Argentina’s business and startup scene is growing and thriving despite economic challenges in the country. The country, that represents the 3rd largest GDP in Latin America ($477 BI est. 2019), is the up and coming tech hub of the region. Key factors such as education, full government support, talent, and other factors such as a convenient time zone and cost, have placed the Argentinean Tech ecosystem in the center of the international scene.
Education in Argentina enables entrepreneurs to create innovative solutions to the nation’s challenges. The emergence of Argentina’s pool of talent is related to the full government support and more than a decade of government policy with sectorial incentives such as the software law – now the Knowledge Economy law that has half sanction in Congress and soon will come in force- and the Entrepreneur’s Law. This state policy plus the tech talent, a similar time zone with the US, and mixed with Argentina’s high English proficiency skills have generated a mature sector with more than 37 tech poles across the country that provide services internationally with the highest required standards and certifications.
Learn about the state of the technology industry in Argentina and why the country is a great opportunity for investors and business partnerships.
Argentina’s Educated and Skilled Workforce Fosters Entrepreneurship
Argentina is home to a skilled and educated population. Advanced degrees foster skill development and entrepreneurship in Argentina.
According to the OECD, about 40% of young adults have completed “tertiary education,” most in the form of a bachelor’s degree. This is above the G20 tertiary education average of 38%,
Most degree-seeking students choose to study in-country. Students with a high school diploma in Argentina are legally eligible for entry into the country’s public universities – which have ranked 66th in the world according to QS Ranking 2020. And the leading the ranking in the Latin American regions. In 2016, the World Economic Forum ranked Argentina in the top 10 economies in Latin America and the Caribbean leveraging their human capital.
This investment in education has paid off. Argentina’s educated workforce means more entrepreneurs and more startups in the capital of Buenos Aires.
Education has enabled founders in Buenos Aires to succeed despite periods of political and economic instability.
The Argentine government also introduced a law in 2017 to encourage entrepreneurs to start businesses. The Law of Entrepreneurs No 27, 349, dated 12 April 2017. More information about the law and digitalization in Argentina can be found at the International Bar Association.
Ley de Emprendedores, or the Entrepreneurs’ Law, gives entrepreneurs and startup founders government support for business ventures.
Argentina Continues to Provide Nearshoring Opportunities
Nearshoring is the process of outsourcing to a nearby country. Argentina is a prime candidate for outsourcing from the United States and Canada for a few reasons:
- Argentina has a high number of English speakers
- Argentina Standard Time is one hour ahead of Eastern Standard Time
According to Nearshore Americas, Argentina is a mature market for outsourced projects from the United States.
English proficiency and cultural similarities between Argentine business services providers and other countries in North, South, and Central American make it an excellent candidate for outsourcing projects such as web development, customer service, or IT services.
Additionally, Argentina Standard Time is only one hour ahead of New York. This makes it easy for outsourced teams in Argentina to adjust their schedules for client meetings and project deadlines.
As the COVID-19 pandemic continues to disperse the world of work, Argentina’s tech hub, Buenos Aires, will remain a top contender for businesses in the Western Hemisphere to nearshore operations.
COVID-19 in Argentina Presents Business Opportunities and Challenges
What began as a seemingly temporary global shutdown to slow the spread of COVID-19 has become a long-term reality for the world of work.
Not wanting to lose the gains made in the business community, the government of Argentina introduced emergency fiscal relief policies for companies in April 2020.
These policies included:
- Postponement of employer contributions to the Argentine Integrated Social Security Program
- Coverage of part of employee wages by the national social security administration
Governments around the world have implemented policies like these to prevent economic stagnation and support small businesses in particular, many of which lack cash reserves to self-fund during a global recession.
The COVID-19 pandemic and the rise of remote tools to complete everyday tasks, however, means increased opportunities for entrepreneurs in Argentina to solve societal challenges with technology. Governments around the world have implemented policies like these to prevent economic stagnation and support small businesses, many of which lack cash reserves to self-fund during a global recession.
Fintech and Digital Currency Industries in Argentina Are Growing
Argentina continues to lead Latin America in financial technology (Fintech). The Argentine people’s relationship with national banks and currency has made the country fertile ground for financial startups, digital currency, and blockchain entrepreneurs.
According to a report from McKinsey about consumer sentiment in Argentina, most Argentinians anticipate the COVID-19 pandemic will impact their personal income and finances for more than two months. This could impact how Argentinians save, spend, and invest their money using digital technology and tools.
National economic turmoil has led to distrust for financial institutions among Argentinians. This means entrepreneurs in fintech have opportunities to build consumer confidence in financial solutions from private industry.
Historic stop and go economic cycles and inflation have created the conditions for thriving fintech companies with a wide range of solutions that aim financial inclusion and access to resources. One article from Forbes details the challenges Argentinians face when looking to perform basic financial tasks, such as withdrawing cash from banks or gaining access to credit. When the formal economy is this challenging, entrepreneurs need to find solutions to build consumer trust and confidence, as well as expand access to financial services to Argentinians with limited access to banking services.
According to Finnovista, payments and remittances comprise 28% of fintech startups in Argentina. Issues of access led to the creation of companies such as Ualá.
Ualá is a personal finance app that provides users prepaid cards through a partnership with MasterCard.
The Ualá card and app work anywhere online that accepts MasterCard. Ualá’s also lets people manage their money and track spending without going through traditional financial institutions.
Startups such as Uala also lead to significant outside investment in the Argentinian fintech ecosystem. Ualá raised $150 million in its Series C funding from Softbank and Tencent, marking Softbank’s first major investment in Argentina.
Argentina Leads Latin America’s Tech Industry
The tech industry in Argentina presents myriad opportunities for in-country entrepreneurs and out-of-country investors and partners.
The high quality of education in Argentina means a workforce with high levels of English proficiency and technical skills. Government policy has even made it easier for tech founders to start and maintain businesses despite economic downturn.
COVID-19, while challenging for the business community, has presented opportunities in the fields of remote work and tech.
Financial help from the government will help small businesses stay afloat. Additionally, the package of incentives that will soon be approved by Congress for knowledge-based services companies and startups will allow a new scale of businesses.
Finally, fintech in Argentina continues to set the pace for businesses in the region. Keep an eye out for innovation in the country in the years to come as the world continues to change.