Argentina: A Top Nearshore Outsourcing Destination for IT Companies

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 salaries, this country is definitely the one to beat. Let’s dive into the specific qualities that make software development outsourcing in Argentina a safe and highly profitable opportunity.

Software Development Advances & Investments

Software development services in Argentina have experienced outstanding growth in the last decade. Even when the rest of the industries in the country were struggling to generate revenue, the IT industry was constantly growing (according to IDC, in 2021, Argentina’s IT industry will experience more than a 10% growth rate).

Investments

In terms of investment, according to the Software and Computer Services Industry  Permanent Observatory’s (OPSSI) most recent annual report (2019):

• In Argentina, software development is the main source of foreign investment (58%), and accounts for 33% of the local market (the remaining 66% is  telecommunications).
• Foreign investments in software decreased by 9.4% in 2020, mainly because of the pandemic. In spite of this, the number of employees grew by almost 7%.
• around 70% of IT companies in the country invested in research and development in 2018. IT-related exports in 2019 generated approx. $1,8 million, accounting  for 2.4% of the country’s GDP (depending on the foreign exchange rate, this percentage can increase significatively).
• Since the Software Industry Promoting Act (Ley de promoción de la industria del software)  was signed into law in 2004, more than 1.500 projects have been financed since then, impacting the development of this industry in the country, increasing demand and opportunities for local talent, and attracting international investors.

Several of Argentina’s software development companies have become incredibly successful over the years: Mercado Libre, OLX, Globant, ASSA, Prominente, Baufest, Neuralsoft, Calipso, Beltratix and Despegar.com.

Software development outsourcing to Argentina has also prospered in the last decade. The country has managed to attract international companies such as SAP, IBM, Hewlett Packard, Motorola, Accenture, Capgemini, McAfee and Oracle. Their need for skilled developers has increased demand, which has led to a more diverse educational offer and more employment opportunities.

Tech Hubs

Despite the fact that Buenos Aires is the epicenter of technological advances and a software development center in Argentina, 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 them working 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 or the Rosario Technological Hub.

These hubs have undertaken all sorts of activities, including promoting and participating in government-funded programs, providing business opportunities or financing to local companies, promoting networking and matchmaking events with investors and businesspeople. They also provide training and professional internships, and have 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 continue to grow.

WeWork’s CEO in Latin America, Tomás Calusio says that the number of members of WeWork has grown exponentially in the last few years and they expect numbers to continue to rise in the coming years. WeWork is also building the largest coworking space in Latin America in Argentina, capable of housing 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. Around 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 biggest 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 bear 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 that has raised more than 900 million dollars from 150 investors.
• CITES, from local insurance corporation Sancor Seguros, provides investment for shares of the startups and has a 24 million dollar venture capital fund.

Skills & Employment

In terms of development skills, Argentinians are among some of the best in the world, especially when it comes to computer programming (80%) and mobile development (89%), according to Coursera’s 2021 Global Skills Index. In terms of data science, Argentina is considered a competitive nation and ranked third in Latin America, especially in data analysis (100%) and statistical programming (91%).

According to the OPSSI report, between 2007 and 2016, the number of IT companies in the country increased by 37%, and today, more than 5.000 companies operate in the country, employing over 100,000 people.

As to how big the talent pool is, according to CESSI (Argentinian Chamber of Software Industry) the number of developers currently working in the country is 115,000, earning approximately 110,000 Argentine pesos (1100 U.S. dollars). Yet, by 2030, CESSI estimates the number of these professionals will ascend to 500,000.

Also, around 30% of Argentina’s developers are currently working specifically in app development.

Software outsourcing to Argentina means companies can tap into all this present and future talent.

‍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 computing-related careers and more than 50 local universities offer IT studies. Enrollments in tech degrees have increased significantly in the last few years, in part because of market demands but also because of government incentives and grants such as Plan 111mil and BEC.AR, that help attract and retain students.

More recently (2021), the government launched Argentina Programa (Argentina Codes), a national plan that provides 60,000 scholarships for a programming course, as well as 100,000 Argentine pesos to buy computers and a free Internet connection.

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 bachelor, master 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 opportunities in software development, 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 careers (3 years), bachelor degrees (4 years) as well as short two-year courses on several different IT-related courses.

According to CESSI, the best new IT-related careers 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.

English Proficiency

According to Education First’s 2020 English Proficiency Index, Argentina ranks #1 in Latin America and #25 in the world when it comes to the country’s level of English, 2 places more than in 2019. The capital city is the most proficient area in the country, followed by Santa Fe, Cordoba and Mendoza.

Having a high level of English, according to EF, means argentinians are able to successfully make 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 for companies thinking of outsourcing to Argentina, since developers must be able to 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 early age

‍Connectivity

According to the Cabase (Argentinian Chamber of Internet), 68% of all Argentinian homes have access to fixed internet, with an average speed of 40,67 Mbps (30,05 mbps in mobile internet). Speedtest’s 2021 Global Index report indicates that Argentina is among Latin America’s top 10 countries in terms of internet speed.

Additionally, 12,1% of all internet connections in the country are via fiber optics (approximately 33.000 km of cables placed), considerably bringing internet prices down.

In terms of mobile connectivity, Argentina went from just 5 million 4G mobile users in December, 2015, to 29 million by the end of 2018. Currently, there are 125 mobile lines every 100,000 inhabitants,

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 Brasil, Chile and Costa Rica, outperformed only by Uruguay, according to GSMA’s “The State of Mobile Internet Connectivity 2019” repo‍

Argentina as a reliable nearshore destination

Argentina has a talented pool of IT professionals with strong English skills.  Considering that rates are cost-effective in comparison to the US, the time difference is minimal and culturally they are very similar to Americans, nearshore software development in Argentina can definitely blossom.

The potential is there, ready to be unlocked.