Chile’s Service Sector is on Fire: A Classic Success Building a Knowledge Economy

SANTIAGO: The Chilean services sector accounted for $13 billion during 2009-2010, and it is projected it will reach $13 billion during the 2011-2012 period. This robust figure shows …

SANTIAGO: The Chilean services sector accounted for $13 billion during 2009-2010, and it is projected it will reach $13 billion during the 2011-2012 period. This robust figure shows a growth rate that will outpace that of goods, the country´s traditional stronghold.  Copper continues to be Chile´s main export, and the price of that high-valued commodity has a direct, and sometimes damaging, effect on other exports such as fruit, wine, fish and more recently software.

With 15 offices in Chile and 56 worldwide, ProChile, formed in 1974 to promote the exportation of non-traditional goods, has grown into one of the nation’s most important trade agencies and in a bid to capture international demand, their focus has switched from goods to services given the explosive growth this sector has seen.  That is just part of what we have learned during a special  press tour of the country hosted by ProChile in Santiago.

“It is important to have a strategy for promoting IT services, and to also have incentives for foreign companies to come to Chile and to create an industry

Stressing Services

Osvaldo Marinao, Head of Services, ProChile could not stress enough the importance of the services sector to his country. However, he lamented the fact that the methodologies tracking the significance of this industry are deficient, and they don´t account for all of the services being provided both domestically and to foreign markets. Nor do they consider Chilean consultants who are contracted by foreign companies and relocate to different countries.

The Department of Services was formed in 2004 as a joint effort of five service providers who determined that a concerted effort was needed in order to solidify the industry. “As a country we decided we needed to focus on services, and created a strategy,” Marinao said during our discussion with him at the ProChile offices in Santiago. “It is complicated because, unlike tangible goods, we are selling a promise. We can´t send samples, but we can use client references. We also have to consider language and cultural barriers. We focus on trust.” The Department created a business platform that included conducting technical seminars. Although it was hard, the funding companies worked with government support to begin exporting services as an association.

Regional Impact

The effort paid off, and earned a regional reputation spurring other countries, such as Colombia, to create similar programs.  Marinao said that promoting IT is involves educating the consumer, and that Chile built its industry by learning from the services provided by countries such as Canada, New Zealand, Australia and the US.

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“It is important to have a strategy for promoting IT services, and to also have incentives for foreign companies to come to Chile and to create an industry,” Marinao stated. One area that Chile is concentrating on is the development of engineering units. To accomplish this, ProChile is working with CORFO on a Global Services division that will promote the adoption of technology developed in Chile by companies such as call centers.  “This is not really an export of technology, but the export of knowledge.” (StartUp Chile has also become an emblem for Chile’s forward thinking.)

As of now, the main markets for technology developed in Chile are Peru, Colombia and Central America. The US purchased $6 million of these products in 2009, which was the first year of exportation to North America. Today, that market is valued at $25 million, not including the amount of services provided directly from Chile to the US. “We work mostly with SaaS,” Marinao explained, “that is the most common modality. The value isn´t in te license, the most important thing is the service associated with the license or the capabilities associated with the product.”  This is what turns promises into tangible goods.

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