THE BLOG
09/03/2014 08:22 pm ET Updated Nov 03, 2014

Debt Default or Not, It's Entrepreneurship That's Going to Save Argentina

These days, when I surf the web, I often see banner ads for something called Fact Check Argentina. The group, which is funded by a "not-for-profit" entity known as the American Task Force Argentina (ATFA), has one very clear "for-profit" goal: driving public opinion in favor of the hedge funds that appear to have the upper hand in Argentina's decade-long sovereign debt battle. The ATFA and the Argentine government are engaged in a media battle that's playing out online and in pricey ads in leading newspapers. Regardless of all of the spilled ink, this is not going to end well for Argentina, it seems.

If you only pay attention to this ongoing war of attrition, you'd be forgiven for missing a more hopeful story that is also coming out of Argentina. Despite years of economic turmoil and political intrigue, the country is making it's case to be known as a hub for technology, software development, and entrepreneurship. Somehow, the technology industry has defied gravity to become a ray of economic sunshine in a country that has grown accustomed to bad news.

Consider all that has happened in Argentina over the past 15 years. Rioting brought down the government in 2001 and the country had 4 presidents in 2 years. The country defaulted on its debt and remains cut-off from the international capital markets. After a brief respite of relative growth and stability, it looks like the administration of Cristina Fernández de Kirchner has little left in its bag of tricks. Argentina now finds itself back in the debt doldrums. Things have gotten so bad that the black market rate - the Dólar Blue - now trades at a level that is more than 50% below the official rate.

Despite all of these headwinds, Argentina still has human capital that is among the finest in the Western Hemisphere. As a result, besides Leo Messi and Pope Francis, lines of code built by Argentina's talented software engineers are among the best things coming out of Argentina these days. Thanks to their efforts, Buenos Aires is positioning itself to become an important outsourcing destination, especially for the US market. For example, just last month, Argentina's Globant, an outsourced development firm, became the first Latin American software company to go public on the NYSE.

Argentina's gambit to build a dominant technology industry is driven by a few core competitive advantages. The country benefits from a high skilled multi-lingual labor force, low wages, and a business friendly time zone for US customers. Plus, Buenos Aires is a beautiful and cosmopolitan city that's easily accessible from the United States via an overnight flight. The city offers high quality hotels, fantastic restaurants, and well-established tourist infrastructure, all at shockingly affordable prices. This is especially true if you can get your hands on some currency at the Dólar Blue rate, as I chronicled last year in Business Insider ("Meanwhile, In Argentina The Black Market Dollar Exchange Has 17,000 Facebook Likes")

Over a steak, empanadas, and, of course, a bottle of malbec, in Buenos Aires' tech-centric Palermo Hollywood district, Lisa Besserman, the founder of Startup Buenos Aires (SUBA), explained what makes the Argentine tech scene special. "Despite - or perhaps thanks to - the ups and downs in the national economy, Argentina has developed a highly resilient class of entrepreneurs who build businesses with global ambitions; they don't have the luxury of staying local." When Besserman moved from New York to Buenos Aires in 2012, she thought she'd stay for a few months. Now fully settled and married to an Argentine, she is driving a movement to replicate the collaborative and dynamic tech scene that she left behind in NYC in her adopted home.

SUBA brings together the tech community via classes, workshops, and frequent events that drive collaboration and the creation of a sustainable tech ecosystem. Since she's got a foot in both countries, she's also fielding an increasing number of inquiries from startups in the U.S who are looking to tap into Buenos Aires' web and mobile development talent. With developer costs that are as little as 25% of the cost in New York or Silicon Valley for equivalent talent, the pitch is straightforward. According to Besserman, "the war for talent nowadays is global and Argentina can compete and win."