CASE STUDY:
Nearshoring Success with an Employer of Record in Mexico
PROJECT
Startup of a 500-person shared service center in Mexico for leading pet products retailer
WHAT WE DID
HR Department setup parallel to talent recruitment and an Employer of Record service
RESULTS
Onboarded 30 executives in 3 months plus 500 employees on 4-week hiring lead time
TIMELINE
Successful HR department startup in 6 months: regulations, policies, payroll, etc
A Short Timeline
THE CHALLENGE
In today's rapidly evolving business landscape, global companies are constantly seeking innovative strategies to enhance efficiency and optimize costs. One such retailer leveraged the Employer of Record solution from Prodensa to achieve a remarkable entry into the Mexican market for their +500-person shared service center.
The client, operating over 1,500 stores throughout North America, aimed to transfer their shared services operations to Mexico. The goal was to support their stores in the United States and establish a new project and investment for a shared service center for their Latin American partners. This move required a comprehensive understanding of the labor market in Mexico, particularly in IT, Tech, and Services positions, and a strategic plan to establish operations within a six months.
CHALLENGES
- Short timeline to have subsidiary up-and-running in Mexico
- Requirement to hire and transfer roles parallel to the start-up
- Lack of experience with talent operations in the Mexican market
- Corproate business plan included outdated salary benchmark data
- Limited knowledge with governmental incentive guidelines
- Lack of effective, international purchasing abilities
- Requirement to hire visa-holding employees in Mexico
- Lack of fiscal implications of their operational strategy in Mexico
A Highly-Functional Partnership
THE STRATEGY
The transition of a shared service center to Mexico was a task that involved a multi-functional team, both at our client's corporate office and within Prodensa. The nearshoring projects involved several critical steps in which both teams collaborated efficiently and effectively to achieve the goals:
- Labor Market Analysis: Conducting a labor market study to understand the availability of talent in Mexico was the first task. The investigation focused on identifying and mapping talent with the required IT skills.
- Policy Adaptation and Cultural Integration: Adapting existing policies to align with Mexican regulations and culturally adapting the HR team to the new landscape was essential for the smooth operation of the shared service center.
- Effective Communication and Team Integration: Assigning a dedicated Project Manager and On-site Coordinator ensured effective communication between the corporate team and the local operation, facilitating a seamless integration process.
- Building the HR Department: From establishing HR policies and compensation packages to hiring key leadership positions such as the Site Director and HR Director, setting up the HR department was tantamount to the project's success.
- Getting First Team Members on Board: Utilizing an Employer of Record service allowed the client to build and involve their executive team in the decision-making process during the business incorporation. This was imperative to becoming an Employer of Choice in Mexico.
Ready to Go in Six Months
THE EXECUTION
Achieving 100% compliance with Mexican regulations, the client's HR department was fully operational within six months. The process involved:
- A talent strategy with a prior understanding of the market and access to a large pool of candidates that fit varying talent profiles.
- Recruitment personnel with boots on the ground in Mexico, achieving 30 executive and managerial professionals within 3 months.
- Mindfacturing® in Mexico through an Employer of Record solution to onboard and manage the first wave of employees for the project.
- Incorporation of a new subsidiary in Mexico, setup of all fiscal, labor and safety regulations, ready to hire employees within 6 months.
- Strategic advisory and executive coaching with the local HR team, while maintaining a 70% retention rate despite the challenge of positions initially offered with lower salaries.
KEY OUTCOMES
- Talent accessibility for IT and technical roles in their shared service center
- Cultural adaptation and integration of binational teams
- Legal and policy adaptation of corporate processes and rules
- Advisory for becoming an Employer of Choice in Mexico
- Project management methodology for HR department startup in Mexico
- Recruitment, selection, and onboarding of new employees
- Employer of Record solution for payroll administration
- Best practice and trusted suppliers for day-to-day HR operations