Architectural plans, legal and accounting consultancy work, software and mobile app development, web design, and film and video game production are just some of the many knowledge-based services (KBSs) that Argentina exports. The country’s export profile no longer centers on cuts of beef or wine, traditional products like yerba mate or dulce de leche, or even tango moves and football players. Instead, the southernmost country in the world is increasingly making a name for itself as a service hub with a reputation for creativity and talent.
The points in Argentina’s favor include a similar time zone to the United States and a skilled workforce with a good command of English. Unicorns like MercadoLibre, Globant, Despegar, and OLX have proven that Argentinian entrepreneurs and businesspeople can reach beyond their country’s borders and even list on the New York Stock Exchange.
Luis Robbio is the founder of Belatrix Software, which began its operations in Mendoza province and today has 600 employees and offices in Argentina, Peru, Colombia, and the United States.
The success of the Argentinian service industry is due to education, which is still free in Argentina and has enabled many people to get the training they need to work in this sector, says Robbio.
Another factor is that Argentinians are really argumentative, which is very welcome in the world of software because it helps you exchange ideas and add value to initiatives. That’s something that our US clients really value.
Knowledge-based services (KBSs) employ medium- and highly skilled personnel and generate knowledge across the economy. KBSs create high-quality employment and promote innovation and development. Today’s information and communication technologies (ICTs) mean that these services are easy to export.
KBSs are about much more than just software, as they also include market and financial analysis and intelligence, advertising, research and development (R&D), and health and education services.
The Importance of KBSs within Argentina’s Economy
According to 2017 data from the Secretariat of Productive Transformation of Argentina, KBSs account for around 14% of the country’s employment and added value (up from 11% in 2003), which puts it on a par with global service powerhouses like the US and EU.
In 2014, over 60,000 companies in the sector employed around 840,000 people, and KBS exports grew by a factor of six between 2003 and 2015.
The industry doesn’t just revolve around large firms: according to a report from the Knowledge Economy Observatory, which is part of the Ministry of Production of Argentina, there are 30 KBS clusters in the country that are made up of over 1200 firms and/or entrepreneurs and employ nearly 38,000 people.
Argentina is one of Latin America’s leading exporters of KBS per capita, with exports that reached US$161 in 2013, a level comparable to those of Chile and Uruguay. Despite this, there is still room for improvement as Argentina remains well behind Costa Rica and countries in Asia and Eastern Europe. Furthermore, KBSs are the only sector to have shown a positive balance of trade among other service sectors in Argentina’s aggregate balance of trade (meaning that exports of KBSs outstripped imports).
The size of the country means that we need to compete with China and India on quality, rather than volume or price. So the best way to create a presence in a competitive market like the United States is by being creative and straightforward when dealing with clients. That’s how we found our foothold in the world,” says Robbio.
Not long ago, three Belatrix engineers from Mendoza set up the company’s office in Silicon Valley. “It was something I’d dreamed of for a long time: being at the creative heart of the IT world, close to all the action,” enthused Robbio. “It took us a while to get our people work permits, but we now have three Argentinians working at the office who interact with our US customers and are the interface between them and all our other offices.”
Firms like Belatrix are clear indicators of Argentina’s growing importance in knowledge-based services within the region. In the future, other similar firms will help forge the path to export diversification.
For more information about the “Made in the Americas Global Digital Services” Summit on July 11th and 12th, visit here.