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Investment opportunities

GLOBAL EXPORT SERVICES

February / 2017

Global Services Program


Contents
1. TRADE IN SERVICES....................................................................................................................... 2
GLOBAL SERVICES. DEFINITION AND CLASSIFICATION .............................................................................. 2
GLOBAL VALUE CHAINS AND GLOBAL SERVICES ..................................................................................... 5
TRENDS IN GLOBAL SERVICES ............................................................................................................. 5
2. INTERNATIONAL TRADE IN SERVICES ................................................................................................ 8
WORLD EXPORTS OF NON-TRADITIONAL SERVICES ................................................................................ 8
URUGUAY: SERVICES EXPORTER COUNTRY ............................................................................................ 9
3. GLOBAL SERVICES EXPORTS FROM URUGUAY.................................................................................. 11
CREATIVE SERVICES ........................................................................................................................ 11
FINANCIAL SERVICES ....................................................................................................................... 12
INFORMATION TECHNOLOGIES ......................................................................................................... 12
CORPORATE SERVICES ..................................................................................................................... 13
REGIONAL HEADQUARTERS & SHARED SERVICES CENTERS .................................................................... 13
OUTSOURCED SERVICES PROVIDERS (BPS&KPS) ................................................................................ 13
INTERNATIONAL TRADE RELATED SERVICES ......................................................................................... 14
TRADING .................................................................................................................................. 14
REGIONAL DISTRIBUTION CENTERS (RDC)...................................................................................... 14
REGIONAL CORPORATE CENTERS (RCCS) ........................................................................................... 15
ASSESSMENT OF GLOBAL EXPORT SERVICES IN URUGUAY ..................................................................... 17
EXPORT COMPANIES – EMPLOYMENT AND EXPORTS ........................................................................ 17
4. GLOBAL POSITIONING OF URUGUAY .............................................................................................. 21
RELIABILITY ................................................................................................................................ 21
MARKET AND NEARSHORE ACCESS ........................................................................................... 22
TALENT....................................................................................................................................... 22
QUALITY OF LIFE......................................................................................................................... 23
Servicios Globales de Exportación

5. INSTITUTIONS ............................................................................................................................ 24
URUGUAY XXI - GLOBAL EXPORT SERVICES PROGRAM (PSG) ............................................................. 24
OTHER PUBLIC SECTOR INSTITUTIONS ................................................................................................ 26
PRIVATE SECTOR ............................................................................................................................ 27
GLOBAL EXPORT SERVICES FROM FREE ZONES..................................................................................... 28
INVESTMENT PROMOTION ............................................................................................................... 30
SPECIAL SCHEMES .......................................................................................................................... 30
GOVERNMENT SPECIFIC INCENTIVES FOR VARIOUS GLOBAL EXPORT SERVICES .......................................... 32
TRADE AND INVESTMENT PROMOTION AGREEMENTS ........................................................................... 35
ANNEX II- METHODOLOGY .................................................................................................................. 37
ESTIMATIONS FROM NON-FREE ZONES .............................................................................................. 37
ESTIMATIONS FROM FREE ZONES ...................................................................................................... 39
ANNEX III. TALENT AVAILABILITY .......................................................................................................... 42
URUGUAY IN SYNTHESIS (2016) ........................................................................................................... 48
MAIN ECONOMIC INDICATORS 2011-2016 ....................................................................................... 48

1
info@uruguayxxi.gub.uy | www.uruguayxxi.gub.uy | @UruguayXXI
Servicios Globales de Exportación

Globalization and its process, increasingly intensified at the end of the 20th century, was accompanied by a
remarkable expansion of international trade in goods and services. In particular, the past decades have
brought about a revolution in the capacity of transmitting, gathering and processing information. This
revolution has allowed companies and persons in one country to easily apply their knowledge and processes
to benefit other companies abroad, thus multiplying the services offered worldwide.

In addition, within the context of international fragmentation of production and the rise of global value
chains, there has been a growing trend towards fragmentation in international trade in services. Many
business functions that have traditionally been done internally - services such as software development,
accounting and auditing, as well as database analysis and other information services that can for the most
part be provided online - are now externally performed1. Thus, there is a growing internationalization of
business services and an increase in the international mobility of factors, including capital (foreign direct
investment), as well as people and know-how.

In addition to the traditional exports of services (tourism and transport), there is a set of services which are
growing in variety and importance. These include communication, information, technology, design,
professional and creative services, which are consumed by companies and individuals.

Among non-traditional services there is a sub-category which derives from a company’s decision to
outsource an activity or process and transfer it abroad. This practice, Offshoring of services explains what is
usually referred to as Global Export Services.

The reasons that lead companies to take these decisions are: benefit-cost ratio advantages, time
complementarity and the possibility to reach new markets, among others. They are intended to reduce
costs, release resources in their countries of origin, increase efficiency and innovation, and make the best of
labor, tax and technological differences among the countries.

Depending on the degree of control of the headquarters over the operations abroad, two different models
for these services apply:

 Offshoring Outsourcing: When the service is outsourced to a supplier abroad.

 Captive Offshoring: When the Company sets up a subsidiary abroad.

Within these two there is an array of business models deemed as global services exports which also
include: Direct Supplier, Dedicated Center, Joint Venture, Build-Operate-Transfer, among others2.

1
See Annex I for a more detailed description of the role of services in Global Value Chains.
2
Based on: “Uruguay en el comercio global de tareas”; IDB, 2012.
2
info@uruguayxxi.gub.uy | www.uruguayxxi.gub.uy | @UruguayXXI
Servicios Globales de Exportación

Chart 1 – Different Services Offshoring models for companies

Source: Created by URUGUAY XXI.

On the other hand, offshoring services may be classified according to the knowledge applied to the provision
of services, in three large categories:

 Business Process Services (BPS): offshoring of business services, related to business and administrative
processes, including accounting, collection, payroll payments, invoicing, Human Resources management,
among others.

 Information Technology Services (ITS): offshoring of IT services in two main areas: software and
applications and activities related to infrastructure and data processing.

 Knowledge Process Services (KPS): offshoring of intensive processes related to knowledge, such as
research and develpoment services, specialist advisory services, and risk and credit analysis, among
others.

These categories vary according to human capital requirements in terms of skills and qualifications. The BPO
segment is generally less intensive in qualified human resources, even though it employs more personnel.
The ITO sector has low qualification requirements for some segments and high-degree of specialization for
some others. The KPO sector requires highly qualified personnel, as it involves knowledge-intensive
processes.

Globally and particularly in Uruguay, there are several companies (regional corporate centers) developing all
these three types of services at the same time (broad spectrum operations).

These categories are joined by a series of vertical services, which require specific knowledge of certain
industries and may require a high degree of specialization. These services include financial, pharmaceutical
and health related services, creative services and professional services.

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Servicios Globales de Exportación

The nature of the global export services provided makes it possible to assume that the vast majority of cases
it is companies which are receiving them. As an exception, some technological solutions can be included
which are directed directly to consumers (Business to Consumer) as well as some financial services.

Chart 2 – Global Export Services Models

Source: Uruguay XXI, adaptation based on Center on Globalization, Governance & Competitiveness, Duke University.

Internationalization of services is an opportunity for the development and growth of countries as it:

 Reduces external vulnerability: Exports of services have not only grown more than goods, but also were
less volatile and more resistant to international crises.

 Diversifies export supply: Services constitute a new product within the export basket which also helps
diversify destinations. Diversification of products and markets also reduces the country’s vulnerability.
 Generates quality employment: Services are human capital-intensive activities. To provide competitive
services at international level, it is necessary to have advantages in terms of quality or quantity of labor.
Necessarily, services exported by small countries will be those requiring skilled labor and generating jobs
for this segment.
 Increases Foreign Direct Investment (FDI): Many multinational companies set up in the country to
provide services to their parent companies. This new flow of FDI translates into better infrastructure
(modern offices, development of technology platforms), more quality work, higher standards, new
technologies and new business processes. Some local firms that interact with these multinationals take
part in these practices and manage to become competitive in order to become internationalized. What
is more, in certain cases new local companies arise from the experience of employees in the
multinational companies (spin-offs), fomenting the national entrepreneurial ecosystem.

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Servicios Globales de Exportación

 Allows for the internationalization of new companies: As the initial capital requirements to provide a
new service are generally much lower than in the case of an export of goods, it is easier for small and
medium-sized enterprises to undertake a new export activity and to enter into a global value chain, with
the possibility of scaling towards segments with greater added value.

The development of Global Export Services is closely related to the phenomenon known as Global Value
Chains (GVC). Productive processes are becoming more and more fragmented worldwide. Production of
goods has become a multinational phenomenon, whereby the different stages of the productive process are
carried out at different places of the world3. In addition to creating opportunities to diversify production and
trade, participation in regional and global value chains allows countries to keep some of the profits related
to the manufactured goods without needing to conduct and dominate each one of the production stages.

Particularly regarding services, countries with qualified human resources and appropriate technological
infrastructure use these advantages to integrate themselves into a high-value link in the production chain
(Upgrading). Thus, investment in human capital and infrastructure is paramount for companies to decide to
offshore some of their business functions to a country which in turn may position itself in global value
chains, developing functional, inter-sectorial scaling processes for processes and products.

Global Services are an industry in a constant process of growth and development, being permeable to new
production trends framed in what has been called the fourth industrial revolution (Industry 4.0). Some of the
most prominent trends are automation and artificial intelligence, the Work At Home Agent (WAHA) model,
the Blockchain data recording method and the digital interconnection of everyday objects known as the
"Internet of Things" (IoT). These will be briefly discussed below.

Artificial Automation and Artificial Intelligence

Technological advances within the frame known as fourth industrial revolution enable extreme automation
and connectivity. Moreover, artificial intelligence (AI) refers to solutions for intelligent decision-making or
prediction. According to Nilsson (1998), AI is defined as "intelligent behavior in artifacts: this implies
perception, reasoning, learning, communication, acting in complex environments."

AI in conjunction with extreme automation make it possible to analyze results and make complex decisions.
Thus, it is possible for virtual and physical systems to cooperate (Cyber- physical Systems4). On the other
hand, connectivity enables universal and instant communication, allowing the emergence of new business
and work models. In conjunction with automation, these systems can control and manage physical processes
and respond similarly to a human.

3
Source: “Fábricas Sincronizadas: América Latina y el Caribe en la Era de las Cadenas Globales de Valor”, IDB, 2014.
4
Cyber- physical Systems refer to “a new generation of systems with physical and computing capacities which allow for
the interaction with people through new and different models.” (Baheti & Gill)
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Servicios Globales de Exportación

In the global services industry, certain low and medium complexity processes are already being automated.
Moreover, companies have systems based on AI solutions which not only facilitate automation but also are
constantly learning about processes, identifying errors, possibilities for improvements, behavior patterns, et
cetera.

WAHA (Work at Home Agent)

The WAHA (Work At Home Agent) trend refers to a mode of work in which agents work from home. This
work format is already a consolidated trend, especially in the industry of call and contact centers, and is
based on the continuous improvement of global connectivity. As a work format it represents certain benefits
for employees, especially in those cases where there are difficulties to move from their homes.

In the United States, more than half of contact centers already have a percentage of their workforce working
from home in WAHA format. Companies like LiveOps, TeleTech, Amazon, IBM, Dell, Xerox, First Data, Oracle,
Deloitte, Apple and Wells Fargo demonstrate this. This is an option which is being incorporated to the
detriment of the offshoring of these services, which generally show low levels of satisfaction by users. In
addition, this modality represents a saving for companies in terms of infrastructure, and in extraordinary
cases of emergency or excess of demand allows to quickly incorporate/replace personnel.

Blockchain

Blockchain is the technology behind digital coins (its origin can be found in bitcoins). It is a public database,
where all transactions (blocks) are stored and must be validated by companies or individuals (miners)
through a key, verifying that the amount transferred is in accordance with the monetary amount available to
the user. Each user has a copy of the updated blockchain, i.e. it is a distributed database. Additionally, each
transaction is added chronologically, without the possibility of deleting data, so the database is in
continuous synchronization. Its main characteristic is the non-requirement of a centralized entity for the
execution of transactions. In turn, as a platform, it may be used for transactions in different parts of the
world and with any type of asset.

According to Gartner, blockchain-based businesses will be worth more than USD 10 billion by 2022. While it
is a technology still considered immature, it will not remain as such for a long time.

In the case of global services, it does not only represent opportunities for the financial services segment but
for any activity which requires some type of transfer and control thereof.

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Servicios Globales de Exportación

Internet of Things

Internet of Things or IoT refers to the interconnection via Internet of objects and devices (things), allowing
the communication and the exchange of information with other devices. By 2020, more than 50 billion
"things" are expected to be interconnected through chips and micro-sensors, performing tasks, sharing
information in real time, making diagnostics and making decisions based on predefined action guides using
artificial intelligence (Burrus, 2016)5.

For the global services segment, this is a trend with strong implications for business models, especially in
certain segments such as Pharma and Health, Logistics and Financial Services, where there are already
several innovations based on IoT: monitoring of Patients, fleet and merchandise control, smart ATMs linked
to customers' smartphones.

An interesting challenge faced by IoT is in the area of data security and privacy, as well as governance, which
is why cyber-security plays an extremely important role within companies.

5
“Daniel Burrus´ Top 20 Technology Hard Trends Shaping 2017”. Available at: http://www.burrus.com/2016/12/daniel-
burrus-top-20-tech-driven-hard-trends-2017/

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Servicios Globales de Exportación

In recent years, services have been one of the most dynamic sectors of the global economy. Their impact is
seen in both world production and employment, as well as in investment and trade flows. In developed
countries services account for 75% of the Gross Domestic Product (GDP) and for 53% in developing
countries. The service sector currently employs 49% of the world's workforce, when in 1990 they employed
only 37%. In developed countries, this ratio rises to 74%. In addition, the services sector represents 63% of
global flows of foreign direct investment.6.
Chart 1 – World Service Exports
Within the context of outstanding growth of
(USD billion)
world commerce, trade in services has
5000
experienced a particularly significant 1980 2015
4500 % of total
dynamism. This has allowed their participation 4000 trade 17% 23%
in total trade to rise from 17% in 1980 to 23% in 3500

2015. 3000 Transport

2500 Travel

2000 Other services


Latin America has not lagged behind in this
1500
trend. Service exports from the region grew at 56%
1000
an annual average rate of 7% in the last decade,
500
reaching almost USD 123 billion, which 0 41%

accounted for 3% of global exports of services. 1980 1990 2000 2015

Source: Uruguay XXI based on UNCTAD.

Exports of services are showing a global deep


Chart 2- World Non-Traditional Services
transformation. A set of more recently developed Exports (Share % 2015)
services related to technology and new business
practices is joining the more traditional service sectors –
Financial
transport and tourism. The incorporation of these non- IT and
16%
Communications
traditional services is gaining increasing relative 18% Royalties and
licence fees
importance. In 2015, they accounted for 53% of the 12%
Insurance
world’s exports of services. 5%

Construction (3%)
While exports of transport and tourism services grew at Other business Government (3%)
an average annual rate of 5.2% in the period 2005-2015, services
41%
Personal, cultural and
recreational services (2%)
non-traditional services did so at 7%. Within non-
traditional services, those associated with Global Export
Services are the most relevant. Exports of business Source: Uruguay XXI based on UNCTAD.
services, IT services and financial services account for
75% of total world exports of this category of services (see Chart 2). The main providers of non-traditional
services in 2015 are the United States and European countries; they are also the main importers.

6
Source: World Investment Report 2015, UNCTAD.
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Servicios Globales de Exportación

Main Exporters Main Importers


of Non-Traditional Services of Non-Traditional Services
United States 16% United States 11%
United Kingdom 10% Ireland 6%
Germany 6% Germany 6%
France 5% France 6%
Netherlands 5% Netherlands 5%
India 5% United Kingdom 5%
Ireland 5% Japan 5%
China 4% China 4%
Japan 4% Singapore 3%
Luxembourg 3% Switzerland 3%
Source: UNCTAD (2015)

Uruguay is not indifferent to the abovementioned global trends. The country has undergone an outward-
looking process over the last twenty years, which has enabled it to participate in global trade flows more
dynamically, while developing a deep productive transformation. This is evidenced in the material shift
experienced in the country’s export structure.

Chart 3 – Structure of Uruguay’s Export Offer


(Share in total export of goods and services, %)
25%

21%
20%

15%

10%

5%

2%

0%
Textiles and Leather and Beef and live Transportation Chemical, Others Dairy products Wood, wood Tourism Non-traditional Agriculture
footware leather animals Services plastics and pulp and paper services
products rubber
industries
1990 2015

Source: Uruguay XXI based on data from BCU, DNA, DGI and Free Zones Area (MEF).

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Servicios Globales de Exportación

Chart 3 shows the shift experienced by the structure of exports over the past two decades. Non-traditional
services is one of the sectors which have become more important. Favored by global transformations and
the advantages of Uruguay as a place to conduct business, non-traditional services are among the economy’s
most dynamic sectors.

Exports of non-traditional services, which in 1990 accounted for only 2% of total exports, currently account
for 21% of total exports. In a period when Uruguayan exports multiplied by 6, this change reflects the strong
dynamism of exports of these services, which multiplied by more than 20 in the last 25 years and are
currently estimated at a value close to 5% of the country’s GDP7. Thanks to this strong growth, these services
are currently as important in the Uruguayan export basket as other traditional activities such as tourism and
exports of the main agricultural/livestock products.

7
This section shows figures estimated based on data provided by DGI and Free Zone Department (MEF). It is likely that
figures corresponding to export of non-traditional services are underestimated.
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Servicios Globales de Exportación

The growing importance of exports of global services from Uruguay lies in some key sectors which have
seized the advantages the country offers for the development of its businesses. The number of companies
exporting this type of services from Uruguay is over 2000, with a great heterogeneity in its size in terms of
employment. There are companies with less than five people (e.g. small consultancies, associated architects,
technological start-ups, etc.) and companies with 1000 employees in service centers (e.g. Sabre) or global
outsourcing companies (e.g. Tata Consultancy Services, EGS).

Main Service Segments

The following describes the services provided from Uruguay within these key sectors or segments and
presents some examples of international companies already carrying out activities in the country.

These include Architecture, Engineering, Design and Audiovisual related services.

The crosscutting attributes for business development are supplemented with specific aspects for
Architecture and Engineering services, such as high availability of multilingual professionals with training and
experience in different building techniques, trained to render quality services at competitive costs.

Uruguayan Architecture and Engineering services stand out due to the availability and excellent benefit-cost
ratio of its highly qualified and committed workforce who are renowned worldwide and have great
command of English and other languages.

Uruguay has more than 1,000 architecture studios, but a large number of professionals work on a freelance
basis. According to data gathered from the Social Security Administration (BPS), more than 80% of this
sector's companies have four or less employees. A high percentage of Uruguayan studios have some
experience in exports8. Drafts and final projects are the main exported products, followed by renders. The
main export destinations are MERCOSUR countries, followed by USA and Canada and European countries.
There have been specific experiences with Asian countries.

For further information see: Architecture and Engineering Services in Uruguay.

8
In a survey conducted by Uruguay XXI among the main architecture studios, half of participants had export experience.

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Servicios Globales de Exportación

In the Design sector, Uruguayan companies offer multiple services in different segments. Within the
Business-to-Business (B2B) segment, the main services offered are graphic design, web design, product
design (industrial and furniture), interior design and landscaping. Providers of these services are in general
micro and small companies or independent professionals and are oriented to the domestic market. It is
estimated that in 2013 (latest available data) exports accounted for 10% of the sector. However, certain
strengths are identified, which show the potential for growth in the sector through internationalization. In
this regard, in the last years worked has been done towards a public-private partnership which many
enhance the development of this sector.
For further information see: Uruguayan Chamber of Design- Conglomerado de Diseño en Uruguay

In Uruguay, the Audiovisual Conglomerate (Conglomerado Audiovisual) is a production complex made up of


cinematographic and audiovisual production companies, service and equipment suppliers, distributors,
exhibitors and film services.

The sector's exports correspond mainly to sales of audiovisual production and post-production services.
Among production companies, the advertising sector is one of the most mature and experienced in terms of
internationalization. It is the sector with the largest number of companies and the one with the best
international insertion, led by a small group highly competitive in Latin America9.

For further information see: National Film and Audiovisual Directorate

These include advisory and financial management services to foreign individual and institutional investors
and insurance and reinsurance management services.

There are a number of international firms in the country focusing on market analysis, risk and consulting, as
well as a critical mass of local and foreign operators providing advice and asset management services to
regional and extra-regional clients. The following are examples of companies providing this type of services
in Uruguay: Asset management and advice: Julius Baer, Apex Fund Services, Compass Group, Raymond
James Latin Advisors, among others.

These include services from technology related companies, through both development services and the
marketing of solutions. Uruguay features specific aspects for the ICT industry, such as the renowned quality
of its human resources, its relevant exporting history, a favorable regulatory framework promoting the
internationalization of ICT companies operating from Uruguay through significant tax exemptions and a
coordinated national innovation system.

Therefore, the Uruguayan ICT industry has become an international supplier of high quality products and
services with investment opportunities not only in existing companies but also in the development of new
enterprises. Professional capabilities and internationally competitive technologies-developing companies

9
Source: Industrial Plans - Phase II, MIEM, March 2014. For further information, follow this link.

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Servicios Globales de Exportación

have emerged and now make up the current business network and have managed to take advantage of the
"Uruguay scale" for testing and implementation of solutions. All this translates into the sector's export
dynamics. For further information: The ICT industry in Uruguay.

This category includes services related to offshoring business processes, in the case of services provided by
in-house centers (eg Regional Headquaters and Shared Services Centers) and also for services provided by
third parties mainly associated with business processes (e.g. Customer Service, backoffice) and knowledge
(e.g. consulting, research & development - R & D).

Uruguay presents a series of transversal attributes for the development of business services, which may be
summarized in security and stability for business, tax benefits, qualified talent, favorable geographical
location, time zone, quality of telecommunications and quality of life; all of which position it as a privileged
location for operations by different models.

Montevideo has become a hub for captive centers in particular, with key positions in the region and
providing support services to foreign trade, supply chain, finance and accounting, human resources,
customer service, contract review, among other tasks.

Most of them are located in free zones, such as Aguada Park, World Trade Center and Zonamerica.
Companies which have established HQ & SSC in Uruguay include Abbott, BASF, Finning Caterpillar, Sabre
Holdings, Syngenta, Altisource, SKF, Arcos Dorados (McDonald's), Pluspetrol and Tenaris among others.

Although the majority of large operations established in Uruguay are captive, there are many (global and
local) providing BPS services, from financial back office to Customer Service Centers (Call and Contact
centers). The main examples are Tata Consultancy Services, ALÓRICA, TMF, Concentrix, Atento and Avanza.

There are incipient cases of companies providing Legal Process Outsourcing services (LPO), that is,
outsourcing of legal processes from Uruguay to American companies. The fundamental tasks carried out are
the study and drafting of contracts, risk analysis, sale and purchase agreements and Human Resources
contracts. The cost of professional fees for Uruguayan lawyers and attorneys is very competitive compared
to the rest of Latin America, and particularly the United States.

In higher value added activities, companies specializing in analysis and advice, such as Willis Towers Watson,
also find advantages in Uruguay for their KPS operations. In addition, a significant number of operations of
various sizes, both domestic and foreign in origin, export professional consultancy services.

Internationalization of research and development (R & D) services is very incipient. Uruguay has strengths
for the development of R & D services, including the availability and quality of physicians and researchers,
the presence of world-renowned research institutions such as the Pasteur Institute, special tax benefits for
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Servicios Globales de Exportación

biotechnological developments, among others. There are also examples of companies which export highly
sophisticated services, such as CCC Medical Devices.

It is also worth mentioning that Uruguay has great potential for the export of clinical research services,
powered by research groups of physicians around specialties such as oncology and hematology, among
others. In this area, there is presence of both public and private institutions developing research activities,
with expansion capabilities. Some regulatory constraints currently restrict further growth of the activity.

For further information see: Pharmaceutical Industry Report.

This segment includes commercial activities with or without the goods transacted passing by the country.
The advantages listed above for business services apply in the same way for this type of activities.

This includes activities of trade in services or goods that do not transit through the national territory, intra-
company commercial activities, purchase activities for the company with sale to third parties and activities
of traders who buy and sell to third parties. Most are operations of foreign companies in the form of captive
centers. Global companies specializing in commodity trading such as Louis Dreyfus Commodities, COFCO
AGRI, Bunge and Trafigura have chosen Uruguay as a regional center.

These include wholesale trade of goods entering the country, carried out by companies in free zones,
activities mainly associated to the regional distribution of high-value products (e.g. pharmaceutical and
technology), which normally combine logistical tasks with those of business or trading services.

Uruguay is positioned as a highly attractive site for the development of distribution and logistics activities, a
safe and agile entry to the region. Not only for its tax advantages for companies with foreign trade
operations, but also for its advantages as a logistics platform. Uruguay is the only country in South America
with free ports and airports, a stable free zones scheme and in compliance with international regulations
(tax compliance). It also has a single foreign trade window (VUCE in Spanish). Some RDCs for high value
products operating in Uruguay include SKF, Columbia, GAP, Dupont, Ricoh, Kodak, Samsonite, Sony,
Lexmark, Shimadzu, Adium Pharma, Mega Pharma and Merck among others.

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Servicios Globales de Exportación

The segments presented so far respond largely to the segmentation developed for statistical purposes;
however, business models usually take on more complex forms. In this regard, it is worth emphasizing within
the Global Services industry the growing phenomenon known as Regional Corporate Centers (RCC),
operations (of more than 20 people) of international companies which use the country as "regional hub",
mainly under some of the models described above or combinations thereof (broad spectrum operations):

Headquarters - Shared Outsourced Companies


ICT Centers
Services Centers Centers (BPS-KPS)

Regional Distribution
Trading Centers R + D Centers
Centers

Examples of RCCs according to Parent Company Origin

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Servicios Globales de Exportación

The growing phenomenon of the Regional Corporate Centers (RCC)10 warranted a survey of this activity in
Uruguay. In total, 54 corporate centers of global companies with recognized brands (operations with more
than 20 people), and which generate approximately 10,000 qualified jobs, were surveyed11. Seventy percent
of these operations are located in free zones (Zonamerica, WTCFZ, Aguada Park or Science Park) and 30% in
non-free territory, within the metropolitan area of Montevideo. Seventy four percent of operations
correspond to captive or in-house centers and 26% are centers of outsourced international suppliers (BPS,
KPS, ITS).

Chart 4 – Regional Corporate Centers in Uruguay

Operations by rank of employees Total employees according to size ranges


46%
31%

20% 19% 28%


17%
13%

11%
9%
6%

20-50 51-100 101-200 201-400 401-1000 20-50 51-100 101-200 201-400 401-1000

Operations by main activity Operations by origin of the company


ASIA
IT
7%
BPS-KPS 17%
18% USA-CAN
30%
RDCs
15%
EUROPE
HQ-SSC 43%
31% TRAD
17% ARG-BRA
20%
ARCH.
2%

Source: Uruguay XXI based on information provided by companies in the sector

10
Operations of international companies (20+ employees) using the country as "regional hub", mainly in one of the
following models or combinations thereof: Headquarters - Shared Services Centers, Trading Centers, Regional
Distribution Centers, ICT Centers, Outsourced Business Centers (BPS-KPS), R & D Centers
11
Source: Prepared by Uruguay XXI based on information provided by companies and other Free Zone operators -
2016.

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Servicios Globales de Exportación

This section presents the estimates prepared by Uruguay XXI with the latest available official data (2014).
These estimates approximate the contribution, in terms of exported value and generated employment, of
each defined segment. For the activities carried out in Free Zones, the Free Zone Area (AZF in Spanish)
estimates of the Ministry of Economy and Finance, based on the Free Zone Census (2014), are used. For
activities in non-free territory, aggregate administrative records are used according to the 5-digit Uniform
International Industrial Classification (CIIU in Spanish rev.4)13 provided by the General Tax Authority (DGI in
Spanish), grouped and correlated with the sectors presented by AZF14. (For more information, see
Methodological Annex).

Based on the indicators used, it is estimated that there are over 2,000 companies that export global
services, generating nearly 20,000 jobs. Exports are estimated to have reached USD 2.85 billion (2014).
This represents 18% of Uruguay's exports of goods and services (2014) and represents approximately 5%
of GDP, confirming the sector's growing importance in the economy.

Table 1 presents data divided by segment, on exported amount and direct employment generated,
consolidating activities from within and outside free zones.

12
Statistics available from the Balance of Payments fail to fully capture the magnitude and characteristics of this
phenomenon. This makes it necessary to use alternative sources to obtain a better approximation to the economic
importance of the sector.
13
See Annex for CIIU rev 4 categories included in each segment of global services.
14
To preserve statistical confidentiality, these agencies only provide aggregate information for each sub-group. It
should be noted that for the activities carried out outside Free Zones, the present estimate is based on conservative
assumptions, which may underestimate the phenomenon, especially in terms of exports. To see information from Free
Zones, see http://zonasfrancas.mef.gub.uy/18424/4/areas/estadisticas-zzff.html
17
Servicios Globales de Exportación

Table 1 – Global Services in Uruguay – 2014

Number of
Export Exports
Exporting
Employment (USD Million)
Companies

Creative Services 202 863 88


Architecture, Engineering and Design 84 288 48
Audiovisuals 118 575 40

Financial Services 151 1,681 486

ICT 581 4,747 382

15
Business Services (HQ, SSC, BPS, KPS) 461 8,315 1,237
Professional, scientific and technical services 380 5,014 521
Administrative and Support Services 81 3,302 716

Trade 658 3,875 661


Trading 534 3,248 556
16
Regional Distribution Centers 124 627 105

Total Global Export Services 2,053 19,481 2,854


Source: Estimation from UXXI based on data from Free Zones Area and DGI.

With regard to the value exported by each of the segments, there are several aspects to be highlighted. First,
the importance of business services - the heart of Global Services – stands out, representing more than USD
1.2 billion in exports.

Additionally, the value exported in services associated with activities of international trade stands out, both
for intermediating goods that do not pass through the territory (Trading), and for centers located in Uruguay
which offer various services associated with the regional distribution of goods.

These activities also include financial services, which are estimated at almost USD 500 million annual
exports, and services associated with Information Technology, important because of their high added value.

The contribution of exports of creative services, although smaller in amount, reflects the importance of a
series of non-traditional services with great potential for growth, generally carried out by small companies
which may prove competitive in terms of quality with the rest of the world.

15
Available information allows to separate "Professional, scientific and technical services" from "Administrative
services and support services". The first group is the one associated with the definitions of BPS and KPS. However, in
the allocation of ISICs of companies there is not always an exact correspondence with each of these activities, which is
why Business Services appear grouped.
16
Although pure logistic activities are not strictly assimilated to the concept of Global Services, these CRDC operations
in FZs would take the form of regional centers, incorporating other tasks typical of this type of services.
18
Servicios Globales de Exportación

Table 2 details the total figures, corresponding to activities taking place in Free Zones. Figures confirm the
consolidation of Free Zones as service export platforms. This is because 75% of the exports of Global Services
are made from one of the Free Zones specialized in providing this type of services, and because Free Zones
account for 50% of the employment.

Table 2 – Global Services from Free Zones - 2014

Number of Exports
Companies Employment (USD Millions)

Architecture and Engineering* 12 83 33

Financial and Insurance Services 95 1,108 468

ICT 56 1,906 180


Information and Communication Services 56 1,906 180

Business Services (HQ,CSC,BPS,KPS)


Professional, scientific and technical services* 137 2,917 419
Administrative and Support Services 26 2,154 597

Trade
Trading 220 1,026 552
Commercial Intermediation 124 627 105

Global Export Services from Free Zones** 670 9.821 2.152


Total Share % 32% 50% 75%

Source: Free Zone Area (AZF)

* The figures for architecture and engineering services are estimations of Uruguay XXI. Data presented by the Free Zones Area are
included under Professional, Scientific and Technical Services.

** For the case of trading, only the value corresponding to costs (USD 350 million) is included. Thus, the figure is comparable with
that estimated for outside the Free Zone.

19
Servicios Globales de Exportación

Regarding Employment, although estimates presented refer only to direct employment, they already reflect
the remarkable importance of Global Services as a source of quality job positions.
In general, the service sector is one of the most intensive activities in terms of employment. Uruguay is no
exception: the tertiary sector employs 71% of the employed population (2016, ILO). Global Services
contribute by generating quality employment which requires a high degree of qualification.

According to data from the Ongoing Household Survey (ECH in Spanish), in 2014 there were 69,434 people
employed in business, financial services and ICT companies. 17. Of those, a 21% (about 15,000 employees)
exclusively export.

As mentioned above, services are human capital-intensive activities, and thus have great potential to
generate new jobs. Insofar as a high proportion of these services are knowledge intensive, there are
opportunities for increasing the use of qualified human resources. As an example, according to the MEF Free
Zones Area, 41.5% of free zone workers have completed tertiary studies, which contrasts with 29% of
Montevideo's total population over 25 years (See Annex IV for a characterization of the availability of talent
within Uruguay)18. These estimates do not include all indirect employment generated by these activities,
such as labor used in the installation and maintenance of infrastructure required for their development
(buildings, offices, cleaning, telecommunications, etc.). Therefore, the overall effect on employment is even
greater.

17
These figures do not include personnel employed in activities included under Global Services, as the vast majority of
those outside Free Zones do not conduct exporting activities. (e.g.Architecture, Audiovisuals, Trade.
18
Source: http://zonasfrancas.mef.gub.uy/innovaportal/file/18425/2/informe_personal-ocupado_zf_2014.pdf
20
Servicios Globales de Exportación

The growing trend of service exports has been possible because Uruguay has special characteristics which
separate it place it in an advantageous position with regard to its competitors, as a high quality and
competitive cost location to provide services to the world. Its reduced market and population are no
restriction when it comes to services and Uruguay has special attributes that make the country an attractive
spot for specific service sectors.

Uruguay is the safest country in one of the most economically attractive regions of the Latin American world
to develop business. It is renowned for its strong political and social stability, supported by a consolidated
democracy and strong legal certainty.

Uruguay has experienced a continuous and sustained growth during the last decade, accompanied by
a series of policies which have improved income distribution and have reduced poverty to its historic lowest
levels. Thus, Uruguay consolidates its position as the most egalitarian Latin American country with the best
income distribution19.

In the 2005-2015 period, Foreign Direct Investment received by Uruguay averaged 5.2% of the country’s
GDP. This positions Uruguay as the second country in the region -after Chile-, in terms of receipt of FDI flows.
It is also important to note that Uruguay has high reinvestment rates of FDI profits, which during the period
2005-2015 were as high as 60%, reflecting foreign investors’ appreciation and confidence in the country. In
addition, Uruguay is the only MERCOSUR country with Investment Grade, ratified by the main rating
agencies (Standard & Poor's, Moody's, Fitch, DBRS, and R & I).

With its Investment Law, Uruguay ensures equal treatment to domestic and foreign investors, and
investment promotion incentives available to both without any discrimination. On the other hand, investors
are not required to comply with prerequisites, or present special authorizations from the State, or have a
local counterpart to operate in Uruguay. Nor are there any restrictions on the entry and exit of capital,
transfer of profits, dividends, interests, etc.

The foreign exchange market is free, which is why companies can operate freely in local or foreign currency.
Additionally, in Uruguay there is a single tax system based on the source principle. Thus, taxes are not levied
from foreign source revenues or from assets located abroad.

The main advantages for global services operations are those stipulated by the Investment Law, decrees
with tax exemptions and/or specific incentives for exports of IT services, shared service centers, call/contact
centers, and biotechnology activities, as well as those offered through the free zones, free ports and airports
schemes. Other tools facilitating the country’s favorable business climate are single foreign trade window
(VUCE), a platform for the management of all procedures associated to import, export and transit
operations, and the new Customs Code (CAROU in Spanish) introducing innovations with regard to customs
matters, thus facilitating internationalization.

19
Source: IMF (WEO April 2016) and “Panorama Social de América Latina” 2015, Cepal.
21
Servicios Globales de Exportación

Among other conditions, its geographical location, the language proficiency of its population, its commercial
trajectory, cultural affinity and trade agreements, position Uruguay as an excellent platform for access to
markets such as Brazil and other Spanish-speaking countries. As member of MERCOSUR, and through the
Free Trade Agreement with Mexico, Uruguay has access to a market of 400 million people, which represents
76% of Latin America's GDP.

Uruguay has regionally positioned itself as a logistics and business hub given its proximity to the most
important markets in South America. The country's free zones, free ports and airport, as well as its customs
warehouses scheme, form an ideal platform for the establishment of Distribution Centers. On the other
hand, cultural affinity with Europe and North America, the fact of having a similar time zone, and excellent
telecommunications infrastructure make the country an ideal nearshore location with those markets.

With regard to technological infrastructure development, Uruguay enjoys a privileged position in the region.
According to the Information and Communication Technologies Development Index from the International
Telecommunication Union (ITU), Uruguay is the leader in Latin America with the highest fixed broadband
penetration and lowest mobile broadband prices. In addition, the country has the highest connection speed
in the region (AKAMAI 2016).

Uruguay has highly competitive talent, thanks to many factors including the exceptionally high quality of its
elementary, technical and university education, the flexibility and adaptability of the Uruguayan workforce
with regard to new production or technological processes. Moreover, Uruguayan workforce has increased its
language capacities, specifically regarding English and Portuguese.

The Uruguayan population has a high level of education, as the country has the highest literacy rate in Latin
America (98%). Free access to public education is available from pre-school to university education. The
state invests 6% of GDP in education and 100% of secondary school students at 15 years of age have
completed at least three years of English and two years in computer science studies.

Access to talent is complemented by the ease with which foreign professionals from other MERCOSUR
countries (Argentina, Brazil, Paraguay and Venezuela) may obtain Uruguayan residence, thus making
Uruguay an attractive place to work and live in.

Uruguay was a world pioneer in the implementation of the Ceibal Plan, a public initiative that began in
200720, which provides free access to laptops for all children and teachers in State Primary schools and High
schools. Through this program, Uruguay has managed to reduce the digital divide (in ten years, the
difference in access between the poorest and richest households has fallen from 35% to 8%) and to
empower the new generations with respect to the challenges of the current working world. Other
achievements worth highlighting are the country’s total connectivity in educational institutions -all of which
have full fiber-optics high-speed connectivity- and the implementation of the Ceibal platform in English,
which contributes to the bilingualism of the Uruguayan population.

In addition, through the Global Services Program, there is an accessibility and talent development strategy
for the sector. On the one hand, with Finishing Schools (co-financed by Uruguay XXI-INEFOP), subsidies of up

20
Based on the “One Laptop per Child” program from MIT, Massachusetts Institute of Technology.
22
Servicios Globales de Exportación

to 70% are awarded for customized training programs for global service companies interested in setting up
or expanding their operations in Uruguay. On the other hand, there is the Smart Talent portal, which
facilitates access to global services talent and positions the sector’s development strategy at national level.

Montevideo is the city with the best quality of life in Latin America (Mercer 2016). This extends to the rest of
the territory, making Uruguay the Best Place to live (Future Brand Index). High quality of life is one of the
most distinctive features of our country, which makes it such a friendly place to live, work and invest.

Uruguay has traditionally been a middle-class society, which to a large extent, explains the achievements in
education and social level, as well as its strong social and political stability. Today, it is the country with the
largest middle class population in Latin America.21.

21
Source: http://www.iadb.org/es/noticias/comunicados-de-prensa/2016-10-24/clase-media-en-america-latina-
alcanza-los-186-millones,11611.html

23
Servicios Globales de Exportación

PSG is a government initiative, financed by the IDB and implemented by Uruguay XXI, since 2012, with the
objective of increasing foreign direct investment, exports and employment in the global export services
sector.

Through this program, Uruguay XXI has incorporated an innovative methodology, in two main aspects: (a)
Focus and sectoral specialization with an integral approach (b) Combination of international promotion, with
After Care actions which mutually reinforce each other.

INTERNATIONAL POSITIONING

Foreign Direct Investment Internationalization


Atracion of Local Offer

BUSINESS ENVIRONMENT – TALENT OFFER

Strategic Plans were developed, led by program specialists, focusing on the following business segments or
subsectors, with their corresponding strategic guidelines:

CORPORATE SERVICES: installation of regional headquarters (HQ), shared service centers (SSC),
Trading centers (TC), regional distribution centers (RDC) and financial advisory services (SAFIN).
PHARMA & HEALTH SERVICES: development of a cluster with a focus on FDI and opportunities for
the location of corporate services, R & D centers and clinical research projects.
INFORMATION TECHNOLOGIES: export development of local industry and FDI - Greenfield projects
and acquisitions - for the generation of high value products and services.
ARCHITECTURE AND ENGINEERING SERVICES: internationalization of the sector through the
installation of global study centers and exports of local firms.

The PSG model is based on:

Generating quality information that contributes to a better knowledge of the sector both inside the
country and abroad.
Positioning the country as a privileged location for the development or provision of global services,
in target markets, through the development and communication of the country's service brand -
Uruguay Smart Services- with specific promotional actions by segment (materials, events, missions,
etc.).
Managing investment queries in a specialized way.
Improving conditions for businesses development with a focus on post-investment or after-care
through: i) Sectoral articulation addressing coordination/information failures and demands of

24
Servicios Globales de Exportación

companies; Ii) Analysis and proposals for improvement the regulatory framework; Iii) Development
of instruments focused on the supply of qualified HR.

For this last point in particular and with the specific objective of improving available capacities and
access to talent for the export of global services, the following are being implemented:

 Finishing Schools Program, in collaboration with INEFOP, which provides companies access to
training programs tailored to their needs, with subsidies of up to 70% of direct costs.
 Smart Talent - a labor portal specialized in free access global services that allows positioning and
facilitating accessibility of talent and providing information for the best decision-making of
stakeholders in the talent supply and demand ecosystem of the sector.

PSG contributions to the internationalization of the Global Services sector 22

 Specialized institutions, strategic plans for internationalization and a team of specialists positioned
as reference for the prioritized segments, in promotion and after care roles.
 Progress in the availability of statistical and qualitative information on the sector.
 Alignment and synergies between UXXI's promotion strategy and the private sector, with high public
authorities and diplomatic representations in target markets.
 Consolidation of value proposition and country positioning for potential investors and clients,
generation of sector country brand, generation of platforms and promotion materials accessible to
different stakeholders (sectoral web site, country videos and testimonials, success stories, graphic
material).
 Communication of value proposition at specialized events abroad and visits to prospects (more than
72 events, more 130 companies visited, more than 3,000 contacts generated).
 Support for international events in Uruguay with international participation, with the potential to
transmit their experience in the country to potential investors in their countries of origin and action
(more than 50 events, more than 80 international k-players visit the country).
 Policymakers and regulators' awareness and setting of agendas, regarding issues relevant to industry
growth and business facilitation (e.g. new regulations for shared service centers, improved
regulation for clinical research, facilitation of ratings for regional distribution of pharmaceutical
products, facilitating the entry of biological samples, facilitating management of residences and visas
for executives and qualified personnel.
 Availability of a portal to facilitate access to talent, currently with more than 14,000 users of the
various functionalities and more than 200 companies that have published more than 600 job
opportunities. More than 200 dynamization and awareness activities have been carried out in
articulation with the educational, governmental and business sectors.
 Co-financing instruments, in agreement with INEFOP, for on demand training plans for potential
investors and installed companies (FINISHING SCHOOLS). More than 105 co-financed plans and
about 3000 people trained.
 Dynamization and support for the local exporter supply (architecture, legal services, clinical research,
video games). More than 20 activities between 2012 and 2016. Design and execution of an
instrument to support the internationalization of ICT SMEs (Pilot plan involving 20 companies).

For Further information see: www.smartservices.uy

22
Non-exhaustive list- Between 2012 and 2016
25
Servicios Globales de Exportación

 National System for Productive Transformation and Competitiveness (SNTPC in Spanish)

This new institution aims to promote the country’s economic, productive and innovative development. It is
responsible for coordinating the work of various public sector stakeholders, focused on expanding
innovative activities with greater added value and national technological content, improving
competitiveness, guiding the promotion of technological demand in the public sector and orienting the
promotion of investments. Some of the public sector stakeholders in the system are ANDE, ANII, CND, LATU
and Uruguay XXI, among others. The Ministerial Cabinet for Productive Transformation and
Competitiveness, composed of 12 ministers, is the governing body of the system and the Ministerial
Secretariat for Productive Transformation and Competitiveness will be in charge of coordination. See Law
19,472: http://www.impo.com.uy/bases/leyes/19472-2016

 Free Zones Area - Ministry of Economy and Finances


It’s the state entity in charge of free-trade zones management, monitoring and control.

Web page: www.zfrancas.gub.uy.

 National Logistics Institute (INALOG)

The Institute aims to position the country as regional leading service provider through its brand “Uruguay
Logistics Hub”. Moreover, it fosters cooperation among stakeholders related to the logistics sector to
optimize competitiveness in regional and international spheres.

Web page: www.inalog.gub.uy

 Ministry of Industry, Energy and Mining (MIEM)

It is the Ministry responsible for the design and implementation of public policies related to different
industrial sectors, focusing on the transformation and strengthening of the national productive system for
sustainable development with social justice, within the framework of regional integration and integration
into a globalized world. Among its main lines of work, actions focused on supporting MSMEs with emphasis
on territorial and entrepreneurship stand out, as well as the articulation of working groups with a sectoral
focus through Sectorial Councils, such as the Sectoral ICT, Pharmaceutical and Biotechnology Councils, and
the Video Games Table. Through these work spaces, the MIEM brings together representatives of the public
sector, companies, workers and academia in order to define sectoral policies agreed by the public and
private sectors that include the definition of goals, tools and indicators, based on quantifiable goals and
targets.

26
Servicios Globales de Exportación

 Uruguayan Free Zones Chamber


It was established in October 2008 with the aim of strengthening the Uruguayan free zone scheme and
promoting the development of business platforms from Uruguayan free zones. The business community that
forms the Uruguayan Free Zones Chamber (CZFUY) is integrated by developers (operators) and users (direct
and indirect) of Uruguayan Free Zones.

Web page: www.czfuy.com/

 Uruguayan Information Technology Chamber (CUTI):


CUTI represents the Uruguayan information and communications technologies (ICTs) industry. It was
founded in 1989 with the purposes of “promoting sustainable development of the information technology
and communications industry, stimulating markets, facilitating growth and globalization of its members, and
emphasizing human development and social responsibility”. It boasts approximately 330 members and
provides a wide range of services including statistic data, business opportunities, globalization assistance,
training activities and promotion of members' products.

Web page: www.cuti.org.uy

 Uruguayan Telecommunications Chamber (CTU):


CTU gathers 37 companies devoted to mobile phone, data transition, international long distance, call
centers, content integrators, mobile applications and multimedia, and infrastructure, equipment and service
providers.

Web page: www.telecomunicaciones.org.uy

 National Chamber of Commerce and Services (CNCS):

It was founded in 1897. The Chamber’s mission is to defend the general interests of the trade and service
sectors and of the private sector of Uruguayan economy, defending the principles of freedom in the
broadest sense within the framework of the rule of law. “The National Chamber of Commerce has always
followed a consistent line of action in the defense, promotion and consultancy for the business private
sector across the country”.

Web page: www.cncs.com.uy/

 Latin American Association of Service Exporters (ALES)

The Latin American Association of Service Exporters is an international organization consisting of 37 public
and private institutions from 17 countries, with the aim to promote Latin America as an exporter of know-
how and as an attractive region for investments in order to turn the region into a global services hub.

Web page: www.ales-lac.org


27
Servicios Globales de Exportación

Uruguay has a very attractive free zone regime for the provision of global services (see Annex I). The country
has twelve free zones (11 private FZ and 1 state-operated FZ), but only four of them are specialized in
services. Most global services are provided from Free Zones located in the metropolitan Montevideo area.
They are briefly described below.

Zonamerica: Located in Montevideo, 8 minutes away from Carrasco International Airport, Zonamerica is a
place where infrastructure, corporate services and its modern business environment provide clients with
comprehensive competitive advantages for conducting business with the region and the world. In 2014,
Zonamerica received an award for Best Free Zone in the Americas for small and medium sized enterprises,
by FDI Magazine from the Financial Times Group.

Zonamerica also operates as a magnet to attract qualified talent with technical skills and language
proficiency, essential for the global services industry. There are currently more than 10,000 people working
in Zonamerica in over 300 companies.

Companies set up in Zonamerica operate in different business areas: logistics, financial services, information
technology, call centers, regional offices, biotechnology, consulting and trade in general. Some of the
companies in the park are Sabre Holdings, Trafigura, Assist Card, Ricoh, Merck, Tata Consultancy Services,
Verifone, PWC, PVCI, TMF, KPMG, CASU, Finning, Despegar.com, RCI, Julius Bär and Citi, among others.

Zonamerica has 28 buildings distributed according to the specific and particular needs of their clients. The
new Celebra building has more than 8,000 sq mt of Premium offices and has earned LEED Gold Certification,
which, together to its iconic design, has turned the building into one of the most emblematic constructions
in the country.

Web site: http://www.zonamerica.com

Aguada Park: Located at Aguada, opposite Montevideo's port and very close to Centro and Ciudad Vieja
(Montevideo's central business district), the free zone is located between ANTEL Telecommunications Tower
(national telecommunications entity) and UTE's Power Supply Plant (national electricity authority). It has a
world class 30,000 sq mt complex, specially designed for services.

Aguada Park's main clients operate in sectors such as software development, call centers, BPO and shared
services, financial services, professional services and trading firms, all focused on the export of services.
Some of the main companies operating from Aguada Park are EGS Expert Global Solutions, Globant,
MercadoLibre, Corporación Navíos, Banco Itaú, Teyma, Sabre Holdings, Travel Leaders, among other
companies. Companies operating in Aguada Park facilities employ approximately 3,200 people (January
2017).

Web site: http://www.aguadapark.com

23
Information provided by each of the Free Zone operators (2016).
28
Servicios Globales de Exportación

WTC Montevideo Free Zone: It is strategically located in the city of Montevideo and has an excellent
building infrastructure which provides its customers with the possibility to work in the first and only LEED
tower in Uruguay. It has 17,000 sq mt of offices, from where about 100 leading companies and 1,200 people
currently offer their services to the world. These include PwC, Deloitte, TCI Delivery Center, Estudios
Energéticos Consultores, Catalent Uruguay, Baker Tilly, Latinbroker, Willis Towers Watson, MVD Consulting,
Graco, Bestseller, Galante & Martins Internacional, Trillonario.com, Contract Global Services, G&R Zona
Franca, among others. In addition, three of the four major grain traders, regional leading financial consulting
firms and a variety of professional firms also render services from this FZ.

Web site: http://www.wtcfreezone.com

Parque de las Ciencias Free Zone: The FZ opened in 2011 and spans over a 55 hectares site in the
Department of Canelones, strategically located on Route 101 and only 1 km away from Carrasco
International Airport, with capacity to accommodate commercial, industrial and service activities. Parque de
las Ciencias boasts a remarkably modern infrastructure and provides a large variety of services. The Zone is
specially designed for enabling the setting up of high-end tech and value-added industrial and scientific
undertakings as well as service providers required to that end.

Currently, it has approximately 53,000 built sq mt. including a modern 6,500 sq mt office building, a 23,000
sq mt pharmaceutical manufacturing plant, and a cutting-edge research and development center with
unique characteristics in the country. There is also a logistics building specialized in the handling of
pharmaceutical products and medical devices, with fractioning, packaging and other services areas, as well
as a new building for general logistics operations soon to become fully operational.

By the end of 2014, construction works begun for a second pharmaceutical manufacturing plant, exclusively
dedicated to quality control, conditioning and manufacturing of injectable drugs. The first stage of the
project shall be finished by mid-2017, when new construction work will begin for logistics and industrial
operation buildings.

Parque de las Ciencias currently has more than 36 users, including pharmaceutical companies, technology
companies, raw material suppliers, medical equipment trading companies, logistics operators and service
providers in several areas including, but not limited to, intellectual property, marketing, design and
engineering.

Web site: http://www.parquedelasciencias.net/es/

29
Servicios Globales de Exportación

One of the main attractions of Uruguay as a recipient of foreign investment is a favorable regulatory
framework, with multiple incentive schemes which adapt to the needs of different sectors and an active
investment policy which has been maintained for many years.
Law 16,906 (1998) declares the promotion and protection of national and foreign investments a matter of
national interest. Under the law foreign investors enjoy the same incentives as local investors, there is no
discrimination with regard to taxation or restrictions on the transfer of profits abroad.
The Law has been updated by Decrees 455/007 and 002/012. For investment projects regardless of activity
sector, which are presented and promoted by the Executive Power, it is possible to obtain an exemption
from the Income Tax on Economic Activities (IRAE by its Spanish acronym) from between 20% and 100% of
the amount invested, according to the type of project and the resulting score of a matrix of indicators. The
single national rate for IRAE is 25%. Movable property of fixed assets and civil works are also exempted from
Wealth Tax (Impuesto al Patrimonio in Spanish) and VAT is recovered from purchases of materials and
services required for the works. Additionally, the law also exempts the importation of fixed assets, declared
non-competitive of the domestic industry from taxes and duties.

Free Zones Law


Free Zones in Uruguay (FZ) are regulated by Law 15,921, dated 17 December, 1987. Free Zones may be
operated by the State or duly authorized private parties. Privately operated Free Zones are managed,
supervised and controlled by the Free Zones Area of the General Directorate of Commerce, Ministry of
Economy and Finance. This department is the main interlocutor for all regulations, permits and controls
referred to all Free Zones in the country. In the case of State operated Free Zones this is the entity
responsible for their management.

At Free Trade Zones it is possible to develop different types of activity: commercial, industrial or services
From Free Zones it is possible to provide services to third countries and, in some cases, to Uruguay.

Companies authorized to develop activities in free zones may be natural or legal persons under any
corporate form. As for legal persons, the form is not limited, but the object must be unique and exclusive.
There is no difference between domestic and foreign investments, nor is there any type of procedure or
special requirement, and foreign companies may establish branches. Up to 25% of the company personnel
may be foreign.
Goods may remain in free zones for unlimited time and their destination can be modified at all times.
Benefits for companies installed in Free Zones include the following:
 Exemption from the Income Tax for Economic Activities (IRAE in Spanish), Wealth Tax (IP in Spanish)
and any other domestic taxes created or to be created. The State is guarantor of this exemption.
 Dividends paid to shareholders domiciled abroad are also exempt from paying taxes in the country.
 Foreign staff may opt between making social security contributions in Uruguay or in their country of
origin.

30
Servicios Globales de Exportación

 Foreign sales and purchases of goods and services are not taxed by Value Added Tax (VAT). Neither
are sales and services provided within the FZ.
 Non-resident entities do not pay IRAE for activities carried out with goods of foreign origin declared
as being in transit or deposited in Free Zones, as long as they are not destined for the national
customs territory. IRAE does not apply either when sales destined for the national territory do not
exceed 5% of the total sales of goods in transit or deposited in the Free Trade Zone.
 Goods exchanged between Free Zones and the rest of the world are exempt from customs duties.

Free Ports and Airports


The Free Port regime represents one of the main reasons behind Uruguay’s position as a logistic platform in
Mercosur and as a distribution center for goods in transit.

Pursuant to Port Law No. 16,246 dated May 1992 – and its later regulations, Montevideo is the first terminal
of the Atlantic coast in South America to operate under a "Free Port" system. This regime is also applicable
to the commercial ports of Colonia, Fray Bentos, La Paloma, Nueva Palmira, Paysandú and Puerto Sauce, as
well as Carrasco International Airport.

When operating in a free port, goods circulate freely without the need for permits or formal procedures.
During their stay at the port customs area, goods are exempt from all import taxes or import-related duties.
The following activities can be carried out:

• Goods-related operations. Operations that add value, change the presentation or implement the free
disposition of merchandise without changing its nature. By way of example, storing, repacking, remarking,
sorting, grouping and ungrouping, consolidating and deconsolidating, handling and fractioning activities.

• Operations related to services rendered to goods: loading, unloading, stowage and mobilization of bulk
items, transportation, transshipment, reshipment, transit, removal, deposit, storage, disposition, ship
supply, ship repairs and other services related to port activities and the free port system.

Apart from the abovementioned customs benefits, the movement of goods and the rendering of services
carried out within port customs area are all Value Added Tax-exempt. Moreover, goods placed under the
free port scheme are not included in the taxable base for Wealth Tax or Income Tax purposes. Unlike what
happens with the Free Zone system, goods under the Free Port system do not lose their origin, whether they
are re-exported in identical conditions as they were imported or are subject to operations which did not
alter the nature of the product or its origin. In this regard, several agreements signed by Uruguay, with
Mercosur and Israel, among others, include a system of certificates of origin which facilitate the type of
operation provided for under the Free Port system.

Temporary Admission
The temporary admission scheme is framed by Law 18,184, and its regulatory decree 505/009. It provides
for the possibility of introducing foreign goods, free of taxes, to be exported later within a specified period.
These goods may be re-dispatched either in the state in which they were introduced or after having been
modified, processed, and repaired or having added value to them. Machinery and equipment entering the
country for repair, maintenance or updating are also covered by this regulation. The period established by
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Servicios Globales de Exportación

law for the permanence of the goods under the scheme is eighteen months. Interested industrial companies
will submit applications for the importation of goods under Temporary Admission to the Technological
Laboratory of Uruguay, which issues the authorization.

In addition, the Law also offers mechanisms such as "Take Stock" and "Drawback". The first consists of the
replacement of imported goods under the general regime, by the importation of similar products, free of
taxes and levies, when they have been used as input for processing in the country, of exported products. The
second one provides the possibility of claiming the restitution of taxes and levies paid for the importation
under general regime of all those goods which by definition can be imported into temporary admission and
which have been used in the country for the elaboration of products destined for export.

1) Contact Centers: Decree No. 207/2008, as amended by Decree No. 379/011- Corporate Income Tax
exemption

Decree No. 379/011 amending Decree No. 207/008 declares the promotion of any activities developed by
Distance Service Centers, provided the following conditions are verified, simultaneously:

 That a minimum of one hundred direct qualified jobs are generated.

 That services be provided for the benefit of non-resident subjects abroad. Services shall be provided
for the sole benefit of non-residents individuals located abroad.

Income originated from such activities is exempt from Income Tax (IRAE), for a period of 10 years as of the
year in which the promotional declaration is requested.

For applications submitted as of 1st January, 2011, said exemption shall be construed in accordance with the
following:
a) A 100% exemption when more than 150 direct qualified work positions are created.

b) b) A 70% exemption when more than 100 direct qualified work positions are created.

2) Protection of Personal Data and Habeas Data Remedy: Law No. 18,331 and Regulatory Decree No.
414/09-

In accordance with the regulation, all natural and legal persons are entitled to the protection of their
personal data, through any information. This reaches data collection, recording and treatment, by whatever
means and modality, in the private or public sectors. Persons responsible for databases shall gather and
keep evidence of the data subject’s consent, informing them of the purpose for which the data is intended
to be used, and also employing techniques which guarantee the integrity, confidentiality and availability of
the protection.

The Decree regulates the operation of the Unit for the Regulation and Control of Personal Data.

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Servicios Globales de Exportación

This law brings the regulation in force in line with European Union requirements, enabling EU clients to enter
into contracts with Uruguay-based companies.

3) Software sector: Corporate income tax exemption for software export activities and related services

Title IV of Consolidated Text 1996 considers exempt income, for Corporate Tax (IRAE) purposes, income
obtained by means of software production and related services, as determined by the Executive Power
provided they be fully utilized abroad.

Corporate Tax (IRAE) Regulatory Decree No 150/2007 includes in its Section 163 bis, software production-
related services such as hosting, call center, business outsourcing, marketing and other services and
activities, provided that software be their main purpose, even when said software is not developed by the
service provider.

With regard to software, said section includes development, deployment at client’s site, version upgrading
and correction, customization (GAPs), quality testing and certification, software maintenance, training and
advising.

Moreover, the same Consolidated Text 1996, Title 4 (IRAE), Section 23, Paragraph I), allows to compute one
and a half times expenses incurred in by way of software services provided by effective payers of this tax.

4) Promotion of biotechnological activity

Decree No. 011/013 provides for the promotion of activities that generate biotechnological products,
services and processes applicable to different strategic production sectors, prioritizing the agricultural,
environmental, and human and animal health sectors.

The Executive Branch, in consultation with the Biotechnology Sector Council, shall review said prioritization
every two years and may include new biotechnological development sectors to be promoted.

Conditions for eligibility for benefits under the decree include at least one of the following:
Implementation of a program for the development of suppliers of biotechnological products and services;
that the company be a micro, small or medium sized company in the biotechnological products and/or
service industry; that the company be a new company that will produce biotechnological products and/or
services.

The decree provides for Corporate Income Tax (IRAE) exemption regarding income derived from promoted
activities, according to the following percentages and terms:

a) Fiscal years beginning on 1 January 2012 and ending on 31 December 2017: 90%.
b) Fiscal years beginning on 1 January 2018 and ending on 31 December 2019: 75%.
c) Fiscal years beginning on 1 January 2020 and ending on 31 December 2021: 50%.

In February 2015, Parliament passed the Law on Biotechnology Promotion, pending enactment by the
Executive Branch.

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Servicios Globales de Exportación

5) Procurement Subprogram for the Pharmaceutical Industry


Decree 194/014 creates the Procurement Subprogram for the Pharmaceutical Industry, which allows for the
application of a market reservation in state bidding and tender processes for pharmaceutical companies
with goods and services of their own production that qualify as national.

It is applicable to procurements carried out by the three branches of government, the State Audit Court,
Electoral Court, Contentious-Administrative Court, departmental governments, autonomous entities and
decentralized services, public education organizations and, in general, all agencies, services and state
entities.

6) Shared Services Centers: IRAE and Wealth Tax exemptions

Decree No. 251/014 and its amendment by Decree No. 330/016 stipulate that activities developed by Shared
Services Centers (SSCs) be promoted under Law 16,906 for the Promotion of Investment. The regulation
defines Shared Services Centers as those entities belonging to multinational companies exclusively devoted
to the provision of services to their related parties. Services include consultancy, data processing,
management or administration, logistics and storage, financial management, and support of R & D
operations. These services provided from SSCs established in Uruguay should be used exclusively abroad.

SSCs shall be subject to a 90% exemption of IRAE and Wealth Tax (IP) applicable to assets attached to such
activities for a term of five years, provided that:

• At least 150 new direct qualified jobs be generated by the end of the first three fiscal years, which must be
kept until the end of the fifth year. At least 75% of said jobs must be held by Uruguayan citizens (provisional
reductions may be authorized).

• A Training Plan be implemented which provides for an expenditure for the training of Uruguayan citizens
of at least UI 10,000.000 (approximately USD 1,200,000) during the aggregate of the first three years.

• Activities correspond to new enterprises.

The exemption shall be valid for ten years when (i) the minimum number of jobs exceeds 300 by the end of
the first five years and said positions are kept until the end of the exemption period; and (ii) the outlay in
training exceeds the UI 20,000,000 (approximately USD 2,400,000) during the first six years.

On the other hand, SSCs focused on the provision of data consultancy and/or data processing services, which
generate 100 new jobs, and training expenses exceed IU 5,000,000 (approximately USD 600,000), will be
exempt from 70 % of IRAE and Wealth Tax (IP) for a term of five years.

These tax exemptions to SSCs will also apply when the promoted services are provided to resident related
entities, provided that these do not exceed 5% of the total amount of services rendered in the fiscal year. In
the event that this proportion is exceeded, these services will not be included in the exemption.

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Servicios Globales de Exportación

Uruguay has been part of the World Trade Organization (WTO) since its inception in 1995 and is part of the
Latin American Integration Association (LAIA/ALADI, 1980). It has also created with Argentina, Brazil and
Paraguay the Southern Common Market – MERCOSUR in 1991, which became a customs union in 1995 with
the free movement of goods, removal of customs duties and non-tariff restrictions between the parties and
a Common External Tariff to other countries. Since 2012 Venezuela has been a full member of MERCOSUR.

1) Trade agreements with access in goods


Uruguay has signed, both as part of MERCOSUR and independently, a series of trade agreements that grant
access to other markets with preferential tariffs. MERCOSUR has executed trade agreements with many
countries in Latin America: Chile (1996), Bolivia (1996), Colombia, Ecuador and Venezuela (2004), Peru
(2005) and Cuba (2006). An agreement that exclusively covers the automotive sector was signed with
Mexico (2002). Outside the region, Mercosur has executed agreements with Israel (2007), India (2004), SACU
(2008), Egypt (2010) and Palestine (2011). Agreements with Egypt and Palestine have not yet come into
force.

Except for agreements with Cuba, India and SACU, which include preferences for a limited number of
products, the remaining agreements subscribed by MERCOSUR tend to form Free Trade Zones, with tariff
reduction schedules that are completed for substantial trade on variable dates according to the country.
Agreements with Chile and Bolivia have reached 100% of tariff reduction for the entire universe of goods. In
the remaining agreements in force, total tariff relief will be achieved for substantial trade by 2019.

Mercosur is also part of the Global System of Trade Preferences among developing countries (GSTP), in force
in Uruguay since 2005. The last Round (2010), not yet in force, involves preferences of 20% to 70% in tariffs
lines with Cuba, Egypt, India, Indonesia, Malaysia, Morocco and Republic of Korea.

Uruguay has also executed with Mexico a bilateral free- trade agreement (2003) which enables the free
movement of goods and services between both countries since June 2004, with certain exceptions which
have been explicitly provided for in the agreement.

In the car industry, which is outside of the scope of MERCOSUR provisions, Uruguay has bilateral agreements
in force with Argentina and Brazil which are regularly updated.

2) Investment protection agreements


Uruguay has executed investment protection and promotion agreements with 31 countries, including but
not limited to Spain, United States of America, Finland, France, Japan and the United Kingdom.

3) Trade in Services Agreements


Uruguay takes part in different instances of negotiation of trade in services:

24
For a more detailed description of international agreements in force, see:
http://www.uruguayxxi.gub.uy/guia/acuerdos-internacionales.html
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Servicios Globales de Exportación

General Agreement on Trade in Services (GATS): multilateral negotiation within the framework of the WTO.
The 159 member countries are signatory to the GATS, but negotiations have been practically stagnant since
2008.

Preferential Agreements with chapters on services: In parallel to the GATS, and under its regulations,
various preferential agreements including services negotiations have emerged.

In MERCOSUR, the Montevideo Protocol (which came into force in 2005) sets the conditions for the
liberalization of trade in services in MERCOSUR, including lists of commitments by individual country. The
protocol was rejected by Paraguay in 2014.There have been seven negotiation rounds in MERCOSUR to this
date, further developing the list of initial commitments, although so far only the first agreed list is in force.

In 2009, the Protocol on Trade in Services between MERCOSUR and Chile was executed, entering into force
in 2012 between Uruguay and Chile. Moreover, a services agreement is currently under negotiation between
MERCOSUR and Colombia.

Finally, the Free Trade Agreement between Uruguay and Mexico includes provisions for all types of services
covered by GATS.

4) Double Taxation and Information Exchange Agreements


Uruguay has agreements to avoid double taxation with 17 countries, several of which include Information
Exchange Agreements. The following table shows these agreements, as well as others already executed and
now pending Parliament ratification from some of the countries party to said agreements.

Germany (2011), Argentina (2013), Korea (2013), Ecuador (2012), Spain (2011), Finland (2013), Hungary
(1991), India (2013), Liechtenstein (2012), Malta (2012), Mexico (2010), Portugal (2012) and Switzerland
(2011), with several other countries in the process of parliamentary ratification.

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Servicios Globales de Exportación

This section details the methodology for calculating the exported value of global services and direct
employment of the sector, specifying the sources of information and the assumptions made in each case.
Available data is obtained with a high level of aggregation25, which is why the estimate is an approximation
to the exported value of global services. In all cases, conservative assumptions are made. It should be
remembered that mainly administrative records are used, which are not elaborated for statistical purposes,
thus generating limitations.

For services provided from the Uruguayan customs territory, aggregated information by sector (ISIC Rev4
five digits) provided by DGI is used, based on affidavits of 2014 (Form 2/149 and 2/148). In these statements,
the companies record, among other data, the amount in Uruguayan pesos of the total turnover, the sales
assimilable to exports26 and remunerations. Moreover, information on personnel employed by companies is
available. For reasons of tax secrecy, only aggregated data per group were accessed. Grouping ISIC sectors
by segments of global services gives an estimate of exports and employment.

Methodology for estimation

1) From the information provided by DGI, data grouped by ISIC rev4 at 5-digit level (2014) were taken
regarding: Number of companies with invoicing, Number of companies with exports, Total amount
invoiced ($), amount invoiced per Exports ($), jobs and wages ($)27.
2) ISIC sectors were grouped according to the following global service classifications 28:
a. Architecture, Engineering and Design
b. Audiovisuals
c. BPS & KPS
d. R+D
e. ICTs
f. RDCs and trading
g. Financial services

Table A1 specifies the ISICs that make up each segment.


3) To ensure that exports of these sectors correspond to services, it was verified that for each ISIC
sector, exports of goods by significant amounts were not be reported in the Customs registries.
4) To ensure no relevant sector in the Global Services classification is omitted, for the remaining ISICs
the amount reported in DGI is compared with data reported in Customs (also aggregated by ISIC).
Cases in which reports by DGI are significantly superior to customs registration are due to the
following reasons:

25
In order to preserve statistical confidentiality, agencies that collect the information provide it only in an aggregate
way for each subgroup.
26
Sales assimilable to exports reported in these forms do not necessarily represent exports. In some cases, sales are
reported in this item which are assimilated to exports in terms of tax treatment. This is not the case for sectors included
in the global services classification.
27
Amounts in Uruguayan pesos were expressed in dollars (annual average Exchange Rate 2014).
28
Groups f and g shall receive a special treatment which will be detailed specified below.
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Servicios Globales de Exportación

a. Services not included in the definition of Global Services (example: transport services)

b. Goods or services assimilated to exports for tax purposes (e.g. hospital activities)

c. Intermediation of goods which do not pass through the national territory. This is the case of trading activities,
which require special treatment for statistical registration. The methodology used in these cases is specified
below.

d. In some cases, companies are classified in an area that would not be included in the definition of services, but in
practice their activity is essentially to provide services. If data were available per company, it would be possible
to compare exports made through customs and exports declared before DGI and attribute the difference to
exports of services. These sectors were analyzed and it was decided to include only those whose exports are
largely attributable to global services. Thus, retail and wholesale trade in computers, peripherals and software
were included (ISIC 46510 and 47410).

5) For the calculation of export employment the following criterion was used:
Export Employment sector = Employment sector x (Number of Exporting Companies sector /
Number of Invoice/Billing Companies sector )

In order to achieve an estimation of employment not depending on previous assumptions, the number of
companies and not the billing of exports was weighted.

Trading and Regional Distribution Centers

For these cases, the exported value was approximated through a cost criterion. This is a minimum
hypothesis, in which the exported service is valued as the cost of producing. Due to the availability of data
exports of each ISIC sector are approximated as remunerations of that sector weighted by the proportion of
billing attributed to exports in the total billing of the sector. This is:

Export Estimations sector = Remuneration sector x (Exports Amount sector / Total Billing Amount sector )

The exports of goods registered in customs is subtracted from the export amounts for trading and
distribution centers:

Export Estimations sector = Remuneration sector x (Exports Amount sector – Customs Exports Amount sector )//
Total Billing Amount sector

In the calculation of traders sectors that meet the following conditions are considered:
1) Classified as wholesale trade (ISIC 46).
2) With sales assimilable to exports 50% higher than customs sales.
This ensures that it is a relevant activity for each segment and that the sector is not included due to a
statistical discrepancy between DGI and Customs.

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Servicios Globales de Exportación

For services provided within Free Zones, information prepared by the Free Zones Area (AZF) of the Ministry
of Economy and Finance (MEF) is used29.
Based on the 2014 Free Zone Census, the Free Zone Area estimates the amount invoiced for exports (in USD)
and jobs generated. Of the total of surveyed sectors, those related to Global Services are selected. These
include Information and Communication services, Professional, scientific and technical services,
Administrative services and support services, Trading, Commercial intermediation and Financial and
insurance services. Based on information provided by the AZF for a group of pre-selected companies, the
contribution of Architecture and Engineering Services, within Professional services, is estimated separately.
In the case of the amount exported by trading companies, it was decided to include under Global Services
only the amount corresponding to costs, so that this figure is comparable with extra-zone estimates. For the
calculation of employment, included under Professional Services are personnel employed independent of
the free zones for services (Aguada Park, Parque de las Ciencias, WTC Freezone and Zonamerica).

Table A1: Classification of Global Services by ISIC

ISIC Rev4 Description

Architecture, Engineering and Design

71101 Architectural Services


71103 Engineering services
74101 Graphic Design Services
Audiovisuals

59110 Film and TV production activities


59120 Post-production activities of films and TV programs
73100 Advertising
74200 Photography Activities
Business Services

69101 Legal and notarial services provided by independent professionals


69109 Other legal and notary services
69201 Accounting services provided by independent professionals
69209 Other accounting services
70201 Accounting services, company consultancy not rendered by professionals
70202 Agency activities
70209 Other business administration and management activities
72200 Research and experimental development in the social sciences
71200 Technical testing and analysis
72100 Research and experimental development in Natural Sciences
73200 Market Research and Public Opinion Surveys
74901 Translation services
74902 Consulting services in Agronomy
74904 Trademark and patent registrations

29
See http://zonasfrancas.mef.gub.uy
39
Servicios Globales de Exportación

74909 Other professional, scientific and technical activities n.e.c.


78100 Employee placement agency activities
78200 Temporary Employment agency activities
78300 Other human resources supply
82110 Combined office administrative service activities
82200 Call center activities
82990 Other business support service activities, n.e.c.
96099 Other service activities n.e.c.
ICTs

46510 Wholesale of computers, computer peripherals and software *


47410 Retail of computers, software, telecommunication *
58200 Publication of computer programs
62010 Computer programming activities
62020 Computer consultancy and computer-related management activities
62090 Other information technology and computer service activities
63110 Data processing, hosting and related activities
63120 Web Portals
Financial services

64200 Activities of holding companies


64302 Investment finance companies (SAFI)
64309 Trusts, funds and other sources of financing n.e.c.
64929 Other types of financing n.e.c.
64990 Other financial activities, excluding insurance and pension funds
65120 General Insurance
65200 Reinsurance
66110 Management of financial markets
66121 Exchange Offices Activities
66122 Exchange and Value Brokers Activities
66129 Other activities related to securities value and raw materials brokerage
66190 Other activities auxiliary to financial services
66210 Risk and damage assessment
66220 Activities of insurance agents and brokers
66290 Other activities auxiliary to insurance and pension funds
66309 Other fund management activities
Traders and Regional Distribution Centers **

46692 Wholesale of fertilizers and agrochemicals


46620 Wholesale of metals and metal ores.
46491 Wholesale trade, pharmaceutical, veterinary, toilet
46109 Other agents of wholesale trade in exchange for remuneration
46699 Wholesale of other goods n.e.c.
46693 Wholesale of waste and recycling materials
46209 Wholesale trade of other agricultural raw materials and animals
46306 Wholesale trade in beef and offal
46302 Wholesale of wine products
46103 Consignees and agents of wool and leather
46307 Wholesale of fishery products
46495 Wholesale of electrical appliances

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Servicios Globales de Exportación

46412 Wholesale of clothing


46301 Wholesale of food, except meat.
46308 Wholesale of tobacco and cigarettes
46632 Wholesale of construction materials
46411 Wholesale of textiles
46309 Wholesale of other food and beverages
46590 Wholesale of other machinery and equipment.
* Included only for the calculation of the exported value.
** For the calculation of the exported value, exports through Customs are subtracted.

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Servicios Globales de Exportación

The services sector is highly labor-intensive and to provide the most basic services, it is important to have a
large number of workers. However, as sophistication escalates, a higher quality of human resources is
required, rather than quantity. Uruguay has become strong in some Global Services specific sectors for
which it offers an outstanding talent availability.

This section describes some general characteristics that have allowed the country to develop these talents
and details the human resources available for each particular segment.

Education Policy

In Uruguay, State education of high academic quality is freely available in all stages, from preschool to
University. This is possible because the State guarantees this access as a right of all citizens.

Uruguay has the highest literacy rate in Latin America (98%). Investment in Education amounts to 4.5% of
the country's GDP and 100% of high school students at the age of 15 have already completed at least 3 years
of English and 2 of Computer Science.

In recent years, the country has promoted certain public policies aimed at the development of digital age
skills from an early age. Uruguay pioneered with the full implementation of the Ceibal Plan, an initiative
launched by the Uruguayan government in 2007 and based on the One Laptop per Child Program from the
Massachusetts Institute of Technology (MIT). In this regard, Uruguay became the first country in the world
to grant free laptops and tablets to all students and teachers of State schools and High Schools in the
country.

The Ceibal Plan is a sample of the successful implementation of long-term policies in Uruguay, which are not
limited to meeting educational objectives, as the plan also allowed to substantially reduce the digital
divide30. Difference in access to ICTs between the richest and the poorest sectors of society in some
dimensions was almost completely eradicated. In 2006, 59% of people in the top income quintile had a
home computer, compared to 4.3% of the poorest quintile. Less than a decade later, in 2015, while in the
upper-income group the percentage rose to 84%, that of the bottom quintile reached almost 78%. In other
words, the gap was reduced from 55% to 6%.

The plan also improved infrastructure and connectivity, through the implementation of fiber optics in all
schools, high schools and Technical education centers, as well as Wi-Fi access in squares, parks, clubs and
other public spaces. Thus, the plan strengthens new generations in the face of the future academic,
professional and work challenges.

One of Uruguay ‘s main differentials is the high competitiveness of its human resources, resulting from the
combination of several factors: high quality of basic, technical and university education and training;

30
The Digital Gap refers to socioeconomic differences between communities with and without access to digital media,
as well as the differential capacity of its members to use them properly.
http://uruguaydigital.gub.uy/wps/wcm/connect/urudigital/0ddead71-d5ee-41a5-b670-
8b19c5491ac7/PCeInternet_2013.pdf?MOD=AJPERES

42
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flexibility and adaptability of Uruguayan workers to new production processes or technologies, and a strong
commitment to assigned projects and tasks. In turn these factors are favored by the continuous increase in
the mastery of other languages, in particular English and Portuguese.

In association with the training of human resources oriented to provide global services, the Uruguayan State
has a series of support programs specifically designed for global service companies:

Finishing Schools: The program grants subsidies in agreement with INEFOP for up to 70% of the training costs
required by companies interested in setting operations in Uruguay and/or expand their exports.

Smart Talent: A labor portal that seeks to coordinate the supply and demand of skilled labor in the global
services sector, which now has more than 14,000 registered users and 200 global service companies.
www.smarttalent.uy

Population and workforce31


Alrededor del 66% de la población y fuerza laboral uruguaya está concentrada en Montevideo y el área
metropolitana. About 60% of the country's population and workforce is located in the Montevideo
metropolitan area.

Source: National Statistics Institute, January 2016.

According to data from the Continuous Household Survey (ECH in Spanish), in 2014 there were 69,434
people employed in global service companies, 21% of which (about 15,000 employees) exclusively provide
international global services.

Work and remuneration


Workdays are limited to 8 hours per day, for a total of 44 hours per week in commercial activities and 48
hours per week in industrial activities. Call centers have a weekly limit of 39 hours, 6 days a week.

31
Sources: All information related to population and employment is based on data obtained from the Continuous
Household Survey from the National Statistics Institute (INE in Spanish); the Annual Survey from the Uruguayan
Chamber of Information Technology; the 2014 Free Zones Census processed by the Free Zones Area at MEF, aggregated
data provided by DGI and Uruguay XXI employment databases.

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Standard Working Day (# working hours) 8

Standard Working Week (# working hours) 40- 44

Compulsory Overtime Bonus (%)* +100%

Third Shift Bonus (%) +20%

Required Standard Foreign Language Bonus (%) +10-20%

*Management positions do not collect overtime payment.

University - Graduates and Undergraduates

Uruguay has a good educational level and free access to education up to university level. University
population in the country exceeds 152,000 enrollments, with an annual admission rate of over 29,400
students and 7,700 graduates per year (2015). Around 86% of the university population corresponds to the
State university system, a proportion which has remained stable over the 5 last years.

General
Number of Educational Institutions in the Metropolitan Area 42 36
Total Students 31,200 152,000
Total admissions – new students Not available 29,400
Total pre-graduate annual graduations Not available 7,700
Studies related to BUSINESS SERVICES
Total Universities/Educational Institutions 12 20
Total Students enrolled 10,200 77,800
Total annual admissions Not available 14,300
Total annual graduations Not available 4,200
ICT related studies
Total Universities/Educational Institutions 4 7
Total Students enrolled 6,900 10,000
Total annual admissions Not available 1,300
Total annual graduations Not available 350
Pharma and Health related studies
Total Universities/Educational Institutions 3 21
Total Students enrolled 1,000 39,900
Total annual admissions Not available 8,000
Total annual graduations Not available 2,200
Architecture and Engineering related studies
Total Universities/Educational Institutions 4 6
Total Students enrolled 1,800 11,300
Total annual admissions Not available 1,800
Total annual graduations Not available 600
Source: Anuario Estadístico MEC, December 2016

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Corporate Services

About 77,800 university students are enrolled in university courses related to business segments involving
tasks associated with business services, with an average of 14,300 new admissions and almost 4,200
graduates per year. Regarding non-university higher education, there are 31,200 enrollments between the
public and private systems, 33% of which are related to Business Services-related courses.

In Uruguay, the Business Services sector is mainly focused on the development of tasks associated with
financial and administrative services, financial and market analysis, international trade, coordination of
logistics chains and human resources management. The country has a pool of skilled workers to develop
professionally in this sector and adapt easily to the new requirements of this industry, since there is a varied
university offer in degree courses associated with business profiles, such as: International Relations,
Accounting, Bachelor in Management and Administration, Bachelor in Marketing, Bachelor in Economics,
Psychology, Human Resources, Law, Notary and Sociology.

Information Technologies (ICT)

There are over 17,000 students enrolled in technical and university courses associated with the ICT sector.
University ICT degree courses have an average income of 1,200 students per year. This figure has
experienced a continuous growth, due to the greater dynamism of the sector and the different awareness
actions conducted to promote the study of ICT courses. On the other hand, university graduations have also
shown a growing trend with an average of 400 graduates per year during the 2006-2014 period. In terms of
enrolled students, the main courses of the academic ICT University offer are Computing, Electronics and
Telecommunications.

Quality education received by Uruguayan ICT human resources has gained worldwide recognition. This is
related to their adaptability to new technologies, their skills in a large number of programming languages
(JavaScript, .NET, C, C++, Python, Ruby on Rails, SQL, etc.) and development tools, and their high degree of
specialization in vertical sectors such as Fintech, Agro, Retail, Logistics, Tourism. Gaming, E-Health and E-
Gov.

The high demand for qualified ICT human resources has seen a strong increase in recent years, with an early
incorporation of university students into the ICT industry. According to the latest UDELAR (2012) university
census, 66% of students enrolled in ICT careers are employed, and 62% of these students have a job related
to their career.

Pharma and Health

For the Pharma and Health related services sector, university careers directly related to this segment, such
as Research, manufacturing or provision of health services, are considered32. It is worth mentioning that
previously analyzed university careers related to business and ICT services are also significant for this

32
The main university courses considered are Biotechnology, Life Sciences, Agricultural Sciences, Nursing,
Pharmaceuticals, Food, Medicine, Nutrition, Dentistry, Chemistry, Veterinary and different medical
technology-related specialties.

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segment, as they also strengthen shared services centers based on foreign trade activities, supply chains,
management and accounting, human resource management or pharmaceutical market research.

In courses directly related to Pharma & Health services there are over 40,000 enrolled students, 97% of
which are enrolled in University. The average annual admissions in Pharmacy and Health University careers
for the period 2006-2015 is 8,000 students, whereas an average of 2,500 students graduate per year. This
figure represents one-third of the total universe of university graduates.

A prominent role is played by medicine in comparison to other university courses related to the sector. In
addition to the number of annual graduates, Uruguay has a high level of university students in the labor
market with many of the skills required for these business segments. According to the latest University
Census (2012), 54% of university students of the selected courses have integrated themselves into the labor
market, 40% of whom are working in jobs directly related to their careers.

Architecture and Engineering

Uruguayan architects are renowned both locally and internationally for their high qualifications and
creativity, their ability to adapt to new technologies, and their commitment to directed tasks and projects.

Academically, Uruguayan Architecture schools are known for having thorough Study Plans, focusing on the
technical aspects of the profession. Thus, Uruguayan architects have excellent capabilities to provide
professional and consulting services for every business stage, from design to construction processes, and
have the ability to adapt to different construction styles and techniques. In the last years of their University
course students complete their academic cycle with a round the world trip, which allows them to become
familiar with relevant architectural works, different technologies and constructive styles and gives them a
more open vision of the world.

This general training enables professionals to develop expertise in the different areas of the process and
their corresponding business segments, which ensures great training for the provision of high quality
services at all stages of the value chain.

Among the architects registered in the Caja de Profesionales Universitarios of Uruguay (CJPPU), there are
about 5,500 active ones and another 1,800 listed as “not exercising their profession independently”. The
latter are generally those working as employees of companies or other organizations (Government,
Academy). On the other hand, according to MEC figures, there are 11,400 university students enrolled in
courses associated with the Architecture and Engineering business segment33, with an average entry of
1,800 new students per year and about 600 graduates per year.

33
Para este análisis se han considerado los cursos de Arquitectura, Diseño, Decoración de Interiores, Ingeniería Civil,
Ingeniería Industrial, Ingeniería Eléctrica e Ingeniería Naval.
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High School Education

In High School education, both public and private, there are 117,000 enrolled students, 41,432 of which are
in fourth grade, 42,125 in fifth and 33,940 in the last year of high school. The professional orientations
chosen by students in fifth and sixth grade are associated with interests or possible options for technical or
university courses which they will eventually take in the future. In sixth grade the professional orientation is
more specific and within the different syllabuses which make up the educational offer, students are mainly
oriented to Humanistic studies, followed by Biological and Scientific Studies. In relation to higher education
in technical college, the responsible institution is the Technical Education Council (UTU, for its Spanish
acronym) which reports a total of 31,600 students enrolled in the various technical high school courses.

Languages34

Some State primary schools teach English as part of the Plan Ceibal and most private schools have included
English in their syllabus. Regarding Portuguese, some primary schools have included it in their syllabus. In
Secondary Education, the teaching of English is compulsory both in state and in private schools.
With regard to University, a general command of the English and Portuguese languages among students of
UdelaR, stands out, although there is also a large number of students who display proficiency in other
languages.

15
12.000
4.200
2.300

Postgraduate Studies

With regard to postgraduate studies and master's degrees, Uruguay offers more than 450 course distributed
among 15 educational centers. In 2015 there were more than 12.000 students enrolled in postgraduate
courses and an average of 4,200 admissions and 2,300 graduates per year.

34
Source: Uruguay XXI based on the University Census by UDELAR, 2012. (Students’ self perception).

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Official name Oriental Republic of Uruguay


Geographical location South America, bordered by Argentina and Brazil
Capital City Montevideo
176,215 sq mts. 95% of its territory is productive land apt for
Area farming exploitation
Population (2015) 3.47 million
Population growth (2015) 0.4% (annual)
GDP per capita (2015) US$ 15,414
Currency Uruguayan Peso ($)
Literacy index 0.98
Life expectancy at birth 77 years
Form of Government Democratic republic with presidential system
Political Division 19 provinces or departments
Time Zone GMT - 03:00
Official Language Spanish

Indicadores 2011 2012 2013 2014 2015 2016e


GDP (Var % per year) 5.2% 3.5% 4.6% 3.2% 1.0% 1.3%
GDP (US$ Million) 47,962 51,265 57,531 57,236 53,443 53,021
Population (Millions of people) 3.41 3.43 3.44 3.45 3.47 3.48
GDP per Capita (US$) 14,054 14,962 16,723 16,572 15,414 15,235
Unemployment rate – Annual Average (% EAP) 6.3% 6.5% 6.5% 6.6% 7.5% 7.8%
Exchange rate (Pesos per US$, Annual Average) 19.3 20.3 20.5 23.2 27.3 30.2
Exchange rate (Annual Average Variation) -3.7% 5.2% 0.8% 13.5% 17.6% 10.4%
Consumer Prices (Var % annually accumulated) 8.6% 7.5% 8.5% 8.3% 9.4% 8.1%
Exports of goods and services (US$ million) 12,916 13,517 13,738 13,691 12,211 11,293
Imports of goods and services (US$ million) 12,755 14,689 14,849 14,458 11,957 10,175
Commercial Surplus/Deficit (US$ million) 161 -1,172 -1,111 -776 254 1,118
Commercial Surplus/Deficit (% of GDP) 0.3% -2.3% -1.9% -1.3% 0.5% 2.1%
Overall Fiscal Balance (% of GDP) -0.9% -2.7% -2.3% -3.5% -3.6% -4.0%
Gross capital formation (% of GDP) 20.9% 22.9% 22.5% 21.2% 19.8% -
Gross Debt of Public Sector (% of GDP) 56.4% 60.7% 57.5% 58.6% 58.7% -
Foreign Direct Investment (US$ million) 2,504 2,536 3,032 2,188 1,279 -

*
Source: GDP data were taken from the IMF, foreign trade data from IED, foreign exchange rates, international reserves, and foreign
debt come from the BCU; the population growth rate, literacy, unemployment and inflation come from the INE (Statistics National
Bureau). Estimated data for 2016.
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