In 2017 Argentina’s software industry enjoyed a record year with exports totalling $1.7bn, breaking the previous record established in 2012 of $1.5bn and 28.3% higher than in 2016. Another positive saw the number of industry professionals to rise 3.2% to 107,100, according to the Chamber of the Argentine Software Industry (Cámara de la Industria Argentina del Software, CESSI). Meanwhile, in a survey carried out in 2017 by the CESSI’s Permanent Observatory of the Software Industry and Information Services (Observatorio Permanente de la Industria de Software y Servicios Informáticos, OPSSI), respondents forecast employment growth of almost 26% in 2018 and a 15% increase in software exports. In the event of there being sufficient talent, respondents said they would expand their workforce by 13.6%, adding 13,100 new jobs to the sector. However, salaries account for the largest percentage of IT companies’ expenditure – around 73% – and optimism regarding recruitment growth is tempered by a lack of IT graduates, with 80% of respondents saying they are having difficulty finding senior app developers, the role most in demand in the sector. Indeed, nurturing existing and new talent is a key area in need of development to ensure IT growth continues.
Nurturing Talent
In May 2018 the CESSI published its Federal Strategic Plan for the Argentine Software Industry 2018-30. The blueprint aimst to generate quality employment, to increase exports and to foster the local creation of intellectual property in order to spur the country’s digital transformation, which it identifies as key to achieving competitiveness in all productive sectors, not just the software industry. The specific goals for 2030 include the creation of 500,000 jobs, embracing diversity and geographical distribution, bringing annual revenue and exports above $20bn and $10bn, respectively, and placing Argentina among the top 30 digitised countries globally and the top five in Latin America. The plan also seeks to improve on the sector’s recent performance in terms of personnel growth, which saw the creation of 4500 jobs in 2017.
A positive global environment for IT should support the plans near-term progress, with Gartner, a US-based global research and advisory company, estimating in April 2018 that global spending in the IT sector will increase by 6.2% in 2018 to $3.7trn, and by 2.8% in 2019. However, while expenditure growth is expected to be high in 2018 and the strongest since 2007, the group estimates that it will wane after 2019 due to a stronger US dollar and economic volatility.
Targeted Growth Goals
The CESSI has identified eight main growth areas within the IT sector. These are cloud computing, which continues to act as a driver of innovation in business models for various sectors; social media, which companies are increasingly channelling as a marketing tool for their products; smartphones, which can drive greater productivity among personnel; the internet of things, as a means of creating smart factories; big data, for facilitating analytics that aid product design and placement; robotics, for the streamlining of production processes; virtual reality; and blockchain.
Legislative Update
In order to achieve these goals, according to the CESSI, Argentina will need to increase the number of qualified IT personnel and design legislation for the software industry. The country’s software promotion law, the “Law of Promotion of the Software Industry,” promulgated in 2005 and updated in 2014, expires at the end of 2019, with industry insiders expressing their concern at the prospect of the IT industry being left bereft of such legislation. The law grants software developers fiscal credits equivalent to 70% of their tax obligations, while most provinces grant an additional tax break on gross revenue, as developers and exporters would face difficulties in surviving without such a law. According to a survey among the 400 companies that adhere to the software promotion law carried out by OPSSI, 58% said they expected a fall in revenues after 2020 if the law was not renewed, 60% forecast a drop in exports, 69% a decrease in numbers of employees, 74% a drop in investment and 96% narrowing profit margins. Given that software is a sector that is labour intensive rather than relying on a commodity, many stakeholders are confident that the government can be convinced of the advantages of a competitive software sector. In June 2018 senators submitted a proposal to extend the legislation to the upper house’s budget committees.
Generating Talent
Actions highlighted as necessary to achieve the CESSI’s 2030 goals include modifications and additions to secondary and higher education curricula, and the introduction of subjects as programming and robotics at an earlier age. Other recommendations include the implementation of scholarships for Argentine IT students to study abroad, and the creation of a new education policy and the training of teachers to help stem the high number of students that abandon IT courses during their first year, estimated as 80% of the total. Higher employment in the IT sector would also bring social benefits, as salaries in the sector are 38% higher than the average. Overall, these measures would contribute to the growth of local talent by allowing local companies to offer specialised solutions to large-scale digital platforms. “The challenge for the future is to continue generating talent in niche areas, such as data science and cyber security. Education is the way to transform the country,” Roberto Alexander, general manager of IBM Argentina, told OBG.
Regional Clusters
Individual regions have also played a major role in the development of the IT industry. In the wake of the creation of the Córdoba Technology Cluster in 2001 by 10 local IT companies, the Córdoba Province was Argentina’s first to declare software development an industrial activity, and it is now one of the country’s main IT hubs, home to 125 firms employing around 3500 people. In 2017 an IT cluster opened in the Mendoza Province that will house 19 companies and employ around 800 people.
While Argentina has shown a rapid adoption of technology for business process optimisation, it has been slow to explore new ways of doing business. “There are 5000 IT companies in Argentina, and there is talent, but complexity comes with issues of cost,” Donzelli told OBG. Further identified opportunities within the IT sector include the need for digitisation to improve transparency and artificial intelligence for data analysis. “Competition internationally – and in the region – is inevitable. What we need is to generate more opportunities here in Argentina, given the local talent,” Alexander told OBG.
Talent development is one of the main pillars of “A New Argentina: Towards the Economy of the Future.” Launched in March 2018, this government initiative is tasked with creating a council of IT entrepreneurs to promote growth through technological innovation.
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