Forget commodities: Latin America is becoming the world’s primary digital service provider
The primary condition to lead digital transformation is technical expertise, and LATAM is the world’s leading evidence of that.
Over the years, the business industry has created various stereotypes for each region of the world according to their expertise. For instance, India is well-known for its spectacular IT leaders, Germany for its unique cars, France for food, Italy for having the world’s best fashion houses and America for the Silicon Valley and its many software development capabilities.
But what about LATAM? For the majority of people in the world, LATAM is still the commodities exporter.
Although these stereotypes seem suitable in our minds, these concepts reflect a lag in our thinking.
In short, the LATAM environment is not like this anymore. Ordinary things might trigger significant transformations. For example, what does it mean for a country to have soda vending machines available in public spaces? Surprisingly, a lot.
What does the arrival of Coca-Cola vending machines in Latin America have to do with digital commerce transformation?
To explain LATAM’s economic shift, I will begin with a story.
I lived in Latin America for almost my entire life, mainly in Rio de Janeiro, Brazil. When I started traveling abroad about twenty-five years ago, I noticed one thing that stuck in my mind. Why did other countries have Coca-Cola vending machines and I couldn’t find any of these in my home country?
The non-existence of these mainstream and typical machines was just a symptom of a past we all have known as reality in most Latin American countries. The value of the goods moved too fast. We’ve experienced times when countries’ inflation rates reached a plateau of almost 80% monthly. As a result, uncertainty ruled and currency fluctuation was massive.
The hyperinflation caused the prices of goods to change every day and, unfortunately, Coca-Cola vending machines couldn’t update prices daily. The higher inflation rates pushed for a monthly update of the soda vending machines’ hardware in order to receive more currency than initially expected, as the currency gradually devalued. It is impossible to have Coca-Cola vending machines in countries with high inflation and security issues. The high cost of capital also made it more challenging to keep inventory in one place for a long time. Consequently, the high cost of capital added one more layer of complexity to inventory management.
How does this story connect with digital commerce? Years later, we now see Coca-Cola vending machines in Brazil and throughout Latin America. The currency stability was the first glimpse of a revolution in the region. Latin America currently experiences a healthy inflation baseline and sustainable interest rates. We now attract and own venture capitals, private equities and growth funds. Besides the political instability (which we’ll still live in for years to come), the region has proven to be a powerful ecosystem for tech startups: fintechs, retail techs, logitechs, etc.
Summing up, with these stable economic conditions, there’s another factor to consider: the complexity of the Latin American retail environment. Nowhere out there would you need to fight against such a mix of tax, merchandising and cash flow operation complexity alongside the need to have multiple fulfillment centers, delivery facilities, carriers, payments and much more. Although this seems negative, the adversity generated a resilient group of digital companies, managed by ultra-adapted executives, who had to be flexible to fight against totally unpredictable obstacles in their countries.
The adverse scenario builds excellence.
Why are the Nordics the world’s most admired sailors? The answer is simple: the locations and treacherous seas they’ve sailed over in their long maritime history have built skillful navigators. They sailed across the North Atlantic Ocean, facing the worst conditions a human can encounter on the sea.
The same type of difficult setting can be seen in Latin America. With its complexity of brand manufacturers and a diverse retail landscape, it has crafted the perfect scenario for developing the best managers of digital commerce providers globally.
Latin America is transforming the Digital Commerce scenario by developing creative engineering.
The world doesn’t know that Latin America has hundreds of thousands of creative engineer graduates, yearly. Mexico, Argentina, Brazil and Colombia are adding more than 250,000 of engineers every year to the global market, which is a significant number in terms of quantity and potential talent coming up in the future. As a result, Latin America, alongside the Asia Pacific market, is growing its software developers pool way faster than North America and EMEA can.
Latin America possesses experienced engineers in the digital commerce landscape. The region holds two of the most mature digital operations in retail: Mercado Libre and Globant, both public companies, traded on NASDAQ and NYSE, respectively. Founded in 1999, Mercado Libre (ticker: MELI) holds a unique marketplace solution that controls the Latin American region with its power in digital commerce engineering. What’s the result? Mercado Libre trained numerous commerce engineers from all over Latin America to sustain its fastest-growing pace, becoming one massive talent tech hub.
Years later, in 2003, Globant (ticker: GLOB) was founded in Buenos Aires. With more than 16K employees, the LATAM company demands and develops thousands of engineers inside their organization. If you are not familiar with the company’s name, Globant sells engineering solutions for companies like Google and it recently reached a valuation of almost $9 billion USD.
Big tech and major global retailers have already discovered Latin America as the source. Uber did not choose the region for one of its tech hubs by chance: it holds an immense talent and creative engineering density. Latin America now has $16 billion USD worth of startups attracting, hiring and developing the best and most talented creative engineers in the digital field at a superior pace. The scale-up phase of these companies requires them to hire and generate more and more creative engineers to fulfill their growth accordingly.
The majority of startups in Latin America have global ambitions. You can see by the example of Nubank, the most recent startup that managed to raise $500M USD from Warren Buffett. As well as Nubank, the Latin American Ebanx raised an amount of $430M USD in their previous rounds of investment. Among these investors was Advent, one of the most prominent global investors in the payments sector.
Although LATAM economic indicators seem attractive for bringing international investments forward, we all know that talent density is the one force that could position Latin America as the global leader of the digital commerce scenario. The talent density is already being developed by the most prominent countries in the region.
LATAM is creating a spinning wheel, a fertile soil for developing the world’s creative engineering talent pool, empowering the region to sell digital knowledge at a competitive price point. It is a self-fulfilling prophecy in which mature companies would have no choice other than to rely on the region. EMEA and the Americas have never met these prices to access a significant talent pool knowledgeable in software for digital transformation.
If you travel to France for the food, if you attend Italian fashion shows, if you hire IT leaders from India, we invite you to shift horizons.
When it comes to LATAM, instead of looking for commodities, you will probably look for a digital service provider from the region.
Latin America is the epicenter of a revolution. Retailers and brand manufacturers worldwide are being pushed to future-proof careers and organizations, meeting the uncomfortable complexity of the latest commerce architecture. With creative engineering and the right environment, LATAM is the source of pioneering software to future-proof your organization.
If you want to know more about the LATAM tech revolution, please send me a direct message on my LinkedIn account.
