Two years ago, Helmut Sprengel, a senior official at German giant BASF, packed his bags and moved his family to a spot he had struggled to locate on a map: Montevideo.
The reason? After an exhaustive search, his company – the largest chemical producer in the world – had decided to open an office in Uruguay to offer administrative and accounting services to its global network of branches. Sprengel had been tasked to direct the Montevideo operation.
“The surroundings are pleasant here. You can live quietly and do what you want without worrying about safety or traffic jams,” he says.
But beyond good working conditions, there was another key factor in BASF's decision. "Here, we find the qualified people we need to provide our services," says Sprengel. The company’s Uruguay team now numbers some 400 people.
The BASF case is not isolated.
Uruguayan-born Walter Hughes had lived in Dallas for nearly two decades, rising up the ranks at the prestigious Humphreys & Partners architecture firm. In 2009, he and his wife, Virginia, decided that they preferred to raise their children in their native country.
After an uncertain juncture in his professional life, Hughes reached an unlikely agreement with Humphreys & Partners. The firm agreed to open an office in Montevideo. They started with four employees. Eight years later, they now have more than 50. The key, Hughes says, has been the level of talent in the labor market. (Although Humphreys also has offices in India and Vietnam, where labor is cheaper, the work of the Uruguayan team is preferred back at headquarters, he insists).
"Today, we cannot take on any more people because we don’t have any physical space left," says Hughes.
Related content: Uruguay's inner transformation
Success via Strategy
In total, 35 foreign companies have established or expanded operations in Uruguay in recent years, making the small country one of the preferred destinations in the world for exported service operations. The list of companies includes several multinationals, including Itaú, Roche, Globant, Abbott, Syngenta and Merck, among others.
Foreign companies invested $308 million in Uruguay between 2013 and 2017, according to Uruguay XXI, the government agency responsible for promoting exports, investments and the country’s image.
A strategy, not good fortune, underpins the trend. Designed and implemented by Uruguay XXI, with technical and financial support from the IDB, it seeks to boost exports and investment by focusing on people.
"Countries like Ireland and Korea can export high-value-added services because they have qualified people," says Fabrizio Opertti, manager of the IDB’s Integration and Trade Sector. "To have a global vision and be able to operate and offer value in a hyper-connected world, the key is human capital."
In 2011, the IDB approved a $10-million project to promote investment and exports of services in Uruguay as well as train and identify talent. Since then, the Bank has worked closely with Uruguay XXI to position the country in North America, Europe and Asia through events, missions and development and mapping of plans.
Gasoline for Investment
One of the flagship programs within the strategy is “finishing schools,” through which companies can obtain non-reimbursable financing of between 40 and 70 percent of the cost of training in technical or soft skills for current and potential employees.
Those involved in the initiative say it has become the gasoline that drives foreign companies to invest and reinvest in Uruguay.
Indeed, between 2012 and 2019, Uruguay XXI and 212 participating companies have invested $4 million in the training of 7,300 employees in sectors including pharmaceuticals and health, information technology, corporate services and architecture, design and civil engineering.
To access the training funds of the finishing schools, companies must submit a proposal to Uruguay XXI to explain their goals, which must be to create new jobs, improve employees’ skills or build new skills demanded by the global services industry.
Humphreys & Partners is among the firms to have taken advantage. The company’s design for a skyport of the future was a finalist at Uber's Elevate 2018 conference. Inspired by a beehive, the innovative creation was developed in the Uruguay office.
Globant, the Argentinean tech “unicorn,” valued at more than $1 billion, is another beneficiary. Specifically, it has looked to the Code Your Future internship program, which has allowed the company to train and identify future employees.
Ana Berón, who grew up in Casavalle, a low-income neighborhood in Montevideo, was hired by BASF after receiving two years of training in administrative management through the finishing school initiative at the NGO Center for Support to Integral Development (CADI).
"I never imagined I would be in this company – that I could become independent and live in another neighborhood. Now, I can give back to my family what they have given me," she says.
Berón has also learned English and Portuguese since joining BASF, through courses offered by the multinational.
Another key initiative within Uruguay’s strategy is Smart Talent, an online portal that provides young professionals with opportunities to study and work in global services.
"Find work in global companies" is the slogan of the portal, which has published more than 2,200 job opportunities in the last four years for 315 companies based in Uruguay. For the most part, job offers are in the technology and web development fields.
For the past three years, Uruguay XXI has also been organizing Smart Talent Day, an annual event to bring together companies and talent. More than 5,000 people have participated as well as 140 companies that export services and educational institutions. The Talent Days offer the participants meeting spaces, talks, and resume checks.
Exports of services in Latin America represent only 3.5% of the global total. A well-structured and well-implemented investment promotion strategy, however, has the potential for big impact.