Cuba Presents a Unique Value Proposition Within the Nearshore IT Market

Cuba still lacks high-level Internet infrastructure, but it is full of programming talent. Add in wage, language, proximity and safety considerations, and the island becomes a great option for the IT market.

Cuba may have substandard Internet infrastructure, but it has a surplus of talented IT professionals accustomed to working for as little as $400 per month. Cuba’s programmers are well educated, tend to speak good English, have strong cultural affinity with the United States, and are familiar with Agile software development techniques, Nearshore Americas revealed in its first live webinar on the state of Cuba’s IT market and infrastructure July 28.

Moderated by Nearshore Americas Managing Director Kirk Laughlin, the webinar featured Nearshore Americas Research Director Sean Goforth and special guest speaker Alex Aguilar, a Cuban programmer with experience working on web and mobile development projects in Chile, Austria, Mexico, South Korea and Germany.

Presenting the findings of Nearshore Americas’ new in-depth investigation “Cuba’s Readiness for ICT Transformation,” Goforth laid out the good and bad news for those interested in the opportunities that are beginning to emerge since President Barack Obama’s move to reconcile with Cuba last December.

That historic announcement sparked lively debate about Cuba’s readiness to become a new offshore services destination, but, Goforth noted, “In recent months the initial excitement has given way to a sober reassessment.” Cuba has good telephone infrastructure but the Internet infrastructure is extremely poor, he stated, while Havana suffers from a significant lack of office space available for commercial purposes.

“The Cuban government has a track record of being unfriendly to foreign investors,” Goforth states, while “over $7 billion US dollars in land claims from Cubans who fled the island after the 1959 Revolution are outstanding.” Moreover, “In the Heritage Foundation’s latest index of economic freedom, Cuba is ranked 176th of 177 countries, above only North Korea.”

Nonetheless, Goforth affirmed, “Cuba is unique in that it has low Internet penetration but a highly trained workforce, especially when it comes to technical skills. In a liberalized environment, Cuba could quickly become a major source of IT outsourcing and research.”

Getting to Know Cuba’s Programmers

In a survey of 317 Cuban IT professionals in May, Nearshore Americas found that over 90% of them were software programmers. “Cuba presents a unique value proposition,” Goforth said. “Instead of back-office operations, its emergence is likely to be led by programmers and what we’re seeing in our research is that there are networks of programmers.” He added: “In the classical outsourcing calculus Cuba should be considered as a wage arbitrage opportunity. At the same time, Cuba’s proximity to the United States will prove an advantage that pays increasing dividends as time goes by.”

Cuban programmers earn well above the average Cuban salary of $20 a month, but much less than programmers in other countries, Goforth noted. “Currently, many of the programmers we’ve surveyed who work for foreign firms, their monthly wages range from $250 to $1,600, with a median wage of roughly $500 a month,” he said. “It does seem low but the reality is most Cubans are making $20 a month, so for a Cuban it’s a lot of money.”

While Cuba’s programmers have little experience with iOS or Android development because of a lack of the necessary infrastructure, they are proficient in many other systems and coding languages, Aguilar noted. Furthermore, Aguilar said: “I think Cuban programmers are able to work in an Agile environment. There are a lot of teams that work in Scrum but the thing that really doesn’t work is when that meeting has to happen with someone who is outside the island because of the telecommunication problems. But yes our programmers are familiar with Agile development techniques.”

How Compatible is Cuba?

Regarding Cuba’s cultural compatibility as a Nearshore destination, Goforth noted, “There is a real cultural affinity between Cuba and the United States because many Cubans have relatives in the United States.” And as for the level of English spoken in Cuba, Goforth said, “Cuba is a highly educated society. I would not go so far as to say that it’s a bilingual society because it’s not. But I would say that among educated Cubans, many have proficiency in English and a surprising number of them have a proficiency in French as well.” Most Cubans are used to reading instructions in English and learn the language from an early age, Aguilar added: “The language barrier is not that high compared to other countries in Latin America where English has had less penetration.”

“The sad thing is that Cuban programmers end up leaving the country in search of better opportunities abroad,” Aguilar remarked. Fortunately, he said, “this situation appears to be changing as the Internet infrastructure improves and people are allowed to open their own businesses so I think the tide is slowly turning.”

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Personal safety is another common concern for many companies that operate in the Nearshore region but the webinar participants all agreed that they have nothing to fear in Cuba. “I have taken more than 100 trips to Latin America in the last seven years. I’ve been to cities in Brazil, Mexico, Colombia, Argentina, you name it, and I honestly can’t think of a city that’s safer than Havana,” Laughlin said. “I was walking around at 11 o’clock at night with absolutely no problems. My experience was very positive and I can’t stress enough that personal safety is one of the factors that we believe Cuba will score very well on.” Aguilar agreed: “Of course there is some level of crime as occurs in every country but when you compare that to the rest of Latin America, especially countries like Mexico or Venezuela, it’s such dramatically low. People are safe in the streets and you can actually feel that safety when you’re there.”

The Need for Improvement

“Many in Havana welcome comparisons with the likes of Vietnam and Singapore, but at the same time Cuba is at the bottom of many well known IT measures. The country in fact ranks alongside the likes of Sub-Saharan African countries and North Korea. This is becoming a source of embarrassment in Havana,” Goforth stated. “Moreover, Cuban officials have begun to quietly acknowledge that their leading programs, specifically healthcare and education, are at risk of losing their edge because of poor connectivity. More and more officials recognize that breakthroughs rely on regular and high-speed Internet access.”

This reality should lead to better infrastructure in the new future. Goforth also took encouragement from the level of talent outside Havana and efforts to improve Internet access in other parts of the country. “This is really an exciting finding,” he said. “Of course Havana is stocked with plenty of talent; it has the leading colleges and universities. However, in our survey we found many respondents citing Villa Clara as a real tech hub. It really is a place where a lot of the young talent has really gravitated toward and there are really exciting things going on in terms of working with universities in software development there. You can also see this in other provinces like Santiago de Cuba. The state has actually encouraged this to a degree, in part by discouraging people from moving to Havana from the provinces, but also now by building out their fiber-optic backbone to these provinces in order to provide better Internet.”

Nearshore Americas’ in-depth investigation “Cuba’s Readiness for ICT Transformation: Infrastructure, Talent, and Opportunities for Offshore Outsourcing” is available now for $749.00. For those that missed the webinar, purchasers of the report will also receive a recording of the session.

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