Argentina's 'Silicon Valley' Thrives ; Software Firms Joined with Government and Universities to Fuel Technology Growth of 45 Percent Last Year

By Vinod Sreeharsha Contributor to The Christian Science Monitor | The Christian Science Monitor, April 19, 2005 | Go to article overview

Argentina's 'Silicon Valley' Thrives ; Software Firms Joined with Government and Universities to Fuel Technology Growth of 45 Percent Last Year


Vinod Sreeharsha Contributor to The Christian Science Monitor, The Christian Science Monitor


Three-and-a-half years ago, Ernesto Krawchik was working out of his house, debugging code on a single computer that he shared with his business partner, while his 1-year-old son tugged at his pant legs.

Coming on the heels of the country's economic collapse, it was a far cry from his days as president of Oracle-Argentina during the tech explosion of the 1990s. "At the time our company was formed, no one took us seriously," Mr. Krawchik says.

Today that company, Idea Factory Software (IFS), employs 90 tech professionals and will add another 100 over the next year. At IFS's office in the San Telmo neighborhood, known for its tango shows, dozens of 20-somethings punch away at their keyboards, solving the software needs of major international corporations.

Welcome to what could be called "El Barrio Silicon" - Argentina's version of Silicon Valley. Since Argentina's $142 billion debt default in 2001, the largest by any country in history, dozens of software start-ups have sprouted, and existing tech firms have seen unprecedented growth. Ironically, it was the disaster that spawned the boom. From the ashes of the crisis, businesses, universities, and the government began working together for the first time to cultivate the information-technology industry. Though relatively small in size, it is one of the unsung heroes of the country's economic recovery.

"The idea for this newfound collaboration is modeled on the technology hubs in the US such as Research Triangle Park and the Route 128 corridor in Boston," which revolve around Duke University and MIT, says Alejandro Prince, president of Prince and Cooke, a research firm based here.

Going strictly by numbers, the IT industry barely registers in Argentina, accounting for less than 1 percent of an economy fueled by soy and beef exports. But its growth rate is one of the highest. According to the Argentine Software Chamber of Commerce, industry revenue grew 45 percent in 2004, compared with 2002. Tech exports climbed 83 percent.

Outsourcing is key

One reason for the growth has been the recent outsourcing phenomenon that has spotlighted India in particular. EDS Inc., the computer-services firm founded by Texas billionaire Ross Perot, forecasts having 1,750 employees here this year, up from 1,250 last year, and more than double the 700 employees of 2000.

Argentina has long had the potential to develop an IT industry. According to the United Nations Human Development Report 2004, Argentina ranks first among Latin American countries in number of Internet users per capita. It is also No. 1 among Latin American countries for research scientists and engineers, with 684 per 1 million people, according to the same report.

Still, Krawchik says, until now, "Argentina has never seriously worked to convert its intellectual talent into a competitive advantage. …

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