Argentina IT Services: Top Players Debate How to Generate More US Business

Source: El Cronista
Argentine IT exports increased by 222% between 2003 and 2009, while the exports of goods reached only 86%, according to data from the Permanent Observatory of the Software and Information Services Industry (POSISI). Numerous companies began selling their products to foreign markets while learning about the needs of customers and how to satisfy them through local production.  Despite the international crisis of 2008/09, local companies that exported products grew by 23.8% between 2009 and 2010, versus the 19% of non-exports.

Argentina’s Promotion of Software Law is targeted at increasing software service exports into the United States. The practice of penetrating the US market can be done many ways, including relying on personal contacts, local associates, recommendations or through personal visits.

How to Land

Javier Porretti, Commercial Director for Softtek Sudamerica Hispana, an IT business service provider nearing 20 years of experience, and billing $300 million USD, recounts,  “toward the beginning of the 90s the strategy was to relocate managers of commercial profile to search for clients abroad.  That helped us to understand the market, not in general statistical terms but to understand the idiosyncrasies of each client and to know whether their needs are related to what we offered, amongst other things.”

Today Softtek exports 50% of its products with 80% going to the United States.  “Our company was created with a focus on the global and directed toward the United States and Great Britain.  The founder’s first action was to write the names of all their contacts on a blackboard and to travel abroad to introduce them to our services.”

Guibert Englebienne, a member of the Globant software development company, remembered “through these contacts came the first client, which quickly made our company grow through recommendations and by word or mouth.”  Globant started operating nearly ten years ago, with an initial investment of $5,000 USD and today earns $60 million USD.  “It is important that we have offices at the places of IT export destinations, as this allows us to have a very close relationship with clients without gaps,” he added.

Edgardo Seijas, Director of the G&L Group, a company that provides IT services and earns $73 million USD, looked for a local associate.  “That was our first experience when we entered the country a few years ago, and business was facilitated, whether by language, cultural aspects or by permanent presence.”  Competir, a company that has been exporting e-learning solutions to technology firms since 2000, uses a Mexican company as its commercial associate to explore the Spanish speaking market in the United States.  Pablo Aristizabal, CEO of Competir, said “We reached that point after having obtained wide product acceptance throughout the Latin American community.”  The entrepreneur, whose firm earns $3 million USD, recommends that the solution that one wishes to export should comply with all the regulatory prerequisites of the country, that its managers study the market fully to identify their desired niches.  It is also suggested to protect oneself against the risk of non-payment, since the legal action processes “can be very slow and costly.”

Pablo Setuain, General Manager for Sudamerica de Core Security Technologies, an IT security company that has half of its staff working in the USA, and exports 90% of its products, said “For other companies, the possibility of selling in the United States appeared in a more indirect and less planned for manner.  It was through presentations and international conferences that we started to be recognized in the industry.  In this manner, important companies started to be interested in our services and products at the end of the 90s.”

Achieving Sustainability

Maintaining operations in the foreign market may be harder than obtaining the first customer, as it requires a sustainable effort over time, consistency of doing business  – which fulfills the agreement – and knowing the cultural rules and customs of the importing country.

“After registering a company in the United States which costs between $1,500 and $2,000 USD, we make sure to find an accountant or attorney who could perform the operation’s day-to-day accounting and malpractice insurance.  Once the first client has been obtained one has to be very patient and perform excellent work,” points out Cesar D’Onofrio, co-founder of Common Sense, an IT solutions company that started sales in the USA in 2006, and earns $4 million USD.

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“The most important thing is to be accurate, deliver on time what has been promised, and maintain pricing consistency.  Avoid surprises, or taking advantage of challenging situations with the client.  In my opinion, it is much easier to generate a faithful client in the United States then in other less-developed markets, principally because work is awarded,” advised Anton Chalbaud, co-founder, along with Matias Paterlini and Claudio Cohen, of the Altodot Company dedicated to the development of marketing technology over social platforms.  The company has been exporting to the US since 2009, and earns about $500,000 USD.

Comparative Advantages

India, a country with one of the most developed software exporting industries in the world, is the strongest competition Argentines have for the US technological market.  “With regards to India, Argentina has two advantages, on the one hand we have the same time zone as the United States which facilitates the implementation of a project that requires daily communication.  On the other it is important to note that our culture more resembles that of the North Americans,” stated D’Onofrio of Common Sense.

Softtek’s Porretti says that one has to find the strategic advantage. “The advantage that the world and the United States offers us Argentines is that we are the principal player in the IT market as seen from this demand.  The majority already tested India and the nations requiring services find themselves with unsatisfied needs that are not provided for in this country, where there are high rotation levels, and where everything is resolved by adding more people,” stated the executive.  Clients diversify where they place their needs, differentiating what is sent to each place based on critical function, the complexity and the technology to be used.  “In India they look to bill an hourly rate while we do so through the IT productivity budget.  These are varying concepts: one based on quantity of people and the other based on quality of people,” concluded the executive.

(Translated and condensed from original article, authored by Aurelia Rego in Buenos Aires)