Argentina
Argentina has the second largest IT market in Latin America. It also ranks as the nation with the most bilingual agents serving clients in the US and Europe.
Argentina's software market, worth more than USD $420 million, specializes in four strategic areas in the software and IT services sector: value-added IT services; healthcare; digital content and internet-related solutions; and agribusiness. Argentina shows potential in the areas of Web development, digital content, video gaming, and e-learning, while remaining highly competent in biotechnology and agriculture. Some of the companies who have put up their businesses include: HP, Oracle, Cisco Systems, Teletech, Motorola, Sony and Reuters, America Online, and Sonny and Reuters. Starbucks and Google have also recently invested in the country's services as well.
Prior to 2001 Argentina was considered a first-world country, with most of their investments focused on developing information technology, data centers, and telephone companies. The most lucrative careers were in the areas of programming, computer design, and telecom networking. The 1990's saw Argentina holding 65 percent of the labor force in designing, creating, and executing Internet start-up companies. However, the devaluation of the peso in 2001 led Argentina to lose its standing as a major economic power leaving much of the population unemployed. Lower office space costs and wages were prevalent, and many outsourcing companies used this to their advantage. This prompted the government to produce a ten-year plan for its IT industry, and some of their strategic moves were to double the number of private-sector IT exports and jobs and reduce the taxes of IT companies by 60%.
Although Argentina has its strengths, it also has certain weaknesses: high inflation rates are major roadblocks which could very well reach the salary ranges in the U.S. and Europe if remain unchecked.
Country overview
Argentina is the second largest country in South America with a population of 41.8 million and has one of the lowest growth rates in Latin America. Argentina is immensely urbanized, with the greater Buenos Aires metropolitan area one of the largest urban areas in the world.
Argentina’s official language is Spanish, locally known as Castellano. Nearly 1.5 million of the population speaks Italian, and an estimated 400,000 speak German. The Argentines are a fusion of mixed ethnic and national groups, with Italians and Spanish immigrants the most dominant cultures. In recent years Argentina has experienced high influx of immigrants from Peru, Bolivia, and Paraguay. Its religion is predominantly Catholic, although a dynamic Jewish community is scattered in the region, creating the largest Jewish population in Latin America.
Argentina has a GDP valued at USD $351 billion, or $596 billion when measured using the purchasing power parity. Argentina has suffered recurring economic setbacks throughout the 20th century, culminating with the most significant crisis 2001 which crippled the economy and gave way to widespread poverty. The economy rebounded in following years and its GDP grew 8.5 percent, giving rise to inflation causing a significant economic slowdown.
Source: CIA Factbook, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Cost competitiveness
Argentina has one of the least expensive outsourcing markets for voice-based agents providing customer care, especially Spanish call center businesses. The devaluation of the peso in 2001, along with a maturing domestic market and competitive wages have made Argentina more appealing to foreign investment.
Employee compensation
Argentina maintains a highly trained pool of software engineers with salaries higher than Indonesia, the Philippines, Pakistan, and India. An Argentine software engineer with one to four years experience typically commands 21 percent of US salaries, averaging USD $12,400. Senior level developers offer comparable savings, with wages of 18 percent of their US counterparts. Argentina offers significant savings for operating projects in Brazil, which has wages of 43 to 56 percent of US salaries for software engineers and developers.
I.T. Project Managers in Argentina have salaries comparable to Mexico, Thailand and Malaysia, at 33 percent of US salaries. Brazil has wages much higher, at 69 percent. Non-voice BPO resources with limited experience earn 18 percent of US salaries, while senior level resources earn 34 percent.
Real estate
Argentina's global office rents, particularly in Buenos Aires, recorded the largest downgrade in South America, with a -14 percent decrease while the region's biggest economy, Brazil had a -8 percent decline. Colliers International’s 2011 Global Office Review quotes class A office space in downtown Buenos Aires at USD $32 per square foot annually, while suburban Buenos Aires real estate typically rents for $26 per square foot annually. Argentina places eighth among the top ten countries with the most competitive office rates in the world.
Taxes
Argentina has a corporate tax rate of 35 percent, and an indirect tax rate is 21 percent. Argentina also gives a 60 percent tax exemption on total income taxes for software companies, a 70 percent reduction on employers' social contributions for employees and ten-year tax stability. There are also tax exemptions for companies who set up their companies in the IT district of Buenos Aires and reimbursements on real estate in Cordoba.
Source: PayScale, SourcingLine, February 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: CB Richard Ellis, Colliers International, SourcingLine, March 2010
Source: Colliers International, SourcingLine, March 2010
Source: KPMG, October 2009
Source: KPMG, October 2009
Source: Doing Business (World Bank), 2010
Resources and skills
Outsourcing sector
Argentina exported USD $770 million in IT professional services and $3.7 billion in technical and business services, and another $897 million of computer and information services. Argentina has the potential to excel in Web development, digital content, e-learning, and video gaming. Its software and IT services specialize in value added IT services, digital content, Internet solutions, and healthcare.
Education and skills
Argentina values education, as education promotes national unity. Federal taxes fund all levels of education except graduate studies; public universities are free and open to anyone. Argentina has the largest number of university students in Latin America, ranking eighth globally. Since 2006, IT-specific educational programs and computer science and programming scholarships have been offered by private and public sector corporations to attract more students.
Language
Argentina is multilingual, with a large portion of the population speaking Spanish, German, English, Italian, and Portuguese. English is more common among the younger population. Buenos Aires was the first city to implement multi-lingual public schools in Latin America. These strong language skills help to make Argentina’s workforce of 16.6 million competitive in the global sourcing market.
Source: CIA Factbook, 2009
Source: IMF, 2008
Source: IMF, 2008
Source: UNESCO, 2009
Source: UNESCO, 2009
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: UNESCO, 2009
Source: UNESCO, NASSCOM, SourcingLine, 2009
Source: UNESCO, 2009
Source: International Telecommunications Union, 2009
Source: International Telecommunications Union, 2009
Business and economic environment
Economic competitiveness and stability
According to the Global Competitive Index published by the World Economic Forum, Argentina has a GCI score of 3.9, low compared to China (4.8), Malaysia (4.9), and Brazil (4.2). Argentina’s macroeconomic stability is indexed at 4.8, beating Brazil’s 4.0 index .
Infrastructure
Argentina’s road quality is average, with a 3.3 quality index, far below Chile’s 5.9 score. Electric supply is indexed similarly, falling below its neighbor’s score with just 3.8 against Chile’s 6.0 index.
Regulation
Argentina ranks 115 among all countries for ease of doing business due to several factors. Complexity of starting a business is low, taking an average of 26 days to create a start-up, compared to its neighbors: Brazil takes on average 120 days and Costa Rica 60 days. Major players in the global sourcing market offer similar numbers to Argentina - India is 29 days and Malaysia is 17 days.
Legal protections and intellectual property
Argentina’s contract enforcement is average with 36 procedures, and time to enforce is also average at 590 days. Brazil’s typical enforcement time is 616 days, Chile’s is 480, and Costa Rica’s is high with 852 days. Contract enforcement is the same as Brazil, costing 17 percent of the total contract value. Intellectual property protection in Argentina scores 2.5 on the global index, while Brazil scores 3.1, the US scores 5.1, and India scores a 3.6 index.
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: International Telecommunications Union, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Transparency International, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: The Global Competitiveness Report, 2009
Source: BSE-IDC Global Software Piracy Study, 2009