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ARGENTINA: Software, a Growing Success Story

Marcela Valente

BUENOS AIRES, Apr 3 2007 (IPS) - Software production and information technology services are a rapidly expanding industry in Argentina. This industry has a number of advantages: it is clean, requires little investment, provides employment for highly qualified personnel, and can operate in even the poorest regions.

Production, exports and jobs in this sector have been growing since 2002 at a rate that is significantly higher than the country’s average economic growth, making it one of the fastest-growing sectors of the Argentine economy. And it has developed in several provinces, rather than being geographically concentrated in one place.

The information technology (IT) business had a turnover of 190 million dollars in 2002, and its exports were puny. But by 2005, turnover had increased to 1.1 billion dollars, and exports were worth 170 million dollars.

“The government is backing this sector vigorously with a strategic plan and special promotional treatment, because we are confident that this industry can aspire to an outstanding position in the local and international markets,” Industry Secretariat strategy coordinator Fernando Grasso told IPS.

The Argentine Chamber of Commerce for Software and IT Services (CESSI) said that the industry is experiencing “multidimensional growth.” It employs more than 50,000 people – twice the number of workers in car factories – and new, mainly young workers are being incorporated at a rate which is growing by 25 percent a year.

As a measure to combat unemployment, the Labour Ministry signed an agreement with CESSI to provide training for 700 unemployed and under-employed people in this new field, which involves design, production and application of computer programmes, and computer services for all areas of the economy.

But the key to the industry’s sustainability in the long term is the Strategic Plan for 2004-2014 for developing software and IT services, drawn up by some 280 representatives of state bodies, universities and chambers of commerce over nine months.

The document indicates that no one country in Latin America has yet established its leadership in the IT field, as Ireland has done within the European Union, or India, which leads exports to the United States.

Argentina has key advantages to aspire to this position, such as highly educated human resources, and these could be used to good effect in the current growth phase of the economy as a trial platform, from which to expand later into regional and global markets.

According to Grasso, Argentina could assume the role in Latin America that Scotland and Ireland play in Europe, where their IT services emphasise quality rather than quantity. “The Secretariat is giving this project high priority, and we are already thinking of extending the term of the strategic plan beyond 2014,” he said.

This will require coordination between the state, companies in the sector, and academics in order to develop industrial growth poles for IT companies. In addition, a law to promote the software industry, which entered into force a few months ago, will ensure fiscal stability and tax incentives.

The strategic plan also advocates the creation of a fund for training workers, with support from the state and IT companies.

It also proposes that the state, as the main consumer of software and services, should play an important role as a customer of products designed and produced in Argentina.

The positive thrust given to the industry can already be seen in the provinces. In the Argentine capital and in cities such as Tandil and Mar del Plata, in Buenos Aires province, IT growth poles have already been established, and the same is true of Córdoba, Entre Ríos, Mendoza, San Luis and several cities in Santa Fe.

One of the growth poles which has aroused the greatest expectations is emerging in Jujuy province in the northwest of the country, not so much due to its size as because it is located in Argentina’s most critical region, according to the United Nations Development Programme (UNDP)’s Human Development Report for 2005.

The UNDP report said that nine provinces in the north of the country belong to this critical region, because of their high levels of poverty, malnutrition, illiteracy and unemployment and lack of public and private investment, and recommended that company clusters be encouraged there in order to foment development.

Jujuy, with barely 1.7 percent of the total population, is one of the least developed provinces. However, a large number of students are studying IT subjects, and the market for their skills is limited. The Jujuy Initiative, an alliance between the university, the provincial government and IT companies, arose in response to this situation.

Jujuy Initiative project manager Jorge Griot told IPS that the programme aims to develop skills and vocations for IT enterprises geared to the market. “We want to design software for the world,” Griot said from Jujuy, 1,800 kilometres northwest of Buenos Aires.

The Jujuy Initiative organises an annual competition among students and graduates of the National University of Jujuy, one of the pillars of the programme, for the design of IT products and services. There is a prize for the most innovative proposal.

“The prize is very modest, only 3,600 pesos (1,200 dollars), for improving equipment, but it’s an incentive,” said Griot. At present 50 students are working on different projects, and two companies have established themselves as export suppliers.

One of the companies exports to Chile, and the other to Peru and Spain, as well as to domestic customers in Buenos Aires and other Argentine provinces. They design programmes that monitor use of the Internet within organisations, manage files, and provide e-mail tools, video games and multimedia systems.

However, as the company owners themselves say, not every idea results in a marketable product. Some need time to mature, while others work well and employ IT workers who do yet design their own projects.

“Argentina has enormous development potential,” said Griot, who is also a professor at the University of Jujuy. “Governments find IT activities very attractive, because they require low levels of investment, produce highly qualified workers, and bring in large sums to the provinces,” he said.