Paragon hunts for equity partners
Published:Wednesday | August 15, 2012 | 12:00 AM
Avia Collinder, Business Writer
Paragon Communications Limited, a local outsourcing firm owned jointly by Canadian Alexander Borba and Jamaican Stafford Burrowes Jr, is in need of capital to expand its sales team and build out office space in Montego Bay.
Paragon is on the hunt for private equity partners or angel investors in Jamaica, according to Borba, the company's president.
The six-year-old company hopes to raise US$2 million for the build out, which Borba says is meant to ready Paragon for listing on the stock market under its medium-term plan.
Borba and Burrowes recently sold Paragon's call centre assets to Davon Crump of Global Outsourcing Solutions Limited in the Montego Bay Free Zone and have spent, they said, US$500,000 to re-establish new operations at the Advantage General Building on Market Street in the city.
"Almost all assets were sold, but we were able to retain our business name of Paragon Limited with a few key clients," Borba told Wednesday Business.
"We have changed to a modular system of operation which allows for expansion as and when needed. We are no longer under pressure to fill hundreds of seats. Large lease models in outsourcing are doomed to fail," he said.
"The investment would allow for a quick ramp up of new clients by the addition of sales teams in locations where Jamaica currently is not being promoted to its fullest," adds Burrowes, who is the son of Dolphin Cove operator Stafford Burrowes.
Began in india
Paragon Communications is successor to a call-centre operation started by Borba and Burrowes as Ant & Bee Outsourcing in India seven years ago, an effort which lasted only one year, after the partners determined it would be more successful as a nearshore operation.
"Stafford Earl Burrowes and I met at college in Canada. We have owned and operated a Canadian recruiting business called Ant & Bee Corporation since 2001. In 2007, Ant & Bee spun off a call centre in Chandigarh, India, under the same name. A year later, the call centre was moved to Montego Bay, expanded and registered as a stand-alone corporation operating under the brand 'Paragon Call Centres'," Borba said.
The Montego Bay operation was sold to Global in March 2012, which made "an offer we could not refuse," Borba said.
Paragon said it retained three clients who did not fit into Global Outsourcing's business model, and re-established itself at offices on Market Street.
"The Advantage General Building gives the call centre more flexibility for future growth, since the space is modular and has better access to transportation," Borba said.
Crump who is CEO and majority shareholder in Global Outsourcing Solutions Limited started business this March with 85 seats and other assets purchased from Paragon.
"We took over the entire operation. It has helped us to move along a lot quicker than we thought. There was one client who needed action immediately. We are still at 85 seats, but we have started the build out to reach 250, which is our goal," Crump told Wednesday Business.
He declined comment on the purchase price, stating only that "it was not cheap".
Burrowes and Borba first registered the name Paragon Communications Limited in Jamaica on March 30, 2007. The company's sales offices are in Toronto, Canada, while finance is handled from offices in Barbados.
Cultural affinity
"Most of our clients are located in Toronto. You need sales staff knocking on doors and meeting clients face to face. I'm always surprised by how many large clients do not have sales offices in their client's backyard," Borba said.
The partners chose Jamaica as the operational base for Paragon because its culture, said Borba, is similar to North America's.
"We all watch similar TV shows, listen to the same music. There are some cultural nuances which are very difficult to capture otherwise," he said, reflecting on the relocation from India.
The one hour time difference between Montego Bay and Miami ensures easy access for trainers, and gives Paragon access to Internet infrastructure of the highest quality, he adds.
With an industry troubled by a high failure rate, and with US companies now being incentivised insource, Borba says that Paragon is experienced enough to avoid the usual pitfalls.
"Most failures in the call-centre industry can be traced back to excessive growth beyond a call centre's capability to manage quality," said Borba.
"Look at how many call centres in Jamaica are sitting on large leases with massive IT infrastructure that are under pressure to fill vacant seats at any cost. They take on commission-based campaigns at very low margins which inevitably fail."
Paragon's approach is modular and low cost, said Burrowes.
"Our IT infrastructure is on the Amazon Cloud, and we add office space and additional agents as we sign new clients to long-term engagements. This makes us scalable, manages our financial risk to bad deals, and lets us focus on what we are good at - hiring, training and managing people," added Borba.
The partners plans to list Paragon on the JSE Junior Exchange in five years.
By then, the call centre's 30-seat operation is targeted to grow to 1,000 seats.
The first milestone is 500 seats within two years.
"The major hurdle is a quality labour force coming from the local colleges," said Borba.
The company's website indicates that Paragon Communications provides turnkey call centre offices for the purpose of receiving and transmitting large volumes of requests by telephone.
"We are currently doing a confidential trial for a client which, if successful, will lead to the addition of 20 seats," Borba said. The company recently advertised locally for trained legal clerks to do searches for clients.