How Argentina seeks to attract global service centers

Argentina plans to increase the size of the knowledge economy market and attract global service centers to the country.

The knowledge economy defines activities that require highly skilled labor and includes professional services, software development, and bio- and nanotechnology.

"The objective is to support these global service centers that can increase their functions or attract new large companies," said the secretary for investment promotion, Ramiro Velloso, during the presentation of the Argentina Delivers High Quality Services campaign, which is being carried out by the national government and business organization Argencon.

In 2023, Argentine exports of professional services amounted to US$4.8bn. The knowledge industry as a whole exported US$8bn.

Despite a slowdown in recent years due to the macroeconomic crisis, the knowledge economy is growing. “This industry is very important for creating exports and is well positioned to capture this opportunity,” SMEs secretary Marcos Ayerra told the event.

Currently, according to data from Ayerra, there are 274,000 formal jobs in the knowledge industry in Argentina, of which almost 157,000 correspond to the software and IT services sector (57%), 60,000 to professional export services (22%) and about 40,000 to the bio- and nanotechnology sector (12%).

Some 50 multinationals have chosen Argentina to set up global service centers, including EY, Accenture and JP Morgan.

“Even in this year of transformation, employment and exports have grown,” said Ayerra.

The industry is benefiting from the knowledge economy promotion regime, approved in 2019. In addition, some provinces and municipalities have added additional benefits for the sector.

“We are working to make ourselves a competitive country again,” Santiago Pordélanne, knowledge economy undersecretary, told BNamericas. “The ordering of the economy, the unification of the exchange rate, the removal of [currency] restrictions will generate a qualitative and quantitative leap in these services.”

Pordélanne said there is a commitment from companies like EY to continue growing in the country and adding new functions. “The chemical company Ecolab has a center that started 15-20 years ago but always had 100-200 people. Today they have jumped to 400 people and they plan to reach 900 or 1,000 people,” he said.

“There is a lot of growth in the same centers” that are installed in the country, he added. As for attracting new companies, he said there are many companies motivated by “the new Argentina” but they are still waiting for the macroeconomic reorganization to be completed.

TRAINING

According to the undersecretary, since professional services correspond to medium and high added-value services, the economic variable does not weigh as much in the business decision. “The training and development of talent [that Argentina has] is something that is highly valued,” he added.

The Argentine university structure allows for the generation of around 300,000 graduates a year.

The government is promoting the training and development of talent through the Capacitar platform, which offers virtual courses in conjunction with the private sector.

"This platform does not only involve the issue of employability, but also covers SMEs, even those that are not part of the knowledge economy, in order to professionalize them and give them access to cutting-edge technology," Pordélanne said.

The Capacitar platform offers 500 courses and has approximately 45,000 subscribers per year.

The plan is to complement this training path with face-to-face courses, approved by the employment and labor ministry and designed in conjunction with the private sector. These courses will be offered in 50 cities across the country.

The funding will be provided by the economy and knowledge fund. “It is a private fund to which the beneficiaries of the economy and knowledge law contribute a part,” said Pordélanne.

In addition, the government will provide companies with tax credits for 12 months equivalent to a minimum living wage to help increase employability.

The knowledge economy fund has approximately 25bn pesos (US$25.3mn). In the first stage 10bn pesos will be distributed, with each province and the city of Buenos Aires receiving 200mn pesos, adding up to about 4.8bn pesos in total. The remaining amount will be distributed among the provinces and the city of Buenos Aires in proportion to their population.

“We are convinced that talent is federal and we do not want a knowledge economy centered on Buenos Aires,” said the undersecretary. This year, a federal knowledge economy council was created, with the participation of representatives from all the provinces of the country, integrating Argencon, software chamber Cessi, the innovation network (RIL) and the federal knowledge economy network.