The bond default by Argentina barely two weeks ago has not
deterred the top-notch banks such as Citigroup Inc. (
) and JPMorgan Chase & Co. (
) from considering the extension of their technology footprints in
Buenos Aires. The availability of skilled professionals at
comparatively low costs compared to other big Latin American
nations such as Brazil and Chile are pushing these banking majors
toward expanding their technology platform in this fiscally-ravaged
Citigroup's technology unit in the country, known as the Argentina
Development Center, is responsible for designing software for its
Latin American business. The New York-based bank is planning to
increase its workforce in the country by 20% within early 2015 from
its current level of 430.
Again, JPMorgan is adding to its employee strength in the
Argentine technology hub, while it is reducing jobs in its
technology support divisions in Chicago, New York, Tampa and Dubai
amid decline in revenues. Again, Accenture plc (
), the Dublin, Ireland-based information technology services firm,
is adding around 700 employees in Argentina.
Albeit the default, Argentina, the second largest economy in Latin
America, has thrown open a vista of opportunities for the global
banks. With abundant supply of skilled workers, programmers and
engineers, and highest literacy rate in Latin America and low cost
of labor, the country is well-positioned to become a software
technology hub in the near future.
According to government sources, this Latin American nation
exported software worth of $900 million in 2013 and the figure is
expected to reach $1.4 billion this year. The ample opportunities
offered by this nation have enticed big banks to enhance their
technology hub in the country.
However, extension of footprint in Argentina comes with associated
risks. Citigroup has already cautioned investors that the risks
emanating from the default can lead to losses. In fact, per a
regulatory filing, the bank has warned that it may incur a loss of
$80 million in case the US regulators downgrade Argentina.
However, the ground reality is that despite all the odds, the
availability of talent in Argentina is encouraging the banking
majors to improve their technology base in the country.
Currently, both Citigroup and JPMorgan carry a Zacks Rank #3
(Hold). One better-ranked bank is PrivateBancorp, Inc. (
), with a Zacks Rank #2 (Buy).
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