latin america & colombia bpo markets: strategic analysis

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LATIN AMERICA & COLOMBIA

BPO MARKETS:

Strategic Analysis

1 Linkedin.com/in/jonathandonado Jonathan Donado

Jonathan Donado

http://www.linkedin.com/in/jonathandonado



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To perform a strategic analysis of the BPO landscape

in Latin America and Colombia

01. Presentation Objective





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01. Overview


Latin America Outsourcing

& BPO Markets




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4

Mexico

Mature market with high level of opportunities

for outsourcing and nearshore projects

Southern Cone

Improving economic conditions

allowing continuing investments in

Chile. Moderate growth expected for

2016-2017

Brazil

Mature market.. It has large

outsourcing players that mainly

concentrate in the domestic

market

Central America & Caribbean

The political environment has

been mostly stable presenting

new opportunities for foreign

investment in the region.

Panama is the fastest growing

BPO location. Belize is an

untapped market.

Andean Countries

Political stability has

exceled further

international investments;

specially in Peru.

Latin America is developing into an attractive offshoring alternative to Asia for US and Europe-

based businesses. Latin American countries offer a tremendous cost savings in wages, real estate,

infrastructure and tax incentives. It has large young labor pool with a cultural affinity to the USA.

01. Latin America Overview

Source: Frost & Sullivan. Latin America Contact Center Solutions & Outsourcing Services Market





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Brazil •The domestic market is strong and local players are focused on serving Brazilian

companies and the Brazil operations of multinationals.

• A few suppliers like Ci&T and Stefanini are bucking that norm and expanding rapidly into

global markets. Other good firms like BRQ, Tivit and TCI continue to be largely focused

domestically.

Mexico • Large Contact Center projects are only expected for offshore services.

• BPO services targeting both domestic marker and Hispanic population in the USA

Southern Cone • Small and medium size contact centers in Chile drive revenues up

• Argentina still has not fully develop its BPO services. Focus on domestic market.

• Guyana has become the star country for its low wages , English speaking workforce and

stable economy/political system.

Andean Countries • Peru with its stable political and pro-business environment has become a major player in

the BPO market.

• Ecuador and Bolivia while having low wages still have not developed its BPO industries.

Market regulation is high and telecom cost above other countries in the region.

Central America &

Caribbean

• Only Panama and Costa Rica has evolved as leading players in the region.

• Dominated by Medium term small contact centers that serve local markets

Latin America Submarkets Highlights:

Linkedin.com/in/jonathandonado Jonathan Donado




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Source: Frost &N Sullivan. Latin America Contact Center Solutions and Outsourcing Services Market

Drivers

• Booting Factors: • Strong growth expected in the

market for offshoring services

• US Driving growth in the region: English Speaking and Hispanic Customers

• Private and Government support to growth of outsourcing industry

• Increasing number of BPO opening locations throughout the region.

Restraints

• Saturation of large contact centers in countries such as Mexico and Brazil restraining domestic growth

• Outsourcing offering create pricing pressure among service providers.

• Low pool of bilingual English speaking workforce limits growth for offshore services to the USA

• Challenging regulatory environment

• Foreign exchange controls and currency devaluations

Drivers & Restraints affecting the outsourcing market in

Latin America





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01. Main Outsourcing Segments

Information Technology Outsourcing

ITO BPO KPO

Business Process Outsourcing

Knowledge Process Outsourcing

• Software as Service

• Infrastructure as Service

• IT Cloud Services

• Data Center Management

• Software Testing Services

• Contact Centers

• Customer Support

• HR Administration

Services

• Telemarketing / Telesales

• CRM

• Data Entry/ Management

• R&D Services

• Telemedicine/Health

Services

• Legal Process Outsourcing

• Graphical Design

• Marker Research

• Financial Data Research





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01. BPO Market

8

Back Office

Front Office

Procedures with relation to the administration of a firm such as

HR services (payroll, applications), Invoicing,

Accounting (accounts payable, accounts receivable), Logistics,

CRM and business analytics)

BPO:

Procedures related to providing

services directly to customers. Main activities are Call Centers,

Customer Support Centers.

Business Processing Outsourcing delegates one or more intensive business

processes of the use of information technology to an external provider who manages

such processed using defined metrics and Key Performance Indicators (KPI). There

are Back Office and Front Office services:





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$4.87 BILLION Information Technology

Outsourcing

ITO

BPO


10% .08 MILLION 4-8%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$0.95 BILLION 9% .07 MILLION 10-15%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: ARGENTINA

Average Annual Salary

ITO / BPO

Entry Level $16,500

Lead Level $23,500

Manager Level $38,000 Source: Neogroup.com





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Outsourcing

ITO

BPO


11% .06 MILLION 15%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$6.07 BILLION 8.3% 1.1 MILLION 15%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: BRAZIL


ITO / BPO

Entry Level $14,500

Lead Level $25,500






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Outsourcing

ITO

BPO


17.4% .003 MILLION 8%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$2.03 BILLION 8.3% .035 MILLION 8%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: COSTA RICA


ITO / BPO

Entry Level $19,000

Lead Level $29,000






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NA BILLION Information Technology

Outsourcing

ITO

BPO


NA% .004 MILLION NA%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$0.21 BILLION 11.4% .013 MILLION 20-25%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: EL SALVADOR


ITO / BPO

Entry Level $7,000

Lead Level $12,500






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Outsourcing

ITO

BPO


20% .01 MILLION 12%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$0.29 BILLION 20% 0.2 MILLION 14%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: JAMAICA


ITO / BPO

Entry Level $10,500

Lead Level $17,200






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- Mexico outsourcing sector is one of the largest in Latin America.

- The proximity to the US makes it highly attractive for American

companies to locate nearshore operations.

- Cybercrime has become a major issue, costing the economy about

$3Billion per year.

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Outsourcing

ITO

BPO


7.3% .5 MILLION 5%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$7.58 BILLION 10% .25 MILLION 7%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: MEXICO


ITO / BPO

Entry Level $14,500

Lead Level $24,000

Manager Level $37,500

Source: Neogroup.com





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Outsourcing

ITO

BPO


8% .01 MILLION 4%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$0.5 BILLION 14% .04 MILLION 12.5%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

01. Latin America: PERU


ITO / BPO

Entry Level $8,500

Lead Level $18,500






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01. Latin America BPO Market: Main Players


LATIN AMERICAN

REGIONAL PLAYERS:

ATENTO

SITEL

TELETECH

TELEPERFORMANCE

DIRECTONE (Caribbean)

ENTEL (Chile)

MULTIENLANCE (Colombia)

CC AMERICAS (Colombia)

TELVISTA (Mexico)

US OFFSHORE

COMPANIES:

CLIENTLOGIC

HISPANIC TELESERVICES

SYKES

LATIN AMERICAN

LOCAL PLAYERS:

Competitive Landscape in Latin America




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02. Colombia

Colombia Outsourcing

& BPO Markets





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Source: http://www.internetworldstats.com/stats2.htm http://news.bbc.co.uk

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02. Colombia: Country Facts

Capital: Bogota

Population: 48.6 million (Census Bureau, 2016)

Area: 1.14 million square km (440,831 square miles)

Monetary unit: 1 Colombian peso = 100 centavos

Main exports: Petroleum, coffee, coal, gold, bananas, cut

flowers, chemicals, emeralds, cotton products, sugar,

livestock

GNI per capita: US $7,780 (World Bank, 2015)

Internet domain: .co

Internet penetration: 58.6% of the population has access to

the web.

International dialing code: +57

Overview

◉ ◉

◉ ◉

◉

◉ ◉ ◉

◉


http://www.internetworldstats.com/stats2.htm

http://www.internetworldstats.com/stats2.htm




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02. Colombia: BPO Market

- The Colombian National BPO association estimates

that in 2015, the outsourcing sector sold US$ 1.9

billion and created 189.000 jobs.

- According to the latest study by the Productive

Transformation Program (PTP), the outsourcing

sector can increase its sales between 2.9% and 9.5%

in the next three years.

- During 2015, call center Spanish services

represented 62.41% of the outsourcing sector

revenues followed by telemarketing and collections

& billing.

- According to the Ministry of Education, in the last

14 years Colombia had 2.9 million of graduates.

53.8% had tertiary education, 18.8% had technician

or technological education, and 19.2% had

postgraduate education.

Colombia BPO Overview

◉

◉

◉

◉





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- Colombia is one of the fastest growing countries in the BPO sector

in Latin America.

- Strong Government Incentives and the recent peace accord with

rebels make it a preferred destination for foreign investment in

the BPO sector.

- Companies like HP, Microsoft, AIG, IBM and SAP has installed

operations in Colombia

- Broadband connections of 8.8 million in 2014 and expected to

triple by 2018


20


Outsourcing

ITO

BPO


18% .05 MILLION NA%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

$3.12 BILLION 10% .13 MILLION 18-20%

Industry

Size Labor

Pool

Attrition

Rate Industry

Growth

02. Latin America: COLOMBIA


ITO / BPO

Entry Level $10,500

Lead Level $18,500






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Source: PTP Colombia – July 2015

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02. Outsourcing Worldwide Market

2006 2008 2010 2014

100.8 157.4

252.2

642.6

CAGR 27%

Evolution Global Outsourcing Services Market in Billion USD:

2009 2010 2011 2013

6.6 9.1

10.6

15.6

CAGR 24%

Evolution Colombia Outsourcing Services Market in Billion USD. Colombia

with $15.6 B in 2014 represents 2.4% of the worldwide market:

2012

13.1





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Rest of the World:

US$642 Billion

Colombia:

US$15.6 Billion (2%)

$38 B

$15.6 B

2014

The Colombia BPO Market though is only 2% of the word market, it expected is

growing an annual 16% per year in the next few years to be a US$ 38 Billion in

2020.

Colombia

BPO

Market:

2020

CAGR 16%

02. Outsourcing Worldwide Market

Source: PTP Colombia – July 2015. Programa Transformacion Productiva / Bancoldex, July 2015

In comparation in 2015, the US BPO Market has a size of $136Billion. . It has an annual growth of 4%, 162,000

businesses employing just below 1 Million people (Source: IbisWorld Market Report http://www.ibisworld.com/industry/business-process-outsourcing-services.html





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02. Colombia Outsourcing Market Overview

Colombia Market:

In 2013, it Colombia BPO sector generated $15.6B, and

had 772,200 direct employees

90% of market revenues came from domestic services and

10% was from offshoring or $1.51Billion:

1. BPO: $692 Million

2. ITO: $477 Million

3. KPO: $347 Million

Market grew $16.% in 2014, and it is expected an annual

CAGR of double digit growth until 2020, which is 3X faster

than its Gross National Product

Garnet ranks Colombia as one of the top 30 countries in

he world for business outsourcing. The report emphasizes

then strengths of the country as a location for call center

operations and transactional BPO jobs, the proactive

government support and the competitive labor costs.

◉

◉

$15.6 Billion Colombia BPO Market Size : Domestic + Offshore

$1.52B Offshore

Outsourcing

Source: Programa Transformacion Productiva / Bancoldex, July 2015

23

◉

◉





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02. Colombia BPO Market Overview

Offshore vs Domestic Services in Colombia

Forecast 2013-2020

Source: Frost & Sullivan

24

2013 2020


http://www.slideshare.net/FrostandSullivan?utm_campaign=profiletracking&utm_medium=sssite&utm_source=ssslideview

http://www.slideshare.net/FrostandSullivan?utm_campaign=profiletracking&utm_medium=sssite&utm_source=ssslideview




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02. BPO Colombia Market Overview

Top Offshore Markets

- The top country for Offshore services is Spain.

- Though there is economic slowdown Spain; it continues

to be the prime market for offshoring.

◉

◉

25

Spain

◉

USA

Chile

- The #2 country is USA

- USA expected to overcome Spain as main foreign

destination for offshoring by 2020

- The #3 country is Chile





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- In the last 10 years, the main BPO foreign companies have establish a

presence in Colombia

Market has a large number of local competitors

Only 6% of the firms are able to provide bilingual services (1)

Shortage of Bilingual Workers

26

02. Colombia BPO Market: Main Challenges





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02. Ranking BPO Segments:

Cell phone companies and IT firms are the main driver for demand in the BPO

sector in Colombia

First: Telecommunications (39%)

It is one of the most dynamic sectors in mobile internet demand. Government

Sought to offer everyone the option to manage their finances using mobile

devices.

Second: Banking / Financial Services (13%)

Due to the growing demand of the population (47 million), this sector requires

and increasing support in mobile telecommunication services for remote

monitoring of patients (telemedicine) and information consolidation (data

entry)

Third: Insurance (6%)

Other markets are: State services (5%); Mass Consumption (2%); Transport & Tourism (1%); Media (1%); Automotive (1%); Other or Various (32%)





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02. Market: BPO Segments

BPO Industry in Colombia – Mayor Segments

Source: ADECC 2012





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02. Services in Colombia

BPO Front Office - Inbound Services is the main market

segment in Colombia

Source: Informe Sostenibildad BPO - Programa de Transformacion Productiva (PTP) - Colombia

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BPO

KPO

+

ITO

60%

40%

6% 34% 60%

Voice Services: Inbound & Outbound

In Colombia

Front Office Back Office

Inbound Outbound

Market %





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02. GEOGRAPHICAL LOCATIONS

The top locations for BPO companies in Colombia:

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Barranquilla #4

Software: Application Development

BPO: Voice basic services: English

IT Services: Basic Help Desk

Medellin #3

Software: Application Development &

Maintenance. Project Management

BPO: Voice basic services & Back Office

service: English & Spanish

IT Services: Customer Support, Basic Help

Desk, IT Infrastructure

Bogota #1

Software: Application Development &

Maintenance. Project Management

BPO: Voice basic services & Back Office

service: English & Spanish

IT Services: Customer Support, Basic Help

Desk, IT Infrastructure

Cali #2

Software: Application Development

BPO: Voice basic services: English


Source: Sostenibildad BPO - Programa de Transformacion Productiva (PTP) - Colombia




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Located

In top 4

Cities

Software

Development

Application

Development

IT

Services Customer

Support

Other

BPOs

Data

Mangt

Acco. &

Finance

Market

Research Tele-

health

E-

Learning

ITO 88% 52% 23% 12%

BPO 95% 43% 21% 16% 15%

KPO 92% 64% 19% 8%

Source: IDB – Tercerizacion de Servicos Informaticos en Colombia. Ricardo Rocha Garcia, PTP y BID 2013

ITO BPO KPO

- The main 4 cities in Colombia (Bogota, Medellin, Barranquilla and Cali) consolidate most of companies in the

outsourcing sector in Colombia:

- In ITO, the main segment of services is in the Software Development with over 50% of companies

focused on that activity

- In BPO, the main service is Customer Support. Most of the companies are specialized in Spanish, though

there is an increase in English language customer help desk in Bogota and Medellin

- In KPO, market research services is the main activity which is focused in the domestic market.

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02. Activities by Segment in Top Cities in Colombia

Bogota

Medellin

Barranquilla

Cali





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02. BPO COMPANY TYPES IN COLOMBIA

BPO

Companies

Operating

In Colombia

Your Company Name Presentation

32

International Colombian Companies: - Have HQ in Colombia - Provide domestic services and

to foreign clients - Includes firms that provide

services to its subsidiaries in the region

- Require skill workforce for IT help desk services

Multinational Companies: - Have an office in Colombia - Domestic & offshore services - Can easily introduce “best

practices” from abroad - Searches for college degree

for Accounting/HR/Sales/ Customer Service

- Look for English/Bilingual staff

SME Colombian Firms: - Fastest growing segment - Low Basic services or low

customer value that are human capital intensive

- Provide mainly domestic services in Spanish

- Search for High School graduates for telemarketing and customer service

Impact Sourcing Firms: - Have only Colombia

operations - Provide domestic services of

low customer value, but with a high impact social value

- Hires displaced workers from terrorism/ rural areas.

- No formal education required





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02. Colombia Workforce Overview

33

Total Workforce Workforce in the Outsourcing Sectors

21.5

0.8

Labor Force in

Colombia

(In Millions people)

27%

17%

12% 8%

7%

29% Commerce

Agrigulture

Industry

Services

Construction

Other

60% 23%

17%

BPO

ITO

KPO

42%

58%

OutsourcingServices





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02. Market: Workforce

- Colombia after Mexico is the 2nd largest Spanish speaking country in the world (OECD reports)

- The country has the second fastest labor force in the region (IMD 2012)

- It is the 3rd largest country with the highest number of graduates in the areas of Business and Engineering (Euromonitor 2012)

- Every year over 200K people graduate from higher education in Colombia: 55% undergraduate and 30% Masters degrees

(Ministry of Education 2012)

Total

Graduates

2001 -2011

Accounting

Source: Observatorio Laboral (Employment Beacon) Ministry of Education 2012

Business Computer

Engineering Industrial

Engineering Economics Electrical

Engineering

5.101 7.065

4.601

8.751

11.919

44.352 A Growing Market with high

capacity of skilled labor





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US$8000

HIGH

US$1000

Educational Level

Avg. A

nnual S

ala

ry

Costa Rica

Trinidad

Jamaica

Mexico

El Salvador

Dominican

Republic

Puerto Rico

Panama

LOW

Note: Educational scale based on UN and other figures on education at primary, secondary and university level

Argentina

Chile

Colombia

Brazil

02. Market: Workforce

Linkedin.com/in/jonathandonado Jonathan Donado 35




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Source: PTP Colombia – July 2015

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02. Salary Comparation

Argentina

$12,922

Evolution Colombia Minimum Salary vs. Other Regional Countries:

In Thousands Colombian Pesos/month

Brazil

$14,520

$11,612 $10,631

Chile Peru Colombia Peru

$7,720 $6,594





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02. Colombian Trade Associations

Trade Associations

37

The 3 main trade associations represent the interests of the

sector companies in Colombia. These organizations create

the policies and regulatory framework and work to promote

the industry abroad.

Started in 2001. It has 44 member

companies that represent over 70%

of the BPO market.

It has become the main trade

association for the industry.

It is the association for small to

mid-sized local corporations. It

promotes other industries

besides BPO. It has 38

members.

Started in 2011 to promote. Its

main focus ins on Collection

Services, though it support

firms involved in the accounts

receivable/contact centers





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03. Sources: BPO Market in Colombia

1. Colombia’s BPO Industry Hampered by a Shortage of Bilingual Workers: Report. Nearshore Americas.

http://www.nearshoreamericas.com/bilingual-population-worries-colombian-bpo-industry/

2. Colombia Government BPO Promotion Office: https://www.ptp.com.co/categoria/TercerizacionBPO.aspx

3. Analysis of the Contact Center Outsourcing Services Market in Colombia:

http://www.slideshare.net/FrostandSullivan/frost-sullivan-ex-summary-cco-colombia-2013

4. Ministry of Education of Colombia. http://www.mineducacion.gov.co/1621/w3-propertyname-2863.html

5. ADECC – Associacion Colombiana de Contact Centers y BPO: www.adecc.org

Main Sources:















https://www.ptp.com.co/categoria/TercerizacionBPO.aspx

















http://www.mineducacion.gov.co/1621/w3-propertyname-2863.html









page 51

04. Testimonials

“Jonathan is a very experienced and highly skilled

executive… a great knowledge about both strategic and

managerial issues, with an international approach. He is

highly recommend as a leader, capable to motivate and

improve performance of his teams, and as a business

developer. And definitively, he is a person you can trust.“ Francisco Martinez

CEO

“Jonathan is a very results-oriented persons, a natural

leader and someone that makes his team really perform

efficiently.”

Eduard Fernandez Executive Director

Source: Linkedin Linkedin.com/in/jonathandonado Jonathan Donado




page 52

05. Connect With Me

Linkedin.com/in/jonathandonado

Thank You

www.branded.me/jonathandonado

Twitter.com/donadosays

Bilingual senior general management

executive with expertise in international

business and Mergers & Acquisitions (M&A).

Senior Executive Fellow - Harvard University

and MBA - IESE

If you like the presentation, please give

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