Globant -Leading the IT Outsourcing Revolution in Latin America- By: Shingo Murakami, MBA Candidate, 2006
Roger Premo, MBA Candidate, 2006
Ina Trantcheva, MBA Candidate, 2006
Erik Yeager, MBA Candidate, 2006
15.389 MIT G-Lab Case
March 21, 2006
Leading the IT Outsourcing Revolution in
Shingo Murakami, MBA Candidate 2006
Roger Premo, MBA Candidate 2006
Ina Trantcheva, MBA Candidate 2006
Erik Yeager, MBA Candidate 2006
Sitting in his Buenos Aires office, Martin Migoya put down a copy of La Nacion, one of
Argentina’s leading newspapers, after reading a new article on Globant and looked out over the
River Plate. As the CEO of Globant, he had grown the company from a few contract workers into a
modern IT outsourcing company with over 240 employees in just four years. Now he was looking
forward to sales of over $12 million in 2006.
This growth had largely been based on Martin’s and his partners’ network of contacts. He and the
CTO, Guibert Englebienne, had sold business through extensive travel and connections. Although
they now sat in Buenos Aires, that was a rarity. Most weeks were spent in London, Boston, Dallas
or Madrid or on planes between those locations.
Although Martin took great pleasure in Globant’s past accomplishments, his aspirations for the
company were even greater. He wanted to build a company that could pride itself as being the best
offshore IT outsourcing company in the Western world. For this, Martin sought to expand and
modify the current sales system of informal networking to build more business. He needed to create
an independent sales organization in the company that could develop leads in a more systematic
Another challenge for Globant was the focus of the business. While the early sales were based on
reputation and connections, that also meant that projects spanned multiple industries and functions.
Would the new sales process require focus and expertise in a particular industry or roles (horizontal
versus vertical focus)? Would a focused repeatable process allow Globant to sell more quickly and
at higher margins? Or would it move the company into a small niche that limited company growth?
The final challenge was competitive. While Globant was the largest independent IT outsourcer in
Argentina, the company faced increasing competition for talented workers as large Indian and
American outsourcing companies sought to build and grow development centers in Argentina. How
would Globant respond to this threat?
The IT Outsourcing Industry
Outsourcing in one form or another has existed for thousands of years. At its root, outsourcing
describes the practice of subcontracting certain functions or tasks to an outside resource. It was the
Industrial Revolution that brought outsourcing into common practice, as specialization allowed the
outsourcing of everything from insurance and accounting services to component manufacturing.
IT outsourcing really began in the early 1990’s with the advent of the internet and the vastly
improved forms of communication that came along with it. Businesses recognized the need to both
build a business presence on the World Wide Web, and prepare for the “Y2K” issues that promised
to affect IT systems at the start of 2000. Very few U.S. companies had the internal capabilities to
address either of these issues, and so began to outsource this IT work to a growing pool of domestic
companies created specifically to address these needs.
At the same time as many U.S. firms began outsourcing domestically, the Indian government saw
an opportunity to build its own outsourcing industry. Based on a strong telecom infrastructure, a
growing base of technology professionals, and low-cost labor, India began positioning itself as a
destination for IT offshoring. This offshoring practice included firms that chose to both build
internal resources in India and outsource functions and tasks to Indian companies. By recognizing
the trend early, India and its companies were able to position themselves as the strongest players in
the IT offshoring market.
Size of the IT Outsourcing Market
While IT spending has experienced its ups and downs over the past decade, the IT outsourcing
market has been steadily increasing (see Exhibit 1). With a total market size of $84 billion in 2005,
the U.S. IT outsourcing industry presents a gigantic opportunity. More importantly for Globant,
however, is the size of the offshoring portion of that market. In 2005, U.S. spending on IT
offshoring was $15.2 billion, with projected growth to nearly $40 billion in five years (see Exhibit
2). Clearly, the value pie is large enough to be spread around, and Globant’s primary task would be
to figure out the best way to procure its slice.
There are a number of reasons that firms have for establishing an outsourcing relationship (see
Exhibit 3). The most critical reasons fall into three areas: (1) Cost and time savings, (2) Access to
expertise not available internally, (3) Ability to refocus on core business functions. Developing
countries offered the best opportunity for cost and time savings due to the low cost of labor, and the
abundance of resources available to throw at projects. Meanwhile, specialized skills and expertise
could be found both domestically, nearby in Canada and Mexico, and overseas, depending on the
type and depth of knowledge required. Overall, firms were looking to offload areas of work that
were not central to their business, allowing them to focus their efforts on those areas where they
could differentiate themselves. Other reasons to outsource are more difficult to generalize, but may
be important on a case-by-case basis.
Selecting an Outsourcing Partner
In order to win new business and expand its operations in the U.S., Globant needed to understand
what criteria were important to IT decision makers when selecting an outsourcing destination.
There are many factors that companies consider when evaluating outsourcing vendors for a
potential partner (see Exhibit 4). However, the most important factors fall into three categories: (1)
Vendors’ capabilities, (2) Total cost, and (3) Communication capability. An outsourcing
company’s capabilities are determined by investigating its specific technical and industry expertise
and by speaking with reference customers. To gain new accounts, Globant would need to make
sure that it compared favorably with the competition on each of these key factors.
Current State of the Industry
In early 2006, the IT outsourcing industry had matured. Most companies have had at least some
experience managing outsourcing relationships, and there is a catalog of knowledge about success
factors and challenges in outsourcing projects (see Exhibit 5). Outsourcing vendors need to prove
that they are equipped to work closely with their clients and have a strong process in place to
manage their projects. Additionally, multitudes of companies have arisen to focus on very specific
technologies. A generalist IT outsourcing company like Globant needed to have even stronger
differentiators to compete in this highly fractured environment.
Globant was founded in 2003 by four engineers who had a clear goal in their minds: to create the
best offshore IT outsourcing company (see Exhibit 6 for the founders’ biographies). Their strategy
was simple—recruit the best local talent and deliver high quality solutions while ensuring superb
customer service. Three years later, the results have been impressive. The company has grown to
more than 240 professionals while its sales have doubled each of the past three years and are
projected to exceed $12 million by the end of 2006. Its client base has also grown tremendously,
spanning across the U.S. and Western Europe and serving four different industries (see Exhibit 7 for
a sample list of customers). With these numbers, Globant has become one of the fastest growing
independent offshore companies in Latin America and the largest in Argentina.
Based in Buenos Aires, Globant has benefited greatly from its location in Latin America for several
reasons. First, the company’s proximity to the U.S. as well as its Western cultural fit allows for
better communication and ongoing project management. Second, the as-yet untapped technology
talent pool in Argentina allows the company immediate access to specific technology and industry
expertise on an as-needed basis. Third, the local low-cost structure allows Globant to offer
competitive pricing and high cost savings. While economically devastating to most Argentine
businesses, the country’s 2001 devaluation of the peso enabled the IT outsourcing industry to
compete on price. The Wall Street Journal summarized Globant’s location in Buenos Aires well:
“Latin America comes out ahead of India and China in the off-shoring equation when factors like
labor quality, labor supply and time-zone differences are taken into account.” (Wall Street Journal,
The company’s business model encompasses three phases of a product’s life cycle: (1) software
development services which cover every aspect from conception to final quality assurance, (2)
infrastructure management which is offered on a 24x7 basis, and (3) other value-added services
such as globalization (for more detailed description, please refer to Exhibit 8).
The company’s culture can be defined as very close-knit and informal. Unlike its competitors, the
company prides itself on below industry average employee turnover rate of 5%. Mostly young
professionals, the employees thrive on the global aspect of the company and the possibilities of
international business travel. To ensure that the language barrier is reduced to a minimum, Globant
requires all of its employees to master a business level of English proficiency.
With Globant’s appeal as a fast growing and global company, recruiting for local talent is not a
challenge. Given the large number of quality job applicants, the company has the luxury of
selecting and retaining only the best. The backgrounds of the employees vary in terms of
technological skill-set—complementing each other well for the diverse demands of each project.
Employees’ knowledge domains differ across platforms (Linux, Unix, and Windows), technologies
used (such as Java, .Net, LAMP, and Oracle), system administration experience as well as
application design work. Although Globant places special emphasis on open source technologies,
the company is always ready to provide any skill-set that a client might request.
While the technical skills present ensure a consistent quality of delivery for the final product, it is
the level of service that ultimately influences the clients who choose to outsource with Globant. In
fact, when describing Globant, some of the most common responses among its clients are the ease
of communication, high level of service, and strong management ethic that the company offers.
With this reputation, Globant can rely on word-of-mouth marketing to increase awareness among
potential customers. Globant’s ability to be close to the customer and understand and satisfy their
needs is what ultimately wins new business and retains the old. As one long-time, happy customer
put it, “We first chose Globant through a referral [from another client] and we stayed with them
because we wanted someone that we can depend on.”
There are literally thousands of IT outsourcing companies across the globe, from domestic giants
like IBM and EDS, to top Indian firms like Infosys and WiPro, to a myriad of smaller, regional
companies. These companies choose to compete on a range of different attributes, including cost,
speed, size, geographic proximity, cultural fit, industry expertise, and functional expertise.
Differentiation is very difficult given the sheer size of the industry, as there are usually several
similar companies for any particular attribute space.
Within the IT outsourcing market, firms choosing vendors often look to select the region first (see
Exhibit 9 for regional salaries and hourly rates). As one of the most popular outsourcing countries,
India has built up a strong reputation over the years, and has the most experience and largest
number of existing relationships and reference customers. However, the country is beginning to run
into manpower limitations. China and Southeast Asia have the lowest labor costs and large,
growing labor pools, but find it difficult to provide a cultural fit with western companies. Latin
America also provides low costs, as well as both geographic proximity and cultural ties to the
United States. Eastern Europe has low costs, but boasts a better fit with Western Europe than with
the U.S. Finally, U.S. firms sometimes outsource to Canada, or firms in low-cost, Midwestern
states. While the cost benefits in these regions are not as high, the fit with the business culture and
language skills is ideal.
While it is impossible to address the laundry list of competitors Globant faces in this industry,
below are a few of the larger players Globant is likely to compete against.
Tata Consulting Services (TCS) was founded in 1968, and is currently headquartered in Mumbai,
India. TCS provides IT outsourcing services to almost all lines of business. It had revenues of $1.8
billion in FY05, with 60% of that derived from the U.S. business. TCS went public on the Bombay
stock exchange in 2004, and with over 50,000 employees, is the largest of the Indian IT outsourcing
companies. TCS has global development centers in both Uruguay and Brazil, presenting a direct
challenge to Globant’s cultural advantage.
Infosys was founded in 1981 by a group of software professionals in Pune, India. It is currently
located in Bangalore, and is listed on the NASDAQ stock exchange. With just under 50,000
employees, it is of similar size to TCS, but is considered a slightly more upscale firm, often winning
awards as the top Indian IT firm. Revenues in FY05 were $1.6 billion. Like TCS, Infosys has no
specific industry focus, preferring to offer IT solutions across all industries. Infosys currently has
no presence in Latin America.
Luxoft is Russia’s largest IT services firm, with approximately 1,400 employees and revenues of
about $37 million. Luxoft was formed in 2000, and is currently held privately. Without the size of
its Indian counterparts, Luxoft focuses on four industries: IT/Telecom, Discrete Manufacturing,
Financial Services, and Software/Product Development. Luxoft also has no presence in Latin
Accenture (formerly Anderson Consulting) was formed in 1989, and is based in Chicago. With
revenues of $15.5 billion in FY05, and over 126,000 employees, Accenture still dwarfs its
international competitors. In addition to IT outsourcing, Accenture provides management
consulting services, which are far more difficult for companies in developing countries to provide.
The company’s IT services division delivers solutions across industries, and is often pitched
together with its management consulting solutions. Accenture has offices all across Latin America,
but costs considerably more than most other offshore vendors.
In addition to these large players, Globant faces a number of smaller competitors, many with North
American sales offices right next to Globant’s Massachusetts location (see Exhibit 10). As a result,
Globant needed to both, identify who its real competitors were, and figure out how to position itself
to succeed against them.
Structure of Relationships
Winning deals while competing head-on with a vast number of vendors would be difficult enough
for Globant. However, the company also has to face an environment where many firms already
have existing, long-term relationships with offshore partners. Specifically, large firms which spend
a large portion of their revenues on IT typically already have an outsourcing vendor with whom
they have been working for 5-7 years. These relationships are often extremely tight, as outsourcing
partners are privy to confidential information, work on projects of critical importance, and have
already invested the time and resources to iron out the kinks in their working relationships. “I’ve
been working with my vendor for 8 years. They satisfy our needs. I’m sorry, but I’m not looking
for a new partner” said the CTO of one Northeastern telecom company.
Still, such relationships do present some opportunities for companies like Globant. A former VP of
Sales for an Eastern European outsourcing firm observed “Every company who has ever worked
with an Indian outsourcing firm has had problems—find a way to alleviate those problems and
you’re starting out on common ground.” If Globant could identify companies having problems with
their current outsourcing relationships, it could be a prime opportunity to present itself as a firm
offering better services. In addition, there are firms who already have partners but are looking to
diversify their geo-political risk by “multi-sourcing” in different geographic regions.
Globant’s other option was to focus on the small to mid-size businesses. While the overall market
was still very large, individual contracts were smaller, and the relationships would probably not be
as valuable in the long-term. Consequently, Globant needed to first determine whether the
outsourcing market in this lower segment was addressable enough to include it in its market entry
Selecting a Target Market
As Globant continued to grow rapidly, Martin realized that some focus was needed to prevent the
company from spreading itself too thin. He felt that it was necessary to target both specific vertical
industries and geographic regions. The management team decided to select four industry verticals
based on their past experience and project expertise. With their first and most consistent client
being EMC, the High Tech sector was an obvious industry to target. In addition, they had built up
considerable knowledge in the Travel industry with two of their largest current clients, OAG and
lastminute.com. Guibert, the CTO, also had extensive experience in the Telecom sector, having
worked as an executive for a New York-based telecommunications company. Finally, COO Martin
Umaran had previously managed IT implementation products in the Financial Services industry,
which became their fourth target. Geographically, Martin decided to begin with U.S. markets
where he had existing customers, the East Coast and Texas, hoping to utilize references there to
While he was satisfied with the logic behind his selections, Martin still wanted confirmation that he
was choosing the right industries and that the geographic markets were large enough. A simple
market size analysis proved that the addressable market was large. Focusing strictly on small to
mid-sized businesses (annual revenues of $100 million to $1 billion), Globant developed a report
that showed their total addressable market to be $2.6 billion (see Exhibit 11). A more difficult task
was understanding the needs of each industry they were targeting.
Industry Review: High Tech
While high tech is a common industry description, there are several distinct industries that fall
under this umbrella, ranging from product- to service-oriented businesses. High Tech
manufacturing and computer peripheral companies are the most product-focused, followed by pre-
packaged software, data-processing and preparation, and lastly, IT services companies themselves.
As each sub-segment has its own needs, Globant would have to understand them in more depth
before deciding which of these sub-segments to target (see Exhibit 12 for a summary of the trends
in each sub-segment). In addition, Globant would need to extend its reach to California if it wished
to compete in any of the high tech industries. California represented about 30% of the high tech
space, and contained many of the big name companies that would provide the most value as
High Tech Manufacturing is focused on squeezing every penny possible out of its operations.
Because this includes IT spending, firms in this sub-segment are very willing to explore low-cost IT
outsourcing relationships. Their largest areas of IT spending occur around data analysis, IT cost
containment, compliance, and manufacturing operations. In addition, due to economies of scale,
there are relatively few small to mid-size manufacturing firms. Most of the larger firms are heavy
users of packaged software such as SAP or Oracle, and their greatest outsourcing need is for
customization expertise in these packages.
Pre-packaged Software is unique in its IT outsourcing needs, as firms in this sub-segment will
outsource not only their IT functions, but also pieces of their product development. Approximately
80% of the companies in this area outsource some part of their application development. Among all
high tech sub-segments, pre-packaged software is the one with the most interest in large-scale
outsourcing arrangements. Additionally, it can be characterized as having a strong interest in using
open source technologies. Areas of focus include implementing Service Oriented Architecture
(SOA), Software as a Service (SaaS), application development, and specialized IT services.
Data Processing and Preparation firms spend the largest percentage of their revenue on IT,
averaging between 6 – 20%. However, due to sensitive data and proprietary software, these firms
are often hesitant to outsource, and even more so to offshore. On the occasions that they do
outsource, projects are usually discrete with short-term scope. The most common areas of
outsourcing in this sub-segment are quality assurance for applications, IT support, data collection
and analysis, and large mainframe applications.
IT Services companies are found to be the least likely to outsource, spending less than 2% of their
budget on IT. For the most part, the only use that one of these firms would have for another
outsourcing company is to serve as a “body shop” to partner with for low-cost labor. Other IT
functions they would outsource are mostly those associated with making their consultants more
productive, such as Voice over IP (VOIP) and security solutions for mobility.
Industry Review: Travel
The travel industry has undergone a major shift away from its traditional means of conducting
business towards online commerce. By using the Internet for travel research and booking, users
have come to value the convenience, speed and easy access to competitive pricing and itinerary
choices. By 2005, 78% of all travelers had turned to the Internet when planning their trips, as
opposed to 65% in 2004. This number is projected to grow further and with an 11% annual growth
rate, the online travel market is forecasted to become a $91 billion industry by 2009 from $51
billion in 2004. As a result, the online travel market is now the leading and fastest growing
category of e-commerce, accounting for over 45% of all online sales.
The industry structure consists of several players: suppliers (such as the airlines, hotels, and car
rentals), agents and global distribution system (GDS) operators (such as Amadeus, Sabre,
Expedia.com, and lastminute.com), and web portals (such as Yahoo! and AOL) (see Exhibit 13 for
a graphical representation of this structure). Although traditionally suppliers have relied on their
agents and GDS operators to reach the end users, the popularity of the internet has moved this
relationship towards competition. Airlines are now fighting with agents, GDS operators and web
portals for market share based on website features and user content. As a result, there is an
increasing pressure for online websites to cut costs and differentiate themselves through innovative
technologies, breadth of functionality, and international capabilities. Given these requirements, the
interest to outsource in the travel industry is growing.
Although off-shoring is still a relatively new idea in the travel industry, most lead players have
already had successful experiences with this process. The most common services being outsourced
are business processes, web hosting, and technology solutions which include custom product
development, internet booking engine, pricing tools, back office automation, and 24/7 operations
Moreover, given the global aspect of this industry, internet marketing is also becoming an important
part of the business model in the travel industry. Through internet marketing, firms benefit not only
through reduced distribution costs but also through a continued and targeted dialog with their
customers and thus an improved customer loyalty.
Industry Review: Telecom
Global telecoms have been internally focused until recently, as they needed to eat into the debt
mountains that they accrued from acquiring 3G licenses, M&A activities and other infrastructure
investments in the late 1990s. Today, the winning companies are emerging back into profitability
and there is more room to evaluate their IT needs and revamp their existing systems. The
percentage growth of off-shoring in the next five years is expected to reach 32-50%.
Although the telecom industry looks attractive, there is considerable competition. Historically,
Indian outsourcers have been the most popular offshoring destination in the telecom industry.
Large companies such as Wipro and Infosys have accrued the knowledge and expertise in various
fields of telecom outsourcing. Even for the small and mid-sized companies which these big Indian
outsourcers do not normally target, there are still many competitors that have both industry and
technical expertise. As one CIO of a mid-sized telecom company shared, “Given the large number
of outsourcers out there, expertise in both telecom and the specific technology we are using is a
strong prerequisite for selecting an outsourcing vendor. Anyone lacking both pieces would not even
be considered as a potential partner.”
Industry Review: Financial Services
The Financial Services industry (FS) has been the leading consumer of IT services. With an
expected growth in spending of 4.2% CAGR through 2009 (Gartner, 2004), FS has the makings of
an attractive market to enter. FS is already a heavy consumer of outsourcing with 90% of firms
using IT outsourcing to some degree. The midsize market, however, is characterized by a different
profile of companies than the overall market. Midsized FS firms exist primarily in retail banking,
broker dealers, mortgages and investment advisory services.
Overall, the midsized segment has a few major needs that are common among the different sub-
segments. The first concern is data security. For competitive, regulatory and operations reasons, it
is essential to maintain system and data integrity. This has traditionally been a hindrance to
offshore infrastructure management, but not necessarily to application development. Additionally,
some firms have devised sophisticated ways to handle infrastructure and operations offshore while
maintaining the needed level of security.
Legacy systems are also an issue throughout FS. Some of the core banking and trading applications
for FS customers are as many as 30 years old. The process of transitioning these systems onto a
modern platform is a complex, risky and expensive proposition. Expertise in both the legacy
systems code (normally COBOL) and modern platforms (J2EE and others) is needed in addition to
understanding the business drivers for the new systems.
The build versus buy decision is also more pertinent in the midsize segment. While larger firms
have the scale to build their own applications, many midsize FS firms have chosen to purchase
third-party software to handle core banking, trading, online presence and other functions. Although
the use of commercial software is known to be widespread, the actual penetration is unknown.
Security Brokers and Dealers
A variety of companies fall into this sub-segment as defined by the Standard Industrial
Classification (SIC) system of the U.S. Department of Labor. Firms range from providers of
outsourced trading technology platforms to other brokers and dealers to money managers that trade
on behalf of their investors. Although highly heterogeneous, all companies examined in this sub-
segment are heavy consumers of IT.
By far the most numerous sub-segment in FS, retail banking is composed of credit unions, regional
and local banks. Competition in this segment is fierce with new offerings and innovations driving
customer acquisition and retention. Retail banks also seek to offer new products to their customers
to gain a greater share of the banking spend (wallet share). Fortunately for Globant, many of the
new products are technology based such as online banking, mobile banking and electronic billing.
There is wide heterogeneity in the degree to which retail banks use outsourcing now, the types of
technologies they are prioritizing and the types of customer needs they address.
Within the midsize market, there are also a variety of mortgage, bond and advisory services
companies. The low number of targets in each group within the midsize market makes determining
the trends in this sub-segment difficult.
Sales Acquisition Process
When companies select their IT outsourcing vendors, they normally either send an RFP (Request
For Proposal) to several potential vendors, or ask a vendor directly for a proposal if they know
someone from previous working relationship, reputation, or referral. After these vetting processes,
they sometimes ask the selected vendor(s) to demonstrate qualifications through references or pilot
engagements with them. Historically, Globant has relied mainly on the management team’s human
network when it pursued a new contract, and had not typically faced competitive bidding situations.
For example, Globant’s client lastminute.com, a major European online travel agency, was
introduced by one of lastminute’s previous clients. Similar to this reference, most of Globant’s
other clients have made positive referrals to Globant’s increasing customer base. Although the
company has benefited greatly from such informal networking, Martin felt that it was time for the
company to adopt a more systematic approach to acquire new customers, especially in the U.S.
where the company had a limited customer base.
While Martin’s focus on the four industries in the East Coast region and Texas was justified as good
starting point to expand the customer base, this focus was not enough to help Globant define its
sales strategy. Globant had to look into additional factors to narrow down and prioritize the
potential pool of clients:
Technology use: There are two types of businesses that differ through their use of technology—
technology creators (companies that use technology as a competitive advantage) and technology
consumers. Given Globant’s software development expertise, companies defined as the technology
creators would benefit more from Globant’s services. Another factor when choosing a potential
client would be companies that work with open source technologies, an area where Globant had
particularly strong technical expertise.
Argentina/Latin America presence: Companies with offices in Argentina are more familiar with
the area and are more likely to choose to outsource there.
No captive offshore development center: A company is unlikely to outsource with Globant if it
has its own captive center for low-cost development and infrastructure management.
Hiring technologists: Companies that are actively hiring IT engineers (information easily
obtainable via internet job postings) indicate the need for IT expertise, which Globant might be able
The second step after prioritizing the potential clients is to create leads to these companies. Given
the competitive nature in this industry, a simple cold call is likely to be futile. As one CIO of a
software company shared, “I receive about ten cold calls a day from various IT outsourcers. If the
vendor can’t give me some differentiating offer—specific technology or industry expertise—and be
able to articulate that within five seconds, I will hang up the phone.” Accordingly, Globant had to
explore other means of accessing a potential customer such as a personal or professional connection
or through expanding the company’s visibility through industry associations, trade shows, and other
networking web sites (i.e. LinkedIn.com).
Expanding the Sales Organization
Beefing up the sales force was another important hurdle. To make effective sales calls, it was
necessary for Globant to train its sales force to share one standard successful sale pitch as the
background story for everyone. Recently, the company hired Daniel Kuperstein as VP of North
America sales and operations. Before joining Globant, Daniel was working as the Director of
Globalization for EMC, the largest information storage and management firm in the world, where
he had worked in a variety of senior marketing positions for the past ten years. Because EMC was
Globant’s first major client, Martin was sure that Daniel’s internal knowledge of the company as
well as his industry experience and social network would help Globant win great new contracts,
especially in the high tech industry.
While Daniel found Globant to be an extremely capable firm in terms of its technical solutions and
customer care, he needed to understand how Globant’s leadership wanted to position the company.
He also needed to know how far to cast his net, both in terms of industry and geography. With his
local presence in the U.S., Globant could stay close to its customers and maintain an ongoing
relationship, something that not all of its competitors could offer.
Finally, Martin was sure that Argentina and Buenos Aires offered tremendous advantages for
potential clients. The geographic proximity, western culture, and modern city lifestyle were all
attractive features. However, he found that there was a general lack of knowledge about his country
among many U.S. IT executives. In addition, fears of criminal activity and political instability were
holdovers from some public problems the country faced in the past. What was the best way to
present Argentina’s recovery and promise in sales presentations?
As Martin was looking out through his office window, he realized that a more structured sales
approach was needed if the company were to achieve its ambitious goal of doubling its size by the
end of 2006. It was in Daniel’s hands now to fully develop this new methodology and implement it
in the U.S. Martin grabbed his brief case and left the office for the next sales call.
Exhibit 1 U.S. IT and IT Outsourcing Spending
$733 $702 $696
$200 CAGR 9.2%
2001 2002 2003 2004 2005
Outsourcing Total IT Spending
Source: Forrester Research
Exhibit 2 U.S. Software and IT Services Offshore Spending
2003 2004 2005 2006 2007 2008 2009 2010
Source: Global Insight
Exhibit 3 Reasons Firms Gave for Outsourcing their IT Needs
• Cost savings
• Access to outside expertise
• Improve focus on company’s core business
• Improve service
• Access to better technology
• Time savings
• Share risks
• Make capital funds available
• Cash infusion
Exhibit 4 Selection Criteria for Choosing an Outsourcing Vendor
Percent of Survey Responses 90%
for Each Factor 80%
Not a Factor 60%
Important Factor 30%
O al R Co on
Pa nc e eri ls
So ti o try
Sa c e S ips
C rtne Cu nce
ua l ati ers
os im ort
C shi p
rs Hom ifica
i te e Z
u r ns
n e la
pp e T
Source: Survey of CIOs and CTOs
Exhibit 5 Reasons for IT Outsourcing Project Success and Failure
Importance Success Factors Challenges
High • •
Ongoing management Problems managing remote
• Well-defined processes
• Loss of control
• Contract with clear goals and
• Vendor team performance
Medium • •
Work closely with vendor Language and cultural
• Proper vendor selection
• Poor planning
• Unclear contracts
Low • •
Identify the details Provider turnover
Many releases Accountability
Simplicity Unforeseen expenses
Exhibit 6 Management Team Biographies
Martin Migoya, CEO
Martin has extensive experience in business management, sales and marketing. As Globant’s CEO, his focus is to drive
revenue, objectives and profitability. He oversees the company's long-term objectives, planning and analysis. Prior to
co-founding Globant, Martin was Director of Business Development and Latin America's Regional Business Manager
at a large consulting and technology services company, developing the IT and ERP markets in Brazil and Argentina. He
was instrumental in managing and developing high technology businesses related to SAP and the Internet, with
customers like Procter & Gamble, Renault, and Roemmers Laboratories. Previously, Martín worked as Project Manager
for REPSOL - YPF, Argentina's largest oil-and-gas company. Martin has lived and worked in Argentina, Brazil, Mexico
and the U.K. He holds a degree in Electronic Engineering from La Plata University and a Masters degree in Business
Administration from CEMA University.
Guibert Englebeienne, CTO
Guibert has an extensive experience in the information technology and communication industries. As Globant’s CTO,
Guibert is in charge of the software production process, and the creation and management of strategic company
technology partnerships. Prior to co-founding Globant, Guibert was a scientific researcher at IBM and later the CTO for
CallNow.com Inc., a telecommunications company based in New York providing international callback services
through the Internet. He also conceived and developed a U.S. patented technology powering a service named 2Speak, to
use the Internet to anonymously connect two parties through phone lines. Guibert was responsible for the phone-chat
implementation in Chinadotcom Co., owner of the biggest Asian Internet portals. He has also worked as an IT
Development Manager outlining and developing software for tax collection through Internet governmental portals.
Guibert has lived and worked in Argentina, US, Venezuela and the U.K. He holds a degree in Computer Science and
Software Engineering from UNICEN University.
Martin Umaran, COO
Martin has extensive experience in executive and business management for technology industries. As Globant’s COO,
Martin is responsible for the delivery of products and professional services, and is actively involved in capacity growth
and process initiatives. Prior to co-founding Globant, Martin was CEO for Neuwagen, a company focused on selling
cars to Caja de Ahorro y Seguro's customers (Argentina's largest insurance company). He also worked at several
technology companies as Senior Business Manager. At Santander Bank, he was responsible for their CRM
implementation initiative. He also negotiated, implemented and operated a state-of-the-art Tax Collection System in
several Venezuelan cities. At YPF Ecuador, Martin worked as a manager of facilities automation and maintenance. He
also worked at Roman Logistics, where he managed several projects for the Argentinean offices of Ford, GM and
Unilever. Martin has lived and worked in Argentina, Ecuador, Venezuela and the U.K. He holds a degree in Mechanical
Engineering from La Plata University and a Masters in Business Administration from IDEA University.
Nestor Nocetti, VP of Corporate Services
Nestor has a considerable amount of experience in the information technology industry, both in operational and
advisory roles. As Globant’s VP of Corporate Services, Nestor is in charge of determining the structure for business
consolidation and expansion, aligned with the corporate objectives and vision. Prior to co-founding Globant, Nestor
worked as Internet Manager in an Argentinean information technology company, where he specialized in internet
marketing and web portals localization with customers like EMC, a world leader in information storage, and Techint, an
engineering and procurement services provider. He also worked on several projects related to Geographic Information
Systems for Light Rio de Janeiro, electricity providers in Brazil and UTE, and a public electricity
provider in Uruguay. He worked as a consultant on issues related to IT development, strategy, and operations in the oil-
and-gas market, for ENAP Chile and YPF Argentina. Nestor has lived and worked in Argentina, Chile and Brazil. He
holds a degree in Electronic Engineering from La Plata University and a degree in Business Direction from IAE
Exhibit 7 Sample list of customers
Exhibit 8 Globant’s Service Offerings
Exhibit 9 Representative Salaries and Hourly Rates for IT Outsourcers Across the Globe
Country Salary Hourly Rates
Ireland $23,000 - $36,000 $40 - $80
Canada $20,000 - $40,000 $40 - $80
Singapore $9,000 - $20,000 $30 - $60
Mexico $7,000 - $12,000 $20 - $35
Russia $5,000 - $9,000 $20 - $40
India $5,000 - $9,000 $20 - $40
Philippines $5,000 - $9,000 $20 - $40
Vietnam $3,000 - $6,000 $15 - $25
China $3,000 - $7,000 $15 - $25
Source: Meta Group.
Exhibit 10 Descriptions of Various IT Outsourcing companies
Company Location(s) Est. Staff Services Model Client Types
StarSoft Cambridge, MA 400 Custom Heavy- offshore Corp. IT
St. Petersburg (NA-NA) Maintenance ODC* IT Services
Dnipopetrovsk, UA $10.5M (2005) R&D ISV’s**
SoftServe Waltham, MA 450 R&D Heavy- offshore ISV’s, small to
Lviv, Ukraine (7-443) QA mid-size
$6.5M est. (2005) Maintenance
Minimal Corp IT
Lohika San Mateo, CA 120 ISV R&D Hybrid, US: ISV’s
Lviv, UA (15-105) Including System Architects. Hardware/device
Odessa, UA $3.5M est. (2005 embedded SW.
Virtusa Boston, USA 1800 Corp IT Hybrid, leveraging Fortune 1000
UK (200-1600 est) ISV’s offshore resources Small->mid-size
Chennai $50-100m est. Maintenance onsite. (50+ H1’s!) ISV’s
Sri Lanka QA Technology Co.’s
Patni 24 Sales off. 11,000 IT Full IT Services, Corporate IT
8 Offshore $326M (2004) IT Management hybrid model Technology Co.’s
Sonata Software 7 Sales, 1,100 ISV Full IT Services, Corp IT
4 Offshore $77M Enterprise/Corp IT hybrid model ISV’s
Locations in India Embedded
E5 Systems VA, USA NA IT Outsourcing Heavy Offshore Corp IT.
Foliage Boston, USA 150 Consulting -> Heavy onshore- Corp clients,
India (partners) (150-?) Systems “offshore ready” embedded
$30M est. Development systems.
Array Software Boston, USA 150 Software Hybrid, w/offshore Technology Co.’s
Partners: India, (20 – 130) Maintenance partners sub-
Russia, Ukraine Est. $15M contracted
*ODC – Offshore Development Center
**ISV – Independent Software Vendor
***BPO – Business Process Outsourcing
Source: Mark Kapij, MIT Sloan Fellow.
Exhibit 11 Potential Market Size (East Coast and Texas)
U.S. Market Segmentation by number of subsidiary companies
East Coast Texas Rest of U.S.
Hi Tech 295 (40%) 48 (6%) 396 (54%)
Telecom 195 (55%) 33 (9%) 125 (35%)
Financial Services 636 (44%) 111 (8%) 705 (49%)
Travel 151 (43%) 23 (7%) 186 (53%)
U.S. Market for Outsourcing (in $M)
East Coast Texas
Hi Tech $372 $56
Telecom $471 $77
Financial Services $1,227 $202
Travel $139 $25
Exhibit 12 Outsourcing Trends in the High Tech Industries
Sub-Segment IT Focus
• Better Utilization and Analysis of Data
High Tech Manufacturing
• IT Cost Containment
• Lean Manufacturing Processes
• Building in SOA to all applications
• Specific IT services requiring specialized knowledge (i.e. firewall
• Application development
• SaaS for non-core activities – HR/Payroll, Recruiting, Professional Services
• Further refine business process IT
• Infrastructure Support (including helpdesk)
• Business Analytics (how to evaluate implementations of software packages)
• QA for applications
Data Processing and Preparation
• IT Development and Support
• Further refine automation for data collection and analysis
• Upgrade and retire legacy applications
• 24/7 Data Collection and Analysis
• Large mainframe applications
• Web Development
• VOIP and other “distance-killing” applications for mobile workers
• Infrastructure Management
• Mainly Sales and HR applications
• Security for mobile workers
• Programming services during projects – low rates, body shop
Exhibit 13 Travel Industry Structure: Major Players