The recent news that Teaneck, NJ-headquartered Cognizant Technology Solutions Corporation intends to hire more than 100 workers in San José, Costa Rica has created some buzz, given that this is the global firm’s fifth center in Latin America, and follows an announcement that it plans to hire 10,000 workers in the United States over the next three years.
“The Costa Rica expansion is mainly to serve Solutionstar, which is a US customer,” Gajen Kandiah, Cognizant’s Executive Vice-President, Business Process Services, tells Nearshore Americas. “This is for Business Process Services [BPS], which differs from Business Process Outsourcing [BPO] in that we are moving from the back office to the middle office.”
The middle office is that part of a financial services firm responsible for transactions and settlements – making sure they are conducted and accounted for. This kind of assistance makes sense for Lewisville, TX-headquartered Solutionstar, which provides technology-based mortgage services to assist companies handling residential mortgage loans. The company, which was formed in 2012 and was already a Cognizant customer, has a wide offering, from default processing to title and valuation services. Solutionstar includes law firms, mortgage companies, and government-sponsored entities among its customers.
“This is a fantastic opportunity for us,” says Kandiah. “We will be offering BPS in English and Spanish for everything from appraisal services, to market origination and closure.”
Cognizant, a Fortune 500 company, has been on a roll of late. For Q3 2013 the company’s revenues were $2.31 billion, an increase of 21.9% over the previous year’s third quarter. From a regional perspective, North America represents 77.3% of the company’s revenue, Europe 18%, and the rest of the world 4.7%. Financial services remain critical to the company’s success, accounting for 41.4% of the total revenue. Deepening BPS engagements with US customers is critical to Cognizant’s long-term growth strategy.
“There is an increasing need for middle office services in financial services,” says Kandiah. “This can include addressing capital markets, trades, foreign exchange, procurement, transaction support, and even HR.”
The choice of Costa Rica to advance the engagement with Solutionstar is in large part due to well-known selling points: the country is close to the US and has a time zone that aligns nicely; and Costa Rica has an educated workforce with high English language proficiency levels.
“We launched our center in Costa Rica about four weeks ago,” says Kandiah. “Overall, including planning, it’s been about three to four months. That’s a typical ramp-up period for us. We were lucky in that there was already significant talent in place, including people who had a mortgage processing background.”
Costa Rica and Beyond
In Costa Rica Cognizant brought in subject matter experts – both local and from other Latin American countries – to get a core group in place.
“You need to get the basic team up and running,” he says. “That middle to upper part of the pyramid of experienced workers gets on board, and then we start hiring and training.”
Cognizant, which has 1,133 active customers, has a heavy emphasis on training in order to address the at-times complex middle-office demands of it clients in financial services.
“With this kind of higher value work, a deeper knowledge of our clients is required,” says Kandiah. “And that then means we have to emphasize training, both in functional areas and specific to a business. Training and development are core elements for us.”
Being such a large organization, Cognizant has significant experience to draw on. The company has delivered more than 20,000 outsourcing projects in 40 countries, and now has over 50 development centers in 15 cities in nine countries. As part of this complex global network, Costa Rica has now been added to Cognizant’s long-term growth strategy.
“We met with Costa Rica’s president, with the trade minister, and others – we were impressed with all of them,” says Kandiah. “They have a vision for their country that includes education and infrastructure, which means we can grow with Solutionstar and also look for new opportunities. As more young educated workers come into the labor force, we can see this becoming a larger delivery center.”
Importantly, Kandiah insists that it was the business case that sealed the deal – not any sweetheart offers from the government.
“This was driven by client needs and not government incentives,” he says. “This investment was made in the context of a global Business Process Services strategy. I want to be able to deploy middle office services to my customers anywhere in the world, and in Costa Rica we can scale.”
Last summer Cognizant also made Forbes “Fast Tech 25” list. To keep that growth going, Kandiah envisions the company moving aggressively into life sciences, data management, and bio-statistical capabilities – healthcare represents 26% of Cognizant’s revenue – with Costa Rica becoming an important node in Cognizant’s global delivery infrastructure.
“We want to get deeper into healthcare and insurance, all the way to addressing the needs of people as they retire,” says Kandiah. “That way, we can offer support to a larger value chain.”