Q&A: What Is Ecuador’s Outsourcing Investment Game Plan?

Ecuador has received relatively little foreign investment compared with much of Latin America in recent years, but in 2011 President Rafael Correa announced his “sincere interest” in attracting investors and his government has now prioritized IT as one of the key sectors of the economy.

Manuel Echeverria, the director of export promotions agency Pro Ecuador, and Karina Amaluisa, Ecuador’s Trade Commissioner, tell Nearshore Americas about the government’s efforts to kick-start the Andean nation’s latent ITO industry.

Nearshore Americas: What does Pro Ecuador do to promote the country and particularly ITO services?

Manuel Echeverria: Founded in December 2010, Pro Ecuador is the official public institute in charge of implementing policies and standards to promote exports and investment in Ecuador. Pro Ecuador works to show the best of our country to the world. Our work focuses on organizing and supporting the participation of Ecuadorian entrepreneurs in international trade fairs, trade missions, and business matchmaking, also participating in important investment meetings worldwide.

Karina Amaluisa: Since Pro Ecuador is the trade and investment promotion institution, it’s also in charge of promoting the prioritized sectors for the economy that have been chosen from the government. One of those prioritized sectors is IT, and there are two projects named Yachay and Parcom that Pro Ecuador is supporting. Both of them have particularities for being developed and are susceptible to access to some incentives that are regulated through the Code of Production (click here for more information on the former).

NSAM: What are the most valuable products or services on offer in Ecuador?

Echeverria: Ecuador has many high quality products to offer. Our great diversity has made it ​​possible for us to produce food products such as fruit, vegetables, seeds, fish, coffee and cacao, and other products, such as wood or fibers, which are used for manufacturing. We also produce a huge variety of wooden furniture, colorful textiles and leather goods and footwear, as well as beautiful local crafts. Ecuador has also developed tourism responsibly. It offers facilities to invest in this sector, incorporating community tourism as a new and exciting option. In addition, there are areas with the best conditions for visitors seniors decide to make this them home.

NSAM: How big is the outsourcing industry in Ecuador? 

Amaluisa: During 2012, there were about 256 companies, with 75 involved in administrative and office support; 25 in call centers; 98 in expos and trade exhibitions and 58 others for support companies in these fields. Most of them are working with their own capabilities and national resources.

NSAM: What makes Ecuador a favorable destination for outsourcers?

Amaluisa: Outsourcing is in an incipient stage in Ecuador, but we have very strong human resources with engineers and technicians able to tailor make IT services depending on the demand. Most of the companies are small and medium size so they can adapt quickly and respond efficiently to the demand of their clients or partners.

NSAM: What incentives are there for investing in Ecuador?

Echeverria: : General incentives for investing in Ecuador include: a 10% reduction of income tax for investing the profits in productive assets; payment deferment of income tax up to five years, for opening the stock equity of the company to employees; exemption of the advanced payment of income tax for five years for new investments by new companies; and exemption of the ISD on the re-payment of interest of foreign loans. We also offer a number of additional incentives in more specific cases.

NSAM: How much foreign direct investment does Ecuador receive each year?

Echeverria: : On average, from 2002 to 2012, Ecuador has received approximately $564 million per year in USD foreign direct investment, according to the Central Bank of Ecuador. Our largest destination of FDI for the last 10 years has been the mining sector.

NSAM: Which countries have invested the most in Ecuador?

Echeverria:  The Central Bank of Ecuador reported that from 2006 to 2012, Mexico provided the most foreign direct investment in Ecuador with $1.36 billion USD, followed by Panama ($523.64 million), Spain ($412m), China ($410.57m), Canada ($335.65m), the Virgin Islands ($190.71m), Colombia ($115.69m) and Venezuela ($98.88m). In the last 8 years more than 10 companies from the United States have also invested approximately $400m; among them: Amdocs, Google, Financial Software Systems, Yellow River Mining and General Motors.

NSAM: Which are the most prominent high-tech or IT firms based in the country?

Amaluisa According to the official data base from the Companies Superintendency, there are approximately 385 companies working in the programming software, IT Consultancy and some others related. The most prominent IT companies are Macosa, COBUS, KRUGER CORPORATION and Agrosoft.

NSAM: How long does it take for a foreign company to set up operations in Ecuador?

Echeverria: According to World Bank’s “Doing Business” magazine, it takes 52 days for a foreign company to set up operations in Ecuador.

NSAM: What percentage of workers in Ecuador speak English?

Echeverria: About 5% of Ecuador’s population speaks a language other than Spanish; however, 80% of business people in Ecuador have a high level of English.