Uruguay: A Tiny Country Turned Mighty Nearshore Outsourcing Hub

28/9/2020
By
Jimena Baliero

Uruguay might not come immediately to mind when you think of  Latin American nearshore powerhouses. But, its potential, talented pool of developers and facilities for foreign companies has definitely made this little South American country of 3.5 million people a destination worth taking a closer look at. 

Discover what’s earned Uruguay its nickname, “The Silicon Valley of South America” and learn more about what it has to offer.

Technological Advances & Investments

Uruguay is the #1 exporter of software per capita in South America and third worldwide. Nearshore software companies have flourished all over the country and the revenue they generate has grown exponentially in the last five years, so much so that the IT industry today accounts for 2.7% of the national Gross Domestic Product (GDP). Traditionally, the strength of the economy was based on agricultural products and meat.

Investments

In the last five years, Uruguay’s tech industry has experienced enormous growth. In fact, according to the Uruguayan Chamber of Information Technologies (CUTI in Spanish), 2018 set a new record, with a total of 1.67 billion in revenue, 6% more than in 2017 (1.59). 

The United States is Uruguay’s main client, accounting for 64% of revenue, followed by Japan.

According to CUTI’s chairman, Leonardo Loureiro, this trend will continue to grow steadily as the IT industry is projected to make up 5% of national GDP in the next five years.  

Technological Advances

In terms of technological advances, several factors indicate that Uruguay is an ideal nearshore destination for outsourcing software development:

  • It’s one of the first countries to adopt the latest version of Internet Protocol, protocol IPv6 (#8 according to Google IPv6)
  • It has the fastest internet via optical fiber in homes and businesses at the lowest prices. It also has one of the region’s fastest internet download speeds.
  • It’s home to one of the best Data Centers in Latin America and several underwater connection points in Argentina, Brazil and the U.S.
  • Uruguay’s the #1 country in terms of e-governance in Latin America, according to the United Nations.

 Another interesting indicator to consider is Cisco’s Global Digital Readiness Index 2019, that measures the level of digitization as a key factor to achieve competitiveness, increase GDP, promote innovation and create new jobs. Uruguay is the second highest scoring country in Latin America, behind Chile.

countries
Word Trade Center Montevideo

COVID-19: Uruguay turned to tech to successfully contain the virus

Since the first confirmed COVID-19 case worldwide back in December, the world has struggled to handle this unprecedented pandemic.

Uruguay is one of the few countries worldwide that has been able to contain the disease, reporting only 1,044 cases and 30 deaths since the beginning of the outbreak (as of July 20th).

Immediately after the first few cases were confirmed nationwide, public officials joined forces with software companies in the private sector to launch Coronavirus.uy, an app that guides users on how to identify symptoms and the right way to proceed and alert health authorities in case they suspect they’ve been infected. 

A few weeks after, the initiative caught the eye of tech moguls, Google and Apple. Uruguay became the first country in the Americas chosen to try their new contact-tracing technology in its app, which notifies a user whenever they might be at risk of having the virus due to coming into close contact with a confirmed patient. 

Thanks to its success in flattening the curve, slowly yet steadily the country has started re-opening its schools, restaurants and stores and allowing flights to and from Europe.

Growing IT Industry

Its capital, Montevideo, is the epicenter of the Uruguayan software development industry. Currently, approximately 700 tech companies are operating in the country and this number continues to grow every year.

Most small and medium sized IT companies and enterprises have opened offices in Montevideo, especially in free trade zones such as the Montevideo World Trade Center, Zonamerica, Aguada Park, Parque de las Ciencias and Parque Tecnológico de LATU (Technological Laboratory of Uruguay). 

However, some growing companies have opted to expand their operations in other, less-populous cities, such as Abstracta. By doing so, they can reach more talent while creating new IT-related job opportunities and stimulate the local economy.

There are several successful Uruguayan companies that have entered the world stage including AstroPay, Bankingly, BGlobal Solutions, Buxis, Bantotal, dLocal, Feng Office, GeneXus, GlamST, ICA, Infocorp, Info Casas, IronHide, MVDtrading, Paganza, PedidosYa, Quanam and Top Systems. 

Additionally, top foreign multinationals in the IT industry have also either opened up shop in the country or hired Uruguayan developers including Globant, IBM, Indra, Microsoft, New Context, NetSuite, Tata Consultancy Services and VeriFone.  

Through the years, Uruguay has produced several very successful, top-of-the-line tech companies, including Dynamia, DVelop, Innuy, Kaizen, MonkeyLearn, Moove It, Octobot, Practica, Rootstrap, TangoCode, UruIT and VAIRIX.

Rising Coworking Spaces & Accelerators

Coworking spaces have become increasingly more popular in the last few years in Uruguay among entrepreneurs, freelancers, travelers and small companies. Most coworking spaces are located in the capital, although since 2018, several spaces have started opening in other departments of the country.

The most popular spaces today are Sinergia, YouHub, Cowork Latam, Espacio Serratosa and Coworking Center. However, several new coworking spaces have opened in the last two years in some other scenic areas of the country, including Co-Lavora in San José, Colonia Cowork in Colonia, Incubación Cowork in Paysandú and Startup Cowork Café in Punta del Este. 

In addition to coworking spaces, several different incubators and accelerators have started up in the country, including: 

  • Sinergia incubator: created by Sinergia group, currently with 58 startups and an investment of almost 3 million dollars. Additionally, it’s the only incubator that works with fintech startups.
  • Impulsa Industria: created by the Uruguayan Chamber of Industries, this incubator is aimed at industrial companies and entrepreneurs.
  • Ingenio: this incubator was the first of its kind in Uruguay, funded by the Technological Laboratory of Uruguay (LATU) in 2001. 

 There are also accelerator programs that provide training, workshops and networking sessions with investors and corporate partners to help new companies and entrepreneurs, such as Acelerador 500 Montevideo. 

countries
Montevideo, Uruguay

High Connectivity

When it comes to connectivity, Uruguay is definitely the one to keep an eye on. Not only are 97% of Uruguayan homes connected via LTE technology, but 82% of them also have broadband connection, positioning itself well over every other country in Latin America.In addition, Uruguay is also at the forefront of the region’s 4G-LTE mobile communications (a 63.3% penetration rate) and it’s recently launched its first 5G network, the first in Latin America. Similarly, mobile penetration is the second highest, after Panama. 

With a total investment of 800 million dollars, Antel, the state-owned telecommunications company, expects to provide complete national Fiber to the Premises (FttP) coverage by 2022. Uruguay is also one of the very few countries in the world where broadband access via cable modem is non-existent. 

Skills & Employment

Uruguay’s public education system is one of the best in the region and the country’s literacy rate is an astounding 96%. Uruguayans begin learning technological skills from their first years of primary school thanks to the One Laptop per Child program (OLPC).

Uruguay adopted OLPC in 2008 and today, the almost 300,000 children in public schools all have their own laptop. In addition, the plan also provides laptops to low-income high school and college students. In 2015, Cisco included Uruguay as one of the countries with 100% connectivity in schools.

In addition, Uruguay was one of the first 10 countries to adopt an official AI strategy and the second in Latin America, after Mexico.

In terms of employment, approximately 13,000 people work in the IT industry in Uruguay, according to the 2019 Uruguayan Chamber of Information Technologies (CUTI) Annual Survey and the unemployment rate in this sector is virtually zero. 

Although Uruguayan programmers have a range of skills, a recent survey by Stack Overflow reveals that most of them have a preference for JavaScript, which is considered the most in-demand IT skill in the market, as stated by the DevSkiller’s Top IT skills report 2020.

Local Universities with Bachelor of Science and Master’s Degrees

Currently, 11% of all college students enroll in engineering programs, although many other students are opting to enroll in other majors such as electronics and information technologies, which are also highly demanded by IT companies. Overall, the country produces 1 engineer per 8,000 inhabitants. 

According to 2016 data, most IT graduates get their degree from the public university, UdelaR (57%), although more and more students are opting for private colleges.

UdelaR (University of the Republic) is the only public university in the country and it consistently ranks among the best in the region. In fact, according to U.S. World News & Report, it’s #21 among the best Latin American universities and #1 in Uruguay. Students interested in computing can either opt for a Bachelor degree in Computer Engineering or a three-year degree in Computing. UdelaR also offers masters in:

  • software engineering
  • computer engineering
  • electrical engineering
  • computing

However, private colleges have been growing consistently in the IT area, adopting more modern curriculums, hiring several professors and experts from renowned companies and offering internships at important companies in the country. 

In fact, recently the ORT University was included among the top 150 best universities in the region. It specializes in technology and offers several degrees in the IT field such as animation, video games and design, art and technology. 

High school graduates can also begin specializing in technology by enrolling in the Labor University, known as UTU, where they can complete a two year degree in networks and software, telecommunications, and more.

countries
Montevideo, Uruguay.

English Proficiency

According to the EF English Proficiency Index, Uruguay ranks #39 out of 100 countries and has a moderate level, with a score of 54.08 above the region mean score, which has a low average proficiency level. Uruguayan students spend on average, 8.7 years learning English.

Furthermore, according to recent data from the Test of English as a Foreign Language (TOEFL), Uruguay has the highest level of proficiency in the region, with a total score of 94 out of 120 points, followed by Argentina and Costa Rica with 91, (well over the region’s mean score of 85). 

Also, a recent report produced by Panama, Chile, Costa Rica and Uruguay states that the latter has the best qualified English teachers in the region. This is mostly due to the fact that in order to start studying to become a teacher, applicants must be at the B2 level. Most primary school English teachers in Uruguay are at the C1 level and most high school English teachers at C2.

Currently, every primary school in the country requires three years of mandatory English classes. Also, the British Council provides almost 350 weekly hours of English to public school students as part of the OLPC project (known in Uruguay as Plan Ceibal).

Consider Uruguay for Nearshoring

In addition to all the virtues mentioned above, there are other aspects that make Uruguay a very attractive country for nearshore service providers and outsourcing companies:

  • Its cost of living continues to be remarkably lower than in the United States and most developed as well as emerging countries such as India or the Philippines.
  • Its work culture is extremely compatible with that of the U.S. and most software developers are used to working in the same manner.
  • Its time zone is convenient for U.S. companies where developers can get up to 8 hours of overlap with the U.S. workday
  • Its airport is among one of the 10 most modern in the world, making it easier for foreigners to travel in and out.
  • It has a 100% income-tax exemption for software exports

 Uruguay definitely has its share of challenges going forward, but overall it does appear to live up to its nickname of “the Silicon Valley of South America”.



TAGS

COMMENTS