America: Open for Business Podcast | How Sonatafy Is Reshaping the Nearshore Software Landscape

Narrator: 0:03

Welcome to America Open for Business, where we talk with high-growth entrepreneurs and leaders who have found success in one of the world’s most important markets.

Cameron: 0:15

Hi everybody. This is Cameron Heffernan. I’m the host of America Open for Business and I am excited for our show today. It’s in our Founders and Owners series. The episode is brought to you, as always, by us, your B2B marketing. We are a truly global marketing agency. Many mid-market B2B companies in particular face challenges as they enter new markets or expand across borders. So we’re here to help with the end-to-end marketing strategy through execution and that enables our clients to be free to focus on customer growth. Discover how we can drive your expansion by visiting our site, yourb2bmarketingco. Not com. Past.

Cameron: 0:56

Guests on our show have included Brian Smith, the original founder of UGG the sheepskin boots and footwear from Australia UGG the sheepskin boots and footwear from Australia, as well as Ben Tija, founder and CEO of Earthly Wellness, a $20 million plus direct-to-consumer e-commerce brand that’s trying to change healthcare. Naturally, and before I introduce today’s guest, who I’m very excited to welcome to the program, I wanted to give a shout out to Noah Tetzner of Rise25, who helps me with these production for these podcasts and the whole format, who introduced me to Steve to come onto the show today, and I appreciate that. Steve Taplin is the CEO of Sonatify Technology, a premier near-shore software development company specializing in top-tier software engineering services. Steve Taplin, welcome to America. Open for Business.

Steve: 1:47

Cameron, thanks for having me. I’m excited to be here.

Cameron: 1:50

Great. I usually start the show with a simple question, and I’ll do the same with you today. How does Sonatify help people?

Steve: 1:59

Our business model is revolved around helping companies do custom software development in both cloud and mobile environments. I’m a huge believer that to differentiate yourself in business to your clients, the experiences of your team members, your partners, that it’s very hard to differentiate yourself without building custom software to make your process more efficient, to make that end user experience better and to stand out. And that’s what our company does is either help companies build custom software development from scratch or getting involved with their existing software development teams to give them additional resources to reach different milestones software development teams, to give them additional resources to reach different milestones and the key niche of our company.

Steve: 2:49

We are headquartered in the US, in Scottsdale, Arizona, and we employ full-time, fully bilingual senior level engineers out of Latin America where they’re providing same time zone support to companies, and in the software development world as complex as it’s gotten, it can be very difficult to work with resources that are not on your same time zone or do not speak English, because you have the constant collaboration is needed to make custom software effective.

Cameron: 3:24

And I had the experience personally. My first virtual assistant was in the Philippines and she shifted her day to be working with us in real time and it was a challenge. It was a challenge culturally, I think. Understanding was difficult and she should have been sleeping when we were meeting and talking and collaborating. I then shifted about, I don’t know, maybe six months ago, to a VA who’s based in Rio Natalie actually will be editing this podcast when we’re done and she’s been fantastic. Her English is incredible. Her work ethic is fantastic. She really seamlessly joined our team and I think you know the time zone. It just sounds like a simple element, but in my experience it’s been huge. Is that what your clients share with you?

Steve: 4:10

Absolutely. Nearshore software really emerged in around 2015, 2016. Originally, large tech was taking advantage of it, setting up software development centers in Costa Rica. It’s continued to grow and with the pandemic I would say prior to the pandemic most people most software engineering CTOs, cios have probably not heard of nearshoring for software and as the pandemic hit and everybody was forced to work remotely, it really opened up the floodgates and increased in popularity. And more than anything, the cycle businesses get in when they’re doing custom software is they’ll have teams working during the day and if you’re working with an offshore team, your goal is to have an hour or two overlap at the end of the day where you could transfer work so they can be productive overnight.

Steve: 5:12

You wake up rinse and repeat, and the problem is that’s not how custom software development works anymore. You need constant interaction, you need instant answers, you need collaboration in order for it to be successful. And so that’s where the same time zone really emerged as a key thing. And when you’re dealing with talented software developers who are top in their game, those people don’t have to work the night shift where they live. Those people don’t have to work the night shift where they live. When you do have people who are working the night shift so they could be on US time zones, they’re normally not the best of the best, because the best of the best don’t have to do that. And you know, as you mentioned, cameron, that’s very disruptive to your lifestyle if you’re working nights to have your family life and your personal work-life balance. And so that’s where we found Latin America, where resources are natively on. The same time zone, where cultural differences are closer aligned to how we are in the US, has been a great thing for accelerating software development projects.

Cameron: 6:26

Yeah, I read the other day that the LATAM outsourcing market is estimated to reach $16 billion this year, according to Statista. So do what you want with the Statista stat, but I’d like to ask you what do you see the potential of this market? It’s quite new too, I would say. I think COVID, indeed, was a big catalyst to this. Where do you see this going in the future? What’s the potential?

Steve: 6:50

I think, as software development continues to evolve, same time zone resources for, and so this is geared towards US-based companies. If you are located in Europe or you know near shore to you is going to mean something different than near shore to US-based resources and US-based companies. But we’ve continued to see high demand. Everybody right now is forced to do more with less. Ai has been phenomenal and how the acceleration of that has come over the past 24 months.

Steve: 7:31

It’s my belief it’ll never replace software developers, at least not in my lifetime but, I, think it will help software developers be more productive, and so I continue to see this track grow and nearshoring from a US perspective, continuing to be a key strategic component for companies building software world of dev and maybe even QA.

Cameron: 8:03

Different elements on the full stack also applies to what we do marketing, content creation. It’s never going to replace someone, it’s never going to fully remove that need, but if it can cut 20% out of a workload or help us be 15%, 20% more efficient, that is a win. And that is a win that you can use to then take those resources and allocate to other areas and the more scalable that is, the more interesting that becomes as a business strategy.

Steve: 8:30

I agree wholeheartedly, and for everything from marketing to sales.

Steve: 8:37

it’s been a great thing and when you get on the development side you start to have issues that you can’t just upload your code into ChatGPT and ask it for its advice, because now you just made your code public and a lot of large companies have their own large language models where that data is secure, but the average small to medium-sized company doesn’t have that, and so in the development world you have to be very careful what you’re putting into these tools and how you’re putting it in. Because you don’t want to, you got to protect your IP.

Cameron: 9:16

We’ve dabbled a bit with, you know, making a custom GPT, and it does allow you to streamline some of that. You always have that concern of where’s this information going, where’s it going to be received, but it’s a nice way to have a good starting point, not have to recreate prompts or information about yourself as an agency or your clients each time.

Steve: 9:37

We are doing a lot of creative and innovative things from an AI perspective and as a B2B marketing company. I think you’d appreciate this. Ai is a buzzword.

Steve: 9:51

If you go on most companies’ websites that have anything to do with technology, they’ll probably list AI more than 50 times throughout their website, and what we find is the marketing team and the engineering teams are really not on the same page, and we have a AI consulting practice that we focus on quick wins for clients, and we do a lot in the healthcare and life sciences area taking patient data, taking drug reactions and creating custom large language models and training those models to help people with quick wins. And it’s interesting but over the past year, I have seen more CIOs and CTOs of companies, 100 million in revenue and more get fired, and the number one reason is their boards, their investors, are asking them to quantify their progress with AI and, let’s face it, most outside of the technology world don’t really understand what AI is, but they’re looking for those wins and they’re looking for those buzzwords, and so that’s definitely a hot area that we’re focused on.

Cameron: 11:07

Interesting when you look at AI in particular and you go back to a year ago, say March or April of 2023, I don’t know if you had this experience, but my experience was people, because my original background was a journalist and I got into PR. I was a writer, a content creator and a lot of people that I worked with in that world, whether they’re clients or past colleagues. The feeling was a threat, particularly people who are older a threat of they’re going to my job’s, going to be at risk, going to be in trouble. And one element that I found interesting was with my overseas clients. That threat wasn’t as evident. The English language wasn’t as precious to them. It was a way to get work done and achieve things. Did you feel that threat? Or maybe people that you on your team as developers that, hey, this is gonna be something that’s gonna put my job at risk?

Steve: 11:56

You know, I’ve always been of the abundances and, as a lifelong tech guy, I have not been impressed with AI until the past 24 months. The leaps that it has made is phenomenal, but, like anything in any industry, you need to adapt or you die, and so you need to figure out how to make the best use of it and see opportunities versus threats. That’s my mentality towards that.

Cameron: 12:46

And how does this apply to our business? Is there an application of it that’s going to be useful? Maybe it’s just internally to save time and efficiency? If it is going to be client facing or outward facing, is that going to be something that’s well received? Are people going to be client facing or outward facing? Is that going to be something that’s well received? Are people going to be okay with that? What are the potential? You know, you know causes or friction that come from that or issues that my client base may have if we’re not transparent with how we’re using this new and you know it changes every day, every time I log in and chat gp to some new plugin or module or element there I think, more than anything, what people need to understand is you need to take the gender AI for what it is, and it could give you great ideas and a starting point.

Steve: 13:30

But some of the recent stats I’ve read in the Wall Street Journal are that right now, most AI models, such as ChatGPT and BARD and the other large ones, are about 80% accurate. And so, um, you, you need to uh, I also um, right, and we do a lot of content, I write for Forbes on entrepreneur magazine and um, you need to take it for what it’s worth, that it can give you good ideas, but it still needs the human touch to it, and so, if you’re presenting this data to clients untouched, direct from the large language models, you definitely need to have caveats in there, because to date.

Steve: 14:17

I haven’t seen more than 80% accuracy and it’s interesting. But AI is I describe it and I’m an old guy. You think of Pac-Man and Pac-Man, you know, one of the original video games that just eats everything that comes to it.

Steve: 14:31

And AI is gobbling data so much that it’s projected by the end of 2025 that these AI models are going to run out of data 2025, that these AI models are going to run out of data and they’re looking for more ways to get data, because all public data it will have consumed by then. And there’s actually some scary ideas out there of large companies licensing out their data in a way that the end users probably won’t like. But it’s just this big data gobbling machine that you got to keep feeding it we’re not aware of.

Cameron: 15:04

I heard an example on it was a podcast a while back about uh the car making companies are now having to be concerned about. They’re now technology companies too data. You know, apple, google, um, ibm have been thinking about it and aware of it for years, gm, volkswagen, ford. That’s something new. But now they’re going to have to be thinking about privacy data. The example was how people use uh tracking that’s built into a gps in a car where uh, um, it was a husband, a split couple, and he was using it to track his wife, wife and ex-wife and causing issues for her. And all of a sudden car companies had to be thinking about this. Before it was not on their radar.

Steve: 15:46

It’s definitely opening up a lot of things and, as this need for data, they’re looking for anything and everything, and invasions of privacy are going to continue to be a big issue, and something that everyone has to watch out for is settings they have on, whether it’s their phone or their GPS or their browser settings, because there is that need for data for these AI, generative AI models to continue to learn and to continue to create new opportunities.

Cameron: 16:22

So a moment ago you had mentioned Europe. I lived and worked in Europe for almost five years and got familiar with my working environment, the offshore, the remote development environments there, whether it’s Poland or Romania or North Africa, and a lot of the listeners. On our show we’re target our content at overseas based companies that want to grow in the U S market. If you’re coming over to the U S either for the first time or trying to expand here, what is the competitive advantage from working with Sonata five that a company like that could realize?

Steve: 16:58

So a great question and, at the end of the day, what where the competitive advantage is going to be is where are your resources that are going to be involved in the software development process? So if you’re a global company that’s headquartered out of australia, but your software development teams are in the us and those are the key resources that need to interact, that’s where Sonata 5 can be a huge help, because we have resources on the same time zone as those teams.

Steve: 17:30

We’ve had Fortune 500 companies that were non-US based but their development and product resources were in the US and they were looking for a solution to leverage lower cost labor than the US that’s in the same time zone. So it kind of depends on where those resources are that need to be having this constant interaction.

Cameron: 17:54

Interesting. I have a client that’s in Central Mexico. They do manufacturing support services and especially after the pandemic we talked about, our messaging focused on the advantage of strategically geographically dispersed production locations some presence in Mexico to be diverse. If there’s a supply chain issue or geopolitical threat tariffs, you have some options. Does that apply to your world and what you guys do?

Steve: 18:28

It absolutely does, and obviously there’s been a lot of geopolitical tension going on right now between Russia and Ukraine. That has been going on for a long time. Outside of the US, the next big hub for software development in the world was probably Ukraine, and they just bred, lived and bred software development in that country for a long time, and so we had a lot of companies that during that time, because of those geopolitical risks, they had all of their software development resources in Ukraine and they needed to diversify. A lot of the software companies that were headquartered there were able to make alternative arrangements to move to nearby countries, but that geopolitical risk made a lot of companies want to diversify because of that, and so we’ve definitely seen that in our space.

Cameron: 19:34

For companies that are looking to outsource development to Latin America. What are some experiences and best practices that you can share with our audience to optimize the engagement?

Steve: 19:46

More than anything, making sure that you have the right cultural fit with the resources and your team. That is why we’re actually a US-based company that hires in Latin America, because we’re really focused on bridging that cultural gap. Employment laws in Latin America are very unique and to attract very good software developers you need to make sure you have very competitive packages.

Steve: 20:18

It’s not as straightforward as the US, where you might have a W-2 employee and a contractor.

Steve: 20:25

They’re more complex throughout Latin America as many of them are socialized countries and there are additional items that need to be of concern. So it can be very hard to hire direct in those markets without having a local presence to be able to do that. And so our company are. You know, we’ve we’ve earned our stripes as as being experts in both the markets and then being able to bridging the gap.

Steve: 20:57

And with that, when we are talking with clients, we always want to understand what they’re trying to accomplish, if they have a certain technology stack they’re using, what resources they have, what they’re looking for from us. We like to use responsibilities matrices to be very clear with clients of who’s responsible for what. Sometimes we’re responsible for everything, sometimes we’re only doing one or two roles, but we have found, by being thorough and making sure we’re only taking product projects that are fit our core competencies, that we can make sure it’s a win-win. And then, when we bring our resources to the table, we always give our clients the opportunity to interview the resources and make sure that they feel there’s going to be the right cultural fit, because that’s really critical for success.

Cameron: 21:47

so you probably have like a cultural assessment, some kind of a cultural assessment, some kind of a tech assessment, and then like an English language assessment.

Steve: 21:55

We actually built a SaaS software that we call Nexus.

Steve: 21:59

That is, I like to joke you do it wrong enough, long enough, and you figure out how to do it right, and so my approach to building companies is I always build custom software systems for the operations of the company so you can minimize mistakes happening the same mistakes happening over.

Steve: 22:17

And our Nexus software is how we find our Latin America engineers and the full process we go through, from code testing and technical tests and cultural and English assessments all the way through how we match them to a client’s business requirements. We’ve actually built a software and we have a community now of over 12,000 engineers in Latin America that are part of this nexus network that we’ve created, this nexus network that we’ve created, and what we do to attract these people is solely educate them how to maximize their income working with US-based companies, and so when we have people in interviews that do something that causes them to not get hired, we’ll create a video or a blog post or an article on it and push it out to this community. And sometimes this is easy as hey, if you don’t have a pretty background where you are put up a virtual background so it’s not distracting.

Steve: 23:21

Another you know, less obvious thing is for software engineers where English is their second language, that clients will always want to challenge you to see how you think as an engineer. And a lot of people where English is not their first language, if they get flustered they try to talk real fast and rush through it. We tell people stop, they’re trying to test your thinking ability and you’re allowed to take a time out or even take a deep breath and think through how to answer, and so those are the kind of tips and things we do that have where we’ve attracted this community, who we’re educating them, and they’re a great resource pool as we grow our business.

Cameron: 24:06

Do you think of yourselves as a human capital, a people company, or a technology company, or an innovation company or some mixture of those things?

Steve: 24:15

We categorize ourselves as a niche custom software development company. We do fully managed projects for clients, we do staff augmentation, we have our own SaaS platform and, as I’ve mentioned, we’ve now rolled out our AI consulting arm helping clients get those quick wins in the AI arena. So services a custom software services company is how we categorize ourselves.

Cameron: 24:46

Okay, and you tend to have longer term relationships with the individuals that are in Latin America.

Steve: 24:54

We currently have 140 full-time employees in Latin America. We don’t use gig workers or part-time contractors. We only have full-time engineers and that’s a key part of how we can ensure quality and we’re not just a. There’s certain companies in the nearshoring space that are nothing more than recruiters trying to match talent in Latin America to that. That’s not our model. We hire engineers.

Steve: 25:25

We have over 170 Glassdoor and Indeed reviews of the experience of working for SonataFi and we maintain phenomenal ratings, although you do get upset people every once in a while. But a big part of why a lot of clients do come to us is they read these Glassdoor and Indeed reviews and want to understand the experience employees have working for us to see if it’s going to be a good fit for them. There’s this misconception that sometimes when you have workers from another country that you don’t treat them very well, you don’t pay them very well, and we see a lot of clients truly care that we’re getting good talent, we’re treating them well and of course any company can say they do, but you got to provide proof points and Glassdoor and Indeed reviews are a key aspect of that, which we can’t control as a company. What’s put out there?

Cameron: 26:28

Right, I mean mean happy. Employees are possibly the best ambassadors for your brand you can can ever have no doubt, um, absolutely no doubt.

Steve: 26:36

And it is interesting, in latin america, exact same skill set, um, but fully bilingual. We’ll get about a 30 premium in pay for somebody who’s not fully bilingual. And our business model is we pay our engineers in the top 90% of the market because we want the best of the best and we’ve been able to, for a long time, keep our engineer attrition well below 7%.

Cameron: 27:03

That’s fantastic. My client that has the manufacturing facility in Mexico. One of the things that they’ve seen over time is that their clients primarily American and Canadian, but some Europeans do. The common experience is they get down there to Mexico, they start their production at a certain level and it quickly grows. We become more aware of the capabilities of the Mexico workforce. Is that a common experience for some of your clients?

Steve: 27:31

So different businesses and all of our engineers do work from home. So we are a remote company and it’s interesting. In most of Latin America prior to the pandemic, working from home was not a thing and if you were a talented software developer you needed to live near a major city like Mexico. City has been a huge hub and the typical Latin America senior software engineer would often have to commute one to three hours each way to and from work, commute one to three hours each way to and from work, and so fast forward to the pandemic, our model being fully remote. I’ve never met more appreciated people to work from home.

Steve: 28:24

They work harder, they get more done and they have a much better work-life balance. And so we’re and what we do and the model we have. It’s not. It’s hard to compare to a manufacturing facility, because the those are typically blue collar workers that you’re trying to figure out the best productive way to maximize capability, where we’re hiring college educated senior software engineers that are already working from home and ready to plug and play into projects and we’re very big on agile methodologies. But we do always adapt to our clients’ best practices that they want to follow. Sometimes there’s good reason for it, sometimes there’s not want to follow. Sometimes there’s good reason for it, sometimes there’s not, and so we kind of edge our clients towards maximizing productivity through following good processes.

Cameron: 29:19

I checked out your background before we talked, and it’s quite an interesting one. I see that you had a couple of stints at IBM, working in private equity. How did those experience culminate into now Sonata Fire, and where do you see yourself going with this over the longer term?

Steve: 29:36

So I started. I did start my career at IBM and I got involved in data center outsourcing right when the internet boom occurred and there were internet or at the time it was called e-business enabled data centers. And I was in the right place at the right time. And IBM’s first e-business hosting center was in Schaumburg, illinois. Per the Bears jersey behind me.

Steve: 30:02

I’m originally from Chicago. I live in Scottsdale, arizona, so I had the unique experience of being on the data center floor of one of the first. So I had the unique experience of being on the data center floor of one of the first what is now known as cloud data centers and got to really accelerate learning in that I was able to get into sales and had a very, very good run selling complex Internet outsourcing solutions. And that’s when I decided the entrepreneurial route was for me. And that’s when I decided the entrepreneurial route was for me. I would build companies by creating custom software to help it operating better and focus on rapid growth and either sell it or move on to the next.

Steve: 30:41

And I have done over 30 companies throughout my career. Two have been wildly successful, another eight have been really good and the other 20 were ones that needed to be pushed aside and moved on, but the mix of corporate and entrepreneurial experience has been a big part of how I grow companies. What I focus on and, at the end of the day, I’m truly passionate about digital transformation, custom software development as the edge. Companies need to differentiate themselves in the market, and to be able to do that in the most cost effective manner is really where my passion is, and Sonatify has been a huge growth company that we barely scratched the surface, and in the next three to five years, I strongly believe that we will become a very well known brand name.

Cameron: 31:45

Fantastic. Well, I’m going to ask you, Steve, one last question. Before I do that, I’d like to direct people to check out Steve’s website, sonatifycom. The content there is incredible. He’s got a lot of rich resources. Steve mentioned being a writer for both Forbes, the Forbes Council program, as well as Entrepreneur, which is a lot of good, good, rich takeaway there Not all related to just software and offshore development, by the way broad business topics and a lot of resources about how to optimize your team and get the most out of your human capital. And my last question for you is we’re sitting down in 10 years and we’re having a podcast interview at that time. What has happened to the Latin America software development offshore industry at that point?

Steve: 32:36

I view it will be as common, if not more popular, than the growth that India outsourcing took, as they were one of the first IT outsourcing markets that started in the 90s and have grown significantly. I absolutely believe that the Latin American market will continue on that same trajectory and there’s many different niches in IT. There’s many different reasons why offshore versus nearshore makes sense, but specifically for the niche on the custom software development side, we’re really passionate that that same time zone support is critical for success and we see that continuing to grow.

Cameron: 33:29

Yeah, it’s tough to beat that proximity, isn’t it?

Steve: 33:32

I actually read an interesting article this morning how salt lake city, utah, has become, uh, a new silicon valley spot because, um, it’s an affordable market and everybody keeps moving away from california because it’s too expensive. And so you’re seeing a shift of where, even in the US, where top IT talent is going.

Cameron: 34:05

And that affordability factor in Latin America I think will be a big factor on the growth and enabling companies small, mid-market companies to compete more than they could with their bigger competitors. I think Exactly. Yeah Well, this has been America Open for Business. I’m Cameron Heffernan and I wanted to say again thank you very much to Steve Taplin, ceo of Sonatify, for joining us on the show. Thanks a lot, steve. Thanks Cameron, I enjoyed it, you too. Take care. Thanks a lot, steve. Thanks, cameron, I enjoyed it, you too.

Narrator: 34:34

Take care. Thanks for listening to the America Open for Business podcast. We’ll see you again next time and be sure to click subscribe to get future episodes. Thank you.