Post on 08-Sep-2014
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Venezuela Software Industry
– Executive Summary Abraham Rojas, August 2011
Abstract: Venezuela isn’t the most famous offshore software development country
in LATAM; the main barrier for off-shoring in Venezuela is the language (poor
English), low testing techniques, minimum to no formal development
documentation, methodology or paradigms and lack of project management.
Nevertheless Venezuela has high skilled task force especially in technology such as
Java, .Net and PHP, excellent creativity and good solution providers. Venezuelan
development companies focus in finance, banking, sales, accounting and industry
specific developments. Working with Venezuelan companies requires lots of
management efforts from customers to secure the delivery of products on time.
Venezuela is a good place for off-shore software development only if the project’s
budget is limited and involves very complex transactions, process and especially in
the financial, banking and / or electronic payment sector. Human Resources Costs
are relatively low in average-software engineer fulltime 8 hours per day 5 days-week
would cost in average US$14.000 per year, while-senior software engineer
US$19.000, graphic designers US$ 16.000 per year, reduce this costs to half if
paying in local currency which make the highest incentive to consider Venezuela as
an option for low cost technical staffing and telecommute.
Keywords: Software, Industry, Venezuela, Development
Venezuela Software Industry Overview
Venezuelan economy is commodity based, focusing in raw materials, oil and mining, therefore a technology
consumer rather than technology exporter. Accordingly with León (2010), there is presence of around 30
transnational software companies registered in Venezuela, including Microsoft, IBM, HP and others with direct
sales of software for about US$ 238 MM, by the end of 2010 the local software development companies arise
to 476 registered companies with direct sales representing US$ 181MM, most famous companies are Saint,
Datapro, Prosoft and Sofos among others with strong presence in Latin America commercializing accounting,
financial, SAP, ERP, SCM, CMS and POS software for LATAM market.
The demographics of software development companies in Venezuela shown-notorious conglomeration in the
capital area, due to it strategically location, software development companies in Venezuela mostly provides
solutions for the local market. According to León (2010) only 25% of the companies provide services or
export software, 93% of this exports target LATAM, 6% USA and 1% Europe, while none to Asia, Africa and
Australia. Colombia, Panama, Ecuador, and Dominican Republic are the countries that consume the most of
software produced in Venezuela.
According to the experience gathered working with multiple outsourced business operations across LATAM,
Venezuela software industry has-good creativity, flexibility, support service in Spanish, good technical skills
for development, excellent domain knowledge in the finances, oil and gas, sales, accounting, banking,
transactional solutions, ERP and industrial process automation, but at the same time lack in the following
areas:
• Development methodologies and paradigms: minimum and no formal development methodology
used by software companies, many use hybrid methodologies not documented.
• Project management: software companies in Venezuela lack of project management representing one
of the major issues, delivery of the product suffers delays due to lack of planning and control of
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whole cycle of software factoring. Companies focus in producing and as many software projects
development scope changes eventually compromising the companies when have to manage change
and release.
• Human Resources: Venezuelans generally do not have-good English level, strong Latin accent in
most of the cases, this represent-huge linguistic barrier when trying to interact with North America
and Europe consumer / clients. Man power within the software industry tends to be very volatile in
Venezuela; resources in average last 1 to max 2 years in the same development company, high skilled
professionals generally migrate to USA, Canada and Europe.
Some other undermining factors to consider about Venezuela are:
• Political instability.
• Energetic crisis generate major power shut downs in large cities across the country.
• Private companies face the risk of government intervention / confiscation.
• Currency Hold, represent-major financial risk for companies based in Venezuela access to foreigner
currency is limited, the black market represent the most straight forward way to deal with
international transactions.
• Violence / criminal actions are one of the major issues in the country.
Cost is one of the most attractiveness of Venezuela when off-shoring, according to the Venezuelan Engineering
College CIV, a junior software engineer can be hired for as low as US$ 1.337,21 per month, working 8 hours
per day, five days a week, while a senior software engineer would cost US$ 1.852,56 shown the Appendix A.
These costs could be negotiated in local currency (Bolivar), and fees converted in the black market reducing
costs approximately in 52%. Please see Appendix A for more details.
Conclusion
Venezuela is not the best place for offshore software development, but current global economic recession and
Venezuelan currency hold, might turn this location as a economic alternative to produce software due to the
low cost of high skilled human resources, linguistic barriers (poor English level), lack of formal methodology
and project management are the main undermining factors of the local industry, therefore additional resources
are required for managing technical documentation, deliverables and meeting deadlines within the US market
requirements.
Recommended lecture links (only available in Spanish):
Estudio de la Industria del Software en Venezuela: http://www.cavedatos.org.ve/download/cdt_107.pdf
La Industria de Software en Venezuela: Una caracterización de su recurso humano
http://kuainasi.ciens.ucv.ve/ideas07/documentos/presentaciones_evetis/01-EVETIS_Lunes.pdf
Cifras sobre Venezuela:
http://www.opeal.net/files/ENCUESTA_DATANALISIS_VENEZUELA_Mayo_2010.pdf
References:
León Vicente L (2010), Estudio de la Industria del Software en Venezuela 2010. Datanalisis.
Caracas, Venezuela.
CIV Colegio de Ingenieros de Venezuela, (2011) tabulador de sueldos y salarios mínimos para
profesionales CIV. Caracas, Venezuela
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Appendixes
Appendix A: Average Wage Tabulation for Venezuelan System, Software, IT engineers.
Years of
Experience
Professional
Level
A.P.N. (*)
Level
Experience
Factor
(**)
Wages
(BsF./Month)
Wages
US / Month
Wages
Black Market
US$ / Month
0-1 P1 18 1,35 5.750,00 1.337,21 676,47
1-2 P1 18 1,48 6.304,00 1.466,05 741,65
2-3 P2 19 1,61 6.858,00 1.594,88 806,82
3-4 P2 19 1,74 7.412,00 1.723,72 872,00
4-5 P2 19 1,87 7.966,00 1.852,56 937,18
5-6 P3 20 2 8.520,00 1.981,40 1.002,35
6-7 P3 20 2,12 9.031,00 2.100,23 1.062,47
7-8 P4 22 2,25 9.585,00 2.229,07 1.127,65
8-9 P4 22 2,38 10.139,00 2.357,91 1.192,82
9-10 P5 24 2,51 10.693,00 2.486,74 1.258,00
10-11 P5 24 2,64 11.247,00 2.615,58 1.323,18
11-12 P6 25 2,77 11.801,00 2.744,42 1.388,35
12-13 P6 25 2,9 12.355,00 2.873,26 1.453,53
13-14 P7 26 3,03 12.909,00 3.002,09 1.518,71
14-15 P7 26 3,16 13.463,00 3.130,93 1.583,88
15-16 P8 27 3,29 14.017,00 3.259,77 1.649,06
16-17 P8 27 3,41 14.528,25 3.378,66 1.709,21
17-18 P8 27 3,54 15.082,12 3.507,47 1.774,37
18-19 P9 27 3,67 15.636,00 3.636,28 1.839,53
19-20 P9 28 3,8 16.190,00 3.765,12 1.904,71
20-21 P9-A 29 3,93 16.744,00 3.893,95 1.969,88
21-22 P9-A 29 4,06 17.298,00 4.022,79 2.035,06
22-23 P9-A 29 4,19 17.852,00 4.151,63 2.100,24
23-24 P9-A 29 4,32 18.406,00 4.280,47 2.165,41
24-25 P9-A 29 4,45 18.960,00 4.409,30 2.230,59
25-26 P10 30 (Consultant)
4,58 19.514,00 4.538,14 2.295,76
26-27 P10 30 (Consultant)
4,7 20.025,28 4.657,04 2.355,92
27-28 P10 30 (Consultant)
4,83 20.579,17 4.785,85 2.421,08
28-29 P10 30 (Consultant)
4,96 21.133,06 4.914,67 2.486,24
29-30 P10 30 (Consultant)
5,09 21.687,00 5.043,49 2.551,41
MAS DE
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P10 30 (Consultant)
5,22 22.240,00 5.172,09 2.616,47
Source: Colegio de Ingenieros de Venezuela (2011).
(*) Escala utilizada por la Administración Pública Nacional
(**) Escala Manual de Contratación del Colegio de Ingenieros de Venezuela