BDO LLP | INTERNATIONAL TECH HUBS SECOND EDITION
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13 INTERNATIONAL TECH HUBS SECOND EDITION | BDO LLP
LATIN AMERICA
The main drive for companies – and investors – looking to establish a foothold in Latin America
companies and entities to enable the development, production, commercialisation and implementation of software and other tangential services. Payment processing and fintech is a successful industry in Brazil, catalysed by the need for increasingly up-to-date payment options to meet the aging financial systems across Latin America. Finally, Colombia – in particular, Medellín – is a hub for the “fourth industrial revolution”, being notable for its innovation and entrepreneurship. It has attracted Apple, IBM and HP to its market as a result. THE TALENT POOL Attracting talent from abroad can be one of the most challenging issues that Latin American countries face, especially given the wide cultural variety across its component countries and the perceived linguistic and political barriers. This being said, companies in Latin America mainly rely on homegrown talent, with many of the best-educated personnel coming out of institutions such as those in Brazil. An impressive 61 universities from Brazil made it into the 2020 Times Higher Education Latin America University Rankings, which comprised 166 establishments. Chile, Mexico and Colombia also offer good higher education opportunities, helping to establish younger talent for tech companies in their home nations.
With expert input from Luis Vila Rojas, Audit Partner, BDO Santiago de Chile, Luz Vasquez, Liaison for the Americas Region, BDO Global; Luis Romero, Partner, BDO Brazil; Dario Vieira de Lima, Audit Partner, BDO Colombia; Rodrigo Cifuentes, Partner, BDO Colombia; and Bernardo Soto Peñafiel, CPA Assurance Partner, BDO Mexico.
is the potential for services and products to reach an extensive population. Which areas will be the first to be broached depends largely on the perceived stability of the economy. Chile, for example, has a smaller footprint, but a better perception of safety for investments. With a huge variety of cultures, business practices, histories and economies, Latin America’s apparent complexity can be intimidating for tech companies unfamiliar with the area. However, with its proximity to other large markets, a huge potential customer base and the relatively inexpensive cost of labour, almost the whole region would make an excellent base for businesses looking to make their mark.
OVERVIEW: A FERTILE REGION WITH HIGH POTENTIAL Latin America’s expansive opportunities offer entrepreneurs the ability to tap into a technological revolution. With tenacity and an awareness of each individual nation’s idiosyncrasies, bold investors and founders can take advantage of this developing market. THE TECH LANDSCAPE The sheer breadth and scope of Latin America’s potential continues to attract businesses to the area, especially those looking to establish themselves or expand into new markets. With strong trade links, an enviable geographical position and an ever-increasing middle-class market, this region offers significant potential to businesses with the right value proposition. The enormous region, often perceived incorrectly as a monolith, offers varying levels of ease of entry. According to the World Bank Ease of Doing Business Report 2019, Mexico, Puerto Rico, Costa Rica, and Peru are seen to be well positioned for continued growth. In terms of doing business, Colombia, Puerto Rico, Mexico, Honduras and Costa Rica have developed comprehensive credit reporting systems that add to their appeal.
THE MAIN DRIVE FOR COMPANIES – AND INVESTORS – LOOKING TO ESTABLISH A FOOTHOLD IN LATIN AMERICA IS THE POTENTIAL FOR SERVICES AND PRODUCTS TO REACH AN EXTENSIVE POPULATION
THE TECH BUSINESS ECOSYSTEM Each individual country within Latin America has its own particular strengths in terms of tech, though some specific areas stand out. The multi-national entities tend to focus on Mexico, given its proximity to the US: HP, IBM, Google and Microsoft are all based in this area. Homegrown talent includes Telcel, a leading player in mobile and internet services. As for locally-developed businesses, Argentina boasts tech firms Globant, MercadoLibre, Despegar, OLX and Auth0, as well as the Chamber of Computer Software and Services Companies (CESSI), a non-profit organisation that brings together regional
THERE ARE NOVEL TAX REGIMES THAT ARE PREFERENTIAL, WITH INCENTIVES THAT MAKE SPECIFIC MARKETS IN LATIN AMERICA FOREIGN INVESTORS WILL FIND THAT MORE TAX-EFFECTIVE AND APPEALING .
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