By Kirk Laughlin
Argentina is – no doubt – a success story in both the domestic and exported IT services market. But one can only fathom where this nation of just over 40 million would be if there was a more collective industry effort to rally around an Argentina IT-empowered “brand.”
This fact is one of several interesting takeaways from a visit to Buenos Aires last week, where all kinds of contradictions and complexities underlie an IT industry that has been growing between 15% to 20% each year since 2003, according to industry group, CESSI. In a variety of meetings with education and technology ministry officials and also executives from Softtek, Globant, Grupo Assa, Neoris, CommonSense, Belatrix and other smaller firms, one sees almost immediately that the exported software sector remains ‘one of the best kept secrets’ in IT offshoring in Latin America.
Among the striking disconnects is that while government officials will trot out figures and programs to defend their nurturing of the sector, private players will openly charge that the government – and to a lesser extent, the IT services chamber – CESSI, are inward focused and have yet to generate a significant plan to communicate the Argentina IT story outside of the country. Frankly, CESSI appears to be asleep at the wheel – somehow ignoring the fact that its website would service potential US investors a whole lot better if it had English functionality, instead of Spanish only.
Nearshore Americas sat down for a video interview with Lino Barañao, Minister of Technology, Science and Innovation, and the minister agreed with the assessment that the ‘best kept secret’ label is indeed accurate, however believing that in time – just like Argentina’s wine export industry – the world will eventually learn of its unique assets.
Of course, market forces more than anything that have been the engine driving Argentina over the last eight years, capitalizing on a some of the best human capital costs in the region. A good number of multinationals who have set up shop here, from Motorola and Verizon, to Sabre and Pugeot, have seized on a well-educated professional population, present not just in Buenos Aires but in another half-dozen mid-tier cities dotted across the country. Those organizations compete with large multinationals, like IBM and Accenture, and also dozens of other mostly small software development firms. (Note, the term ‘software factor’ is widely used in Argentina to describe software builders.) About 60,000 professionals work in the IT industry of Argentina.
Nearshore Americas was invited in as a guest for an evening MeetUp event in Buenos Aires last week, sponsored by CommonSense and Globant, to share best practices on selling IT services in the US. Over 150 professionals turned out, many of them from a startup community that is just starting to get global recognition through the awareness-building of groups like Buenos Aires-based Palermo Valley, which was on hand.
Not surprisingly, most corporate executives and startup entrepreneurs we talked to have already assumed that if they are going to grow their revenue streams outside of Argentina, they are going to do it alone. “Our industry is not a critical item on the President’s Cristina Fernandez’s agenda,” said one executive. (Late last week “Cristina” as she is known, said she is unsure if she will run for re-election in the fall despite the belief she would win handily.)
In our view, this is one key disappointment around Argentina, and we’ve been increasingly aware of this fact since launching Nearshore Americas over two years ago. The lack of an engaged group to push an IT brand into the US results in lots of firms thinking more about their own viability rather that the possibility of being part of an industry consortium that would have far more reach and influence than individual brands. Martin Mendez, president of the Latin American Cluster at Neoris, wants to see more consistency in driving home the message. “We will get there, but we still need to act as more of a country, if you look at the potential of missions and different export activities.”
To its credit, the Argentinian government does maintain a long-standing commitment to quality education, yet the “quality” is not what is used to be – especially at the high school level - according to many. The public university system is widespread and has, become a beacon of high quality learning for natives as well as international students. (Remarkably, the foreign students can enroll in Argentina’s public university system at no cost, having access to virtually the same resources as Argentine citizens.)
About 7,000 tech-trained graduates are required every year to keep up with demand, yet only about 3,000 are produced annually. With the expansion of major software players, Globant and HP come to mind as firms who have grown larger in the last 12 months, there are clearly concerns about a battle for talent. “Technical careers need to be promoted early, accompanied by better teaching of math and science,” said one CEO of a software factory, based in a second tier city.
Overall, Argentina still has a quite a compelling story as a source for IT services. But there is no doubt many tech-savvy Argentinian business people see the glass as half empty, and seem to be aware that the opportunity to improve the country’s tech image is still there waiting to be tackled.