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Business Management

A Land Grab for LatAm Tech... And the US Wants In Too

The globalising technology-enabled economy has led to changes that would have been unthinkable just 20 years ago. India as IT outsourcing superpower? China’s Alibaba to be one of the biggest IPOs ever in the US? Russia and Israel to translate military knowledge into commercial software excellence? Forgotten quarters of ancient trading cities like Paris, Berlin, Istanbul and London becoming internet creative centres? Nobody would have credited it.

Barring the most obscure parts of the world, there is almost nowhere that is not touting itself as the next outsourcing or innovation hub but Latin America is among the most attractive areas to become a hotspot. Or perhaps that might be ‘hotter spot’. Native companies like Stefanini in Brazil (profiled here) and Globant in Argentina have already developed skills that feed the commercial needs of the continent and beyond. The 15-year-old, Argentine-originated Mercado Libre (Mercado Livre in Portuguese) has become the Latin Amazon.com from Argentina and Brazil to the Unites States, Uruguay and Venezuela.

But there is a hunger to go further and, as ever, money is acting as a magnet. The government-backed Startup Chile has been a successful effort to create an entrepreneurial spirit has been successful and has attracted a significant number of foreigners to move to the country. Some hubs are predictable and others less so: Rio de Janeiro and Sao Paolo in Brazil might be guessed at by outsiders but also there are other hubs in the country such as Campina, Recife, Manaus, Curitiba and Belo Horizonte. Outside Brazil, Mexico City, Monterey, Bogota, Caracas and Lima outsiders might readily imagine as candidates but Guatemala City, Panama City and San Juan in Puerto Rico? Perhaps less so.

Some encapsulate technology’s ability to change the fundamentals of place, culture and identity, and they are winning attention beyond locals as models of regeneration. The UK newspaper The Daily Telegraph recently reported on Medellin in Colombia — the ultimate cliché of drugs, crime and corruption to outsiders — and how it has emerged as a tech cluster and a city praised for its inventive town planning, transportation and environmental policies. Citi, the Wall Street Journal and the Urban Land Institute recently named Medellin as their Innovative City of the Year.

Wherever they are in the world, many of these emerging clusters are similar in nature, featuring fast-start incentive packages, hackathons and other contests, and the lure of access to young, low-cost skills and links to governments and universities. They are already proving to be honeypots for recruiters, advisors and others necessary to make up that much desired phenomenon: the technology ecosystem. Organisations like startup counsel provider Endeavor (profiled here) are finding Latin America fertile ground.

Latin America is growing. The GDP upward tick might not constitute hyper-growth (2-6%, roughly speaking) but it covers many countries. IDC has predicted an 8% rise across the region in IT spending in 2014 and another analyst, Frost & Sullivan, predicts a $3bn market for cloud computing in the region by 2017. That improving situation and outlook is attracting interest from across the border too, however, as, inevitably, the giants of IT sniff opportunities to sell more wares and hire more people.

The Technology Foundation of the Americas is a group that promotes the Miami area as the technology ecosystem in South Florida. On its website it says this:

“As one looks at the current technology landscape, there is a convergence of events taking place that heightens the importance of emerging markets like those in Latin America. Major technology companies are seeking new and burgeoning markets to fuel their growth, and IT leaders in emerging markets have an insatiable thirst for solutions that will enable their organizations to thrive in the global marketplace. Additionally, Latin America is home to a large pool of sophisticated IT professionals that are looking to launch technology businesses or enticing employment opportunities with the world’s leading technology companies.

“The Technology Foundation of the Americas believes that Miami is the ideal location to serve as the hub for the technology sector in Latin America. Recognized as the ‘Gateway to the Americas,’ Miami is the bridge that connects the world’s technology sector and Latin America.”

The Technology Foundation also operates eMerge Americas, a Miami conference covering LatAm trends and what those trends mean for the rest of the world.

It’s not the only US group seeking to benefit from Latin America’s new strength by blurring the line between US and LatAm interests. Microsoft has, in recent years, quadrupled staff to 400 in its Fort Lauderdale office where it oversees LatAm and Caribbean operations. The software giant also recently opened an innovation centre in downtown Miami’s Venture Hive community.

“We believe that Latin America is a land of opportunities,” Microsoft Latin America president Hernan Rincon told local newspaper the SunSentinel in April this year.

The ancient trade border of the United States and the Americas has always been lucrative, although some would argue that the richer northern side of the line has too often had the whip hand. Today, as technology becomes a major part of LatAm growth and the US craves access to skills and growing markets, a more balanced, mutually beneficial exchange may become possible.

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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