Argentina: A Top Nearshore Outsourcing Destination for IT Companies

28/9/2020
By
Jimena Baliero

It’s hard to talk about nearshore outsourcing without Argentina coming to mind as one of its main tech hubs.

With highly talented professionals, opportunities for both startups and outsourcing companies, attractive government subsidies and cost-effective pay rates, Argentina is definitely the one to beat. Let’s dive into the specific qualities that make this country a land of opportunities for software development.

Technological Advances & Investments

The software industry in Argentina has experienced outstanding growth in the last decade. Even while the rest of the industries in the country were struggling to generate revenue, the IT industry was constantly growing (experiencing 3 to 5% annual growth.)

Investments

In terms of investment, according to the Software and Computer Services Industry Permanent Observatory’s (OPSSI) most recent annual report (2018):

  • Software development is the main source of foreign investment in the country (58%), and more than 50 percent of these investments come from the U.S.
  • Around 70% of IT companies in the country invested in research and development in 2018. IT-related exports in 2017 generated approx. $1.7 million, accounting for 2.5% of the country’s annual exports.
  • Since the Software Industry Promotion Act (Ley de promoción de la industria del software) was signed into law in 2004, more than 1,500 projects have since been financed. As a result, demand grew for local talent and more opportunities have arisen as well as further activity from foreign investors.

 Argentina is also home to hugely successful companies that have heavily invested in software technology from the private sector: Mercado Libre (South America’s ebay), OLX, Globant and Despegar.com. Their need for skilled developers has increased demand, which has led to more diverse educational programs and more employment opportunities.

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Tech Hubs

Despite the fact that Buenos Aires is the country’s epicenter of technological advances and software, there are several technological parks, hubs and clusters in other provinces. 

There are around 30 other initiatives distributed between Chaco, Formosa, Corrientes, Jujuy, Salta, Tucuman, Mendoza, San Luis, Neuquén and Río Negro; all of which work closely with local universities, companies and technological institutions. 

A large number of these hubs were built as non-profits in the 2000s, such as the Buenos Aires IT Hub, the Southern Technologica Hub in Bahia Blanca, the Córdoba Technology Cluster, the Mendoza ICT Hub, the La Plata IT Hub and the Rosario Technological Hub.

These hubs have undertaken all sorts of activities, including promoting and participating in government-funded programs, providing business and financing opportunities, and promoting networking events. They also provide training, professional internships, and coworking spaces for rent. 

Coworking Spaces & Accelerators

Coworking spaces have become very popular in the last few years in Argentina. Around 150 are currently operating in the country and this industry will only continue to grow. 

WeWork’s CEO in Latin America, Tomás Calusio says that the number of the cowork’s members has grown exponentially in the last few years and they expect numbers to continue to rise in 2020. WeWork is also building the largest coworking space in Latin America in Argentina, with capacity for up to 4,000 members. 

Most of the people that use coworking spaces in the country are either entrepreneurs, freelancers, CEOs from corporations and video game developers. 90% of the spaces are privately held, although a few are non-profit or government spaces. 

In terms of accelerators, many are owned by the largest companies in the country:

  • Globant Ventures, from Globant, provides funding and mentorship programs for local and international startups.
  • MELI Fund, from Mercado Libre, has invested in over 25 companies in the last five years.
  • Eklos, funded by beer company, Quilmes, has invested over 100,000 dollars in the last 3 years.
  • Wayra, funded by Spanish multinational Telefónica, has worked with over 57 local startups and more than 400 international companies.
  • Nxtp.Labs, a business accelerator, has raised more than 900 million dollars from 150 investors.
  • CITES, from local insurance corporation, Sancor Seguros, provides investment for startup shares and has a $24 million venture capital fund.

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Skills & Employment

In terms of finding talent with development skills, Argentinians have become especially in ddemand after Coursera published its 2019 Global Skills Index which ranked Argentina as the #1 country in cutting-edge technical skills, mainly software engineering (100%), operating systems (95%) and HCI (76%).

The next South American country in this ranking is Brazil, coming in at number 30.

According to the OPSSI report, between 2007 and 2016, the number of IT companies in the country increased by 37%, and today, there are more than 5,000 companies that collectively employ over 100,000 people.

As to how big the talent pool is, according to Stack Overflow, in 2018, Argentina had close to 115,000 developers, but according to CESSI (Argentinian Chamber of Software Industry) the number should be closer to 135,000 by now. In addition, around 30% of Argentina’s developers are currently working specifically in app development.

Local Universities with Engineering Programs

In the last 20 years, Argentina has invested heavily in higher education and infrastructure, bringing software development companies and universities closer together.

Currently, around 90,000 students are pursuing computer science-related majors and more than 50 local universities offer IT studies. Enrollment in tech degrees has increased significantly in the last few years, in part because of market demand but also because of government incentives and grants such as Plan 111mil and BEC.AR, that help attract and retain students.

Apart from local government scholarships, several international organizations and institutions such as the Italo-Latin American International Organization (IILA), the Organization of American States (OAS), Santander Bank and Sancor Seguros Group, provide scholarships to fund undergraduate, graduate, and doctorate studies.  

In the last few years, several Argentinian universities have appeared in prestigious international rankings including QS, the Center for World University Rankings (CWUR) and Times World University Ranking.

Given the increase in local and international software development opportunities, Argentinians can now study anything from software development to big data,  AI, business intelligence and video game design and development, among many others. 

You can find technical career programs (3 years), bachelor degrees (4 years) as well as short, two-year training programs with various IT-related courses. 

According to CESSI, the best new IT-related degrees in the country are:

  • BA in Information Technology by the Argentinian Business School (EAN)
  • BA in Administration and Systems imparted by the Buenos Aires Technological Institute (ITBA)
  • BA in Information Technologies Management imparted by the Argentinian Business University (UADE)
  • BA in Systems and Business Management imparted by the CAECE University.
  • BA in Information Technologies and BA in System and Company Administration, both imparted by the University of Palermo (UP)
  • BA in Administration and Systems imparted by the ITBA, UP and University of the Merchant Marine.

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English Proficiency

According to Education First’s 2019 English Proficiency Index, Argentina ranks #1 in Latin America and #27 in the world when it comes to the country’s level of English. The capital city is the second most proficient area in the country, just after Santa Fe.

Having a high level of English, according to EF, means Argentinians are able to successfully give a presentation at work and can easily read and listen to any conversation in English without needing any kind of subtitles or translation. 

This is key to ensuring that developers can understand instructions, complex concepts and successfully communicate with clients and peers.

English is taught as a mandatory subject in primary school, and although there are other languages available, English is by far the most popular. There are also several bilingual schools, especially in the capital, so Argentinians start getting acquainted with the language at a very young age. 

High Connectivity

According to Cabase (the Argentinian Chamber of Internet), 63.8% of all Argentinian homes have access to both fixed and mobile internet, the highest in the region, with an average speed of 20.76 Mbps. Speedtest’s 2019 Global Index report indicates that in terms of internet speed, Argentina is in fifth place, just below Uruguay, Peru, Mexico and Brazil.

In terms of fiber optic connection, the country has approximately 20,000 miles of cables implemented, considerably bringing internet prices down. 

In terms of mobile connectivity, Argentina went from just 5 million 4G mobile users in December of 2015 to 29 million by the end of 2018. Puerto Rico and Argentina are tied in first place as the two countries with the highest percentage of population with mobile internet.

When it comes to information and communication technology (ICT) development, Argentina ranks second in the region, before Brazil, Chile and Costa Rica, only outperformed by Uruguay, according to GSMA’s “The State of Mobile Internet Connectivity 2019” report.

Argentina as a reliable nearshore destination

Argentina has a talented pool of IT professionals with strong English skills.  Considering that pay rates are cost-effective in comparison to the US, the time difference is minimal and that culturally, Argentinians are very similar to Americans, nearshore outsourcing can definitely blossom in this South American nation. 

The potential for collaboration is there, ready to be unlocked.

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