Paraguayan firms' transition towards industry 4.0 still 'incipient' – report

The progress of companies in Paraguay towards practices and processes aligned with industry 4.0, such as automation and digitization to spur innovation and efficiency, is steady but remains largely incipient.

This is the main conclusion of a report the Inter-American Development Bank (IDB) published on the country's challenges and opportunities on this front.

See the report, in Spanish, in the Documents box in the top-right corner.

The report is based on a survey carried out at the end of 2023 with 152 enterprises of different sizes and verticals operating in the country.

But because “the transition process towards industry 4.0 in Paraguay is incipient” a range of opportunities opens up for providers, integrators, partners and companies in the ICT sector, not least because local companies are largely relying on outsourcing, acquiring technology from external developers.

According to the IDB, the country’s digital transformation “seems to be more oriented towards the integration and improvement of existing technologies and knowledge – developed by third parties – than to their own in-house technological developments.”

The report focused on the types of technologies implemented in different areas at enterprises, the innovative actions in place and those planned, as well as the main hurdles local companies face when adopting new technologies, and the gap between demand and supply of skills.

WORKFORCE AND INVESTMENTS

In the last three years, Paraguayan companies have advanced in innovation efforts, said the report, with eight out of 10 claiming to have introduced a new product or service to the market and implemented a new process or significantly improved existing ones.

Yet, on average, only 14% of those surveyed said they were carrying out R&D+I projects.

And there are other challenges.

The human factor and investment capabilities stand as the main obstacles to the digitization of Paraguayan companies, according to the report.

Four out of 10 companies highlighted a lack of human resources with adequate knowledge as a major issue and three out of 10 mentioned difficulties related to investment and funding (amount, access to financing and credit, amortization periods and benefits).

Those that embarked on this journey said the effect of automation was neutral to existing manpower.

Some 45% of companies said that their headcount didn't change as result of the incorporation of digital technologies and automation, but 20% acknowledged having cut jobs and 26% said they needed to hire more workers.

NOT SO ADVANCED TECH

On average, eight out of 10 firms use less advanced technologies (first and second generation, mainly analog ones) and only 17% use technologies closer to industry 4.0 (third and fourth generation), meaning those linked to big data, IoT, automation and virtualization, among others.

The greatest technological lag is seen in the relationship with the client and consumer, as seven out of 10 firms use first generation technology, said the IDB.

On the other hand, the most technologically advanced functional area is the relationship with suppliers, in which 22% of companies use third and fourth generation technologies. 

Looking ahead, 58% of companies in the country expect to deploy 3.0 and 4.0 technologies.

According to data from statistics institute INE, of total active companies registered in the country, those dedicated to industrial activities represent 15% (41,474 companies) and account for around 18% of the employed population.

These are mostly companies from the food and beverages, textiles, leather tanning and dressing, wood and cork, paper and pulp, and chemistry and pharmaceutical verticals.

NEW PUSH TO CONNECTIVITY

BNamericas reported previously that the IDB is planning to increase funding for telecoms and connectivity projects in Latin America.

The initiative is starting with internet providers in Brazil and is set to be expanded to Mexico and other regional markets.