Nearshore Americas

Cuba’s IT Ecosystem is Getting a Kickstart from a Well Positioned Player

Cuba is not a great example of a model based on knowledge and intellectual assets as sources of competitiveness and long-term economic growth. 

The island’s centralized economic planning and overreliance on tourism, remittances and more recently the controversial exports of medical services, has so far sidelined technological innovation, save a few exceptions: the local biotechnology industry exports medications to global markets and has produced five vaccine candidates against Covid-19, three of which have emergency regulatory approval. 

But amid the worst economic crisis in 30 years and the ongoing impact of the pandemic, Cuba’s government is trying to update its technology policy and approach to innovation. 

Science and technology parks are a novel addition to the new strategy. Now, the Havana Science and Technology Park (PCT), headquartered at the University of Computer Sciences (UCI), is set to become a prominent innovation ecosystem on the island. 

Sandra Madiedo, founder of Archipiélago Startapero

PCT, inaugurated in 2020, plans to operate as an incubator, efficiently integrating universities, research centers, foreign capital, local startups as well as state resources. 

“The Park tries to provide an umbrella for all the high-tech projects developed by UCI’s faculty, alumni and students. It’ll reach small private startups as well, providing a legal, flexible framework with adequate infrastructure to incubate all kind of businesses and produce high-value products and services,” said Sandra Madiedo, a Havana-based digital strategy consultant and founder of Archipiélago Startapero who has been following the Park’s development since its opening. 

Cuba’s Quality Human Capital Highlighted

Cuba has long been praised as an educational powerhouse in Latin America. However, the Caribbean country hasn’t yet seen the full results of its investment in education. Constant brain drains, limitations on private initiatives and the monopoly of the state over the exercise of professional services, means Cuba’s human talent has been unable to flourish. 

Despite this, the country is known for having an underground outsourcing ecosystem with an endless supply of developers who provide services to foreign clients. This previously informal service provision arrangement is now being formalized with the help of the PCT, which is providing the space and professional surroundings for these types of technology services and jobs.

Foreign companies are already taking advantage of the opportunity to hire local talent in Cuba. This is the case of SMaBiT, a European company which became the first international client at the PCT. SMaBiT develops integrated hardware for smart home sensors, industrial gateways and security cameras, as well as network platforms for the management of IoT devices and video analysis.

Peter Hoyer, managing director of SMaBiT

“Back in 2018 we were looking for development resources for both our software and hardware products. After looking at places like Mexico and Colombia, we decided to go to Cuba. At the beginning we engaged freelancers, basically private people doing work from their homes,” said Peter Hoyer, managing director of SMaBiT. 

“But we wanted structure. The goal was to fully employ our people and provide the correct framework for them and our clients. Now we have an office at the PCT with nine people and we’re looking to expand,” added Hoyer. 

PCT relies on the technical talent trained at UCI as well as the staff hired by companies located in the Park. 

“The talent coming out of UCI is highly qualified. We have one of the highest rates of STEM graduates in Latin America. It’s great to see that now they can get exposed to international business practices and new technology,” said Madiedo. 

For Hoyer, the hiring process can be an obstacle for foreign companies entering the Cuban market without previous experience. 

“You wouldn’t expect it from Cuba because the country doesn’t have any IT manufacturing exports, but the knowledge here is excellent” — Peter Hoyer

“PCT doesn’t provide strong talent sourcing capabilities for specific functions and expertise. If you already have freelancers in Cuba, the Park is a great way to formalize them. Realistically, outsourcing the hiring and managing of employees to the Park has limitations as a business practice, but if you can find the right people, then the results are excellent.”

The company began its Cuban experience hiring software developers but then found strong computer engineers in areas like PCT system design. 

“You wouldn’t expect it from Cuba because the country doesn’t have any IT manufacturing exports, but the knowledge here is excellent,” Hoyer said.

New Technologies, New Opportunities in Cuba

The Park has already signed around 40 projects prioritizing strategic areas such as big data and data analytics, the electronics industry, cybersecurity, energy efficiency and solutions for healthcare and the pharmaceutical industry. The agreement with AlaSoluciones, a local private company developing technological solutions for agriculture, security and other industries, has elevated the expectations about the Park’s potential to generate high impact products. 

Other signups include EMSI Farma, which works on the automation of already existing processes, particularly in healthcare. The small, Havana-based company developed the main software behind the ventilators used in Cuba to treat Covid-19 patients. 

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“The Park is a great opportunity for Cubans as well. The Park acts as some sort of commercial representative for local companies and employees and takes care of legal issues and other matters. The Park then takes a low, fixed percentage of all revenues as a management fee,” Hoyer explained. “We get many advantages in return. We can import all the hardware that we need without tariffs or limitations.”  

The PCT offers similar opportunities and conditions to other initiatives of its kind in Latin America and the Caribbean. “At the moment, the objectives and the legal framework of the Park are very similar to other technology parks around the world,” Hoyer added.

For Madiedo, the one thing to worry about could be how disconnected PCT is from international business practices.

“I believe that it is still a bit detached from the business logic that prevails in the world. So far, many companies have a legal backing, access to infrastructure that is privileged to a few. We have to study very carefully issues around unfair competition and how it will affect the services and products in both the local market and exports,” she said. 

Bryan Campbell Romero

Bryan Ch. Campbell Romero is the Investment and Policy Editor at Nearshore Americas. He also contributes to other publications with analysis on political risk, society and the entrepreneurial ecosystems of Cuba and the Latin American region. Originally from Cuba, Bryan holds a Bachelor’s degree in Philosophy (Licenciatura en Filosofía) from the University of Havana.

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