argentina-tech
Business Management

Argentina's IT Industry Aims to Become Regional Leader

Argentina's IT sector is going on a world tour. Since last year, the growing industry has ramped up its efforts to reach markets abroad, starting with Latin America and the US.

In early March, representatives from six software and IT services firms from Argentina traveled to the US to present seminars and promote their wares to potential clients and partners in Washington D.C. and Philadelphia, including the IMF, the World Bank and the OAS. The third and final stop was the large and curious crowd that attended the SXSW Interactive Festival in Austin. It was the second year that Argentina hosted its own booth at the internationally popular conference—but this time, the country's IT sector had something new to say.

What sets these six representative firms apart is their membership in a new trade promotion initiative created by CESSI (Spanish), the country's IT trade organization, which has 650 members. Red Argentina IT, as the initiative is known, was created in March 2013 to strengthen and expand the reach of IT firms abroad. Three months after this network was founded, 33 companies were already on board, with a current total of 36.

“The truth is there is no magic to it. If you want to sell, you have to be there,” says Sebastian Rodriguez, who serves as External Markets Coordinator at CESSI and oversees Red Argentina IT.

The biggest challenge in expanding abroad is in overcoming the difficulties that arise from lack of human contact. Many markets desire constant contact, and with the network, IT firms are pushing hard to increase their permanent presence abroad by making more trade missions and attending more conferences around the world.

CESSI's member representatives had been attending several trade shows each year in various countries around the world, but each experience further emphasized the need for a more permanent Argentine presence within particular markets, Rodriguez explains. Instead of attending two to four shows a year, companies in each of the five locations abroad are now attending 10 to 15 events, as well as hosting their own events abroad. For the US group in the network, attendance every month at the biggest and most important trade fairs and conferences in the US is the new goal.

Even the latest communications technologies don't help when the client wants to do business over a long dinner. And those are just the kinds of clients that Argentina's IT firms are dealing with as they expand across Latin America.

However, the US is also a big market for Argentina's IT firms: 50% of IT exports are to the US. One of the representatives on the March tour is Nancy Medica, CMO of Making Sense (a network member with 130 employees and growing) who says there is much more room for growth and that Argentina still needs to be positioned as an outsourcing destination.

“We need to defy the myth that people here don't speak English, or that there are problems due to the time zone or to cultural differences,” Medica says. In fact, she argues that as a nearshore outsourcing destination, Argentina offers the advantages of cultural and geographic proximity for better cooperation with the client, less travel expenses and lower total cost of engagement.

For now, the network consists of five country groups: Chile, Colombia, Mexico, Brazil and the US. The US group is the largest with 16 member companies, Colombia and Chile have 11 together, Mexico has six and Brazil has four.

To join the network, a company must already have done its homework on its target market and have traveled there at least once. There are also certain regulations that must be agreed to in order to maintain fair competition among companies. 

Rodriguez notes that “a lot of demand but medium supply” is one of the main reasons that Argentina's IT sector will continue to grow exponentially as it has since 2003, and why local IT professionals don't leave the country to take jobs abroad.

Expansion into even more markets will happen fast, Rodriguez says. There is much demand in Peru, and a Europe office, based in London, is in the works--but the network's current priority is to consolidate. Ultimately, the goal is for Argentina's IT sector to become the regional market leader, but there is huge competition from Brazil and Mexico.

Rodriguez hopes the number of companies in the network will grow as word continues to spread outside of Buenos Aires (where 60% of CESSI's member firms are located) and into more isolated tech hubs like Santa Fe and Cordoba. Although there are over 600 companies that are members of CESSI, he explains that more haven't joined the network for a variety of reasons.

“Some are happy with what they have, some are in an early stage and can't really take advantage of the network, some are not into the institutional thing, and then some just don't yet know about Red.”

However, non-network members still receive assessment assistance from CESSI.

Working closely with the Ministry of Foreign Affairs, CESSI enables heavy promotion and substantial financial support of the IT sector, funding programs for training high school and university students in IT skills and creating incentives like the Software Promotion Law--established in 2004 and most recently amended in February this year--which offers substantial tax breaks to qualified software and IT services firms. By 2015, Rodriguez says 50,000 new jobs will be created within the IT sector, in addition to the 30,000 jobs already generated over the past three years.

“We ask, ‘What do you need? What can we do for you?’ The companies in the network all have lots of initiative--we just coordinate. You need to go to that trade mission? Okay, we will arrange a pavilion. The network is theirs, not ours,” Rodriguez says.

 

Suchi Rudra is a freelance writer currently based in Buenos Aires and covers business, green building and travel.

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Suchi Rudra

Suchi Rudra is a freelance writer currently based in Buenos Aires and covers business, green building and travel.

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