Ulises Muniz, Vice President, North America, Grupo PAE, Mexico.
“I believe that one of our strongest values is the flexibility of our structures and processes […]. Another important element of our philosophy is innovation. We are continually looking at new and creative ways to help our clients increase their cost efficiency, especially in the economic environment of this past year,” says Ulises Muniz, Vice President, North America, Grupo PAE, Mexico.
With two decades of experience, Grupo PAE has come a long way from its beginnings as a human capital outsourcing company in 1993, to become a diversified and integrated services provider. What have been some of the company’s key milestones in its development history recently?
I would say that the key developments that our company has seen are our international expansion and the increased presence of the group in Central America, Peru and the West Coast of the US. One of the next milestones would take place starting from January when we will move our US operations to the East Coast, in order to improve our cost efficiency.
Considering you actively cater to a number of industries through a diverse range of services (Human Capital, Food, Microcredit, Technology and Merchandising), how would you sum up Grupo PAE’s value proposition? How do you help your clients cut costs and streamline their operations?
We always do our best to provide our clients with all the necessary human resource (HR) solutions contributing towards their goals of focusing on their core business activities. Furthermore, we offer risk management services related to human capital. Our wide experience in the sector allows us to identify and overcome all the possible risks that may arise. We are committed to establishing a relationship based on partnerships with our client’s and we invest great efforts into understanding their needs.
In an increasingly competitive world, how does Grupo PAE differentiate itself from the rest in the services it provides and the relationships it has with customers?
I believe that one of our strongest values is the flexibility of our structures and processes. The collaboration with our clients is very similar to a partnership and we try to integrate ourselves within their operations. Another important element of our philosophy is innovation. We are continually looking at new and creative ways to help our clients increase their cost efficiency, especially in the economic environment of this past year.
How do you expect the reforms to impact Mexico’s energy sector from an HR perspective?
After reviewing the main points of the energy reform, my opinion is that there are a large number of big companies that are interested in investing in Mexico. Simultaneously however, many of them already have operations in our country and were anticipating the highly publicized energy reforms that will open a range of new investment opportunities for them. My observation is that all these players will face a tremendous amount of challenges at the implementation of the new legislations and procedures. That will be the time when they will turn their attention towards companies such as Grupo PAE that can lessen that burden.
Who are some of your most prominent clients in Mexico’s oil and gas industry today and what services do you provide to them?
Our clients range from small to medium size companies, based in the Gulf of Mexico. The majority of them are Pemex service providers, such as drilling or engineering companies. We offer them integrated services that include hiring, training, handling the human resources, paying the taxes, helping them reduce HR related risks and ensure they provide their employees with best practices in Mexico.
Broadly speaking, the global energy industry is suffering from a deficiency of engineers and experienced professionals. However, Mexico alone has more engineers than the US despite having less than half the population. Having said that, what is your assessment of the availability and competence of Mexico energy professionals?
In my opinion it is difficult to have quality, trained people. A major change in the culture and the educational system would be necessary. It is impressive and unfortunate that there are such large numbers of people with low opportunities for education. Looking into the future however, we should improve the curricula that universities are offering and find new ways of education; otherwise I see very little improvement in the near future. In recognition of this fact, this is perhaps why the educational reform was one of the most widely accepted reforms in the past year.
In 2010 and 2011, Grupo PAE expanded its horizon and successfully penetrated the Peruvian and US markets, respectively. How was the company able to successfully enter those markets? What were the critical success factors and what were the main lessons learned?
The main reason to look into those markets was to diversify ourselves and to look for additional investments, while concentrating our business in Mexico.
In Peru we are working with the oil and gas sector as well as mining. On the other hand, it is not the same case in the US. Some of the success factors worth mentioning are innovation and patience. We understood that every market is different. One may think that it is similar to theirs but it is in fact rather different and innovation is crucial when materializing the service offered. One of the most important lessons we learned is to rely on local people instead of trying to conquer them. As a consequence, we have a Peruvian general manager heading our operations there, which the Mexicans are only supervising. In part, this defines the success we have achieved there so far.
In terms of the clients Grupo PAE works with, what opportunities have you identified for expanding your client base in Mexico?
With the major amendments in the tax laws ahead, we are focused on finding and implementing a solution allowing our foreign clients that wish to invest in Mexico to do so in an efficient and safe manner. We intend to help them streamline the cost of doing business in Mexico by, for instance, developing the most efficient tax structures that simultaneously minimize the risks they incur. In this regard, I would say that in 2014 we will see an increased level of activity in the market, although the players will be more or less the same.
How would you break down the company revenue structure? And how do you expect this to change throughout 2014?
Approximately 70 percent of our operations are in Mexico, about 20 percent in the US and 10 percent in Peru. However, throughout the next year, we will be committed to expanding our presence in Central America.
The oil and gas market represents no more than 5 percent of our revenues; however, the imminent energy reforms will change that with the influx of foreign investors it is expected to bring. We will look to expand into the energy sector more aggressively, which in fact used to be a very lucrative for us in 2008, when some 40-50 percent of our revenues came from that side of the industry. Furthermore, we are planning to partner with a hydroelectric plant in Peru and leverage that experience and track record to further expand in that field in Mexico and the US.
As Grupo PAE celebrates its 20th anniversary, what goals would you like to achieve in your capacity as Vice President of North America?
We are aiming to become one of the major worldwide human capital service providers. The next challenge would be entering the Colombian market next year and to move our US offices to Miami, on the East Coast. We are also looking to expand in the Ibero-American part of the world, in countries like Spain and Brazil; after that we will analyze the possibility of going into the Middle East, a huge market with a highly developed oil and gas sector that is favorably geared towards the outsourcing services industries. In sum, we have laid out an ambitious growth plan for the company over the following five to ten years, after which we will focus on consolidating our presence globally.
What would you like Grupo PAE to be known for?
We are a huge and strong partner to do business with and they can rely on us to help them in the core aspects of their business, including not only the management of their human capital, but also with risk assessment and financial services. We provide them with integrated solutions and we do it with passion. I would invite the readers to invest in Mexico, because we have an excellent location and neighbors, we are friendly and the time could not be better for that.