Nearshore Americas

Paraguay’s Software Sector Soars Despite Botched Presidency

By Jon TontiThe same behavior that got Paraguayan president Fernando Lugo kicked out of office – mainly not consulting with relevant constituencies and mandating his own ill-informed agenda from the top down with poor results – has also put a temporary dent in the country’s surging ICT sector.

“He launched an Information, Communication, and Technology policy without consulting the ICT sector, at least not in any kind of comprehensive way,” explained Pedro Yambay, President of Inventiva, a provider of Oracle and Microsoft based enterprise solutions.  “There was a lot of inconsistency, writing policies with one hand and erasing them with the elbow.  His government took a very strong position on open sourced software, adamantly encouraging it be used and taught without weighing what is actually the best solution – obviously people need to know how to manage both open source and proprietary software.  There was also a lot of corruption in hardware and software procurement services for the ministries on top of just mismanagement / half-done projects left to die,” stated Yambay.

“Despite all that, our ICT sector is a experiencing a 14% year-on-year growth rate, we are growing tremendously.  And because we produce a lot of hardware here we have some of the cheapest hardware costs in the region,” he exclaimed.

Paraguay grabbed headlines this past week for the expedited impeachment of Lugo, a former Roman Catholic Bishop that was thrown out of office with a 76-1 vote in the lower house and 39-4 vote in the Senate.  The impeachment comes on the heels of a clash between police and landless farmers that resulted in 17 dead, seven of them police officers, in Curuguaty, a rural community near the border with Brazil.

Lugo was charged and condemned with “poor performance of his duties,” and although few people disputed that (because of his substandard record); there has been pervasive disapproval from regional governments taking the form of scolding rhetoric except Venezuela’s vow to cease oil shipments.

Lugo came to power with the support of the country’s two enemy political blocks, the conservative Colorados and the Blue (Liberal) Party.  He quickly began to alienate both sides by inviting few into this cabinet while charting his own agenda without consulting relevant constituencies.  The general population was demonstrably disenchanted as well; 60 percent of Paraguayans believed Lugo was not resolving the countries challenges while 12 percent believe he was according to a local poll cited by Reuters.

The Paraguayan government launched a Ministry of IT and Communications in April of this year that seeks to stimulate the efforts of local governments, research centers, universities, and private industry to accelerate and direct the advancement of the country’s ICT sector.

ICT Sector Taking Steps

The Cámara de Tecnología de la Información del Paraguay (CTIP) recently predicted that sales of software and IT services may grow by 15 percent this year and the small market for software exports 8 percent.

The Paraguayan government launched a Ministry of IT and Communications in April of this year that seeks to stimulate the efforts of local governments, research centers, universities, and private industry to accelerate and direct the advancement of the country’s ICT sector.

Before that, the country’s ICT sector was thinking forward and planning supporting events.  SummIT, a conference organized by CiSOFT and CADMI, the country’s software industry chamber and a civil society organization supporting computer information technology, took place the week of June 13th.  The event had the stated challenge of “How to take advantage of Information and Communications Technologies for the development of the society.”

Less than month later this July CiSOFT and Universidad Nacional de Asunción are collaborating to host the international HUBCON 2012 conference, an ethical hacking conference that focuses on best practices to protect information flow from current threats.


Excitement about ICT and the country’s future is being driven by youth.  “60 percent of our population is under 28 years old and they are growing up with a lot more tech knowhow,” said Yambay.

TJ Thomander, Director of Communications at Tech Change, interviewed approximately 150 recent high school graduates in Paraguay and says “they are ready for it, they want to be competitive with other countries and they feel their prospects are very good,” when asked about how Paraguayan youth approach technology.  He said at the high school he had contact with students learned Office and basic internet research skills, and that of course they are avid social media users.  TJ also saw that access to IT coursework is there at the university level for young Paraguayans, however, a vibrant IT sector to push large numbers of Paraguayans towards tech careers is not yet in place.

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Macro Pulse

Paraguay has the lowest GDP per capita in South America behind Bolivia at US$5,548 according to the IMF.  The country touts its steady currency and enjoys a 5.5 percent compound annual growth rate according to the Heritage Foundation (HF).

Minimum wage stands at about US$400 while there is no income tax on the individual in Paraguay.  Corporate tax rates top out at 10% according the HF’s country profile on Paraguay while VAT and property tax round out the spectrum amounting to an overall tax burden of 14.5 percent of total domestic income.

The Heritage Foundation also reports that “Formal-sector unemployment is high,” and “More than one-third of Paraguayans live below the poverty line.”  That may actually be cause to look into Paraguay further as those poverty numbers are similar to popular offshoring destinations where the most significant labor arbitrage margins are achieved.

Reader:  If you want to know more about Paraguay please comment on this article and state what you want to know.

Kirk Laughlin

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

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