Bolivia doesn’t often make the headlines in the Nearshore news roundup. Until recently, there’s been good reason for US companies to overlook it. An inactive investment promotion scene, mixed English abilities and an inward-facing tech industry provided plenty of reasons to avoid the country. Now, however, a former manufacturing hub is growing its status as the country’s leading tech destination.
“Since 2001, there has been a slow build up of the tech ecosystem in Bolivia generally, and specifically in Cochabamba. During the last five years a lot of software companies have moved in and we’ve seen the real estate market grow as a result,” said Wilfredo Vargas, Bolivia Country Manager at Encora, a global IT services firm.
“Last year business in Bolivia grew rapidly, doubling in size of operation and revenue generation. We have professionals in La Paz and Santa Cruz, but Cochabamba now represents about 70% of our 150 workforce in Bolivia and is at the center of this change,” he added.
Bolivia’s population is just over 11.6 million, and Cochabamba, in the center of the landlocked country, is home to about 10% of the population. There are some 60 software companies – large players like Encora and other Bolivia natives including JalaSoft, as well as small national shops trying to find gaps in the market.
With the digital transformation of global organizations accelerated by the pandemic, Cochabamba is proving a solid hunting ground for specific and in-demand IT skillets. The ratcheting pressure to find greater volumes of skilled labor is offering the city, previously off the radar of many major US companies, to take a second look. Stakeholders are hoping that as Cochabamba’s Nearshore fortunes turn, Bolivia’s overall tech ecosystem can become a focus of government investment for future growth.
Skill Sets and Salaries
Cochabamba’s gradual pivot from national market provision aligned with its position as a logistical hub to outward facing Nearshore delivery means that the skills on offer are still heavily heavily influenced by local requirements.
The city is not unique in this. In Bolivia, the nature of the internal market means nine out of ten software devs have at least five years learning in systems engineering.
Now this is changing.
Miguel Paco, president of Cochabamba’s Informatics School, which offers bridging courses to professionals and helps bolster preparedness of new graduates for the job market, highlighted the different skill sets that the international market demands from Cochabamba.
“Both the international and national markets now try to contract talent as early as possible but the national market looks for more robust or mature skillsets, Open Source technologies like PHP. In contrast, the international market demands skills in recent technologies like React and Angular,” he explained.
The creation of the school was in part necessary to produce the talent that the growing international market was looking for. While foreign companies wanted to hire talent from the city, students lacked a level of job-ready preparedness in modern technologies. Though universities provided a bedrock of technical understanding, organizations were, at first, unwilling to refine that understanding through on the job experience.
While foreign companies wanted to hire talent from the city, students lacked a level of job-ready preparedness in modern technologies — Miguel Paco
“Five years ago we recognized a problem that companies could not hire talent because they were not completely ready to work. Companies were unwilling to meet the additional cost and time — the two or three months — that new recruits needed to get up to speed,” he said.
But the clamor for IT skills worldwide has opened that opportunity for new graduates, and talent is flourishing in certain areas.
“Cochabamba’s strength is with object oriented programming,” said Ivan Jordan, Bolivia managing director at Willdom, a regional talent sourcing company.
“There are really strong communities with quality professionals around .Net and Java, and many companies here use these technologies as a base. The majority of the universities in Cochabamba form their engineers in Java but most graduates switch to .Net as the market demands,” he said.
Vargas agrees that Cochabamba offers serious .Net capabilities, but underlines that the city cannot offer the full gamut of programming languages that the digital transformation is calling for.
“Front end development and mobile development significantly grew in demand last year. That means we’re looking for people specialising in React development. But there was also an increased need for DevOps, and we’ve found them hard to find in Cochabamba, so most of our hires in DevOps have been made in La Paz,” he said.
Despite Cochabamba’s rise to the forefront of IT in Bolivia, salaries remain cheaper than the capital, La Paz, or Santa Cruz, says Jordan.
There’s a realization in Bolivia that this is something we should do, but authorities don’t seem to know where to put money or effort — Daniel Andrade
“Willdom has a policy to pay employees based on knowledge not on place, but obviously expectations on salaries do vary depending on the country,” he said.
“A senior engineer in Bolivia usually requests between US$4,000 and US$5,000 monthly against, for example, US$5,000 and US$6,000 in Argentina. Costa Rica is about the same as Argentina. And that’s because the price of living is certainly cheaper in Bolivia.”
Direct Connections Don’t Come Cheap
In September 2020, Bolivia activated its first and only optical fiber network providing direct connections to international telecom networks. The 2,000km line through Peru helped end the country’s reliance on leasing data internationally and Interim President Jeanine Áñez declared at the time that with the activation “Bolivia enters the age of fast and cheap internet”.
But as a landlocked country, access to the Pacific still means going through Peru, and while the direct connection provides high-quality internet with solid speeds, it isn’t particularly cheap.
“I’m working from home right now, and my connection delivers 70mbp/s. It costs about US$80 per month,” said Jordan.
Intentions to Push Cochabamba as a Nearshore Destination
Daniel Andrade, a social entrepreneur and president of Fundacion Progreso, a social investment initiative that seeks to build industry in Bolivia, explained that the country’s investment options are far shallower than regional neighbours.
“One problem is the universe of investable options, meaning the pipeline of companies there are to invest in. We have three or four major tech companies doing very well for themselves, but we haven’t been able to articulate a wider community of actors – from the public sector and universities – to provide companies with the people they need to populate the organizations and to find bigger markets,” he said.
“They haven’t been aided by formal public policy decisions to push Cochabamba to become this fully-fledged tech hub. There needs to be more support to help grow those smaller companies and mature the ecosystem.”
Government-led efforts like the Ciudadela Clientífica de Cochabamba have been talked up, but little to no progress has been made. A specialist in public policy, Andrade understands the need for state sponsorship if Cochabamba is to move to the next level and become a true regional tech destination, yet he has reservations about the government’s ability to lead that charge.
“There’s a realization in Bolivia that this is something we should do, but authorities don’t seem to know where to put money or effort. More likely than not they think it’s an infrastructure problem, literally the building of something tangible. But the problems are generally financial – all the funds the government has procured for tech are very difficult to access,” he said.
Indeed, relevant information and concrete data sets are difficult to find from any government source. For now, the private sector is taking the lead on development in Cochabamba, though without a central association plans are informal. The city’s industry stakeholders have reportedly discussed plans to grow the number of Nearshore engineers in the city from around 5,000 to 20,000 in the next five years, but no formal target has been agreed or published.
While local behemoth JalaSoft is helping promote the industry’s interests through outreach initiatives at local universities, a sustained public-private effort has yet to be seen.
Population: Urban area is approximately 856,000 while Greater Metropolitan Area is 1,337,000 in 2020.
Universities: Mixture of 14 tertiary education institutions
Connectivity: Single optical fiber network that connects to the Pacific via Peru
Languages: Spanish speaking population with mixed English abilities. This is a hurdle that the city will need to overcome in order to truly fashion itself as a Nearshore hub.
Main Industries: Agriculture, industrial manufacturing and logistics
Transportation Infrastructure: Jorge Wilstermann International Airport