Digital transformation “today is a giant steamroller that will go over everything,” said the president of the Chamber of Information Technologies.
Although the Covid-19 crisis had a generalized impact, for the software sector, it was not as crippling as it was for other branches of economy, assured the president of the Uruguayan Chamber of Information Technologies (CUTI), Leonardo Loureiro. And in the not too distant future, as a result of the pandemic, “the digital transformation” became a “giant steamroller that will pass over everything,” he predicted in dialogue with Search.
“We were lucky,” said Ana Inés Echavarren, Infocorp’s chief executive officer, in reference to everything that Covid-19 brought. The Uruguayan industry was in better conditions to face a crisis than in 2002, in part because of its “spectacular” previous situation, as described by Loureiro. The drop in activity in these months was “slight,” in part because today, technology is a “fundamental part of operation” for many sectors, said the president of the CUTI.
However, a survey with other business organizations revealed that, among the CUTI partners, some companies were the hardest hit by the COVID-19 pandemic, especially the providers of tourism services and automobile dealers, for example. On the other hand, the most diversified organizations “reoriented” their strategies towards other sectors, as they noticed that demand was increasing, for example, in the areas of finances, insurance and the government, Loureiro said.
In particular, due to its specific activity, Infocorp saw “incredible growth from some of its clients,” Echavarren said. As an “iconic example”, she mentioned the Banco Agrario de Colombia, which “began to open more than 1,000 accounts per day” to be able to pay “the subsidies determined by the government” for that country’s population. There has also been growth in other digital interaction modalities.
Among the most affected Uruguayan companies, there were mainly two strategies to minimize the impact, Loureiro said. On the one hand, the reorientation of workers towards activities of “certification, training” and development of “new products,” in order to avoid referrals to “unemployment insurance.” And, on the other hand, they resorted to the Juntos Somos Industria project: those who had “available resources” offered them to others who needed them temporarily, taking over the salary in that period.
Loureiro received a call during the first hours after the first cases of Covid-19 in the country were confirmed, already knowing what he had to do: he had to “go out to promote teleworking,” he commented. But the problem, he added, is that this modality is not yet regulated and, therefore, there are “many contingencies” for which a company may prefer not to incorporate it. For example, he mentioned the difficulties in determining whether an accident, under these conditions, would be considered work-related or not, as well as other “little things that arise at the moment.”
Beyond that, what the pandemic did was take digital work “to its maximum expression.” In fact, prior to the teleworking bill proposed a few weeks ago by the Colorado deputy Carmen Sanguinetti – “quite interesting” although “obviously perfectible” – others had already been presented, and the CUTI – together with the government and other organizations – was already working on its own bill.
On the other hand, the businessman highlighted the importance of the country’s digital infrastructure: “Very few countries were able to do what Uruguay did thanks to the infrastructure that Antel provides to us in this case.”
Exports from the Uruguayan software industry totaled US $ 760 million in 2018, the business representative reported. A few years ago, it was expected that by 2020 they would reach US $ 1 billion, but that was not fulfilled.
Business is 64% concentrated in the United States: it is Uruguay’s biggest importer in this industry, followed by meat and grains.
In addition, Loureiro recalled that, when talking about ICT, exporting does not only mean placing goods and services in other markets, but also opening branches and new companies in these places, either with the “traditional model” of sending a commercial representative or settling in physically in these countries. Among other new destinations, the chamber has traveled to China three times in order to “understand this market” and there are already “highly developed” companies in business with Japan.
In this sense, the recent sale of Infocorp – one of the most important banking software companies – to the Canadian group Constellation Software Inc. is “excellent news,” as it contributes to the internationalization of the industry, said Echavarren. “It’s a super valuable case” to learn from, she said.
Another area in which “a lot of work was also done” in the last two months is in the creation of value as a way to grow “more and more.” Loureiro stated that one cannot “depend on services” and called for “a change in the productive matrix,” concentrating on intellectual property, which comprehends not only software licenses, but also “analytical, data and business models.” For this, he assured, “it is not enough to increase the base of the pyramid,” it is necessary to incorporate more doctors, masters, engineers, accountants and economists who add “a lot of value” to the sector.
During a forum organized by the CUTI in 2018, Marcel Mordezcki, professor of technology management and innovation at the ORT University, warned about the need to also exploit the other “end” of the value chain: the contact with the public. Loureiro explained that this concept refers to what is called “born-global” companies, or born to be global, a type of enterprise or business unit specially conceived to expand into other markets, incorporating “multilanguage and multi-channel features, ” as well as expansion strategies. According to this businessman, there are “many” examples of this in Uruguay.
According to Echavarren, the sale of Infocorp also confirms that Uruguayan talent and its national products “are at the same level” as those of the first world. “Having to always think about selling abroad and understanding that we have to be flexible” make the Uruguayan “creative and innovative.” As an example of this, the executive said that the Canadian group asked them to give talks to other companies to transmit their “good practices in some problems,” solved in ways that the others “would never have imagined.”
In any case, and despite these advances, Echavarren and Loureiro agree that there is still much to do. In fact, in the context of the last electoral campaign, the CUTI sent the different candidates a series of proposals for 2020-2025, among which they mention the need to improve the availability of trained human capital. “If you want to position yourself in a world like this, you need to be innovative and talented,” said the president of the chamber. With an estimated deficit of 2,500 technicians, this is one of the three pillars on which the union focuses, along with internationalization and innovation.
The proposals also include improving access to export destinations, the creation of a “Technological Uruguay” country brand, the “modernization” of the labor market and greater financing for the accomplishment of the main objectives defined in the document. At the end of the current government period, the sector expects its industry to represent 5% of the Gross Domestic Product – doubling its activity – and to create 10,000 jobs.
They also demand lower taxes on technology and electronic imports, the “modification” of the Ceibal Plan, the flexibilization of some regulations, an increase in investment and the creation of a technology visa program to encourage talent immigration.
Even in the midst of the current coronavirus crisis, an optimistic vision about the future of the sector is repeated among the entrepreneurs consulted. “Before the pandemic, there was an overwhelming digital transformation: today it is a giant steamroller that is going to pass over everything. It is going to be five, or ten times, faster than it has been,” said Loureiro. According to him, “there is no going back,” since people “got used to doing everything online.” In addition, he maintained that “this is not going to be the only virus.”
“Some things we were expecting for 2030 will already be happening in 2023,” he predicted. As examples, he talked about harvesters, which “look like NASA” and need “loaded files or programs” to start working.
Regarding the future of teleworking, Loureiro foresees a change in the current conception. “You think about it in the way we work today, but it’s not just going to be that. In the future, I, sitting here, will be able to control a combine harvester in Salto with a joystick, or a drone leaving my farm in Soriano. That’s what’s going to happen.”
But, in addition to agriculture, it is necessary for other sectors of the economy to “understand the impact that this is going to have.” Today, activities such as construction “make very little use” of technologies such as BIM (Building Information Management) or management systems, purchase and checking of materials, he observed.
In this context, the financial sector is, according to Loureiro, one of the most advanced ones, but also one of the most conservative due to the strong influence of the banking sector.
On the other hand, Echavarren believes that bank managers “want to do things” and the obstacles come from some “ancient regulations and laws that do not match the present times.” To illustrate this idea, the businesswoman made reference to the incorporation of digital companies to open accounts in a non-face-to-face way, or the acceptance of a videoconference as an “interview with the executive,” processes that in her opinion are “easy” to incorporate, but that “sometimes, are not the country’s priority, especially in times of crisis.”
However, she acknowledged, it is not enough “to pose a problem, the proposal of a solution is also needed.” This is why she understands that banks need to get together and think about the sector’s future.
As to the implementation of new technologies, her opinion is that there is a “very long” road ahead. “Before – and I mean three years ago, not ten – we used to think that a platform’s version could be used up to five years. Today, we think that platforms can be used for two years, in the best of cases.”
In addition, Echavarren can already see a way out of a crisis that “helped put banks within reach,” as they “have already confirmed the importance of technology investments. We are already having conversations.” For this purpose, she stated, “the year is going to pick up, although it will not be as excellent as planned. But I don’t want to say it too loudly,” and assured that “it is not possible to relax.”