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Argentine province bets on Silicon Valley future

Better known for its rich farming and universities, the central Argentine province of Cordoba is styling itself as the country's own Silicon Valley, and more than 250 technology firms already call it home.
/ Source: Reuters

Better known for its rich farming and universities, the central Argentine province of Cordoba is styling itself as the country's own Silicon Valley, and more than 250 technology firms already call it home.

Argentina's capital, Buenos Aires, has long been dominant as the financial and industrial hub of Latin America's No. 3 economy, but Cordoba's provincial government is confident that tax breaks and a large skilled work force give it an edge.

"When you're deciding on a city, there are lots of things to consider, such as whether there are universities, talent being generated and infrastructure," said Jose Berruecos, local president of Electronic Data Systems Corp.

"Cordoba has that. And obviously the tax conditions make it even more attractive," he added.

EDS, which recently opened a development center in Cordoba, is the world's No. 2 technology services provider after International Business Machines Corp..

Local officials say it is difficult to estimate total investment in the technology sector, but EDS, chipmaker Intel Corp. and Motorola alone have pumped in about $50 million since 2001 and they plan to increase that fourfold in the next five years.

"In six years, Cordoba has turned itself into the most dynamic information technology center in Latin America, starting with Motorola's move here in 2001," said Jorge Mansilla, the province's industry and commerce secretary.

Cordoba, which lies about 500 miles northwest of Buenos Aires, is Argentina's top corn- and soy-farming district and a popular tourist destination among Argentines.

Mansilla said the province, with a population of about three million and nine universities, had the South American country's highest per capita rate of vocational students, undergraduates and postgraduates.

Prestigious universities — including the National University of Cordoba, which was founded in 1613 by Jesuits and is the country's oldest — draw students from across the country. Argentina is often viewed as having one of the best-educated work forces in Latin America.

To satisfy demand from the information technology sector, universities, companies and the local government have designed a study program to meet the industry's skills needs.

The government also plans a grant scheme for high school students who want to pursue technology-linked degree courses.

The province has also benefited from the sharp devaluation of Argentina's currency at the height of a 2001-2002 economic crisis, which cut costs for foreign investors and made Argentine exports more competitive.

The local peso currency was pegged one-to-one to the U.S. dollar, but there are now more than three to the greenback.

About 14,000 people are employed at Cordoba's information technology outfits, which include telecommunications, electronics, software, hardware and call-center companies.

"At the moment, Motorola, Intel Corp. and EDS have about 500 staff between them, and this number will surpass 3,000 by 2012. By that time, we estimate that some 23,000 people will work in the sector," Mansilla said.

In an effort to attract new firms, Cordoba's provincial government offers tax breaks for the first 20 years, cheap electricity and subsidies aimed at creating new jobs.

EDS has one of its eight operations-and-development centers in Cordoba. It has three more in India, and two each in China and Hungary.

"Argentina is attractive because it's in the same time zone and close to the United States, which is an extremely important market. In terms of prices, we're very often more competitive than India," Berruecos said.

"We can get to markets much more quickly and competitively than India because of our geographical location," he added.

However, industry analysts say Argentina's natural advantages are not everything, and that the country must take advantage of the devaluation of the peso.

"It's essential to take advantage of the favorable circumstances due to the devaluation and make (the boom) last, to maintain and deepen accords with the universities to adapt their curriculum to meet the needs of the industry," said Enrique Carrier of the consulting firm Carrier and Associates.

"It's important to work to maintain the advantages. And, in fact, I think that's already happening," he added.