Reengineering the Tech Culture of Latin America

A brief history of the evolution of the tech economy, the software outsourcing sector, and the tech culture in Latin America.

There’s a lot of buzz around the rise of the tech industry in Latin America. The continent is growing its own unicorns, Softbank is flooding the market with cash, the smartphone boom turned most Latin Americans into e-consumers, the tech innovation spirit is catching on. Despite the size of the market and its potential, Latin America has not risen as a global leader of technology yet. Its ascension is already planned, but its tech culture needs a little readjustment prior to entering the arena of fully-fledged tech regional powers.

To understand this complex situation, a little step back into the early days of the tech culture is necessary to observe how tech ethics were shaped by historical events and phenomenons over the years, and what being a tech company means today. 

A brief History of the tech culture

With the rise of personal computers and software during the 80s, a new type of company culture emerged: Along the lines of the “work hard, play hard”, software companies created more playful work environments where the establishment was to be challenged through unleashed creativity and complete dedication. Apple’s Macintosh offices were known as a wild place to work for. Just like Steve Jobs, a lot of tech entrepreneurs grew up during the New Age era of the 60s and 70s, and adopted rather unconventional techniques once they operated their own companies.

“It’s better to be a pirate than to join the Navy”

famously said the founder of Apple inc.

During the 90s and early 2000s, the tech working culture fell under the influence of the tech startup trend (the dotcom boom). Often led by young entrepreneurs, dotcom startups were different. They had a ping pong table, a chill/sleeping area, a fridge full of soda and beers, street art on the walls, scooters to go around the office, cool gizmo all over, etc. A “kidult” imaginary world that strongly resonated with Tom Hanks’ NY apartment in the 1988 movie Big. Those novel work environments were designed to inspire safety and boost creativity. In Facebook’s early days, Mark Zuckerberg had set up the same type of work environment in his house, as portrayed in the movie The Social Network.

The tech working culture is also correlated with higher revenues. The typical gross margin for a software company is 90%, a cash-rich configuration that makes it easier to share with the working force. Because the tech culture needed to think beyond traditional boundaries –  money being one of them – startups of the 90s literally burned their VC money: $135 million in 18 months for, $60 million and 0 revenue for govWorks, $121 million in 3 years for, $250 million in 3 years for Kozmo, $104 million in 2 years for… Some of that money went into throwing some of the wildest parties of the 90s, but all the companies mentioned above failed hard during the dotcom crash. Suddenly strapped for cash, tech companies learned to rationalize their economics to stabilize the tech market.

As developers became a massive workforce worldwide, “brogrammers” became the new issue of the tech working culture. A vast majority of software entrepreneurs and developers were young (white) males. This lack of gender and age balance shaped the industry’s mentality, turning it into a testosterone-driven competition, a barrier for the ineluctable globalization of the software sector. Developing “all-inclusive” working cultures became the new challenge of the tech economy.

The outsourcing para-narrative

Outsourcing, whether it be software or hardware, has always been Silicon Valley’s dirty little secret. In the 60s, Mexico was the ghost manufacturer of California-developed technologies. In the 90s, with the boom of personal computers and the internet, IT managers could suddenly turn to the other side of the planet (namely India and China) to outsource their projects. And they did. Software products could be built remotely and fully delivered through telecommunications, opening infinite new possibilities.

Offshoring to the Eastern world turned into a nightmare for many Western IT managers. Whatever was saved on cheaper labor was wasted in cultural clashes, repetitive early AM calls, and unsatisfying results. IT managers learned the hard way that “just outsource it” did not just work. In 2005, Deloitte Consulting released a study portraying offshore software development as a declining trend. India had to weather a long PR nightmare regarding the potential of its software development muscle, and faced a too-big-to-fail scandal in 2009 when the Indian software giant Satyam collapsed Enron-style almost overnight. Thus it became a hard fact in the tech working culture: to do software offshoring right, it takes more than just having “cheap developers somewhere”.

Fragmenting and losing track of value has been another historic issue faced with outsourcing. Hewlett-Packard has been criticized for overdoing outsourcing since 2002, giving away its competitive edge one byte after the other over the years. Recently, Boeing was under heavy scrutiny following 2 crashes linked to bad coding written by the Indian software partner of the aeronautics juggernaut.

Those unfortunate outcomes show that:

  • Just like Ikea will decide where to buy wood on the planet according to a variety of factors, any industrial player will have the same strategy when it comes to buying software development. That is the rule of a global market.
  • Even technology giants like Boeing and Hewlett-Packard have not yet mastered the art of doing software offshore outsourcing right.

Evangelizing the tech culture in Latin America

Fast-forward to the early 2010s. The Web 2.0 boom relaunched the web economy. Tech startups raise money in the Silicon Valley, but cannot hire 100% of their team in the area, because of the salaries being excessively high in the region. In search for an alternative to Asia, a new wave of tech entrepreneurs turned to Latin America. Mexico, Brazil and Argentina have the potential to compete with India and China’s software development power. Plus, Latam countries are aligned with the US time zones, making it almost seamless to manage a project in real time, which has become a major factor in any agile-driven and Slack-centric organization.

What Latin American countries lacked at that point was a strong tech culture. Most of the big Latam tech companies did not exist 15 years ago. The market of software development is underdeveloped, and lacks the tech ethics that shaped the US tech economy during the previous decades. In other words, despite its heavy pool of tech workers, Latin America does not have the tech spirit to become a tech leader on its own… Yet.

The company Blue Trail Software was created in 2012. It opened its first software production center opened in Mexico and rapidly  expanded to Argentina. While it has been tagged as the next Mexican IT company, its headquarters are located in the San Francisco Bay Area, and its Board of Directors is mostly composed of Americans. Beyond software development, the role of Blue Trail Software is to instill a new spirit in the Latam tech market. First by bringing focus on inclusion. The CEO of Blue Trail Software is a woman and one of the goals of the company is to build a gender-balanced work environment. The company provides an in-house training program to create more entry-level opportunities. “Empower employees” is the company’s proclaimed motto, and its focus on nurturing talents whims a fresh new breeze over the Latam tech culture. Its offices are inspired by the playful spirit of the tech culture. All the ingredients of the modern tech company are here.

Wizeline was created in 2014. Beyond providing a software development service, the company is strongly focused on maintaining an efficient multicultural working environment. At Nearsoft (created in 2006), Nearsoftians are invited to “be playful and innovate”. iTexico partners with local universities to “create a culture of sustainable development and use of high-impact technology”. Latin American companies have their very own cultural singularity, those companies are working on reengineering the international tech standards to make the shoe fit on Latin America’s foot.

Aligning the Latin American tech culture with international standards to build a global software economy is one of the key challenges of the continent. The goal is to build a round-the-clock, round-the-earth permanent production capacity. Latin America is a key missing piece in this global organization (along with Africa). But pioneering companies, such as the ones mentioned above, are taking on the challenge to turn Latin Americans into culture-conscious tech entrepreneurs. Those companies are committed to make Latin America compatible with the global plug-and-play tech economy by reengineering its tech force, one talent at a time.

Further reading