Information Technology in Argentina
Wireless Communications
Because the Argentine market for telecommunications equipment and services is experiencing rapid growth in the wake of privatization and seven years ago the telecommunications sector should grow at 15-20 percent annually as the rapid deployment of new cellular networks and investments in the wireless infrastructure will drive the market for equipment and services. The two regional telephone companies, Telecom Argentina Telecom and Telefonica de Argentina Telefonica, are aggressively moving to deploy new networks and improving the country's reputation for poor service. In wireless communications, the February 1994 award of regional cellular licenses to a consortium led by GTE and AT&T has established a strong U.S. presence in this market long dominated by European service companies.
The mobile wireless penetration rate in Argentina is growing at rapid rate. Because of the large costs for wiring a country for telephones, Argentina will probably see higher rates of wireless growth than more developed countries. The wireless market has significant room for growth as new and existing operators enlarge their networks, migrate to new technologies and develop new marketing tools and services.
Software Development
Because 62% of Argentina's GDP comes from the service sector [6], Argentina's strong growing economy continues to encourage purchases of imported goods and services. Given the high expansion in the computer base, significant software purchases will have to take place to. Application software of universal applications should find a growing market. Growing markets will be the newly privatized public utilities; banks; and insurance companies.
As mentioned earlier, domestic software development is nearly non-existent in Argentina. There are a few domestic vendors that produce financial and accounting software that conforms to local and national financial standards. Argentina's strong currency continues to encourage purchases of imported goods and services.
I would not use Argentina for offshore software development because of the lack of substantial software development experience. It will be difficult for Argentina to grow much of a domestic software development industry due to the enormous competitive disadvantage Argentina possesses. It is doubtful Argentina can compete with large international vendors with established marketshares such as Microsoft, IBM, Novell, and Oracle. Because Argentina's standard software and hardware for businesses are becoming aligned with the rest of the developed countries, it is likely Argentina will fully adopt these established standards.
Telecommunication Equipment
Because of the explosive growth of the Argentine telecommunications services, the telecommunications equipment market will continue to grow. Imports have traditionally supplied about one-third of the telecommunications equipment market; however, privatization and increased competition have increased the ratio of imports close to one half of the total market.
I would invest in IT manufacturing in Argentina because of the growing demand for information technology and telecommunications equipment. Most of the investment in this market is coming from international sources. Because of the technical transfer that will occur, Argentina will slowly grow their domestic IT manufacturing.
Analysis:Impacts
on the (non-IT) Globally-Competing Firm
Last Updated: 5/5/97
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