact that Standard and Poors rated the country as a Grade A for eight years in a row. Then again if you go to Latin American countries, that stability is not there a lot of times, for a lot of those countries. It is controlled and then it comes back a few years later, and the economy just goes downhill. So that`s something that`s interesting. And also, on the regulatory side, as a country there`s a lot of influence from England. You incorporate a lot of those regulatory requirements, civil law, commercial law, the commercial codes, then it seems they have a stable regulatory environment, and some stable institutions. That`s something that I found interesting when you decide to do  due dilligence on setting up a business.

Finance TnT: So it`s quite literally an island of stability.

Silvestre Melo: Yes, exactly. It has a cycle, but every country has a cycle. There`s one thing that`s interesting there, when I think about the Caribbean, I think about hurricanes as well, living in south Florida. But if you think about the supply chain of services, a company in the US or Canada that`s outsourcing to another country, a low-cost country, so let`s pick Trinidad & Tobago in this case, so you are in the Caribbean, but I learned that it`s below what they call the hurricane belt. If you look at the map, you know, Trinidad & Tobago is very close to South America, just a little bit north of Brazil and east of Venezuela.

So it’s a little bit below where you have some problems with hurricanes. So if you think about, BPO as part of a supply chain of services, being out of that hurricane belt means a lot less risk that you need to incur, because those things might strike. You know, you might spend five years and nothing happens, but then the sixth year something can happen, so that`s one of the risks. From a risk standpoint, Trinidad & Tobago presents an interesting prospect as well.

Finance TnT: Right, that`s a very good point. They are out of the hurricane belt.

Silvestre Melo: People talk about supply chains mostly where goods are involved but it’s the same kind of risk when services are involved.

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