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Viewing cable 07BUENOSAIRES639, AMBASSADOR'S IT SECTOR ROUNDTABLE

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Reference ID Created Released Classification Origin
07BUENOSAIRES639 2007-04-05 10:59 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
VZCZCXYZ0018
RR RUEHWEB

DE RUEHBU #0639/01 0951059
ZNR UUUUU ZZH
R 051059Z APR 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 7739
RUCPDOC/USDOC WASHINGTON DC
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6079
RUEHCV/AMEMBASSY CARACAS 1165
RUEHMN/AMEMBASSY MONTEVIDEO 6333
RUEHSG/AMEMBASSY SANTIAGO 0317
RUEHBR/AMEMBASSY BRASILIA 5938
RUEHLP/AMEMBASSY LA PAZ APR SAO PAULO 3228
RUEHRI/AMCONSUL RIO DE JANEIRO 2188
RUEHVL/AMEMBASSY VILNIUS 0017
UNCLAS BUENOS AIRES 000639 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
STATE FOR WHA/BSC AND WHA/EPSC 
E FOR THOMAS PIERCE 
EB/CBA FOR FMERMOUD, DENNIS WINSTEAD 
EB/IFD/OIA FOR WSCHOLZ, MTRACTON 
EB/IFD/OMA FOR AHAVILAND AND ASIROTIC 
PASS NSC FOR JOSE CARDENAS 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
PASS USTR FOR EEISSENSTAT, SCRONIN 
TREASURY FOR RALBANO AND LTRAN 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ECON EINV ECPS AR
SUBJECT: AMBASSADOR'S IT SECTOR ROUNDTABLE 
 
 
1. (U) Contains business-sensitive information.  Not for internet 
distribution 
 
 
--------- 
Summary 
--------- 
 
2. (SBU) Ambassador hosted an information technology (IT) roundtable 
for the Argentine country managers of IBM, Sun Microsystems, Hewlett 
Packard, Oracle, Intel, Avaya, Dell, AMD, and Cisco.  Company reps 
noted strong growth over the past five years following Argentina's 
economic crisis and emphasized Argentina's increasing importance as 
a regional platform for new IT technology development to support 
their businesses in other South/Central American countries. They 
welcomed minimal GoA interference in the IT sector but were 
concerned at the lack of any defined GoA agenda to promote the 
sector's long term development, including through education 
programs.  Company reps contrasted the GoA's laissez faire attitude 
with those of neighboring countries who have placed IT sector 
advancement among their highest priorities.  They responded 
positively to the Ambassador's offer to arrange a follow-on meeting 
with Planning Minister De Vido to encourage the GoA to better 
exploit its competitive advantage in IT services and develop a 
comprehensive IT sector development agenda.  End Summary. 
 
------------------------------------- 
Argentina a Strategic IT Headquarters 
------------------------------------- 
 
3. (SBU) On March 28, Ambassador hosted a roundtable meeting for 
representatives of U.S. IT companies operating in Argentina, 
including IBM, Sun Microsystems, Hewlett Packard, Oracle, Intel, 
Avaya, Dell, AMD, and Cisco.  Company reps agreed that IT sector 
growth in Argentina has been strong during the past five years of 
Argentina's post-crisis economic recovery, a recovery in which GDP 
growth has averaged 8 percent and where an undervalued currency made 
the technical and creative talent the IT sector requires relatively 
inexpensive.  Many IT companies reported revenue growth rates in the 
double-digits for the past four years. Cisco reported a 40 percent 
increase in sales in 2006 alone. 
 
4. (SBU) As domestic inflation progressively erodes Argentina's 
labor cost advantages and shrinks profit margins, IT company reps 
emphasized Argentina's strategic importance as a regional platform 
for new technology development to support their business in other 
South/Central American countries and in some cases Europe and the 
U.S.  Both Intel and Motorola have opened large software development 
centers in the city of Cordoba.  Avaya (a former division of Lucent 
Technologies) opened a call center and recently launched its own 
software "factory" dedicated to IP solutions. 
 
--------------------------------------------- --------- 
MINIMAL GOA INTERFERENCE - BUT LITTLE STRATEGIC VISION 
--------------------------------------------- --------- 
 
5. (SBU) In an Argentine economy plagued by increasing levels of 
government intervention in markets, IT company reps hailed minimal 
GoA regulation and interference in their sector.  However, they also 
noted the lack of any defined GoA agenda to promote the sector's 
long-term development, including through education programs. 
According to company reps, as a percentage of GDP, the IT industry 
in Argentina represents a low 2 percent, compared to 5 percent in 
the U.S., 3.7 percent in Europe and 3 percent in Chile. 
 
 
6. (SBU) The major challenge facing the IT industry in Argentina 
today, participants agreed, is the increasing difficulty in locating 
 
 
 
 
qualified IT personnel, from call center technicians to software 
engineers.  They called on the GoA to take a more active role in 
encouraging universities to create new programs and to better tailor 
existing IT degree programs to provide the IT sector the trained 
creative talent they need to grow.  They also noted the need for 
individual IT companies and IT associations to encourage the GoA to 
invest now in the nation's IT future. To this end, Oracle explained 
that they have developed a training program with the Argentine 
Ministry of Labor targeting young unemployed Argentines.  Company 
reps  contrasted the GoA's laissez faire attitude with those of 
neighboring countries including Uruguay who have placed the 
advancement of the IT sector among their highest priorities. 
 
---------------- 
BROADBAND ACCESS 
---------------- 
 
7.(SBU) In response to the Ambassador's question on broadband 
access, participants noted that an overwhelming 92 percent of 
broadband subscribers are located in the fiber optic corridor that 
spans Argentina's three largest cities Buenos Aires, Rosario and 
Cordoba and includes roughly half of Argentina's 40 million 
inhabitants.  Broadband use is rising rapidly, with a 67 percent 
increase in the number of private and business sector high-speed 
subscribers in 2006 alone.  Argentina currently has approximately 
1.5 million users and service subscriptions are growing 100 percent 
yearly. Argentine broadband penetration, industry reps noted, lags 
behind Chile but is ahead of neighboring Brazil. 
 
---------------- 
Embassy Advocacy 
---------------- 
 
8. (SBU) Ambassador appreciated the IT company reps willingness to 
share their views and concerns and asked how the Embassy could best 
advocate on their behalf with GoA authorities.  They responded 
positively to the Ambassador's offer to arrange a follow-on meeting 
with Planning Minister De Vido to push the GoA to consider 
developing a comprehensive IT strategy. 
 
----------------------------------------- 
Comment: A GoA chief Information Officer? 
----------------------------------------- 
 
9. (SBU) IT companies in Argentina welcome the GoA's laissez faire 
treatment of their sector, but recognize that current high levels of 
growth cannot be sustained absent greater GoA support to promote the 
sector's long term development, including through education 
programs.  Participants highlighted diffused responsibility for IT 
sector issues among GoA Ministries and suggested that Argentina 
would do well to emulate other national efforts and name the 
government equivalent of a corporate "Chief Information Officer." 
Post will facilitate meetings for U.S. IT company reps with senior 
GoA officials, including the Planning Minister, to encourage the GoA 
to better exploit its competitive advantage in IT services and 
develop a comprehensive IT sector development agenda. 
 
Wayne