A New Light Dawns on Puerto Rico’s Global Tech Ecosystem
With rich history and culture, exceptional food, pristine beaches and majestic mountains, Puerto Rico’s a quintessential Caribbean paradise. But looking closer you will find a different side to this paradise: a robust, modern entrepreneurial and IT services ecosystem burgeoning as an undercurrent.
Best practices developed by businesses in Puerto Rico in reaction to the whipsaw of unpredictable weather over the years are also playing an important role in putting the nation at the forefront of a digital revolution.
Take for example hurricane Fiona, which hit the island recently. It was the resilience of domestically operating businesses and its local workforce that prevented a cascading failure to happen. Lessons from earlier disasters –hurricane Maria and the pandemic– helped businesses in Puerto Rico maintain operations, as employees continued to deliver business value and companies maintained the supply chain running smoothly amidst a crisis.
Lessons from earlier [climate] disasters helped businesses in Puerto Rico maintain operations
A definite political will in Puerto Rico has been central in empowering the services space over the years across varying industries, such as software development, medical device manufacturing and tech services. The IT services sector today is an important economic driver in this US territory.
The island nation also made most of the technology and business landscape shifts during the pandemic by feeding the development of an already existing, rich with potential tech services industry.
The foremost advantage that Puerto Rico offers is convenience:
- The Convenience of Similarity: Puerto Rico is a US territory and mirrors Intellectual Property (IP) protections and other regulations of the US. Puerto Rico and the mainland US also share the same currency, languages and cultures, plus an overlapping time zone.
- The Convenience of Location: The proximity of Puerto Rico to the mainland US offers huge advantages. Merely a short flight away from all major US cities, nearshore providers in Puerto Rico can conveniently work with clients on-site to ensure project deliverables with minimal disruption.
- The Convenience of Skilled Talent Pool: With world-class educational institutions and easy access to American ones, the talent pool in Puerto Rico has come to be highly skilled in advanced software engineering, data science and other coveted fields. The industry is also well equipped with state-of-the-art best practices and methodologies, such as Agile, Lean manufacturing and more. And yet, Puerto Rico’s billing rates are 30-50% lower than mainland competitors. Global businesses have found a significant economic advantage in engaging Puerto Rico for its service support needs.
Backing this growth is Puerto Rico’s specialized and diversified industrial base. Combine this with a skilled and educated workforce that is proficient in English, a workday overlap for better coordination, a world class communications infrastructure and the legal and banking structures that are the same as those in the US. Puerto Rico not only offers the same laws, regulations and standards as in the US, but a significant cost advantage as well, compared with the mainland.
Because of a common currency, companies in Puerto Rico are immune to fluctuations in foreign exchange. Simply put, for companies wanting the offshore advantage at a nearshore destination, Puerto Rico is the perfect fit.
As the complexity of tech grows and the need to bring advanced solutions to life quickly and efficiently amplifies, so will the market demand. There are many tax breaks offered to specific industries; public buildings can be leased at attractive rates; and there are varied wage incentives and access to financing through tax-free industrial bonds and direct loans. The country also simplified its taxation scheme by launching a program which cut the individual tax rate to a flat 4% across the board and 75% property tax exemption, among other benefits.
The key is to evolve constantly, and Puerto Rico is ahead in that race
The demand from US policymakers to bring back services and manufacturing to nearshore destinations from far-flung geographies has opened more possibilities for Puerto Rico to leverage the varied conveniences it offers.
The disruption of the outsourcing market in the Philippines, because of the pandemic, is another geopolitical factor working to Puerto Rico’s advantage. Puerto Rico already hosts some of the biggest names in the pharma industry, including Pfizer, Eli Lilly and Bristol-Myers Squibb. Global technology companies, such as Infosys, Microsoft and GE also have a strong presence in Puerto Rico.
The IT services sector in Puerto Rico is seeing demand rise in multiple sectors, most notably in healthcare communications and technology, call centers, insurance and banking.
Puerto Rico continues to strengthen its position as a business and investment enabler. The island is leveraging its advantages, such as its highly educated workforce, strong infrastructure, socio-political stability, as well as tax credits and incentives. The country is also preparing to be among the chosen few to initiate 5G testing. This will give further fillip to Puerto Rico’s tech services industry, as technology enablement firms test applications and build advanced use cases.
The key is to evolve constantly, and Puerto Rico is ahead in that race. Leveraging its human and digital capital optimally can very well position the island as the nearshore/offshore hub of the world.
This article was first published on Nearshore Americas