Scaling high-performing teams in Costa Rica staffing legend Doug Firestone on growing to 225 LATAM

What does it take to grow an IT staffing firm to $28M in revenue while competing against giants like Tech Systems? For Doug Firestone, the answer was found in the jungles of Costa Rica. 

In this episode, Doug shares his transition from a Pennsylvania-based founder to a nearshoring pioneer. We explore the logistical and cultural "must-haves" for setting up shop in Latin America, from choosing the right free trade zones to hiring talent directly from tech hubs like IBM and Amazon. Doug also provides a candid look at his "failures," explaining why a great solution needs an even better go-to-market strategy to survive client pullbacks. 

Key Takeaways:

• Why industry verticals (like Blue Cross Blue Shield) drive higher margins than technology niches. 
• The "Calculus" of Nearshoring: Evaluating flight ease, education, and geopolitics. 
• How to pitch nearshoring to big-name clients like Comcast. 

🎧 Host | Brian Samson – Founder of 💻 Plugg Technologies
🔗 https://www.linkedin.com/in/briansamson/

🎙️ Sponsored by Plugg Technologies – Connecting U.S. companies with top-tier software developers across Latin America.
🌐 https://www.plugg.tech

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Transcript

Welcome Sponsor And Guest

SPEAKER_01 0:12

Welcome everyone to another episode of the Nearshore Cafe Podcast. I'm your host, Brian Sampson. If you have ever wondered what it would be like to start a business in Costa Rica, scale it and grow it, especially in that IT staffing and solution space, this is gonna be a great show for you. We've got Doug Firestone. Before I introduce Doug, let me thank our sponsor, Clug Technologies, P-L-U-G-G. Doug, welcome to the show. Thanks, Brian. How are you doing today? I'm doing awesome. You're calling in from sunny Florida, right? I am. I'm based in Florida now. Love it. Love it. Well, Florida's part of the story. Costa Rica's part of the story. Can't wait to get into all that.

Building Arcus Through Recessions

SPEAKER_01 1:04

But tell us uh, you know, life before the jungles of Costa Rica. How did what were you doing? How did you end up there?

SPEAKER_00 1:11

Yeah, uh, Brian, it's it's been a great journey for me. I'm I'm a serial entrepreneur. I never meant to even be a business person, let alone an entrepreneur. 1999, during that Y2K time frame, someone led me to a person that said, hey, there's a need for IT staffing people. Didn't even know anything about it. I literally started a company when I thought there was a big boom. As you know, by January 1 of 2000, it was a bust. Uh but I started my first company uh in June of 99. Uh I had 15 consultants billing in 99. I persevered through 20 and 21. I'm sorry, wrong years, 2001, 2002. Uh, and I had like 50 consultants billing. We were based in Harrisburg, Pennsylvania. We persevered. We focused in on IT staffing, uh, focused on building a recruiting engine, focused on hiring great people, which always ended up being kind of the mantra. That company who kept scaling. Harrisburg, Philadelphia, nationwide. We ended up with uh uh doing $28 million in revenue, 6% net income. Clients were like Comcast, all the blue crosses, Time Warner, AOL back then, three or four states, and we were killing it. But then that recession started peaking around the corner, and I started thinking about how I could find other resources for my recruiting to backfill my recruiting teams. And, you know, everyone was talking India, India, India, and I didn't want to do India. So I started looking at near shore options. So I'll pause there. I didn't know if I just kept I could keep going and talking.

SPEAKER_01 2:58

Yeah, I can't wait to get into Costa Rica, but I think, you know, let's recognize the size and scale that you build just in IT staffing. Did you did you have a particular niche where you're doing generalist roles like Java developers, dot net, people soft, whatever?

SPEAKER_00 3:14

Initially I did anything IT, purely staff augmentation. We did some permanent placement because that always drops the bottom line nicely. But we really just did what everyone did, which was just hustle. But then once we started building and became storytellers, it kind of took off.

Vertical Focus And Recruiting Engine

SPEAKER_00 3:33

But it wasn't until I focused in on verticals that it really took off. And I tell all my friends in the industry, you got to get into verticals. And I'm not talking technologies, I'm talking about industries. Because if you pick the right ones and you do your research, it can drive up margins big time, uh, but it really helps you scale nationwide. I got fortunate to get into Independence Blue Cross in Philadelphia and then high mark in Pennsylvania for blues. And then I was able to launch that nationwide, and we were ended up in almost 30 Blue Cross Blue Shields in the United States.

SPEAKER_01 4:11

Wow, incredible. And were you the primary salesperson or like what when did you start to grow?

SPEAKER_00 4:17

Well, listen, when you're the founder and CEO, you always have to be the best salesperson. Yeah. But no, I I was very smart from the beginning. I I didn't want to do it myself. I built out teams of very qualified people, both on the recruiting side and the sales side. And I've always been a believer that the engine that runs these type of companies is recruiting.

SPEAKER_01 4:41

Yeah.

SPEAKER_00 4:42

And so I always put a lot of emphasis and money into recruiting, compensated them well, and it always paid off for me.

SPEAKER_01 4:50

Yeah. In Harrisburg, is that where you're from? Is that where you started it there?

SPEAKER_00 4:54

Yeah, I was from Hershey, Pennsylvania, and uh, you know, I literally just kind of fell into it. I got super lucky, and I started all on my own. I got I got a guy that gave me $50,000 in in free space and gave me a lead, and that's what I took it off on. Um, I never had any other uh investments, never had any other uh partners or owners at all. I mean, I was mine for about 12 years. Yeah, that's incredible.

SPEAKER_01 5:22

Yeah, thank you. If I remember um Harrisburg is like there's like a lot of government offices there. Did you was that one of the first things?

SPEAKER_00 5:30

Yeah, we did some projects here. We were we were before the VMS systems hitting government, which drove down those margins. We did play in some of the quasi-public agencies in Harrisburg and also Philadelphia, and we kind of carried that forward as we look nationwide. We we didn't want to go in directly where everyone goes. If you go to the Turnpike Commissions or the Waterworks departments, they have more money and there's a lot of opportunities there. People kind of they always want the the big guy, and sometimes the big guy is flooded with uh competitors.

SPEAKER_01 6:06

Yeah. Now, were you competing with I mean, there's there's some big IT stacking companies that have been around forever, like the tech system and the K courses.

SPEAKER_00 6:16

Yeah, and then we also had computer aid was a big Pennsylvania one, but tech systems, computer aid were always there, and we were we were we would compete with them all the time. They always had a lot more money than we were, but but we always persevered and and beat them.

SPEAKER_01 6:32

Yeah. And when you say the verticals, I totally agree with you. When did that start? Did you feel like everyone was kind of commoditized and you you had to pivot some way, or how did that happen?

SPEAKER_00 6:44

No, it wasn't that. It it was more when I was looking at my business and when I was looking at the mix of of companies and where we put our emphasis, I just saw an opportunity to focus. And it's really more of a focus in my mind, because if your biz dev can focus that way, if your recruiters can focus that way, it's easier to move consultants from one blue to another blue, but it's much easier. These companies want the experience of companies that have the functional business knowledge as well as the technical knowledge.

SPEAKER_01 7:20

Yeah, yeah. And, you know, we'll get into near shoring in a second, but you know, that that run-up, um, you know, I I got into the IT staffing world right after the crash, so 2004, and the Indian H 1B world was was big for for my book of business. Did that also, was that something that you also grew on when you were making these placement?

SPEAKER_00 7:44

What was your what was what what was the question? Sorry.

SPEAKER_01 7:47

Like the uh like um Indian firms, H1Bs as partners, was that was that a big part of your book of business?

SPEAKER_00 7:54

Well, w we we we had a a fundamental process and expectation that all of our clients would be end clients. So we didn't go through other people and other companies. Uh we would use those source companies, those guys on corp to corp or W-2 to supplement our recruiting teams. We actually took a recruiter and dedicated them directly to sourcing from India, sourcing from those Indian source companies. But I I kept pushing my recruiting team to hire local, to hire W-2s, to hire salaries. And we never ever did sponsor. We, if we had visas, we went through other companies.

SPEAKER_01 8:36

Yeah.

SPEAKER_00 8:37

But it has to be part, it has to be part of the solution. There's no way it's not.

SPEAKER_01 8:41

Yeah, and I think the reason I I'm intrigued by this is um, you know, just like if you were a realtor in 2001 or 2002, if you're in tech staffing in 1999 or 2002, everyone thinks it's easy, but the thing is there's so much more competition. And um, you know, if you're if you're doing tech staffing in 2009, you've got your choice of candidates, but there's no clients. Correct. You're doing tech recruiting in 1999. There's a million customers, no candidates.

SPEAKER_00 9:14

It's never easy, no matter what. It's never easy. And and I can't tell me how many times uh I've heard saying that that staff augmentation, staffing uh would go away and dry up. Um I heard it in 2000, 2004, 2008, 2012, uh just this year you hear regarding AI. It's never going away. We may have to adjust. But I think what that means is is you've got to build better processes internally. You gotta hire better, and ultimately you gotta deliver quality results at good pricing. It doesn't have to be the cheapest either. It's just gotta be smart pricing.

SPEAKER_01 9:54

Yeah. And the business we're talking about, Doug, this is Arcus. Yeah, Arcus. Yep. And then uh when did Arcus enter Costa Rica?

Why Costa Rica Won The Search

SPEAKER_00 10:03

Um, well, we started looking at it in around 2007. It came out of a strategic planning session that we had. And again, we'd we'd thought about India. Um, and uh I hired uh an outside consultant uh to evaluate um different um countries in Latin America. We put a condition that they had to be strong English speaking, strong technology-wise, strong education-wise, uh, and competitive pricing, not the cheapest, but competitive. We looked at Panama, Costa Rica, Belize. People forget about Belize, uh, and of course Mexico. And we went to Panama, Costa Rica, Mexico, and Belize and checked them out. Fell in love with San Jose, Costa Rica. I mean, it was just once we got there, we knew it was the right place. And that was 2007. By 2008, we were we were up and running. Uh, and at first we were up and running um to backfill our staffing uh department. So it was literally sourcers first uh and recruiters second that were hired. And I think we had 10 people uh moved one of my recruiters from from Harrisburg or Philadelphia down to anchor that project.

SPEAKER_01 11:27

Yeah. Could you tell us more about just the calculus of vetting Panama, Mexico, Costa Rica, and Belize? And there's so many things to look at, you know, proximity, office space, hardware.

SPEAKER_00 11:41

Tell us, you know, what what were some of the things you looked at and Yeah, uh, you know, all all the all the all the above. I mean, it you know, but part of it was, you know, the geopolitics always plays a role. Yeah. And Panama, that's what took Panama out because back then Panama didn't have the best rap with the US, still may or may not.

SPEAKER_01 12:02

Yeah.

SPEAKER_00 12:03

But uh, you know, we looked at geopolitics, we looked at the education system, we looked at our competitors that were there, we looked at the call centers and the tech companies that were in these countries, knowing that they were training uh at very high levels. And we ended up recruiting away from the tech companies in San Jose. Um, but it but but it's not easy, and there's a little bit of gut, and I think as a founder CEO, there's also a little bit of what do you like? I mean, I I liked San Jose and the beaches of Costa Rica a lot better than I like Panama City or Mexico City. And you know, Mexico City wasn't even safe. Costa Rica was moderately safe. It's certainly a lot more safe now.

SPEAKER_01 12:44

Yeah. And when you were when you were doing this, you were still personally living in Harrisburg.

SPEAKER_00 12:50

Yeah, I was burning the midnight oil just like any uh any consultant would. I never left my family. I never left uh uh being in Harrisburg, but I jet set it. What changed for me in 2007 to 2012 really was living on US air at the time. And I had a I will tell you what that was another thing that did take we take into account was the flights. Now it's a little bit much easier, but back then uh US Air was going daily into San Jose from Charlotte. So I could get in and out in the same day if I needed to. And there in the morning and take a night flight out. So and then they were only going to San Jose, but but that was a challenge with like for but for example, Belize in Panama. Um, you know, I had to go from Harrisburg and get to Miami and then different types of planes in and out of Miami. So flight and ease of that travel, but you you also have to be there. You can't open in a foreign country without being there.

SPEAKER_01 13:49

Yeah, yeah. And and you opened like uh like you registered an official entity, kind of went went all in on that.

SPEAKER_00 13:55

Yeah, I mean, listen, you have to do it right. I mean, going into a foreign country is hard. That was something we took into account as well. We we went into a free trade zone, which made it uh a little bit easier. We did our research, hired a good attorney, hired a good accounting firm. It costs money to to do this. And there's benefits to doing it, but you gotta do it the right way. If you try to do it on on the cheap, it just doesn't work. It really doesn't.

SPEAKER_01 14:22

Yeah. I can speak, I can speak from my experience. Argentina is where I did what you did. Um, gosh, it's ranked like 150th or worse, you know, in places to do business or east of doing business. Where where does Costa Rica kind of sit on there? Is it easy, hard in the middle? Yeah.

SPEAKER_00 14:39

No, it it's it's easy to do business there, easy to do business as an American. They recognize the U.S., so banking and stuff isn't a problem. Contracts, everything is is simple and it's in English, matter of fact. So Costa Rica was was just prime for that. And for the most part, you know, they're Spanish speaking first, but second, everyone else speaks English.

SPEAKER_01 15:02

Yeah.

SPEAKER_00 15:03

I remember uh I didn't speak Spanish. I I wasn't I had a little bit of Spanish in my in my toolkit, but I didn't speak it. You know, it was amazing how many people did under the age of 30. Everyone did. So I would go to a grocery store and I'd pick a line. The cashiers were always older and didn't speak any English, but I'd pick the line where there was a young bag boy because then I could always get through and do my checkout and stuff. Sure. But but they said but everyone speaks English, which makes it easy and everything's in English.

Comcast Pilot And Rapid Scale

SPEAKER_01 15:35

Yeah. Talk to us about tell us about the first few customers. What kind of convincing did you have to do that, hey, you know, uh it's not that crazy of a risk to have your IT people on Costa Rica.

SPEAKER_00 15:49

Well, at first it was my staffing and recruiting people. That was seamless to my customers. So we we set up a process where they were qualifying, sourcing and qualifying, and then sending them to the U.S. And then U.S. recruiters were then doing another qualifying and then sending them directly to a client. So those clients never saw that. That what that was was for me to build up and augment my existing teams at re much reduced costs. I mean, it was significantly cheaper than U.S. costs. And my US team bought into it because if they were able to get quality and quality candidates and and we could get more wins, it became a win-win. And it worked. What happened where you were headed is I realized while I was there, when I had 10 people hired that came out of industry in in San Jose, I realized there was a lot of great talent there. So I could recognize the talent. And along the way, we started sharing with some of our best clients that we were in Costa Rica. We did that early and said, hey, listen, if you ever have a need for offshoring, would you consider near shoring? We got the best solution for you. Um, our first client that the bit was Comcast. So it was my biggest client and my first client to go out of Costa Rica, uh, and they did infrastructure support. We did DBAs and systems administrators. We found them at probably 80% less in price than we could find them or they could find them in the U.S. I mean, it was just amazing. And that was our test was Comcast. We went all in. We were like, listen, if we're gonna do it, then we gotta do it the right way. Those recruiters that we had on board helped me find the initial technical team. And then from there, I built out a technical management team on site there in Costa Rica.

SPEAKER_01 17:48

Yeah, incredible. And do you remember, I I mean, it was a while ago. Do you remember those initial conversations with Comcast and you know what put them over the edge? Like, sure, we'll give this a try.

SPEAKER_00 18:01

Yeah, you know, a lot of it is you, you know, people do business with with who they trust. And and so we had already had a reputation built, um, and it was a great reputation. They had a need. And to become with you, they were they were scared of India. I don't know that Comcast has ever gone to India, to my knowledge. Um, but but they had not been to India. They were looking at India. I gave them a solution that was much more palatable to them. They sold to their management, and and it was very quick. I mean, we had uh 10 people up and running very quickly. It really good bill rates still, but they were up and running, and then that scaled probably almost 25 people on the Comcast team, which was which was huge for several years.

SPEAKER_01 18:42

Yeah. And then what years was this? And maybe Europe.

SPEAKER_00 18:46

That was like in 2000. Um, that part was probably 2009, 10, 11.

SPEAKER_01 18:52

Okay, interesting. So this is great recession when most US IT staffing companies were getting hit hard, and you had a solution that was just as good, but a massive cost savings for a company like Comcast.

SPEAKER_00 19:06

Yeah, it it's good and bad, Brian. I'll I'll be canned with you. I mean, the the offshoring, the near-shoring in this case of staffing and recruiting and back office made a hundred percent sense. And it supported my core business, it helped me grow my core business, it gave me a competitive advantage. The pivot to uh more tech solutions, um, and I and I'll tell you, we did something else there as well, was my entrepreneurial instincts going on fire and probably chasing that shiny object that I saw because I went from 2,000 square feet to almost 18,000 square feet in about three years. And uh, we grew, including a technical inbound and outbound call center as well. So I scaled from 10 people to 225 people at my peak. Um, it was it was a crazy journey. What we had was quality people, great education, great English, and also great infrastructure. So we didn't have any problems with connectivity back to the states. And it worked. It really did. I mean, near shoring works. People like near shoring. Costs have gone up. It's not the way it was. I mean, I saw them rise during my four years in Costa Rica. I saw the rates go up every day. Every seemed like every day they were coming to me saying, uh, I I need more pay, I need more money, or I'm gonna leave and go someplace else.

SPEAKER_01 20:32

Yeah. Um, when you talked about there were some companies you could recruit out of, if I remember way back, I think Intel might have been one of the first movers there.

SPEAKER_00 20:42

Yeah. HP was the largest. Intel, IBM, Amazon. I mean, all the big companies, and they had not just call centers. And and when they had call centers in Costa Rica, they were technical call centers. They weren't customer service like you might get out of the, you know, the Philippines or something like that now. But there were, but there were tech companies, there were software development companies. They had a very mature free trade zone setup.

unknown 21:09

Yeah.

SPEAKER_00 21:10

And there were some good benefits of that, including security, but uh it was who's who driving around San Jose and still is. Yeah. And and so that made it a lot easier to find. I mean, if you gotta, I just picked out recruiters from uh other recruiting companies, but also out of the IBMs and the Amazon. So then they were super well trained. I knew they had great uh backgrounds and educations.

Challenges Of Running Abroad

SPEAKER_00 21:37

Yeah.

SPEAKER_01 21:37

You know, we like to keep it real on the show, and there's a lot of amazing things about near shoring and uh especially Costa Rica. Can you tell us about some of the challenges that maybe you faced too, and either ones that you were able to overcome or even ones that were were just really rough?

SPEAKER_00 21:54

Listen, you're going to a foreign country. I mean, it's not a cakewalk. I don't care the you get some Sparkles in your eyes, and you see the volcanoes in the mountains, and you think it's great, but there's headaches from transportation to housing to turnover. You run into issues around vendors there and paying of vendors. So you have to have local vendors. It's not easy. I don't think there's one thing that really jumps out at me, but I think there's a balance between understanding that you're there for business, not for a vacation. So you have to take it super seriously. You know, security is another issue. I mean, there was always an issue with security. And there always is when you're, in my case, an American, you're heading to a foreign country, you open up a proper and promising business, you've got an issue. Transportation of your team is an issue. Where they live is an issue. And you have an obligation as a CEO to protect not just your locals, but also to protect those who are flying back and forth from the U.S. And you had to integrate those cultures together or it wouldn't work long term either. Yeah, yeah, for sure. And uh you can't just go for the beaches, even though they're the the best.

SPEAKER_01 23:08

Yeah. Did you get a chance to uh travel in country, go to Manuel Antonio and stuff like that?

SPEAKER_00 23:14

Yeah, of course. I mean, Manuel Antonio is my favorite. I was there between before the the road was built between San Jose and Jaco. I mean, it was a two-lane road before the uh the Chinese came in and built a highway, and and it would take us hours to get to Jaco to the beach. But we did explore, we took time to explore, and we did some entertaining. We took clients down there. Um, so Comcast sent people. A lot of my a lot of my clients uh would want to go down there. Um, so I used that as a way to convince them uh that it was a great place and that near shoring was great. Of course, they wanted to spend 80% of their time at the beach and only probably 20% of their time in the office, but but it worked for for a lot of my clients. Yeah.

SPEAKER_01 23:58

Um how would you look at Costa

Nearshoring Today And Go To Market

SPEAKER_01 24:01

Rica today? You know, fast forward to 2026, present day. What is it good for? What what is it kind of challenging for?

SPEAKER_00 24:09

Listen, I think I think in general, near shoring is going to be highlighted again. It's never gone away. Yeah. But but there's lots of pressures again with India, with the Middle East, with what's going on geopolitically. Um is a business owner augmenting and setting up in Costa Rica or or Latin America is a no-brainer. To me, it's a no-brainer. I would do it again. I I advise people and consult with people to help them do it. You know, I'm biased towards Costa Rica, but but countries evolve as well. It's a lot more expensive than Costa Rica now. Nicaragua is uh is still cheaper. Parts of Mexico are cheaper. Now Colombia is a lot better. When I was there, Colombia wasn't safe enough for us to explore. You know, Brazil's tough. You know, Brazil's obviously Portuguese speaking, an isolationist country. So it's a little tougher. You mentioned Argentina. It's it's it's a great rap, but it's so far away. I mean, there's just all these balances of what people have to look at. But I would encourage anyone and everyone to take a hard look at augmenting back office, some primary functions, sales, recruiting, technology. It it makes a lot of business sense.

SPEAKER_01 25:25

Yeah. I think this is a good segue to what you are doing now in your advisory role. Tell us more about your current company, cross borders, and and and how people can do it.

SPEAKER_00 25:36

Yeah, after I uh exited uh Arcus and I successfully sold Arcus, I successfully sold Arcus Public, which we didn't mention, which was my executive search company in the public sector. Arcus Solutions in Costa Rica closed. I just need to go on the rucker and telling everyone, and this is this will segue to my current business, I had a great solution, but I didn't have the right go-to-market strategy. So I ended up when Comcast, after three years, decided to pull back. I didn't have enough clients to sustain. And I didn't have the right strategy in place. Fast forward today, after spending 10 years in higher education in the US and in Dubai, three years ago, I went back into the business of consulting, helping companies primarily out of India and the Middle East as they were looking to enter the U.S. market. So working with startups, working with founders, strategy, but a lot of it around go to market because I've realized I had to learn from my mistakes and my failures, also my successes, but but I always lead with my failures and go-to-market strategies are so key nowadays. So we primarily work with those founders and CEOs that help them get established here in the U.S., get them set up here in the U.S. and get them targeted, focused on the right companies and get them business because that's what's going to make them successful.

SPEAKER_01 26:58

Yeah, amazing. Anything that I didn't ask you about Costa Rica that you think the audience should know?

SPEAKER_00 27:03

If you don't want to go there for business, go there for pleasure. I think uh you know still one of the hottest tourist attractions uh or destinations in from the U.S. The people are amazing. You can't beat it, beat them and and just near shore in general, tremendous opportunities for the right business people, whether you're a small company or a medium-sized company or a very large company. You can you can save a lot of money and get some fantastic talent to support your teams. Amazing.

SPEAKER_01 27:30

Doug, thank you so much for uh sharing your wisdom and experience on short cafe podcast.

SPEAKER_00 27:36

Thank you and congratulations to you and your successes as well. Oh, thank

Wrap Up And Plug Technologies

SPEAKER_00 27:40

you so much.

SPEAKER_01 27:40

We are sponsored by Plug Technologies, P L U G G dot Tech. Great way to connect talent from Latin America to growing US companies. Again, this is the Near Short Cafe Podcast. We'll see you again next time. Thank you.