Argentina: More near-shore than offshore

When most companies think tech outsourcing, they think India. Not so home-grown dot-com survivor Lastminute.com, which recently named Argentina as its offshoring destination of choice.

The UK dot-com darling has handed all of its core Unix and database administration operations to an offshore tech company called Globant based in Buenos Aires. Lastminute's US CTO Chip Steinmetz, admitted in a recent interview with ZDNet UK that the venture was "very high-risk", but said Argentina was attractive because of the weak local currency, the fact that a lot of the population have dual-European passports and the time difference, which allows for 24-hour support of a European business.

Software programming wages in Buenos Aires are about $11 an hour, or around 15 percent lower than in India's high-tech capital of Bangalore. This in itself wouldn't mean much without indigenous tech expertise, but thanks to massive investment in IT in the decade preceding the country's economic collapse in 2001, there is no shortage of programming skills.

ZDNet UK spoke with Globant's head of business development, Martin Migoya, about the outsourcing opportunities in Argentina and the way his company is using IP telephony to turn offshore into near-shore.

What factors have contributed to turning Argentina into a potential off-shoring destination?
A:In December 2001, there was a big devaluation and salaries went down a lot, to approximately one-fifth of the salaries you have here. But in the 10 years before that there was a huge investment in technology, so we have now a huge infrastructure of cheap bandwidth and efficient telephone communications and world-class buildings which combine to make Argentina a very attractive offshore destination.

From 1990 to 2001, one peso equalled one dollar. We had that fixed right. Buenos Aires was one of the most expensive places in the world to live. Having that money, all the companies were investing a lot; Argentina was a cradle for 80 percent of the entrepreneurs in the Internet bubble in Latin America. Huge data centres were built and all the telephone companies were privatised. Companies needed to invest in IT to stay competitive in that environment. In 2001 after devaluation, we went down to three pesos to one dollar -- so all the investment up to that point was still there but the relative cost of living and salaries had dropped. A new opportunity was born there and we are trying to take advantage of that.

I have read that software programmer salaries in Argentina are about 15 percent lower than in India?

They are lower because the market is not over-fished. That is one of the interesting things. This advantage will probably disappear in two to three years, but that's the way it is.