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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