Almost a year ago, Nearshore Americas analyzed Argentina’s effort to become a more visible player in the nearshore sourcing market. The country already hosts multiple large global companies like Motorola, Microsoft, HP, IBM, Sony, Starbucks and Google. However, although the country has long been an option for service centers, it has not managed to ascend to the levels of popularity seen in destinations like Brazil.
With the new emergence of a thriving tech entrepreneurial community, a strong social media story and increasing international attention, is Argentina shedding its mercurial image and driving to become a true leader in the sourcing community of the Americas?
The Road Traveled
During the Internet revolution of the 90s, the then affluent Argentina was a significant participant. The country was a source of multiple web start-ups and contributed a highly educated workforce to the market. Argentina used its wealth to make significant investments in education and infrastructure to occupy a leading position. However, in 2001 the peso was devalued, creating a market containing an educated, technically astute workforce with limited employment opportunities.
One country’s crisis is another’s opportunity. The economic environment made Argentinean cities, like Buenos Aires, a very affordable option for U.S. companies. Energy costs are 30% to 60% cheaper than in the U.S. and real estate is similarly affordable. These are real savings, but the cost of workers is notable. The salary of a contact center resource is on average less than Indian firms, attractive for a country that a one hour time difference from the east coast.
So why has the country moved to front of the nearshore pack? Many point to bad marketing others to the complex regulations and unionization of the country. It’s likely some combination of factors, but, whatever the reason, Argentina has not become a leader in the market. The environment may be about to change.
Enter the Entrepreneurs
Analyst firms from Gartner to Forrester project social media to be a major business driver over the next few years. The overwhelming consensus is that social presence will be a significant factor in sales. And, Twitter is big in Argentina.
Twitter’s lead engineer for its International team, Matt Sanford, said over 60% of registered Twitter accounts were already coming from outside the U.S. The fastest growth, according to the data is in Argentina, Brazil, Colombia, Mexico and Venezuela. Twitter began support for Spanish in 2009, but growth in Latin America really accelerated about a year later.
Nearshore Americas spoke with Leandro Henflen COO and Founder of Tangelo, a digital marketing agency focusing on mobile applications. One of the company’s founders is in Silicon Valley, CEO Antonio Altamirano, and the other, Henflen, in Río Cuarto, Argentina. The company offers mobile technology services to U.S. companies. “More and more we see how important it is important for companies in Argentina have a Facebook and Twitter account,” says Henflen. “More and more companies are using Twitter as a support channel and Facebook as a tool for promotions. It was a huge step in Argentina.”
The social interaction facilitated by Twitter allowed a loosely coupled group of entrepreneurs to form Palermo Valley in Buenos Aires. Palermo Valley is a non-profit that connects individuals from business community and the Internet industry. The group started in the Palermo neighborhood of Buenos Aires and has since expanded to other areas of Latin America including Chile, Chile, Uruguay, Peru, Colombia, Venezuela, Panama, Costa Rica and Mexico. Palermo Valley now organizes regular events and training that draw more than 500 participants, according to Sally Buberman a Palermo Valley organizer. The group also went to Silicon Valley to get startup inspiration at the end of last year.
Twitter made this possible. The movement would not have been able to reach its current momentum without the social medium platform. Technology entrepreneurship is growing despite the still emerging venture capital infrastructure in the country. Palermo Valley enhances relationships by facilitating access to experienced entrepreneurs and supporting a culture of innovation and risk taking for participants.
Buberman said that investment is growing internally, but traditionally it been difficult for financial institutions to provide funds for things they can’t touch and see. New sources of seed capital from organizations like 500 Startups is attracting new market entrants that can offer unique services internally and to the outsourcing community.
Argentina’s effort to become a significant provider of technical services resources is not limited to traditional strategies or even online social media. The country is a destination for the innovative Geeks on a Plane (GOAP) South America program, which is underway 04/29/2011 to 05/08/2011.
Social Introduction Spurs Sourcing
GOAP is an invite-only business travel and cultural exchange program comprised of US and international entrepreneurs, techies, investors, and bloggers. The current session of GOAP is visiting technology hubs in Brazil (Sao Paulo & Rio de Janeiro), Chile (Santiago) and Argentina (Buenos Aires). The endeavor includes participants from many well-known organizations like:
- Simply Hired
- Google (Brazil)
It also supports Latin American entrepreneurs and investors such as Endeavor, Start-Up Chile and Palermo Valley. Why does this matter? It exposes U.S. firms to the technology delivery that is possible in Argentina, a fact that has not been well publicized. Startups can frequently offer client an agile engagement model that large multi-nationals may not be nimble enough to execute.
Despite the technical innovation and entrepreneurship, there are still challenges with Argentina leading the Latin American outsourcing market – humans. Last week, the Central Bank of Argentina said, “For 2011 an expansion in [economic] activity superior to 6.5% is expected and an unemployment rate close to the lowest levels of the last 20 years,” when discussing the country’s GDP growth.
The low unemployment rate coupled with a population of over 40 million, smaller than some of the other major Latin American technology hubs, means the country may not be able to meet rapid and continuing rises in demand, should momentum increase and continue to rise.
Given the growth of social media outside the U.S. , its popularity globally and the close cultural relations between the U.S. and nearshore service providers like Argentina, we may soon see social media campaigns transitioning from domestic endeavors to becoming another service offering for Latin American startups striving to creating new markets.