Caso Tecnonexo - MIT Sloan School of Management

Buenos AiresJanuary 2007

INTERNAL DOCUMENT: Organic Growth Strategy

Assessing Tecnonexo’s U.S. Market Entry Strategy through Organic Growth

Table of Contents

I. Executive summary

II. U.S. e-learning Market

III. Suggested markets to explore

IV. U.S. corporate e-learning programs

V. Tecnonexo’s competitive advantage

VI. Findings/Recommendations

I. Appendix I: ESL training market in the U.S.

I. Executive Summary

There are many things to consider when entering the U.S. market

♦ There is no single large U.S. e-learning market; the market is actually comprised of numerous smaller niches

♦ The vast majority of firms are custom content players whose competitive advantage is domain expertise in a specific niche

♦ The most lucrative opportunities are with large companies in general training but less sophisticated 1st customers might be smaller companies or specialized training for a business units

♦ It is a small world of e-learning experts which lowers the cost of sales but makes reputation very important

♦ U.S. market characterized by stricter technical standards and high touch consultative relationships

♦ Most U.S. firms have their own LMS and competition is fierce in this space making it more prudent to focus on custom content

♦ Diversity training issues are on the horizon for major U.S. firms but training in foreign languages is limited

♦ Using Mexico as a stepping stone would make U.S. entry easier

♦ In addition to industry vertical and business process niches, capability and methodology expertise can be a competitive advantage

Tecnonexo must improve its technical capabilities and consulting skills to compete effectively in U.S. on anything other than low cost

♦ Phase I: Continue growth with Mexico expansion while developing technical and consulting capabilities (0-18 months)

– Use Mexico as a stepping stone to U.S.

• Large opportunity, close ties to U.S. market, lower technical expectations, Tecnonexocurrently well positioned

– Start with small U.S. businesses where Tecnonexo can be a complete solution provider

• More price sensitive, less influence in e-learning community, more in line with Tecnonexo’score competencies

♦ Phase II: Enter the U.S. by targeting a niche and expanding (6-24 months)

– Focus on a niche where Tecnonexo can compete with boutique players

– Expand to adjacent industry verticals or training functions eventually becoming a consultative integrator

II. U.S. e-learning Market

�U.S. e-learning industry overview

−Market size/growth

−Target company size

−Market segmentation

�Industry trends, 2007

�Competitive landscape

Industry publications and market research

♦ Ambient Insight (www.ambientinsight.com)

♦ ASTD (www.astd.org)

♦ Bersin & Associates (www.bersin.com)

♦ Chief Learning Officer Magazine (www.clomedia.com)

♦ Eduventures (www.eduventures.com)

♦ E-Learning! Magazine (www.b2bmediaco.com)

♦ Elliott Masie (www.masie.com)

♦ HR Institute (www.hrinstitute.org)

♦ IDC (www.idc.com)

♦ Gartner (www.gartner.com)

♦ New England Learning Association (www.nelearning.org)

♦ Simba (www.simbanet.com)

♦ Training Magazine (www.trainingmag.com)

♦ Training & Development (http://www.astd.org/astd/publications/td_magazine)

Introduction

External non-tech spending

In 2006, e-learning services outsourced to external vendors represented roughly $11 billion of $109.25 billion in total U.S. training budgets

Market Size and Growth

$10.89 $10.89 $10.89

$18.61 $18.61

$79.75

Total Employee Learning& Development

External Services E-Learning

$109.25 billion

$29.5 billion

$10.89 billion

*Source: 2006 ASTD State of the Industry

U.S. Employee Learning & Development Budgets, 2006

The proportion of technology-based training-related spending continues its growth as companies become better able to quantify cost savings and efficiency gains to e-learning.

The proportion of technology-based training-related spending continues its growth as companies become better able to quantify cost savings and efficiency gains to e-learning.

Internal learning budgets

e-Learning

The U.S. corporate e-learning market has been growing at an impressive >30% rate for the past several years

29% 31%

37%35%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2005- '06 2004-'06

10 Largest FirmsRest of Sector

52% 48%

10 Largest FirmsRest of Sector

Corporate E-learning Training Revenue Growth Rates: 2004- ‘06 Market Share: 2006

*Source: 2006 Simba Information


The growth rate of the smaller firms outpaced the 10 largest e-learning firms in 2006.The growth rate of the smaller firms outpaced the 10 largest e-learning firms in 2006.

Instructor-LedClassroom

70%

Other7%

VirtualClassroom

16%

Online, Self-Study

7%

Instructor-LedClassroom

62%

Other9%

VirtualClassroom

14%

Online, Self-Study

15%

Though a traditional classroom setting still represents the majority of training delivery, e-learning is growing in U.S. companies

20062005

Training Delivery Methods

*Source: Dec. 2006 Training Magazine Industry Report


A year-over-year comparison shows that Online Self-Study more than doubled in 2006, making it the area of training with the fastest growth.

A year-over-year comparison shows that Online Self-Study more than doubled in 2006, making it the area of training with the fastest growth.

With bigger budgets and better technology, large companies are more likely to have adopted e-learning


62% 14% 15% 9%

65% 20% 8% 7%

57% 24% 12% 7%

Instructor-Led Classroom Online Self-Study Virtual Classroom Other

>10,000 employees

1,000 - 9,999 employees

<1,000 employees

Training Delivery Methods by Company Size

Target Company Size

Training modules must be designed to teach at least 100-200 students for e-learning to make sense economically.

Training modules must be designed to teach at least 100-200 students for e-learning to make sense economically.

71% of large companies outsource some or all of their custom content development


73% 22% 5%

58% 36% 6%

29% 62% 9%

No Outsourcing Some Outsourcing Most/All Outsourced

>10,000 employees

1,000 - 9,999 employees

<1,000 employees

Custom Content Development Amount Outsourced by Company Size

Target Company Size

Companies outsource custom content development to e-learning firms with a perceived expertise in a specific subject or a technical skill (e.g. simulation).

Companies outsource custom content development to e-learning firms with a perceived expertise in a specific subject or a technical skill (e.g. simulation).

Larger companies are the most likely to have invested in an e-learning infrastructure


Technology Usage by Company Size

11%

24%

37%

51%

75%

28%

0%

25%

50%

75%

<1,000 Employees 1,000 – 9,999 Employees

>10,000 Employees

LMSLCMS

Target Company Size

It is difficult to convince companies to switch away from a legacy LMS; smaller companies are better targets for end-to-end solutions.

It is difficult to convince companies to switch away from a legacy LMS; smaller companies are better targets for end-to-end solutions.

Technology, Education and Financial Services are the industries most likely to use e-learning


57% 8% 21% 13%

76% 9% 5% 9%

84% 10% 2%4%

72% 15% 8% 5%

57% 18% 21% 2%

52% 23% 18% 7%

Instructor-Led Classroom Online Self-Study Virtual Classroom Other

Technology

Retail

Manufacturing

Healthcare

Education

Financial / Insurance

Training Delivery Methods by Industry

Market Segmentation

As a result, there are more specialty e-learning firms currently competing in these industries. As a result, there are more specialty e-learning firms currently competing in these industries.

Compliance training converts well into an e-learning format, with 35% mostly or entirely online


57% 41% 1%1%

55% 44% 1%0%

54% 40% 4%2%

54% 33% 9% 4%

44% 41% 13% 3%

37% 50% 12% 1%

33% 52% 13% 1%

26% 64% 6% 4%

31% 33% 17% 18%

No Online Some Online Mostly Online All Online

Executive Development

Mgt./Supervisory Training

Interpersonal Skills

IT/Systems Training

Desktop Application Training

Customer Service Training

Sales Training

Mandatory/ Compliance Training

Industry-Specific Training

Types of Training Conducted Online

Market Segmentation

Top ten largest niche markets

Market Segmentation


(Technology)


(Financial / Insurance)


(Technology)


(Technology)


(Healthcare)

IT/Systems Training (Technology)

Mgt./Supervisory Training

(Technology)





Executive Development

(Technology)

Business process/function and industry matrix

Tech

nolo

gy

Retai

l

Man

ufac

turin

g

Health

care

Educa

tion

Fina

ncia

l /

Insu

ranc

e Executive Development

Mgt./Supervisory

Training


IT/Systems Training

Desktop Application

Training

Customer Service

Training

Sales Training

Mandatory/ Compliance

Training

Industry-Specific

Training

3741466983106

3741466983106

4349548197124

50576395113145

616876114137175

626977116139177

657381122146186

707988132158202

97109121182218278

Market Segmentation

Outsourcing of custom content development is expected to increase in the coming months


Planned Outsourcing in Next 12 Months

7%

14%

0%

5%

10%

15%

Custom ContentDevelopment

More OutsourcingLess Outsourcing

Outsourcing Trends

As the benefits of e-learning become better quantified and more widely known, companies will outsource more content development in areas where they lack internal expertise.

As the benefits of e-learning become better quantified and more widely known, companies will outsource more content development in areas where they lack internal expertise.

As the e-learning market matures, corporate training is the latest business function to see a surge in outsourcing


Outsourced Services

29%

30%

44%

24%

23%Learner Support

LMS Administration

Custom ContentDevelopment

LMS Operations / Hosting

Instruction

Outsourcing Trends

Almost 30% of companies outsource at least some custom content development.Almost 30% of companies outsource at least some custom content development.

1%

2%

11%

13%

0.2%

0%Education

Retail

Healthcare

Manufacturing

Technology

Financial / Insurance

Financial / Insurance and Technology are the verticals where outsourcing to foreign firms is catching on the fastest


Use of Offshore Firms for Custom Content Development by Industry

Outsourcing Trends

Outsourced projects tend to be relatively simple in terms of bells and whistles but high-volume to take full advantage of the difference in labor costs.

Outsourced projects tend to be relatively simple in terms of bells and whistles but high-volume to take full advantage of the difference in labor costs.

As new learning tools are adopted, the complexity of supporting different systems increases the desire for an integrated platform


Usage of Learning Tools and Technology

13%

24%

30%

39%

58%

5%

12%

Podcasting

EPSS*

LCMS

Rapid e-Learning Tool

Application Simulation Tool

LMS

Virtual Classroom

* Electronic Performance Support System

Technology Trends

�Traditional corporate training departments will be less widespread�Learning will be driven by the central training group, with less emphasis on company

divisions and departments

As e-learning continues to grow in 2007, content will be developed faster and will be created more by users and communities

Increased Outsourcing

�While payrolls decreased an average of 11% in 2006, learning organization continue to spend on technology. A defined outsourcing strategy will lower costs while providing a stable technology investment

Key Trends Outlook for 2007 from Bersin

�Talent management will change the role of Human Resources�Leadership and management training will be the largest program area spending

�Content created by and defined by users, who can publish material quickly�Less control over content since there will be more avenues for publication�Social networking will be integrated into e-learning programs�Users will publish courses in fraction of time

�Courses will be smaller, and created more rapidly --> attractive for today’s media oriented youth

�Gaming, simulation, and wikis will enhance user experience, and community feedback

New Focus Areas

Centralization

Content Management

New Approaches

*Source: Bersin & Associates 2007 Predictions

Summary

Size of Custom Courseware Vendors(Number of Employees)

< 2564%

26-4922%

5003%

100-4996%

50-995%

Tecnonexo

* Source: Brandon-Hall.com

The U.S. e-learning industry is highly fragmented, with 1,500-2,000 firms currently competing

♦ There is no single large U.S. e-learning market; the market is actually comprised of numerous smaller niches.

♦ The vast majority of firms are custom content players whose competitive advantage is domain expertise in a specific niche.

♦ The market sustains so many firms because many of these custom content firms are essentially “one man shows”, with relationship owners who lack the cash flow and/or motivation to expand.

Summary

There is a long tail of niche players in the U.S. market that Tecnonexo will initially be competing with

Fir

m R

even

ues

1,500 to 2,000 e-learning companies in the U.S.

Biggest firms fall into three categories

1. LMS companies

2. Off the shelf content creators

3. Consultative integrators

Vast majority of firms are custom content niche players whose competitive advantage

is domain expertise

If Tecnonexo wants to be competitive in the U.S. market it will have to develop expertise in a niche to compete with small firms – once this is established, it can build its brand, reputation and

capabilities to eventually become a consultative integrator.

Summary

III. Suggested markets to explore

�Mexican e-learning industry outlook

�Opportunities in the Mexican market

�Hispanic market in the U.S.

�Why Mexico will be a logical first step to further development

�Non-corporate market

Mexico and the Mexican Market for Tecnonexo

� Population

106 Million People

� Gross Domestic Product

743.07 BN USD (Adjusted)

� Internet Users

28 Million internet users

� Number of Personal Computers

13 Million

� Number of Business PC’s

5.1 Million (60% of them with internet access)

� Educational Expense as

percent of GDP

7.07%

� Unemployment Rate

4.02%

Tijuana

Guadalajara

Mexico D.F.

Cancun

Monterrey

Hermosillo

Puebla

Ciudad Juarez

Mexican Opportunity

Key cities to consider

Source: INEGI

The Mexican e-learning market is approximately $1.4 B, and consists of mostly government contracted work*

♦ Value and growth of the market– Estimated at $1 billion (USD) in 2004 and forecasted to increase 40% by 2006

– Strong growth predicted for the coming years, due in part to the current administrations E-Mexico initiative and increased corporate learning investment by multinationals, larger Mexican companies and financial institutions

– Mexican Small & medium enterprises (SME’s) will increasingly demand E-Learning solutions and custom content

♦ E-Mexico government project– The national E-Mexico project is aimed at encouraging the use of information technology in Mexico –

one specific objective is to get 98% of the Mexican population on-line by 2025

– One section of the project concerns e-learning

– Currently, there are some 28 million Web users, that is, nearly 27% of the total population

– This increase in Internet use in Mexico points to growing demand for e-learning technology

♦ Business opportunities– Explore opportunities with larger Mexican companies and with transnational companies in Mexico by

cold calling or leveraging Argentina and Ecuador’s successful ventures through HR manager’s recommendations

– Position Tecnonexo as idle partner for booming SME’s. Franchising companies a great opportunity.

– Keep abreast of calls for tenders from the Mexican government to find out about new projects under the E-Mexico project – calls for tenders can be seen at www.compranet.gob.mx

– Explore potential synergies with ILCE (a multilateral organization with presence in LATAM and HQ in Mexico) – they provide most of the content for the Mexican Government

Mexican Opportunity

*Source: Government of Quebec; http://www.mdeie.gouv.qc.ca/page/web/portail/en/exportation/nav/market_sheets.html?page=details.jsp&iddoc=55765

Corporate opportunities in Mexico

♦ What to expect– Still an underserved market but increasing competition from foreign competitors (CISCO, TATA,

and smaller cross-border e-Learning companies from the U.S.)

– Mexicans are not very used to training for their benefit, but they will engage in training required by their companies

– Many Universities (UNAM, IMAC, ITESM, UAdeG, etc.) are engaging in content creation and delivery methods for companies

– Mexican government a very big player (E-Mexico, PEMEX, CFE, CNA)

– SME’s are great targets, however will have to educate them in the benefits of e-Learning and presenting content in an intuitive, pedagogical way

♦ If Tecnonexo were to enter the Mexican Market– Building a physical presence in the country will be important because high physical interaction is

expected during the sales process

– There is a hierarchical decision making process in large companies so work your way up through the ranks

– Active participation in chambers, organizations, symposiums and conferences highly recommended to network, show commitment to the market and gain visibility

– Mexico is a franchising leader in the region, and they are growing very fast. Use solution selling: These companies represent an interesting opportunity to provide E-training

– Crucial for Tecnonexo to engage in direct relationship with the people providing the content. Content is more valuable than technology for Mexican companies

Mexican Opportunity

Mexico – Some of the “Big Boys”

Aeromexico, AeromarAirlineMEX, USA, UE10,000Aeromexico

Ticketmaster, OCCESAEntertainmentMEX, USA, ARG, BRAN.D.CIE

Mexicana, HotelesPosadas, Caesar Park

LeisureMEX, USA, ARG, BRAN.D.Grupo Posadas

Comercial Mexicana, Sumesa, COSTCO

RetailMEX35,837Comercial Mexicana

Elektra, TV Azteca, BancoAzteca, Iusacell, Unefon

Retail/Congl.MEX, USA50,871Grupo Salinas

Bimbo, MarinelaFoodMEX, USA, ESP, ARG81,072Grupo BIMBO

Grupo Minero, FerrosurMiningMEX, PER19,143Grupo Mexico

ITAM, Palacio de HierroConglomerateMEX39,856Grupo BAL

Alpek, Sigma, OnexaConglomerateMEX, USA, AmCentral38,315Grupo ALFA

Banamex/CitibankBankingMEX59,000BANAMEX

BancomerBankingMEX60,000BBVA-Bancomer

Coca Cola, Jugos Del ValleBeveragesUSA, LATAM90,731FEMSA

Construrama, PatrimonioHoy

CementUSA, LATAM, EurAsia51,771CEMEX

ElectricidadElectricityMEX79,969CFE

Telmex, Telcel, Sanborns, Sears, Cti, Banco Inbursa

ConglomerateMEX, USA, LATAM160,000Grupo CARSO

Pemex Gas, RefinacionOilMEX145,427PEMEX

TrademarksIndustryCountriesEmployeesName

Mexican Opportunity

Roadmap to enter the Mexican market

♦ Option A: Office of Representation with No Income (ORNI)

– This is the equivalent to a sales agency. Any transaction will be done between the Mexican company and Tecnonexo Argentina. The Mexican company can deduct the payment under Rule 2.4.31 of the Federal Tax Miscellaneous

– This will minimize the people that are necessary in Mexico (Accounting, Bookkeeping) while allowing Mexican companies to physically perceive Tecnonexo’s presence in the country

– Certain formalities such as registry in the National Registry of Foreign Investments and filings before the tax authorities are required

♦ Pros: – Lower cost alternative to incorporating. Will allow for an initial exploration, yet more formal

incursion into the Mexican market. Less paperwork than to have everything sourced from ARG. No employee liability in Mexico, no hassles with social security (labor laws are harsh)

♦ Cons: – Some companies might prefer dealing with a Mexican company. Many government contracts

might not be open to bidding by foreign companies. Many day to day items are easier to deal with a Mexican company (local employees payroll, lease of equipment)

Mexican Roadmap


♦ Option B: Incorporation of a Mexican subsidiary

– Creation of a legal entity in Mexico, either a S.A. de C.V. or a S. de R.L. de C.V.

– If the Mexican market is profitable for Tecnonexo, eventually it will have to incorporate.

– The whole process can take more than 40 days from start to finish. It requires a fair amount of formalities and consequences that need to be further discussed with a Mexican lawyer

– It only makes sense to incorporate in either Mexico City or Monterrey, because of the concentration of company headquarters and ease of travel to other parts of the country

♦ Pros: – More solid structure creates positive signaling to Mexican companies. Transfer pricing between

Mexico and Argentina to take advantage of tax benefits. Easier to obtain credit, leases, and to hire more than a few employees. More international positioning for Tecnonexo

♦ Cons: – Incorporation is more expensive, takes more time and demands administrative staff

Mexican Roadmap


♦ Option C: Partnership with a Mexican company

– Create a joint venture agreement between Tecnonexo and a Mexican company

– The characteristics of the partner company must be a company that deals with corporate training and that has not explored the E-Learning solution, however is aware of its potential and recognizes Tecnonexo as a leader in Latin America

– This will allow Tecnonexo to leverage their brand name and value proposition, without competing with the Mexican company’s offering, thus aligning incentives, and not resulting in another partnership fiasco for Tecnonexo.

– It will be hard to find a decent sized company with these characteristics, and especially hard to find this without deeper knowledge of the Mexican Market.

♦ Pros: – Very low cost solution to begin exploring the Mexican Market. Tecnonexo’s leadership in LatAm can

be better leveraged with a Mexican company than with an American company

♦ Cons: – Hard to find a company that fits the profile. It can take a while before they truly understand

Tecnonexo’s value proposition. Tecnonexo can not capture the Whole PIE that they could alone.

Mexican Roadmap

How much will it cost Tecnonexo? – Some rough numbers

Incorporation of a Company (SA de CV or S de RL de CV):

Legal Fees/Permits $ 10,000 USD :

Employees:Directors:

Argentinean Salary + $ 36,000 USD

Ex-Pat Bonus $ 30,000 USD

Staff:

Administrative $ 8,000 USD

Salespeople (x2) $ 24,000 USD plus comm.

Office:B+ Office space $ 24,000 USD

Polanco/Lomas/Insurgentes

Office Costs:

Telephone $ 5,000 USD

ADSL Internet $ 1,000 USD

Furniture $10,000 USD

Supplies $10,000 USD

Company Car $ 8,000 USD

Trade Organizations

AMIPCI, AMITI, etc. $ 300 USD

-----------------------------------------------------------------------------------

TOTAL (Per Year in USD) $168,000 USD

Mexican Roadmap

Incorporation of an ORNI:

Legal Fees/Permits $ 5,000 USD :

Employees:Directors:

Argentinean Salary + $ 36,000 USD

Ex-Pat Bonus $ 30,000 USD

Staff:

Manpower Outsource $ 10,000 USD

Salespeople (x2) $ 24,000 USD plus comm.

Office:B+ Office space $ 24,000 USD

Polanco/Lomas/Insurgentes

Office Costs:

Telephone $ 5,000 USD

ADSL Internet $ 1,000 USD

Furniture $10,000 USD

Supplies $10,000 USD

Company Car $ 8,000 USD

Trade Organizations

AMIPCI, AMITI, etc. $ 300 USD

-----------------------------------------------------------------------------------

TOTAL (Per Year in USD) $165,000 USD

Mexico sales forecast and assumptionsSales Forecast 2007 2008 2009 2010 2011

Transnational CompaniesRevenues 50,000 250,000 500,000 700,000 800,000

Clients 1 5 8 10 11

Large Mexican CompaniesRevenues 45,000 350,000 450,000 550,000 650,000

Clients 3 8 10 12 14

SME Mexican CompaniesRevenues 200,000 320,000 550,000 750,000 1,100,000

Clients 10 15 25 35 50

Mexican Government (All areas)Revenues 80,000 300,000 480,000 700,000 800,000

Clients 2 6 8 10 10

Mexican NGOsRevenues 10,000 20,000 30,000 45,000 60,000

Clients 1 2 2 3 3

Multilateral Organizations in MexicoRevenues 40,000 80,000 150,000 180,000 200,000

Clients 1 2 3 3 4

SchoolsRevenues 0 10,000 30,000 80,000 150,000

Clients 0 1 3 8 15

TOTAL REVENUE 425,000 1,330,000 2,190,000 3,005,000 3,760,000

TOTAL CLIENTS 18 39 59 81 107

Assumptions to Consider

♦ Experts: e-Learning in Mexico will grow very rapidly for next 3 years, specially for larger Mexican companies and SME’s

♦ Transnational companies are educated about e-Learning opportunities, it will take a lot more to sell. Forecast underestimates corporate premium

♦ Franchises (prime e-Learning clients) will grow 17%, have been steadily growing

♦ Government is harder to get in, but they will pay a premium and quickly assign a hefty project quota. 2006 – 2012 cycle.

♦ Local NGO’s are not big players, and mostly corporate Spin-offs

♦ Schools have great potential, yet small budgets

Mexican Roadmap

The Hispanic market in the U.S.

♦ In the U.S., there are nearly 41 Million foreign born immigrants and over 75% from them come from Latin America & the Caribbean.

♦ 74% of Hispanics connect to the Internet every day and 78% access the Web from home.

♦ Hispanics are currently spending 55% of their online time on Spanish sites.

♦ Hispanics purchasing power in the U.S. surpassed the $800 BN frontier.

Unauthorized Immigrants

11.1 Million (30%)

Refugees2.6 Million (7%)

Temporary Legal Residents1.3 Million (3%) Legal

Permanent Residents

10.5 Million (28%)

Naturalized Citizens

11.5 Million (31%)

♦ Marketers have focused on Hispanics acculturating vs. assimilating. Now: Retro-Acculturation.

♦ U.S. society wants Hispanics to assimilate: Create a diverse, yet national culture.

♦ Hispanics want to preserve their roots: They usually live in Ethnic Enclaves (Ghettos), holding on to their language and customs.

♦ The Result: In many cities throughout the U.S., Spanish dominant consumers are able to live and work without having to learn English or give up their culture and traditions. It is better if they are trained in English, yet they retain more if they are taught in Spanish.

Source: Transpanish

U.S. Hispanic Market

46% of Hispanics are Spanish-dominant speakers, 23% are bilingual, 63% speak Spanish at home

Potential sources of opportunity in the U.S.

♦ Hispanic diversity in the workplace (Develop a product with Tecnonexo’s expertise)

– Educate the customer on the differences that exist within their Hispanic employees, positioning Tecnonexo as the one company that understands different cultural/ethnic backgrounds labeled under a broader “Hispanic” category

– Similar in offering to Global Training (www.global-training.com), which teaches about diversity in the workplace, yet dedicated exclusively to understanding Hispanics

– Educate about diversity within the Hispanic diversity. There are at least 14 distinct groups that make up the Hispanic/Latino American population, whose members trace their lineage to North America (Mexico and the Caribbean), Europe (Spain), and South America, as well as from the isthmus of Central America

♦ Minority (Hispanic) supplier training programs– Provide e-learning solutions for large corporations who have a minority supplier business program,

which includes Hispanic businesses

– It is large companies’ best interest that their suppliers are well trained and understand the policies of the client company. To ensure this, some content in Spanish and a thorough understanding of the Hispanic/Latino population in the U.S. might be desired

– Potential partnerships include U.S. Hispanic Chamber of Commerce, National Minority Supplier Development Council, among others

– Areas of opportunity are Quality Assurance, Operations, Client Company Culture


Mexico can be a logical first step to entering the U.S.

♦ Mexico is the Latin American country with the largest number of domestic transnational companies

♦ Competitiveness in Mexico is pursued very aggressively by multinational companies

♦ Mexico has the largest number of American companies (2600) and the largest FDI from the U.S., which means there is a great potential of cross selling to U.S. counterparts

♦ Tecnonexo enjoys good reputation in the Mexican market because of media coverage and self published e-learning magazine

♦ Mexico is the largest economy in the region (followed closely by Brazil)

♦ There is more assimilation of U.S. culture in Mexico than in any other country in Latin America

♦ The Hispanic market in the U.S. is comprised of 66% Mexican origin immigrants, therefore a presence in Mexico can provide some leverage when pitching to the U.S. about understanding the Mexican/Hispanic market

♦ There is a better competitive landscape in Mexico, therefore the experience gained in that market will be useful when entering the U.S. market in full force.


Tecnonexo also works with non-corporate organizations, and continues to grow in this market since its entry in 2006

Current Non-corporate ClientsCurrent Non-corporate Clients

� UNDP (Argentina)

� World Bank (US)

� Pan American Health Organization (US)

� Fundación del Saber (Panama)

� AMIA (Argentina)

� Fundación CDI (Argentina)

� ASAE (Argentina)

� World Health Organization

� UNDP (Argentina)

� World Bank (US)

� Pan American Health Organization (US)

� Fundación del Saber (Panama)

� AMIA (Argentina)

� Fundación CDI (Argentina)

� ASAE (Argentina)

� World Health Organization

Several new projects and clients have been referred to us as a result of our success with PAHO, our first NGO client in 2006; leading to one of our largest current projects, The WHO

PAHO

Staff Development Unit

PAHO

Staff Development Unit

Unidad de Género,

Grupo Étnico y Salud

Unidad de Género,

Grupo Étnico y SaludLegal AffairsLegal Affairs Knowledge

Operation UnitKnowledge

Operation Unit

World HealthOrganizationWorld HealthOrganization

Non-Corporate Market

Characteristics of the non-corporate market that make it attractive

♦ There is a significant opportunity to leverage past successes in the non-corporate market in the U.S. because of the highly networked nature of the industry

– skjd

♦ The government bid process is highly consolidated such that once Tecnonexogets approval as a preferred service provider they will be invited to bid on a wide array of projects

– Key U.S. government vendor approval organizations for e-learning (www.usalearning.gov)

• Office of Personnel Management (OPM) – Training Management Assistance (TMA) – Go Learn (www.opm.gov/hrd/tma)

• Foreign Service Institute (FSI) – (http://www.state.gov/m/fsi/)

• Fastrac (http://www.wbtrain.com)

• National Technical Information Service (NTIS) www.ntis.gov

♦ The partnership model still may hold promise in this industry because of the vendor selection process

– If Tecnonexo cannot get on the list of government approved vendors it may be possible to become a subcontractor for firms that are and still maintain brand visibility and profit margin

• Advanced Distributed Learning (ADL) – (www.adlnet.gov)

Non-Corporate Market

IV. U.S. corporate e-learning programs

�Structure of e-learning deployments

�Foreign Language Opportunity

�Vendor Selection

�Technical Superiority

�Evaluation Methodology

Interviews conducted with decision makers in a variety of industries

♦ Boeing: Jon Schneider, Worldwide Learning Training and Development Leader

♦ Bank of America: George Selix, Service Delivery Executive for Global Human

Resources Technology

♦ Carrier (a United Technology Company): Patrick Preux, Vice President of Human Resources and Brenda Keaton, Vice President of Leadership and Development

♦ General Motors: Donnee Ramelli, CEO of GM University

♦ Intel: Coco Yackley, Human Resource Chief Information Officer

♦ Hawaiian TelCom: Tom Pipal, Director of Corporate Training

♦ Tesoro: Bill Thomson, Manager of Learning Solutions

♦ Dell Computer: Paul McKinnon, Sr. Vice President of Human Resources

♦ Accenture: Dan Bielenberg, Accenture Capability Development Strategy

♦ e-learning Consultant: Ann Marion

♦ W.R. Grace: Craig Walloch, Manager of Technology Transfer and Training

Structure of e-learning deployments for U.S. companies is maturing

As the e-learning market matures there will be more unified technology platforms and a more consolidated vendor selection process increasing

the importance of the corporate training department

General Training

(Compliance/Regulatory, Business ethics, New Employee Orientation)

Business Unit #1

♦ New product training

♦ Technical skills

Business Unit #2

♦Supervisory skills

♦ Health and safety

Business Unit #3

♦ Technical skills

♦ Sales training

♦ Customer training

Structure

Best opportunity, but most stringent

RFP process

Impossible to compete

Less stringent RFP

process

The maturation of U.S. e-learning industry and what it means to Tecnonexo

♦ Major companies are investing in one Learning Management System that can handle worldwide e-learning needs

– The ability to easily integrate with these systems will be imperative

– Tecnonexo needs to keep up-to-date on how to integrate with U.S. LMS systems (ie be SCORM and AICC compliant)

♦ Purchasing process will become more defined forcing business units to select vendors dictated by the corporate training department

– Corporate training department will be making the majority of vendor selections for business units

– Tecnonexo should target a niche in general training where it can create contacts within corporate training departments

– Tecnonexo can use this foot in the door to sell into individual business units and other areas of the business

♦ These trends are just starting to take effect and it is important to note that there is still a long way to go (5+ years) before they become a reality

– Still it is important for Tecnonexo to position itself correctly from the start while still maintaining the entrepreneurial spirit kept them agile and flexible in the short term

– LMS is becoming a commodity in the U.S. and so therefore not worth wasting resources on for the U.S. market – a partnership with a major LMS provider might be a better option

Structure

U.S. e-learning opportunities in foreign languages are limited

♦ Individual business units make the majority of the custom content purchases and see little need to purchase e-learning in a foreign language

– There is no market for foreign language specific training in U.S. based business units

– Tecnonexo should approach the foreign business units directly (i.e. Mexico)

♦ Training in foreign language purchased by U.S. based firms is generally a mere translation of a module that was developed in English

– The only value in a U.S. based firm hiring an e-learning company that specializes in foreign language is for translation (low value)

• The exception to this would be if Tecnonexo could provide language-diversity needs for any language so that firms that need things in multiple languages could have one service provider addressing all of their language-diversity needs (Spanish, Portuguese, Chinese, Vietnamese, etc.)

– Tecnonexo should avoid selling itself as a foreign language expert but might consider doing some translation as a way to get a foot in the door (entry tactic – not long-term strategy)

Foreign Language

Technical terminology ESL holds promise

Source: U.S. Census Data, 2004

♦ e-learning is becoming more widely adopted and the business world is becoming more global

– The need for effective cultural training among multinationals is increasing

– Technical ESL to train employees on technical terms (generally English) that are used globally becoming important (especially for companies that manufacture globally)

♦ Cultural training– Content provided by the company and Tecnonexo to train employees on different cultures and

more effective interaction techniques

♦ Technical ESL– The content would come from the client but Tecnonexo would have to hire technical/language

experts, which will increase up-front costs

– Some of content could be reused for future projects in that same industry

– Secure a relationship with reputable, credible sources of technical expertise where a projects might take place and hire once the project is sold

Foreign Language

Experts agree that learning English increases productivity or at least the perception of worker ability

♦ Kossoudji (JLE, 1988):– Employers perceive English language ability as positive signal of worker ability;

reduces the “general uncertainty about productivity” and provides “extra signal that, by overcoming the language barrier, [English speakers] have higher levels of ability and drive than the average person with the same measured characteristics.”

♦ Carnevale et.al.:– Economists “assume that English ability is a skill that makes a worker more

productive and, hence, brings greater rewards in the U.S. labor market”– “…after having achieved a given level of understanding of the spoken word,

then improved skills in speaking, reading, and writing do matter to employers”and can lead to “subsequent incremental increases in productivity”

♦ Mason: – Mexican-Americans NOT fluent in Spanish “receive an annual premium of 13%,

more than $1,200 per year”– Is English acquisition attractive to employers beyond workplace proficiency –

economic AND ethno-social assimilation?

Foreign Language

Source: Kossoudjj, Carnevale, Mason

Vendors are selected because of expertise and technical execution


♦ When companies outsource their content development to a third party provider, they must be convinced that:

– Integration will be smooth (technical compatibility and execution)

– Third party has expertise not possessed in-house

♦ Top 5 vendor selection criteria (order shifts in importance depending on project)– Subject Matter Expertise: industry vertical, business function

– Quality: references, demos, instructionally effective, adult education, edutainment

– Accuracy: no mistakes, professional looking

– Easy to work with: frequent reviews, good use of in-house experts, professional interaction

– On-time delivery

♦ Flawless technical execution in the U.S. is a minimum expectation– Server problems, crashes, bugs, etc. are not tolerated and will immediately eliminate you from

any bid process or preferred vendor list

– Technonexo needs to invest in the proper technical infrastructure and quality assurance if they want to enter the U.S. market as anything other than a low cost provider

Vendor Selection

Sourcing gets more sophisticated as companies get larger

Large Firms

• Form a partnership with one system integrator that in turn sources to other providers when the request is beyond capabilities

• Few e-learning companies even have this capability

Medium/Large Firms

• Issue request for proposal periodically and create a short list of preferred vendors for use on different projects

• Sophisticated LMS

• Rigorous selection process

Small Firms

• Shop vendors for each individual project with very little coordination of entire e-learning solution

• More price sensitive

• Less sophisticated selection process

The greatest opportunity will be with the larger firms but Tecnonexo does not currently have the capabilities necessary to compete so it will have to start out with small to medium firms and move

up the value chain

Vendor Selection

Companies prefer to have a few e-learning vendors because of steep learning curves and high switching costs

♦ More companies are looking for e-learning “partners” with the capability to implement comprehensive solutions that and help shape e-learning strategy

– Building a variety of skills in different areas will be important

♦ Because e-learning vendor switching costs are very high, companies tend toconduct thorough vendor evaluations, complete with on-site visits, reference checks, and reviews of sample content

– RFPs typically used if high-volume content is needed

– May also retain a few (2 or 3) trusted contractors for smaller, one-off learning projects

– Big companies and big projects will have long difficult sales cycles

♦ Because of the high perceived risk in selecting an e-learning partner you must come off as a reliable, trusted advisor

– Beware of unhappy customers because it is difficult to overcome a poor reputation

Vendor Selection

It’s a small world: Industry groups and organizations

♦ E-learning professionals from the largest companies are part of a small highly networked group that share information making referral and reputation important

– Few RPP’s, cold calls difficult

– Generally trusted vendors started out by doing a small piece of work very well

– Imperative to not ruin your reputation before it is built

♦ ASTD – American Society of Training and Development (www.astd.org)

– ASTD Benchmarking Forum (http://www.astd.org/astd/Research/benchmarking_forum)

♦ Chief Learning Officer (www.cloevents.com or www.clomedia.com)

♦ Elliott Masie – Industry thought leader (www.masie.com)

♦ ISPI – International Society for Performance Improvement (www.ispi.org)

♦ E-learning Guild (www.elearningguild.com)

♦ Corporate University Exchange (www.corpu.com)

♦ ACM – Association for Computing Machinery (www.acm.org)

– eLearn magazine (www.elearnmag.org)

Vendor Selection

Organizations Identified by Interviewees

E-learning currently most suited for lower order cognitive skills on Blooms Taxonomy such as knowledge transfer and basic comprehension

Synthesis &

Evaluation

Application &

Analysis

Knowledge &

Comprehension

Trend: As e-learning becomes more interactive and provides the ability to simulate complex work scenarios it will start to be used more and more for higher order skills training

To recall and demonstrate understanding of facts, terms, basic

concepts and ideas

To solve problems in new situations by applying previously acquired

knowledge

To make judgments, defend opinions, and combine information in different ways to solve problems

Learning ObjectivesBlooms Taxonomy

Technical Superiority

Creating technical superiority to deliver more e-learning training for more complex skills could be a competitive advantage

♦ Enabled by advancements in learning technology – Increased bandwidth

– More sophisticated simulations

– Advancements in gaming technology including more sophisticated logic trees, graphics and storytelling

– “Smart” programs that identify how each individual learner learns best and adapts over time

♦ These advancements are being used more and more to teach higher order cognitive skills

– Less complex training is becoming commoditized and is increasingly sent offshore to India

– Tecnonexo could develop a unique technical ability as a potential niche and differentiator

Technical Superiority

How corporate training is evaluated: Kirkpatrick Scale

What they thought and felt

about the training

Results

Behavior

Reaction of the Student

Learning

The resulting increase in knowledge or capability

Extent of behavior and capability improvement & implementation/application

The effects on the business or environment resulting from the trainee's

performance

Developing methodologies to help clients measure behavioral change and attributable results of e-learning programs can solve a customer pain, increase sales and become a competitive advantage

Impact assessment via the management systems already in place

Post training surveys or questionnaires

Observation and feedback from the manager 90 days later to assess change in behavior

Evaluation tools and methodsDescription and characteristics

Assessment tests before and after the training

Relevance and Practicality

Quick, easy to obtain but time consuming to analyze

Relatively simple to set up for clear cut quantifiable skills, more difficult for complex learning

Behavioral change requires cooperation of line managers and can be time consuming

Very difficult to set up a way to directly attribute to training but if possible very effective

Evaluation Methodology

Creating a sophisticated proprietary methodology for measuring results of e-learning deployments could be a competitive advantage

♦ e-learning most easily justified in budgets when impact can be quantified– Find a niche with measurable business processes (ex. Sales)

♦ Companies historically have viewed training as an employee “benefit”– Need to convince customers that training is an “investment”

♦ Moving down the Kirkpatrick scale to help your customers start measuring behavior and results could be a potential niche

Evaluation Methodology

V. Tecnonexo’s Competitive Advantage

�SWOT analysis

�Lessons learned from U.S. market entry

U.S.A.

♦ Strengths

– Exchange-rate driven cost advantage

♦ Weaknesses

– No reputation or brand name

– Lack of subject matter expertise

– Technological infrastructure, both internal and client-facing

– No in-person sales presence; limited U.S. sales experience

– Stigma of offshore outsourcing as low-cost (as opposed to high perceived quality)

♦ Opportunities

– End-to-end solutions for smaller companies adopting e-learning for the 1st time

– Companies previously serviced through partner

– Trusted provider of custom content to large companies with established e-learning

♦ Threats

– Exchange rates change, evaporating cost advantage

SWOT

Latin America

♦ Strengths

– Market leader position; reputation and brand name

– Experience in various niches – many more implementations than competition

– Ability to act as integrator, managing subcontractors and offering an end-to-end solution

– Scale and expertise to handle large projects (e.g. Argentine IRS)

♦ Weaknesses

– Technological infrastructure, both internal and client-facing

♦ Opportunities

– Mexico

– NGOs

♦ Threats

– Large foreign firm (e.g. Tata) to seriously make a play for the Latin American market

– Disaster affects servers with no backup

SWOT

SWOT Takeaways

♦ Currently, Tecnonexo has a vastly stronger competitive position in LatAm than in the U.S.

♦ Without differentiating expertise in a particular industry topic or technical aspect, Tecnonexo’s primary strength in the U.S. is its cost advantage

♦ In order to overcome the company’s current competitive disadvantages and establish a foothold in the U.S. market, Tecnonexo should:

– Initially focus on small to mid-size U.S. companies who are price-sensitive and currently not offering e-learning

– Leverage relationships with LatAm clients who have presence in the U.S. to make contacts, become included in searches

– Approach U.S. clients formerly served through partners, as Tecnonexo will have some initial credibility when describing firm capabilities and approach

– Use Mexico as a gateway to the U.S. market

SWOT

Growth in the U.S. has been stifled by distance, a lack of a dedicated sales force, and poor partner relationships

DistanceDistance�Substantial physical distance between Argentina and U.S.�No local presence; difficulty in building consultative client relationships�Cultural and language differences

Sales ForceSales Force�No dedicated salespeople “on the ground” in U.S.�Sales force must understand both Latin and U.S. culture

Partnership focus

Partnership focus

�AXG regarded by partners as a low-cost, last-minute outsourcing option�Low visibility, low collaboration, little control�Prevention of building consultative client relationships

Key Issues: Barriers to execution:

Partnership Model

To move to a higher point in the industry value chain, Tecnonexo must own its client relationships

♦ Discontinue partnership model in order to “own” relationships– Consultative, high perceived quality approach allows for higher fees

– “Trusted partner” long-term client relationships represent recurring revenue streams

– Cross-sell potential within client organizations

♦ Target acquisition of U.S. firm with strong “front office”, while sourcing technical work to Argentina to capitalize on cost savings

– Achieve efficiencies by increasing scale, spreading fixed costs across larger client base and utilizing capacity of Argentine back office

– Acquiring U.S. and European-based sales and relationship management functions while maintaining offshore back offices is the model being used by Indian companies such as Tata and NIIT

♦ Build a strong sales force from scratch that is on the ground and able to build the necessary consultative client relationships

SolutionSolution

Partnership Model

VI. Findings/Recommendations

There are many things to consider when entering the U.S. market

♦ There is no single large U.S. e-learning market; the market is actually comprised of numerous smaller niches

♦ The vast majority of firms are custom content players whose competitive advantage is domain expertise in a specific niche

♦ The most lucrative opportunities are with large companies in general training but less sophisticated 1st customers might be smaller companies or specialized training for a business units

♦ It is a small world of e-learning experts which lowers the cost of sales but makes reputation very important

♦ U.S. market characterized by stricter technical standards and high touch consultative relationships

♦ Most U.S. firms have their own LMS and competition is fierce in this space making it more prudent to focus on custom content

♦ Diversity training issues are on the horizon for major U.S. firms but training in foreign languages is limited

♦ Using Mexico as a stepping stone would make U.S. entry easier

♦ In addition to industry vertical and business process niches, capability and methodology expertise can be a competitive advantage

Tecnonexo must improve its technical capabilities and consulting skills to compete effectively in U.S. on anything other than low cost

♦ Phase I: Continue growth with Mexico expansion while developing technical and consulting capabilities (0-18 months)

– Use Mexico as a stepping stone to U.S.

• Large opportunity, close ties to U.S. market, lower technical expectations, Tecnonexocurrently well positioned

– Start with small U.S. businesses where Tecnonexo can be a complete solution provider

• More price sensitive, less influence in e-learning community, more in line with Tecnonexo’score competencies

♦ Phase II: Enter the U.S. by targeting a niche and expanding (6-24 months)

– Focus on a niche where Tecnonexo can compete with boutique players

– Expand to adjacent industry verticals or training functions eventually becoming a consultative integrator

Tecnonexo needs to start off as a niche player with domain expertise and slowly build the skills, scale and reputation to be a consultative integrator

Fir

m R

even

ues

1,500 to 2,000 e-learning companies in the U.S.

Biggest firms fall into three categories

1. LMS companies

2. Off the shelf content creators

3. Consultative integrators

Vast majority of firms are custom content niche players whose

competitive advantage is domain expertise

Tecnonexo can’t compete with current U.S. based consultative integrators because they have higher perceived quality and does not want to compete with foreign consultative integrators

because that is all about price

Business process/function and industry matrix

Penetrate and propagate strategy to move into adjacent markets (example: Plateau started with Red Cross and Navy and now is a major industry player)*

Tech

nolo

gy

Retai

l

Man

ufac

turin

g

Health

care

Educa

tion

Fina

ncia

l /

Insu

ranc

e Executive Development

Mgt./Supervisory

Training


IT/Systems Training

Desktop Application

Training

Customer Service

Training

Sales Training

Mandatory/ Compliance

Training

Industry-Specific

Training

3741466983106

3741466983106

4349548197124

50576395113145

616876114137175

626977116139177

657381122146186

707988132158202

97109121182218278

Vendor Positioning in E-learning Segments

Source: “Market overview 2003: Corporate eLearning” - Forrester Research (2003), Booz Allen Hamilton

�Skilllsoft�NIIT�Netg�Global Knowledge

�Interwise�WebEx�OneTouch

�Deloitte Consulting�Accenture Learning

Services

TechnologyContent

�EDS�IBM Learning

�GP e-Learning�AXG (U.S.)

�THINQ�Plateau

�SumTotal�Saba�Intellinex�KnowledgePlanet

�WBT Systems�Logic Bay�OUtStart�Vuepoint�AXG (LatAm)

Custom Content Developers (CCC)

�Digitalize content provided by customers using in-house development methodologies to optimize learning experience

Content Sellers

�Create and sell their own content

Infrastructure Providers

�Design, implement and support LMS systems and other software that manages and administers the training content

Service Providers

�Consult clients in the strategy, planning, and implementation of e-learning services

Tecnonexo focused on custom content development and technology infrastructure in but in the U.S. services will become more important

Potential specialized content niches identified for further evaluation

♦ Technical ESL– Technical ESL to train employees on technical terms (generally English) that are used globally

becoming important (especially for companies that manufacture globally)

♦ Mandatory/compliance training for technology, financial services, or healthcare industries

– This is the most attractive niche in the U.S. that would make it a good place to start from a market perspective

♦ Non-corporate market– Governmental, non-governmental and non-profit organizations that need custom content e-

learning solutions

♦ Cultural training or localization of content – Position Tecnonexo to capitalize on an emerging trend as the one company that understands

different cultural/ethnic backgrounds

♦ Multiple language capability – Address firms that need training in multiple languages and want one service provider addressing

all of their language-diversity needs

♦ Minority supplier training programs/Hispanic owned businesses– U.S. based businesses that are predominantly made up of Hispanics that need e-learning

solutions

Potential capability/methodology niches identified for further evaluation

♦ Technology leader: simulation, storytelling, gaming, etc (example Wisdom Tools)– Creating technical superiority to deliver more e-learning training for more complex skills could be

a competitive advantage

♦ Advanced behavior and results measurement methodology – Creating a sophisticated proprietary methodology for measuring results of e-learning

deployments could be a competitive advantage

Implementation tactics

♦ Different sales force requirements in U.S.– Must have resident sales force that has in-depth knowledge of local e-learning industry and Tecnonexo’s

capabilities in order to develop relationships through high touch consulting services

♦ Leverage current relationships– Get introductions from current LatAm multinational customers to sell work in the U.S.

– Approach U.S. clients formerly served through partners, as Tecnonexo will have some initial credibility when describing firm capabilities and approach

♦ Raise visibility through thought leadership– Publish white papers, speak at conferences, provide interview to media

♦ Penetrate and propagate– Start with general training (i.e. compliance) at the corporate level and move to more specialized training at the

business unit level later

– Start off doing simple translation to build the relationship

♦ It is a small world– Leverage initial successes into adjacent industries

– Use the small, tight-knit universe of e-learning professionals to get referrals/recommendations

– Act as a reliable, trusted advisor rather than simply a vendor

• Talk about successes and thought leadership in Latin America

♦ Mexico’s unique challenges– Set up a local office to show commitment to region and provide necessary service, be aware of very hierarchical

structure, use chambers to network and build credibility

– Explore potential synergies with ILCE (a multilateral organization with presence in LATAM and HQ in Mexico) –they provide most of the content for the Mexican Government

– Target transnational's where relationships can be leveraged into the U.S.

VII. Appendix

�ESL training in the U.S.

ESL courses through content partner

• Learning to speak English well is a great value added proposition for the Hispanic population, low educated, more assimilation which yields higher income.

• Partner with a prestigeous content company and create an ESL E-learning Platform (Berlitz, Harmon Hall)

•No “nationwide” ESL programming!

Program Types and Venues:• State- and locally-run programs (fed and local public funds)

• Nonprofit-run programs (public and private funds)

• Workplace/vocational ESL (VESL) (public and private funds)

• Community centers, nonprofits, local clubs, community colleges, prisons, offices, workplaces, etc.

Insufficient Supply, some examples:

� New York City—Most ESL programs keep waiting lists because of demand, but use lotteries. Learners must wait several years.

�Phoenix, Arizona—State’s largest ESL provider has a waiting list of over 1,000 people with wait up to 18 months for the highest demand evening classes.

�Boston, Massachusetts - At least 16,725 adults on ESL waiting lists; wait times as long as three years for some programs.

5.8$22,230Speaks English Well

Only Speaks English/Speaks Well: 196%

Only Speaks English/Not Well: 236%

Only Speaks English/No English: 365%

Wage Differentials:

6.3—All

13.1$8,923Does not Speak English

8.4$13,815Does not Speak English Well

4.5$32,695Speaks English Very Well

5.1$32,560Only Speaks English

Unemployment ratesMean Annual EarningsEnglish-Speaking Proficiency

English Acquisition, Earnings, and Employment: Foreign-Born 20-64 Year Olds in the U.S.

Reasons for Participating in ESL Programs

0 10 20 30 40 50 60 70 80 90 100

Improve self esteem

Make daily life easier

Attend college or vocational school

Get raise or promotion

Get new job with a different

employer

Get U.S. citizenship

Help children with school work

Percentage of Respondents

USDA, National Center for Education Statistics, Adult Education, Survey 2005 National Household Education Surveys Program

Education of immigrants and education of source country’s population

6

8

10

12

14

16

18

1 3 5 7 9 11 13

Education in source country (years)

Ed

uca

tion

of i

mm

igra

nt g

rou

p (y

ears

)

Regression line indicates that a one-year

increase in the source country's education

raises the education of the immigrant

group by .9 years

Each point represents a national origin group

Canada

Mexico

Portugal

Haiti

UK

France

India

Brazil

Sw itzerland

New

Zealand

Ecuador

Guatemala

Poland

2004: Proportion of Foreign Born Workers in Major Industry Groups

34.9%

19.8%19.2%20.9%

10.6%10.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

.Managementand Professional

. Sales and Office . Service . Production,Transportation,

and MaterialMoving

. Construction,Extraction, andMaintenance

. Farming,Fishing, and

Forestry

Naturalized Citizen Non-Citizen

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