Nearshore Americas

Nearshore Wage Comparison: Argentina Offers the Best Bargain in IT Talent

Argentina is criticized for a lot of things – and Nearshore Americas has not shied away from pointing out where the country’s weaknesses are. But when it comes to finding good talent at a good price, Argentina is near the top of the pyramid among major IT services destinations in Latin America.

We investigated the issue by inviting one of Argentina’s top IT journalists –  Mariana Pernas – to find out just how much of a bargain Argentina is today. Read on to see what she found.

Movement Toward Specialization
Argentinian based IT global services providers have grown quickly to match Nearshore sourcing demands, and are likely to emerge from the international economic crisis largely unscathed. Salaries of IT professionals have increased as well, but still remain lower than in other Latin American countries. According to Julio Sánchez, Manager at advisory services firm Towers Watson, “High tech companies are currently worried about the problem of talented worker retention because it is crucial for their business. But the local IT industry is getting more specialized, adding value with quality certifications, knowledge and security requirements that clients now need.”

The Towers Watson analyst remarks that during this year – similar to what happened in 2009 – IT companies will make lower salary increases than other sectors of the economy. “While we expect a 16% or 17% salary increase rate in the general market for 2010, IT enterprises are probably going to show 13.5%. But in the second part of the year we expect an additional 2-4% payment increase”, he says. “On the contrary, telecommunications firms will give a higher increase of 15-16% of salary”, Sánchez affirms.

A survey carried out by Towers Watson (see chart above), claims that the annual total cash salary that a Senior Analyst receives – this includes program developers, testers and architects – is US$ 21,369, while the same position in Brazil is paid US$ 39,054 and in Mexico US$ 35,105. The salary differs for each technology however. “Java and .Net program developers are among the better paid and most demanded IT professionals in the Argentinian market. And as SAP application investments grow, which is expected, ABAP programmers will be more required by companies”, says Sánchez.

On the other hand, Sánchez admits that 2009 bonuses in the IT market jumped between 10% and 15% in the Latin American region.

More than a Cost Play

High tech companies have their own point of view. “In the case of senior professionals, the local costs are 60% lower than Europe and the US”, says Claudio Della Penna, VP Global Services at Grupo ASSA. But he remarks: “Although cost competitiveness is important, our clients appreciate skills like knowledge, flexibility, commitment and creativity to solve problems”.

Grupo ASSA is a 1,000-person Argentina based company which provides consultancy and outsourcing services in SAP, Oracle-JD Edwards and legacy software to the US, Chile, Brazil, Mexico, Colombia, Peru and Belgium among others.

The local subsidiary of Mexican firm Softtek, which employs 400 professionals in Argentina, also provides SAP, Java and .Net application services to LATAM and US markets. Javier Porreti, Softtek Commercial Regional Director, emphasizes the lower cost of the services supplied from Argentina. He gives some examples: “The final price in Argentina is 30% lower than the US, 50% less than Brazil, 60% less than Chile, and 70% lower than Colombia and Mexico”. According to him, Argentinian IT companies are strong in software programming.

Porretti also admits that providing Nearshore “products and customized applications is more difficult because it implies more interaction with users”. He concludes: “As salaries represent 80% of those business costs, the compensation cost measured in dollars is the main driver of competitiveness.”

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

3 comments

  • I believe that Uruguay should've been included in this compairason, as it is not only cheaper, but also has been the a neural hub for many outsourcing companies in the last 20+ years leveraging this type of services.

    • We know Uruguay has a story to tell. Stay tuned, a special report on your country is in the works as we speak!

  • Seems like the inflation rate in Argentina is specifically worth mentioning at 25-30% annually based on most private consultants since this one factor could completely change the game in and the comparison in less than a year's time. I'd hate to see someone establish a presence in Argentina based on information in this article to find that the value proposition evaporated before they could even get established.