By Tarun George

“The challenge for Argentina is scalability” - Cristian Arguello, Argentina Country Manager, Cognizant

The Argentina outsourcing sector has been around for some time. Since the late ‘80s cities like Buenos Aires have hosted shared service centers for US firms, and while the country is still not an outsourcing powerhouse, it has recently been making waves in the IT services sector. The government has prioritized the software development and design industries over call centers, leading to a strong IT presence in the country, and many new home-grown providers that are being noticed by everyone from North America to India. But Argentina remains mired in chronic problems like heavy bureaucracy and red tape, arbitrary investment rules, and more recently, wage inflation. Nearshore Americas takes a look at some of these challenges to provide a balanced profile of Argentina as an outsourcing option for your company.

One of the MERCOSUR members along with Brazil, Paraguay and Uruguay, Argentina has a lot to offer in terms of business environment. According to the 2009 A.T. Kearney Global Services Location Index, Argentina ranked 27th in the world and 5th in Latin America as an offshore destination. Foreign investment has been on the climb, and some big names to invest have included Intel, Google, Siemens, LG, Yahoo!, HP, Microsoft and IBM. Many of them cite low wages, and an IT-proficient workforce as factors in their decision.

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Source: CXOToday

GlobalLogic has acquired Cubika, a prominent software development firm with headquarters in Buenos Aires, Argentina and offices in La Plata and Mendoza. The partnership will combine Cubika’s Latin America workforce with GlobalLogic’s Velocity platform and global reach to create a major near-shore innovation hub for software product R&D.

Cubika has a team of more than 200 technology professionals with expertise in Flex, SOA, Java and .NET technologies. The company specializes in building software products for the media, entertainment, telecom and finance markets. By partnering with GlobalLogic, Cubika will be able to maximize its investment in Argentina while providing employees with greater career opportunities and the ability to collaborate on a global level.

“We have long wanted to say that we searched the four corners of the globe for the world’s most talented software engineers. Now we can,” said Peter Harrison, CEO of GlobalLogic, which already has a material presence …

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A Q/A  Interview with Steve Mezak, CEO at Accelerance and author of Software Without Borders

“If all you want are cheap programmers then there are many companies around the world who will provide them”

Steve Mezak has been a part of the software development industry for over 25 years as a successful entrepreneur (he’s been a key player in six startups) and as a globally respected author on software engineering. His current company, Accelerance, works with development teams in Argentina, Chile, Colombia, Mexico and Costa Rica – so naturally Steve has a good sense of the quality of work produced out of Latin America and how the Americas stands up against the rest of the world.

When it comes to software development, there is increasing attention paid to code quality, establishing very clear requirements and working at a faster pace to move into production. Some say that it’s becoming harder than ever to offshore software development – theoretically slowing the process – because of these more pressurized conditions. Your thoughts?

Actually, in many ways it is getting easier to offshore outsource software development because many hard lessons have been learned over the years on what works and what does not.

For too long there has been an overemphasis on using outsourced software development just to lower costs. If you can hire programmers offshore at $30 an hour than hiring them at $15 an hour must be better. And if all you want cheap programmers then there are many companies around the world who will provide them.  Consequently, many companies outsourcing their software development learned that a low hourly rate does not translate into real savings if you also happen to want quality software as part of the deal.

Software development is not a “core competency” of many companies and outsourcing makes perfect sense for them.

Smart companies no longer seek to hire the cheapest programmers on the planet. They do want good results at a cost lower than hiring a room full of programmers locally. And they likely laid off employees in the recession and now want to use outsourcing as a way to get things done. Are they cutting costs? No, because costs are presently zero. They want to use outsourcing to get things done without having to hire employees back.

Having good software requirements are important, yet many companies try to outsource without them. In fact the most dominant requirement may be their limited budget and again outsourcing begins with a preoccupation with cost.

“What can you get done for $50K (or $25K, or even less)?” They ask. As one of our nearshore partners says, “Just because your budget is limited doesn’t automatically reduce the complexity of the software you need.”

Software development is not a “core competency” of many companies and outsourcing makes perfect sense for them. If there is pressure, it is to find the outsourcing vendors who can truly provide a professional software development service and not just a roomful of programmers in an exotic location. Of the thousands of vendors out there, smart companies want to outsource only to the good ones.

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By Kirk Laughlin, NSAM Editorial Director

Quick: Name a Latin American software dev firm that will land on NASDAQ within two years, boasting strong revenue and a world-beating reputation for building slick online social networking apps?

Answer: Try Argentina’s Globant, a classic Latin American success story that has so much upside that India Inc. (major India-based global services firms) has already tried to scoop it up.

Nearshore Americas sat down with Martin Migoya, the energetic chief executive of Globant and one of four founders of the company, recently in New York City, to talk about the firm’s big ambitions to become one of the world’s premiere offshore software development players.

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