For customer service and entry-level sales work, companies have been outsourcing to specialists offshore in places like India and the Philippines for a couple of decades now. But Danny Frisco, whose specialty is freight logistics, feared that entrusting a valuable truck shipment on an American turnpike to an operator in Asia wasn’t practical.
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Just before the start of the COVID-19 pandemic, in October 2019, Frisco started up his firm, Rapido Solutions Group, with a different alternative. In a process called nearshoring, he established a big office in Guadalajara, a city of 2 million northwest of Mexico City, staffed by employees who can provide many of the same functions performed by logistics companies’ back offices in the U.S., from selling and paying bills to communicating with truck drivers en route to their destinations.
Nearshoring works for Rapido. The firm has grown to a workforce of 550 by promoting itself as a staffing agency to logistics clients, hiring people to work for specific clients but employing them on the Rapido payroll. The workers, all of whom are bilingual, fill a talent gap that companies in the U.S. have wrestled with while delivering significant savings. A fresh college graduate entering the lower rungs of the logistics industry in the U.S. is paid $45,000 a year and up, while those employed by Rapido in Mexico are paid closer to $15,000.
In setting up Rapido, 34-year-old Frisco is also following an unusual model. He runs the company as CEO from a one-man office in River North. All of his employees, led by Chief Operating Officer Roberto Icaza, 32, are based in Mexico. Frisco doesn’t even speak Spanish; Icaza, who is from Nicaragua and fluent in Spanish, takes care of any language barriers.
Frisco says that nearshoring ought to be the labor solution for the future. “The big advantage is that the time zone is virtually the same as it is for American-based companies. The close proximity means that our clients can travel to Mexico when needed and meet with the employees we’ve reserved for them,” he says. “Staffing has become a real problem in the U.S., but in Mexico we can hire and train people quickly.”
The perception north of the border is that Mexicans are low-skill and speak only Spanish, destined to work as immigrants in the U.S. in landscaping and restaurant kitchens. Yet R.J. Parrilli, an early Rapido investor (the company got its start with $100,000 in capital) and CEO of Midway Staffing in Hillside, says that image is all wrong.
“Rapido is able to hire mostly college graduates around Guadalajara who are actually very proficient in English,” he says. He has several employees of his own reserved to Midway working at Rapido. He admits that he and many other American companies fear the hassles of setting up a workforce in Mexico. “You’ve got to find the real estate and set up accounting and banking and so much more,” Parrilli says. “Outsourcing all that to Rapido makes sense.”
Frisco grew up in Portage Park in Chicago and graduated from the University of Iowa with a degree in finance. After graduation, he worked for seven years at Coyote Logistics in Chicago, starting in sales cold-calling trucking companies. Along the way, he noticed that low-skill jobs like tracking and tracing—fielding calls from truck drivers on their current locations and delivery schedules—were ripe for outsourcing. But call centers based in, say, Mumbai, would be hard-pressed to perform such work.
Amid a nationwide shortage of truck drivers, many shippers have increasingly come to rely on Mexican immigrants to drive over the road. That makes the bilingual staff in Rapido’s Guadalajara office a particularly good fit in logistics work. The office has become expert at managing transborder traffic issues as more products are made in Mexico and shipped north.
Frisco is the firm’s lead salesman, calling largely on prospective clients around the Midwest. He visits Mexico periodically and is laying plans to find more space in Guadalajara to expand the workforce there “to 1,000 people next year and 3,000 people within three to five years,” he says.
Rapido will do more than $10 million in revenues this year. Frisco figures the firm will eventually get acquired by a much bigger staffing or outsourcing company. He recalls that his former employer, Coyote Logistics, was sold for $1.8 billion to United Parcel Service in 2015. Even if Rapido is sold or merged, Frisco would like to stay where he is. “I’d like to run the company for at least the next five to 10 years,” he says. “We still have a lot to do here.”
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