What skill level can you find in Uruguay? Are they prepared to compete at a world-class level like their national soccer team? Why international companies have offices in Uruguay, what benefits does the country offer? What about the education efforts related to IT? Why is the United States their biggest export market? Is the startup ecosystem of Uruguay attractive?
We are going to address these questions and many more.
Fabian: You are listening to The Kaizen Podcast, episode number one. Today we are talking about the IT industry in Uruguay, so let's get started.
Fabian: Hey everybody, Fabian from Kaizen Softworks, here. Welcome to The Kaizen podcast. Thanks for coming. The Kaizen Podcast is produced every two weeks for your enjoyment. Show notes and links are found at https://podcast.kzsoftworks.com. Come back often and feel free to add the podcast to your favorite RSS feed, TuneIn, Stitcher, and Spotify. You can also follow me on Twitter at @kzfabi. Now, let's get into the show.
Fabian: I'm here today with Leonardo Loureiro. He's the President of the Chamber of Uruguayan IT companies, and he's also the International Business Development Manager of Quanam. Welcome to the show, Leo.
Leonardo: Thank you very much for inviting me, Fabian.
Fabian: Yeah, anytime. So, can you tell us a little more about you, what you do at Quanam?
Leonardo: Yes, yes. I'm a computer engineer, I have an MBA degree, and I'm married with one son and two daughters. Quanam is an IT professional service company that provides services around the world, and we have offices in several countries. Three offices in Brazil, Sao Paulo, Rio de Janeiro and Porto Alegre, Santiago, Chile, Mexico, Miami, and New York, and obviously, Uruguay is the headquarters.
Fabian: Several places. So how long have you been working for them?
Leonardo: Really, I work for them since 2012, six years. It's a very nice company to work with.
Fabian: Do you get to travel often to all their offices they have?
Leonardo: Really, I work in the countries that we don't have offices. The office, obviously, the United States is ... I opened the office in the United States, and obviously, I work in the United States a lot. I worked in Central America, Caribe, and in Brazil for several years.
Fabian: Cool. So, all right. Let's get into the topic of today. I would like to start by playing with a parallelism. I found digging in your LinkedIn profile that you were in the Parser football team of your university while you were studying a computer science degree, and soccer, how it is called in the United States, it's a big passion for Uruguayans. Not long ago, just a couple of weeks ago we were in the World Cup. Everybody was really happy here in Uruguay. We made it to the quarterfinals. But then it was really sad. It was a little painful also for several people around here. I remember also watching the kid crying on the TV. That was really painful. But, how would you compare this passion Uruguayans have, the strategy, the planning and the cultural level our national team has with the professionals that one could find in the Uruguayan IT industry.
Leonardo: Okay, really, we have a problem because my passion is basketball. I played in the Uruguayan league in the '80s, in the final of the '80s really. But, in the university it is very easy to put together, to play soccer, it's easier than the basketball.
Leonardo: And I played in the Parser team and play in several championships, university championships in the five years. I played several championships, I won. We won really because we play.
Fabian: As a team.
Leonardo: In a team, eleven people. Really, it's a good question, the parallelism because if you play in games that, in the play, teams, for example, basketball five people or soccer eleven people. You need to work together, and if you work, you play this type of games, you learn more about how the team works. And it's very important, for example, for the IT industry, the team works and the parallelism is very important because you need in the team different skills and in the games and you need different skills in the computer teams. For example, obviously, the architects, the project manager, the developers.
Fabian: They have several roles.
Leonardo: All for example, fortunately, the areas, for example, the accountants and the other type of engineering. I like, too, the parallelism because you need to work together to achieve the computer project.
Fabian: And do you think the skill level is competitive at a world-class?
Leonardo: Yes. Uruguay has a long tradition in computer education because imagine that we established in Uruguay the computer degree fifty years ago. We have a lot of computer engineers with a high level of education and these professionals, in addition, these professionals get trained in American and European universities and this learn a lot in other cultures and bring to Uruguay or different projects this knowledge.
Fabian: Nice. Yep. So, let's, tell me a little more about the quality of the facilities, the connectivity level that one could find here in Uruguay.
Leonardo: Uruguay has an excellent telecommunication infrastructure. We have a fiber optic cable to connect the United States to Uruguay.
Leonardo: We have LTE infrastructure around the country. But, we have for example the last mile in fiber optics to the homes. For example, in my house, I have an excellent connection to establish, for example, a call or a webinar that is provided in different points of Uruguay. For example, Quanam has offices in Bella Union. Is a very, very little town in Uruguay. Six hundred kilometers from Montevideo, the capital. In this city, we have an excellent communication to-
Leonardo: Establish a call with companies around the world.
Fabian: Like, we were in a big city, anywhere else.
Leonardo: Yes. Yes. It's the same. For example, when you, when I establish a call with a customer from another country, I move in my cell phones and it's better than the United States in different points.
Fabian: And, now that you compare, I read, I don't remember the report, but it was telling about the speed of connectivity you get here is at the level of the United States. Right?
Leonardo: Yes. It's better than the United States, it is first in the ranking in the Latin American countries.
Fabian: Cool. That's a really big difference. A big differentiator, right? So, now, that all said. Being a small country has not produced a negative impact in the growth of the IT industry in Uruguay and for those who don't know, Uruguay has a population of only three million people. And during the last years, a dozen of international companies sat operations here. Just to name a few, I remember Microsoft, Tata Consultancy Services, Sabre, Oracle NetSuite, and among others. Why do you think these companies are attracted to operate in Uruguay?
Leonardo: Really, the first reason is the talent. The talent is, we have excellent engineers and others type of knowledge. We have a relevant benefit for growing IT firms. For example, Uruguay has a one hundred percent exoneration of income tax for the payment of things through the export of software and services. The companies can hire university graduates, really, Uruguayan university graduates with as a non-dependent employment. Uruguay allows the money movement without taxes. The companies in Uruguay has the same process as the foreign companies. For the government is the same as a foreign company and a local company. And this is the ... I think this is the reason that this type of firms gets established here in Uruguay. Also, Uruguay is recognized as a democracy, as ... our law, we respect the law.
Fabian: Cool. That's very important here, especially in South America, right?
Leonardo: Yes, we are very different than our neighborhood.
Fabian: Yeah. Exactly. So, and now that you mentioned that Uruguay has a good talent pool, let's move into education. And Uruguay is recognized probably world-wide for the one laptop per child program, better called Plan Ceibal here, right? What is the impact the country is pursuing with this project and for how long has it been running?
Leonardo: Yes. The Plan Ceibal, the last year was the anniversary of the Plan Ceibal, it was ten years. Maybe the impact of this education we will see it in the next years, but we have ... really Plan Ceibal has other types of projects, for example, that are in Uruguay more than two hundred labs that high school students train or try 3D printers, robotics, and IoT systems.
Leonardo: For example, this students, the country, really the teams, won a lot of competitions in the United States, the NASA competition [Spanish news link], the World-Wide Robotic competition, and we have an excellent experience in those areas. I think that in the near future we will see the impact of this education.
Fabian: Cool. And now that you mentioned robotics, I remember a case that I met because of a friend, at a public school in Canelones, which is another city here in Uruguay, that they were playing with the laptop of the Plan Ceibal and the Lego Mindstorms and they were, this kid had a workshop that they had to build and play with this Lego Mindstorms, programming the interfaces and making the robots do stuff. That was really, a really nice-
Leonardo: Yes. It's really nice. My young daughter worked with this type of robotics. I bought a robot in the United States and she is programming the different movements of the robots.
Fabian: Cool. How old is she?
Fabian: Fifteen. Nice. So, what other education efforts are being done here?
Leonardo: Yeah, for example, CUTI, our chamber works with Plan Ceibal in a program called in Spanish "Jovenes a Programar", is "Young Programmers" in English. That we work ... the teachers are provided by the industry, the teachers are professionals that work in our companies and teach different courses. For example, programming, programming web, programming, .NET, testing, databases, a product used a lot in Uruguay called Genexus. And learn a lot in English. This project, for example, works in different cities in the country, it is an excellent experience we do with this project. And now we are working on a project called BIT that provides different courses in online modality, the contents are provided by worldwide providers like Udemy, edX, and local universities. And in this case, we have more than two thousand people studying in these type of courses.
Fabian: We mentioned the Chamber of Uruguay and IT companies several times during our talk, but we didn't get to what it is, or what do you do there, right? So, can you tell me more about the Chamber?
Leonardo: Yes. CUTI is the acronym of Uruguay IT Chamber [in Spanish]. We have a lot of members, the IT companies, more than three hundred fifty companies that provide services in different areas. In vertical markets, for example, we have companies that provide core banking systems, internet banking systems, in the health area, in agrotech, in different vertical markets. We have a lot of companies that provide services in horizontal markets, products or services. For example, your company, Kaizen Softworks. Or for example, my company, Quanam. Or other companies like in the Artificial Intelligence area, Blockchain, Big Data, we have a lot of companies that work in outsourcing services. This is the type of companies that are the members of CUTI.
Fabian: And what's your role there? You are the president, but what are you trying to do there?
Leonardo: Yeah, I try to... We work in a huge ecosystem here in Uruguay. We are the catalyst of this IT ecosystem. In the ecosystem, we work together, the universities, the academia, for example, the public academy, and four or five private universities. We work with different agencies, national agencies, government agencies, for example, the Research and Development Agency of Uruguay, the agency that promotes the digital governance. For example, Uruguay has a long tradition of incorporating technology in the public companies and the ministries and so on. We work in the ecosystem with agents in international agencies, central with technology parks, free-trade zones. We are working together to increase our sector. For example, to increase exports we work in different projects to work in the United States, we have trade missions to the United States, to China, to Mexico, to Germany. We work in different ways to increase our size.
Fabian: That's a lot of work. So, you mentioned that the Chamber represents more than three hundred companies, but I guess that's not the total number of companies in the IT sector in Uruguay. Do you have the number of...
Leonardo: Really our members represent the ninety percent of the companies.
Fabian: Oh, ninety percent? Oh.
Leonardo: Yes, we have ... we are very representative of the IT sector.
Fabian: Cool. That's very good.
Leonardo: Yes. And obviously, the most important companies are members of CUTI.
Fabian: Cool. And tell me more about these companies. You were telling me about they were working on Machine Learning, Artificial Intelligence, different verticals, any more additional examples that are worth mentioning?
Leonardo: Oh, for example, we have success stories in different companies. For example, there is a company called Ironhide Game Studio that is obviously working in the area of games. And for example, this company was in the top ten of the Apple Store. There are a lot of downloads of their game. Their game is called Kingdom Rush. It's a successful company in this area. There are companies that were accelerated in the United States, for example, in 500 Startups, this company is called Monkey Learn, they work in Natural Language Processing. They have a lot of customers in the United States. Really, the company and the product and the services launch in the United States to the world, really, because they work for the world. This is the type of companies that work here in Uruguay.
Fabian: You mention that the Chamber do several trips along the year, these trades missions, and you mention the United States, China, and different other countries. Could you tell me a little more about what are the top export countries that Uruguay IT companies have?
Leonardo: Yes. Our exports in 2016. That's the last numbers, represent 400 million dollars. United States is the most important client for us because the United States represents 58% of our exports. The next is Argentina with only 6%.
Fabian: Yeah. That's a big difference.
Leonardo: Yes. We have a long tradition with the United States and the percentage increases every year. But, for example, we have countries, very sophisticated countries such as Japan, Switzerland, Ireland. We have these countries in the top ten of our exports destinations.
Fabian: Just a correction, I just want to make sure, you mentioned 400 million dollars were exported, is that only the United States? Because I think I have that ...
Leonardo: No, 400 million dollars is the total exports of the Uruguayan IT market.
Fabian: Total Exports.
Fabian: All right.
Leonardo: And the United States represent 58% percent of this 400 million.
Fabian: Right. And, so, you said there's a big difference ... fifty-eight percent the United States and just six percent Argentina. So, why do you think the United States is the biggest market for Uruguayan companies?
Leonardo: Really, the United States is the most important market in ...
Fabian: Of everybody?
Leonardo: In technology. No, I mean, the United States consumes the... really, the fifty percent of the market around the world. And, obviously, Uruguay...
Fabian: Is not an exception.
Leonardo: Yes, is not an exception. And has a possibility to sell more in the United States.
Fabian: And we are pretty aligned on the time zones, right?
Leonardo: Yeah, we are in a similar time zone as the United States, is a perfect location for nearshore outsourcing. For example, we have a lot of projects in Brazil, but in Brazil because of the crises, the companies changed their focus and see to the United States.
Fabian: And, so, looking at reports, I'm thinking it said something like 10% growth, year over year in the last few years.
Fabian: Of the exports.
Leonardo: Yeah, in the exports, but in the local market we are the same in ...
Fabian: Very much the same.
Fabian: So, the Chamber, I heard is not so happy about these results and wants to make a bigger jump on these exports. What's the goal? What are you trying to achieve with that?
Leonardo: Yes, really, we try to work to increase our exports to the United States and to other countries. We need to move forward in this direction because we have a lot of companies that work in products, in software products and these companies need more experience in internalization and use the partnerships with other companies in the United States, and we need to work with these companies, really to teach how to sell technology in the United States.
Leonardo: Really, it's an important focus because the country, the United States is a very particular market. We need to sell more, and obviously to other countries. Chile, Colombia, Mexico, Europe. And we are working on a new strategy to increase these efforts.
Fabian: Okay. Any part of that strategy that you can share right now? Or because I know that you just started...
Leonardo: We really, we are working on this newest strategy. I suppose that finally in November we will have this strategy...
Fabian: A more consolidated plan.
Fabian: All right. So, let's move into the final part of this kind of interview that I wanted to do to you to start this show of this podcast. I want to talk about the startup ecosystem here in Uruguay. What can you tell me? Because I just want to give the idea to the audience about how it is here in every aspect, right? What can you tell me? Do we have coworks? Do we have incubators? How are them?
Leonardo: Yes. In Uruguay there are now, there are a lot of coworks distributed in the country, there are coworks in Punta del Este which is a very nice city to ...
Fabian: And touristic place.
Leonardo: Yes, a touristic point. There are coworks in cities 500 kilometers from Montevideo. Salto, Paysandu, Colonia which is in front of Buenos Aires, Argentina. And there are a lot here in the capital of Montevideo. We have more than ten incubators, also distributed in the country. We have not an accelerator, but similar to an accelerator that works together with the national agency of research and innovation [ANII], working with venture capitals. Really, not venture capitals, it's a found they invest in different companies. And this type of team, work, for example, to invest in Blockchain projects, invest in Agro-tech projects, invest in Artificial Intelligence projects, and they work like an accelerator. It's not an accelerator, but it's similar an accelerator. The concept of an accelerator in the United States. But, we have incubators with more than fifteen years here in Uruguay. Ingenio was founded in 2002.
Fabian: And that's one made by the government, right?
Leonardo: Really. It's a ...
Fabian: It's installed in a government campus but...
Leonardo: Really, LATU is the owner of Ingenio but LATU is a public company. It's a State company, but it's not the government.
Fabian: Got it.
Leonardo: It's a particular state here in Uruguay. But, we have a lot of startups here in Uruguay. The universities have pre-incubators, the ORT University has a long tradition as preincubator. There are many, many, many start-ups that were funded in this preincubator, for example, PedidosYA is a company that was funded, the idea was born in the pre-incubator. ANII, the National Agency of Research and Innovation found, really found 25.000 dollars. It's a few money. And that's ... and this company works around Latin America, but in the last year, hero ...
Fabian: Delivery Hero.
Leonardo: Delivery Hero, a German company acquired PedidosYA and for example, this company in the last year, launched the IPO in Frankfurt for one thousand million Euros. It's a huge company that is obviously working now in Latin America, and also in Europe.
Fabian: Just to add a little information. PedidosYA is an online food delivery service. Right?
Leonardo: Yes. Thank you very much for ...
Fabian: Just adding that detail. Any other success cases? You already talk about Ironhide. Now, PedidosYA. Any other example?
Leonardo: MonkeyLearn. There are other examples, one called GlamST. It's a company that provides services in the luxury... a woman's styles. You can try the products in a digital mode, and after that, buy the physical product. It's a company accelerated Plug and Play accelerator, in Silicon Valley.
Leonardo: Genexus is the most relevant company here in Uruguay. They have offices in Mexico, Brazil, Argentina, United States, Japan, Dubai, China, there are ... they work around the world. They have more than ten thousand customers, more than one hundred thousand users. It's a huge company that provides services and products around the world.
Fabian: Now, I want to understand a little more about where these companies, these start-ups, are innovating the most and also is Agrotech, because, for those that don't know, Agro is a big industry here in Uruguay, right? So, I guess, what's the work companies are doing in that area, taking advantage of that big industry here?
Leonardo: Yes. Because the Agro is the more important industry here in Uruguay. Obviously, if you provide services for this type of company, it's very easy to move, for example, to Argentina, Paraguay, and Brazil, or south Brazil. That work in this area and provide the similar services. For example, Uruguay has an excellent project, we have the traceability of bovine cargo. All our cows have a chip.
Fabian: That's right.
Leonardo: Yeah. And the ministry of bovine cargo has the traceability of these animals. For example, it incorporates cows, horses, pigs and other animals here in Uruguay.
Fabian: Cool. I think we are pretty much covered. Do you want to add something? To the startups or any of the topics we already covered?
Leonardo: No, it's fine.
Fabian: It's a really nice overview of, to have a sensation of the IT industry here in Uruguay.
Leonardo: Yes, yes.
Fabian: All right, so, I think that was really good. Thank you for coming, Leo. Thank you for coming to talk about the Uruguay IT Industry. I really enjoyed this. Thank you so much for your time today and being in the first episode.
Leonardo: Yes. Thank you very much for inviting me.
Fabian: Thanks everyone for listening to The Kaizen Podcast. This podcast has been brought to you by Kaizen Softworks. Check us out at https://kzsoftworks.com.