Statistical Drill Down: Lack of ICT is a Deal Killer for Cuba’s Outsourcing Future

Cuba has long boasted of having one of the most educated workforces in the entire world. However, for all its prevalence of technical studies – indeed the country’s statistics …

Cuba has long boasted of having one of the most educated workforces in the entire world. However, for all its prevalence of technical studies – indeed the country’s statistics show the country to be above its neighbors in terms of quality education, especially within the applied sciences – it is yet to be seen if the local IT talent does in fact have the theoretical as well as the practical training required to compete – especially in the dynamic global services industry.

The lack of Internet access in the country is a constraint for the development of IT markets, although this is changing as the island is becoming more connected. Also, the high-tech industry, which is state-sponsored almost in its entirety, does not have the capacity to absorb the local talent, which drives IT talent into academia or in technical solutions for local state-led enterprises.

The Brains are There 

Education was one of the backbones of the Cuban revolution, and stats continually point to the country’s high literacy rates. The government provides free schooling from grammar all the way through graduate and even doctorate school. According to the United Nations, the government spent 13.4% of GDP in education between 2005 and 2011, which is quite high when compared to other countries in the region such Mexico, with 4.4% and 6.6% in Costa Rica. The CIA World Factbook states that a whopping 99.8% of the Cuban population is literate, and according to local sources, 187 of every 10,000 Cubans have a technical and professional education of some sort.

Academia is certainly widespread in Cuba, and computer engineering or informatics is a common field. The Cuban government has long preached of its goal of becoming an information-based society, and has thus nurtured its science and mathematics-based faculties, namely medicine, engineering, and technology. Cuban doctors, for example, are internationally reputed, and the government has at times exchanged medical services in return for goods and services, such as oil in Venezuela.

There are specialized IT and computer sciences departments in every one of the country’s forty-plus universities. The Instituto Superior Politécnico José Antonio Echeverría (CUJAE) is the largest, and has undergraduate, as well as post-graduate programs. The CUJAE also hosts doctoral research on a wide array of scientific and technological topics. Interestingly, local data show that up to 2011, only 6% of college graduates from the sciences specialized in technical sciences. The majority of college students chose medical and social sciences. Through the universities, the government has sponsored some R&D programs as well.

IT Pros Need Access

IT acumen, however, is incomplete without strong connectivity, and Cuba has one of the lowest in the hemisphere. Telecommunications infrastructure is limited, and falls behind other countries in the region. Most of the connectivity is based on the X.25 protocol, which is no longer adequate. This is not unrelated to the country’s political isolation from the US, which resulted in a lack of funding and technology transfer into the sector.

Up to 2010, only 15.9 of every 100 Cubans had Internet access, according to the UN. This is quite low when compared to neighboring Dominican Republic, for example, which in that same year had 39.5, or 36.5 of every 100 inhabitants in Colombia. Even regular phone usage is uncommon, with just 19.3 subscribers per every 100 Cubans (this figure is 99.8 in Dominican Republic, for example). The prevalent medium is the local “intranet”, an in-country network, and it is not clear if the official statistics for internet penetration refer to actual internet or intranet system.

The cost of Internet access is very high, making connections (most of which are dial-up) available mostly to the few who have the chance to earn hard-currency. One half-hour of internet connection costs around 6 CUC, a bit over US$6. This is not affordable for a population that makes the equivalent of around US$20 per month. The government distributes “cyberpuntos” or internet credit, mostly to students and other citizens with national IDs, and the computers with internet access are mostly available in hotels and universities, although internet cafes are quickly being assimilated into Cuban culture.

In August 2012, Cuba was linked to Venezuela via a 1,000 mile fiber-optics cable, known as the ALBA-1. Until this year, however, the cable only carried voice traffic, and all internet traffic was carried by ETECSA, the Cuban Telecommunications Enterprise S.A. through three satellites. According to Ivan Garcia, a local blogger, opening a Yahoo email can take up to 6 minutes, and since the connection runs at 100 kilobytes, downloading videos and photos that exceed a megabyte is not advisable. That means that that data from Cuba to the US, for example, traveled over 43,000 miles and back, rendering an extremely slow connection. It is not surprising, then, that research on Cuba is so difficult, and documents available online are, in the most part, outdated.

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Earlier this year, ETECSA confirmed that some incoming traffic was being carried through the ALBA-1, and in May, there were reports that the branch connecting Cuba and Jamaica was activated, will provide greater bandwidth. However, access to the internet will be neither abundant nor cheap just yet, since the network and local infrastructure requires improvements. Moreover, the government still has a say in the population’s exposure to the www.

Practically Lacking 

According to Emily Morris, a Research Associate and Lecturer in Economic Development of Latin America and the Caribbean at the UCL Institute of the Americas who has specialized in Cuban studies, the Cuban youth definitely has been offered the theoretical knowledge on all things technological, but the practical knowledge is most probably lacking. Once connectivity is more effective in the country, and Cuba is in fact connected to the rest of the world, says Morris, this will change, although it will be gradual.

The question of allocating these skilled IT professionals also arises. Academic studies indicate that the Cuban high-tech industry employs around 5,000 to 6,000 workers only, although this data is outdated. IT services that meet local technological needs are prevalent, namely programming. However, fields with little internal demand such as software and hardware development are weaker.

With most of the companies being state-owned, there are few employment opportunities for recent grads. A 2nd year undergraduate student at the Informatics Faculty of CUJAE in Havana interviewed for this article indicated that the demand for employment depends on the field. Programmers, she said, are in higher demand by local enterprises. She also indicated that academia is among the most favored fields, and universities are always in demand for new professors and training personnel. Both the universities and the enterprises are state-owned.

There are other constraints, such as intellectual property and anti-piracy laws, none of which exist in a communist regime. Going forward, the government’s ability to attract foreign direct investment will be crucial for an IT economy, and even a possible leap into offshore programs.

Cuba continues to be controlled by Raul Castro, brother to long-time president, Fidel Castro. Castro is currently serving a five-year term through 2017, but the country has already begun to feel the uncertainty of a hand-over to a younger generation of leaders (Castro is in his 80’s). Most analysts agree that this will trigger the start of a gradual process of liberalization, and the eventual empowerment of the private sector and the emergence of a market economy. It will not be until then that Cuba’s computer scientists and engineers will come into their own.

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