Chile IT: How One Agency Acts as an Engine for Exports

By Patrick Haller

When a country such as Chile is known worldwide for traditional products such as copper, fish, wine and fruit, introducing a new industry can be challenging. Established in 2009, Chile IT grew from a public policy to move away from natural resources, and develop knowledge-based industries. Branding strategies are integral to marketing success, and without this key element companies hardly find success, especially in the international market.

ChileiT, a public/private initiative led by the Chilean Association of Information Technology Companies (ACTI), helps its members to promote and export their services/products to global markets. With two platforms in New York and Bogota, Chile iT aims to establish itself as the face of the Chilean IT sector in these strategic locations. The two employees in New York, and one in Bogota, network and create relationships, generate sales leads and create a framework within the market. By combining resources, the member companies are able to leverage the advantage of having one brand and infrastructure, and a high-level executive act on their behalf in markets that they wouldn’t be able to penetrate alone.

While the US platform is co-financed by Innova and CORFO, the companies participating in the Latin American promotion efforts fund the Colombian office. The idea of developing a new sector grew out of a study the Chilean government commissioned from the Boston Consulting Group which found that Chile had a lot of advantages such as a solid infrastructure, stable economy, political stability and a deep pool of human resources. And the IT industry had been developing for decades –currently there are more than 800 IT companies in Chile.

A Tiered Approach

In assessing the potential human capital of the country,  Gordana Stojkovic, Executive Director of Chile IT, says the country has “a long way to go. They had to ask ‘what do we have, what are the gaps, what do we need?’” In partnership with universities such as the Pontificia Universidad Católica de Chile, Universidad de las Américas, DUOC, INACAP and many others, programs were designed to educate a new class of professionals. Even if the talent existed, there was still a lack of soft-skills such as leadership, creativity and innovation, according to Stojkovic, which required the design of additional courses. Today the Chilean IT sector accounts for 30,000 positions, however, an estimated 80,000 to 100,000 additional employees will be needed by 2014.

An added challenge was ensuring the level of English language education was strong enough to reach global standards. The Chilean government provided 5,000 scholarships within the last three years for continuing education for students who already possessed a good command of English. Currently there are between 45,000 and 50,000 certified English speakers included in a registry maintained by CORFO.

One of the biggest challenges Chilean companies have found in New York is that there is a different process when dealing with US clients

Ready to Launch

Stojkovic specified that Chile IT, “is not for startups. It is for companies that are already competitive with proven success in the local market. They don’t need to be a big company, but they have to be ready to launch internationally.” New York was selected for the US platform because the Financial and IT industries are well-developed, and it is a good place to launch the promotion of offshore IT services. “It has a high density of sophisticated customers,” explained Stojkovic.

“We didn’t want to be spread out; it was a question of focusing to build a beachhead.” Bogota was chosen because Colombia is developing and is in a very strong position. Chile IT has also been able to form strategic relationships with organizations like Invest in Bogota that helps it understand the market. The spirit of the Latin American platform is to gather the experience and knowledge of the member companies so they can apply it to big projects in Bogota, and to have an associative way of working. “Chile IT is the only initiative (of its kind)  in Latin America that is government supported,” stressed Stojkovic, “it is a special touch to have government backing.” Even if it doesn’t have government funding.

One of the biggest challenges Chilean companies have found in New York is that there is a different process when dealing with US clients; when they say they want something “for tomorrow” they mean it, said Mónica Retamal, from Ki Teknology, one of the companies that is part of Chile-IT´s American platform. With regard to the market opportunities Stojkovic said, “It’s not easy, it’s not cheap,” said, “but once you are out, it is worth it in the long run. In Chile we have Santiago, some in Valparaiso and Concepcion, but after that you are done.” Chilean companies exported between $700 and $800 million in services during the 2009-2010 period.

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The Latin American platform is for companies interested in that market over the US, although it is possible for a company to participate in both, such as Novared has done. “We are following our customers,” Carlos Bustos, VP of Global Services, told us, “Many Chilean companies are going to Colombia.” In all likelihood Novared would not be in Colombia if its clients weren’t. The information security specialist provides services to retail, telecom and financial services companies. Bustos explained his company’s strategy, “We add value by creating partnerships with companies selling similar services. We can’t find partners in Latin America so we offer more systems integration there and do everything for the final customer.”

The way the Latin American market developed forced Novared to adopt a different implementation method. “We are selling knowledge from Chile; the main thing is to focus on finding IT and Telecom sectors in Latin America. It is important to know the technological reality of each country, and then to see the Chilean advantage to help position ourselves.”

ADEXUS, specialists in systems integration, with clients in various industries such as Movistar, Telmex, Codelco and Shell, participates in the Latin American platform and is opening a Colombian office that will manage services provided from Chile. At first they will start with ten Chilean employees then train people in Colombia. Pedro Aguayo Jara, Solutions Manager, explained, “We want to duplicate our experience with the Chilean mining, governmental and finance sectors.” ADEXUS has also been providing services to GE’s aviation division since 2002.

Switch, a provider of technology solutions in the field of computer telephony that won an award for innovation, is a 100% Chilean company participating solely in the Latin American platform. Jose Miguel Covarrubias, Commercial Manager, pointed out that “When you are considering foreign markets you have to choose one and focus.” The company is hoping to close a contract in Colombia based on a revenue share with a Colombian Telco company. However, according to Covarrubias, “Colombia is not in the same position from a tech level as Chile. Solutions like intelligent IBRs, a very powerful product installed in Chile about five years ago, can be repeated in other countries.” One distinction in Colombia is that there are many small companies whereas Chile has mainly large companies.

Overall, Chile IT provides sales contacts, a local executive who has an insider’s understanding of the market, presence on the global stage, and solid promotion platforms for member companies.