Q&A: Virtual Reality Becoming Mendoza’s Next Big Industry

While Mendoza, Argentina, might be best known for its wines made from Malbec and other premium grape varieties, the city is pinning its hopes on its growing IT sector and, in particular, its expertise in virtual reality, multimedia, and web design.

While Mendoza, Argentina, might be best known for its wines made from Malbec and other premium grape varieties, the city is pinning its hopes on its growing IT sector and, in particular, its expertise in virtual reality, multimedia, and web design.

With a population of over 120,000 and a growing focus on innovation and high-end value services, Mendoza offers an interesting alternative to the more well-known hubs of Buenos Aires and its rivals. Although the labor pool is small, there is an interesting array of talent in the city and the broader province.

Nearshore Americas sat down with Mario Lázzaro, Executive Director of Promelndoza Foundation; Jeronimo Vargas, CEO of Aconcagua Software Factory S.A.; Rodolfo Giro, President of Polo TiC Mendoza and President of Inamika Interactive; and Carolina Suárez Garcés of ProMendoza, to discuss what Mendoza has to offer, its techniques for growing its IT sector, and its aspirations as a budding IT hub for Argentina.

Nearshore Americas: How would you describe the current state of the IT sector in Mendoza? 

Rodolfo Giro: Mendoza’s IT sector is growing at a high rate as it moves toward innovative products and service exports, such as software development, web design, and services with more added value than pure IT. There are currently more than 200 IT-related companies operating in Mendoza, which employ around 5,000 professionals in total. Most companies have around 15 employees, with Belatrix being the largest at around 400 people, taking into consideration all its branches. These companies export 80% of their production.

The people of Mendoza once transformed a desert into an orchard, so it is a province with a history of innovation. It is the main city of western Argentina and the fourth largest city in the entire country. Mendoza has seven universities that offer IT careers and there is currently a three-hectare ICT park under development that is scheduled to be complete by next December. This park will host companies, universities and business incubators. There are also many other careers offered by local universities that are related to the ICT sector, like the creative and cultural industries in design, audiovisual, architecture, and others.

Between 70 and 80% of the software made in Mendoza is sent to a different country. I believe that 50% goes to Latin America and Europe and 50% to the United States, which is the main market.

Nearshore Americas: Buenos Aires has a reputation for being the hub for IT in Argentina. What are the benefits of Mendoza as a nearshore IT outsourcing destination, and how do you compete with destinations like Buenos Aires?

Giro: Mendoza is only a 35 minute flight from Santiago, Chile, and has an international airport with access to Lima and Sao Paulo, with connections to the rest of the world through either those cities or Buenos Aires. Mendoza’s time zone also allows professionals to work simultaneously with their partners in US and Canada, presenting another advantage to the city.

Being a smaller ecosystem has advantages too, as companies in Mendoza have been able to develop good relationships with other industry players, such as universities and government. With the city’s culture of innovation, projects often include significant R&D components, but because the local market for these kinds of products is small, companies work mostly for foreign clients abroad. In that way, these businesses qualify for exemptions on provincial taxes.

Nearshore Americas: Despite the small size of Mendoza, you are ambitious in wanting it to grow into a hub for IT in Argentina. How are you working to develop the IT sector in the city?

Giro: Alongside the aforementioned ICT Park, that is under construction right now, all the actors in this sector – government, the universities and Polo TIC, a newly formed non-profit that is specifically designed to encourage IT development – are also encouraging funds for scholarships and loans for students to increase the number of professionals.

ProMendoza, the export and investment promotion body of Mendoza Province, works closely with the IT sector to expand its markets and is appointing a new officer specifically for this activity.

Mario Lazzaro: Our aim was to quadruple the GDP participation of the tech sector between 2010 to 2020, which by now has already tripled, so we can say it is already working. We know that this first increment was easier to achieve than this last 25%. I believe we can make it and that’s our goal. The main challenge for Mendoza is to increase the number of professionals and to attract investments that will boost local projects and make them global.

Nearshore Americas: What sort of IT expertise and talent is Mendoza known for?

Jeronimo Vargas: The bigger talents lie in open source technologies and in programming related skills, but the big brands like IBM, HP and Motorola have developed a lot of talents and skills in Argentina and in Mendoza, in particular. I believe that those are the highlights of the skills we can offer.

Carolina Garces: We have many designers that accompany these processes so they can program or create software, but we also have a lot of web designers or graphic designers. We have eight universities in Mendoza and many of them offer those kinds of careers. These other professionals also support the IT sector.

Giro: We have a large number of multimedia developers and designers, as well as virtual reality designers. We may not be the biggest region for people, but we have very talented people and a growing number of entrepreneurs. In total, we have 800 engineers, 3,200 developers and 1,000 other professionals in IT in Mendoza.

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Nearshore Americas: What kinds of verticals do you currently serve? Are there any specific niches being developed?

Giro: Given Mendoza’s place as a wine region, the IT sector is not in the winery process, but does offer support to the industry, with web design, for example. One of our most developed IT companies works in logistics, with vehicle tracking, fleet management, and emergency services management. Other verticals include retail, e-commerce, banking, E-government, E-security, and E-learning. We also have a large community of video game designers and developers, so our programmers know about virtual reality and augmented reality.

Vargas: An example that Rodolfo isn’t bragging about is a project on virtual reality. Here in Mendoza, we found the biggest dinosaur that every lived, bigger than the blue whale even. We have a natural history museum in Mendoza and the director of the museum realized that if they managed to reconstruct the life-sized skeleton it would not fit into the exhibit. So, in 2011, Rodolfo offered to build a virtual reality model of the dinosaur and a Jurassic Park-like simulation. They developed the virtual reality engine for it and it is running today.

Nearshore Americas: What have been the highlights in terms of IT investment over the past year in Mendoza?

Giro: The Polo TIC initiative was built with help from our mature network of government, education and industry players, and Mendoza has several successful cases that are now part of multinational companies, like the case of Eventioz, which now belongs to Eventbrite. There are worldwide leading cases like the Zaldivar Ophthalmological Institute or the Cosmic Rays Observatory in Malargüe (Pierre Auger).

Lazzaro: The private sector has built a strong bond of partnership with the provincial government in a relationship of strong commitment. Similar to what we did with the wine, which is the main industry in Mendoza, we want to create one of the biggest hubs for IT in Argentina.

Education and training forms part of this. We have many lines of work, so we are conducting actions on several fronts. We are particularly interested in developing a vocation among junior students in elementary school or the early years of high school. In these schools we conduct programs like “a day in the technology life”, where participating companies invite groups of children from schools all over the state to interact with people who are working in technology. This helps them to understand what the new jobs are like in the technology industry; in most cases, these job descriptions didn’t exist when their parents were working. We are particularly proud of this program and have been working on it for four to five years. We also have scholarship programs, we work together with the Inter-American Development Bank, and we try to develop soft skills such as customer orientation, effective communication and leadership.

Nearshore Americas: Where do you see the sector developing from here?

Lazzaro: We would like to consolidate our position as leaders in innovative projects with high added value, strengthening the capacity of R&D, innovation and talent management. Mendoza is a city where people want to live, the idea is to increase the number of professionals, train them and import them from other regions.