Nearshore Americas

Uruguay IT Hits Full Speed, Despite a Few Bumps Along the Way

Small population countries in the Nearshore market should never be placed all in the same bucket, and that is especially true for Uruguay, a country of 3.5 million with a surprisingly potent IT services machine that continues to perfect the execution of the global export model.

But before getting into the state of Uruguay IT, let’s get some perspective on why Uruguay is – just different. The place is unique and the types of distinctions it has tells you a lot about its character: Has the highest literacy rate in South America, first and only country in Latin America to legalize cannabis (2013), 95% of energy consumption is borne from renewables and boast one of the world’s most progressive immigration policies – allowing foreigners to basically gain permission to reside there in  about 15 days.

Go Big, Go Global

Being a smaller market has its advantages, and the one characteristic that shone brightly during a visit this week to Montevideo and Punta Del Este (attending the Punta Tech conference), was a fundamental fact that virtually everyone in the IT ecosystem here understands: To make it, to really succeed, you need to be ready to market and sell globally.

This fact has had a lasting influence on the evolution of the IT industry, now estimated to represent over $800 million in annual export business. The source for much of that growth is driven from the United States where an estimated 65% of exports land, supported by a population of about 12,500 IT staff within Uruguay.

When Nearshore Americas wrote its first country report on Uruguay in 2010, the lack of scalability in IT services was one of the most notable deficiencies. At the time, Javier Peña Capobianco, one of the leading authorities on Uruguay IT and current secretary general of Montevideo-based ALES (Latin American Association of Service Exporters), said: “The number of IT workers will not be enough to satisfy the demand. If we don’t change our educational curriculum and graduate more students in IT, we will have a problem in the future.”

Nearly ten years later, the talent challenges persist. The difference now is that there are more IT shops competing for talent, so more creative strategies are in play as companies look to attract and retain professionals. Promoting the company’s brand name locally is essential, and several firms are actively hosting community events, meetups, and youth coding programs. These sorts of external campaigns support a virtuous cycle of awareness-building that seems to increase the numbers of people who become familiar with export services and the skills necessary to perform.

Cutting Edge Digital

The Electric Factory, a digital products studio founded 16 years ago currently with about 110 resources, sits in both the hardware and software worlds and therefore, needs to tap talent in both spheres in order to create fully integrated solutions. “Having hardware and software development in the same place gives talent the possibility to work on cutting edge digital production projects that has to do each day more with things and less with screens. To separate both words is to deny reality,” says Andres Guarino, chief executive officer at TEF. He agrees that Uruguay has to continue to confront the talent issue. “We have many challenges. The ones I feel are more important, although they many seem contradictory, are to build critical mass and grow in specialization.”

Andrés Guarino (l) and Martin Testorelli of The Electric Factory showcase a guitar prototype built by one of the firm’s designers.

Another interesting development in recruitment has been the steady increase of programmers and engineers arriving and seeking employment from Venezuela and Cuba. Multiple executives and entrepreneurs reported to us that the skill level of these professionals is consistently strong, and has gotten stronger in the last few years, especially among the expats from Venezuela.

Daniel Brignardello, chief operating officer at PayGroup, a payments processor with the bulk of its business existing in Brazil, says about ten percent of the company’s workforce is from Cuba or Venezuela.

Make IT Your Home

Providing adequate office locations for outsourcers has emerged as an unexpected challenge the last few years. Although there are dozens of free trade zones, as well as several tech parks, when software firms want to pursue mid-grade office accommodations in the choice neighborhoods of Montevideo, the offerings are limited and expensive, many say.

As a result, more frequently firms are transforming existing single-family homes into full-scale office operations, turning living rooms into development labs and garages into mini-server rooms. For example, Switch Software Solutions, a 50-person software firm with offices in Uruguay and Austin, TX, has outgrown its existing location and is preparing to move into a newly built single-family home in the heart of Punta Carretas, one of the city’s elite residential and commercial districts. The beautiful, open-plan home contains an estimated 5,000 square foot of work space, on two floors, five bathrooms, large kitchen, a small pool and a cottage-like building in the rear which functions as a barbeque station, or Parilla, where famous Uruguayan Asado is grilled over wood (never coal!).

 “We’re still working out the ground rules for when our people can use the pool, but there is no question we see it as a great recruiting tool,” said Switch’s human capital manager, Sabrina Rebollo, during an on-premise tour last week. “We like the atmosphere of the home, it’s warm and more inviting for our workers.”

The country’s capability with the most potency appears to be successful management of the export model. Dozens of software firms have set up commercial offices in the United States, and there is widespread awareness that maintaining a sustainable business requires a well-honed strategy to capture US partners.

“We learned a lot about how to do business with US companies in recent years,” says Leonardo Loureiro, International Business Development manager at Quanam, and also president of CUTI, the chamber representing over 360 ICT companies in Uruguay, from large multinationals like Tata Consultancy Services (TCS), to startups with under ten employees. Member companies have specializations ranging from fintech and agriculture to blockchain, mobile/web development, machine-learning and natural language processing, among other pillars.“When companies are born here, they are created with an international viewpoint.”

Quality and Integrity

Loureiro also emphasized that attention to quality and a very solid reputation among commercial clients is what often sets the country apart from other options. “We have had a working democracy in Uruguay for many years now, and this reflects our values. We respect our agreements and hold true to our promises,” he said.

Kaizen Softworks co-founder and CEO Fabian Fernandez Bargas points out that a flexible approach to solving problems is another cultural strength. “We understand and embrace the fact that IT projects require partners to be flexible and adapt,” said Bargas, who launched his 20-person software firm about four years ago, and now has an office in Boston, in addition to Montevideo.

Gabriel Rozman, an IT services legend in Uruguay commented on the need to develop IT talent: “Once you have a mayor player (TCS) you had to push more students into IT education at the tertiary level.”

Meanwhile, people like Gabriel Rozman, a former senior TCS executive who is considered a legend in Uruguay for his visionary recommendation to land TCS’s first Latin America operation in Uruguay over 18 years ago, is not particularly surprised by the robust emergence of Uruguay IT.

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Rozman, who has  broad ranging involvement with Uruguayan tech development, from mentoring entrepreneurs to orchestrating trade delegations to China, credits programs like the one-laptop per child program (another first for Uruguay as it was the originator of the practice globally), as accelerating the fluency of young people in global technology. “Once you have a mayor player (TCS) you had to push more students into IT education at the tertiary level,” said Rozman, noting that TCS has served as a training ground for many young professionals who later launched their own startups.

Mirroring the expansion of the larger IT community, TCS has doubled in size during the last ten years, surpassing the 1,600-employee mark recently. “We continue to see great growth in our business. Uruguay has performed very well for us,” commented TCS Delivery Head in Uruguay Santiago Priario.

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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