Uruguay offers several advantages for companies providing outsourced or offshore services: 1) A stable political and business environment, advanced infrastructure, and multilingual workforce. Uruguay also has lower costs than other countries in the region. 2) Tax benefits are available for investment in free trade zones and certain industries such as contact centers and software. 3) Montevideo has become a hub for the offshore services industry, with over 20,000 people now employed in sectors like contact centers, IT, and audiovisual services.

1. April
2010
Offshoring & Outsourcing
Investment Opportunities in Uruguay

2. 1. Why invest in the service export industry in Uruguay?
1. Uruguay has several characteristics that make it attractive for companies offering
services for export, utilizing either outsourced or captive operations:
Suitable natural geographic, economic, political and business environment characteristics.
Uruguay is noted among Latin American countries for its economic liberalization and
security.
Attractive cultural and educational foundations, including a multilingual population.
Suitable time zone between the United States and Europe (for time-sensitive services).
Advanced communications and connectivity infrastructure.
Reasonable wage costs.
Easy procedures for foreign worker immigration.
2. Uruguay treats foreign and national investments
equally and has signed investment protection and
promotion agreements with 26 countries, including
Spain, the U.S., Finland, France and the U.K.
There are no restrictions on the repatriation of capital,
profits, dividends or interest.
3. The country has vast experience in the offshoring
services industry, including substantial foreign and
domestic investments that have been increasing over
time. An estimated 20,000 people work in the industry.
Among the foreign companies that have invested in the industry are Tata
Consultancy Services, Sabre Holdings, Atento and Avanza.
Two undertakings (Aguada Park and WTC Free Zone) are joining the country’s main
technology park, Zonamérica, as Free Zones, thus increasing capacity for operations
and international services under the offshoring model.
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3. 4. Several systems, such as the Free Zones and the Investment Promotion Law, favor
investment by reducing or eliminating the IRAE corporate income tax.
In the case of contact centers, a 2008 decree provides corporate income tax
exemptions under certain circumstances. In addition, the 2008 Information
Protection Law puts national requirements in line with those of the European Union.
In the software and related services industry (ITO, BPO and KPO)1, exemptions for
corporate income tax are granted for exports. In the audiovisual industry, a
government fund has been created to support national film and other audiovisual
productions. In addition, donations made by companies to projects linked to the
audiovisual industry may be deducted from corporate income tax.
2. Characteristics that make Uruguay a very attractive location for
offshore services
Uruguay offers economic, cultural, educational and industry-specific advantages that
make it a very attractive location to set up outsourcing and captive services for
export.
2.1 Suitable geographic, economic, political and business environment
characteristics
Uruguay has a natural environment that is
free of natural disasters. It is politically stable
with a representative democracy and
rotation of the three main political parties.
Uruguay’s per capita GDP was approximately
USD 10,000 in 2008, which is third in South
America just behind Chile and Argentina.
The country’s GDP has grown at a rapid pace since 2004 and even in 2009 (although
at a lower rate of 2.9% due to the international crisis). Growth is expected to
continue in the coming years. Since 2004, macroeconomic indicators have remained
satisfactory and inflation has been under control (in the single digits).
Uruguay offers the most open business environment in the region (Tholons, Report
on Outsourcing in Uruguay, June 2009):
1
ITO (Information Technology Outsourcing) refers to information technologies including software and consulting, BPO (Business Process
Outsourcing) refers to business processes including accounting, collections, staff administration, etc. and KPO (Knowledge Process
Outsourcing) refers to knowledge intensive processes (research and development, design, etc.)
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4. • There are no restrictions on the repatriation of capital, profits, dividends or
interest.
• No permits or prior authorization are required to make foreign investments.
Local companies may be 100% foreign owned.
• The foreign exchange market is open and
there are no limits on foreign currency
trading. Investments can be made in any
currency.
• There are no restrictions on hiring foreign
staff (except for companies located in
Free Zones where 75% of employees must
be domestic). A residency permit and
proof of good health are the only
requirements.
• Residency permits can be quickly obtained and anyone who has entered the
country legally can obtain one and start working even during the application
process.
• Citizens from most western nations do not require visas to enter the country.
Uruguay offers the safest destination for outsourcing in Latin America (Tholons,
Report on Outsourcing in Uruguay, June 2009):
• Low impact of crime on business. The World Economic Forum’s 2009/2010
Global Competitiveness Report (GCR) compared Uruguay with Argentina,
Brazil, Chile, Costa Rica and Mexico using three variables: organized crime,
costs to companies regarding crime and violence and costs for businesses
regarding terrorism. Uruguay earned the best scores in all three areas.
• Uruguay leads Latin America with respect to regulatory framework and
property rights. The 2009/2010 GCR evaluated four variables and in Latin
America, only Chile and Costa Rica were relatively comparable (legal system
efficiency, judicial independence, intellectual property protection and
property rights).
• International Research on Peace and Corruption places Uruguay among the
best countries in the region. Transparency International ranks Uruguay as the
country with the lowest corruption in Latin America (2009) along with Chile,
as does the Institute for Economics and Peace (2008 Global Peace Index).
• Uruguay also offers insurance against political risk to investors through an
agreement between the Uruguayan government and the U.S. Overseas
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5. Private Investment Corporation (OPIC). The insurance covers all risks except
credit risk with claims subject to international arbitration.
2.2 Attractive cultural and educational characteristics
Uruguayans are mainly descendents of European (mostly Spanish and Italian) immigrants.
There are no conflicts among minority groups.
The country’s literacy rate is very high (98% in 2008).
The country ranked 23rd in the world (130 countries) in 2007 in tertiary education
enrollment. As seen in the following chart, Uruguay ranked second behind Argentina in
Latin America (World Economic Forum’s Global Competitiveness Report 2009/10):
Tertiary education enrollment
Argentina 20
Uruguay 23
Chile 38
Colombia 68
Brazil 73
Mexico 75
Costa Rica 78
Source: World Economic Forum’s Global Competitiveness Report 2009/2010
Managerial talent is high and there are many examples of Uruguayans who begin their
careers in Uruguay and succeed internationally.
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6. In 2009, the first stage of a government plan to provide all public elementary school children
with laptop computers and all public elementary schools with internet connectivity was
successfully completed (Plan Ceibal, One Laptop per Child).
In 2010, the second stage of the plan will be
implemented to supply computers to all first and
second year high school students.
Uruguay and in particular Montevideo are noted for
a high standard of living at a low cost:
• Quality of life (Montevideo): First in
South America (Mercer, 2009)
• Cost of living (Montevideo): Fourth lowest in South America (Mercer, 2009)
2.3 Use of several languages
* English
English is widely spoken by young people (41% of the active population
between 19 and 24 years of age and 31% between ages 25 and 34). Estimates
by the National Statistics Institute (INE) show that 26.5% of the active
population in the country as a whole speaks English. In Montevideo, some
37% speak English2. Nearly 70% of those who have completed or are currently in tertiary
studies know English and 40% of those who have completed secondary studies know the
language.
The state-run University of the Republic, the largest university in the country, reported in its
2007 student census that 70.5% of students can comprehend written English and 50.7% can
speak the language (out of a total of 81,774 students).
* Portuguese
Portuguese is spoken by many Uruguayans who live or were raised in cities
that border Brazil. Two departmental capitals, Rivera and Artigas (as well as
other smaller cities), are located on the border and have sister cities on the
Brazilian side. As a result, residents are bilingual in Spanish and Portuguese.
The University of the Republic’s 2007 student survey shows that 28.5% can read Portuguese
and 34% can comprehend the language orally.
* Other languages
Several other languages are spoken by minor segments of the population.
For example, Sabre Holdings, a U.S. company located in Zonamérica (a
technology park in Montevideo), maintains contacts with clients in 15
languages, including Spanish, English, Portuguese, Italian, French, German,
2
National Statistics Institute (INE). Expanded Household Survey, 2006.
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7. Swedish and Turkish.
In these cases, human resources available include not only residents who are descendents of
immigrants who speak these languages, but also alumni of bilingual schools and Uruguayan
emigrants (or their children) who reside abroad and want to return.
The 2007 university student census shows that approximately 18% and 8.5% can
comprehend written or spoken Italian and French, respectively.
2.4 Time zone between the United States and Europe
Uruguay is geographically located between the
U.S. and European time zones. The time
difference between Uruguay and India is between
7.5 and 8.5 hours.
This location enables complementary tasks to be
performed during the normal workday from an
office in Montevideo with those in other regions.
For example, TCS Uruguay combines its client
service center in Montevideo with another
located in India, enabling round-the-clock
worldwide services.
2.5 Uruguay is now seen in reports on international outsourcing locations
A.T. Kearney, Offshore Location Attractiveness Index
Since 2006, Uruguay has been among the 50 most attractive countries
for services outsourcing.
Tholons, Top 50 Emerging Global Outsourcing Cities
Montevideo appeared in a 2009 report among the top 50 emerging
cities. Uruguay appeared as one of the top 20 emerging countries for
global service offshoring.
2.6 Concentration in Montevideo
Today, nearly all contact centers are located in the department of Montevideo, both in the
downtown area as well as in the Zonamérica technology park, where tax exemptions under
the Free Zone system are granted. Most export service companies (outsourcing or in-house)
mentioned in this report are also located in Montevideo.
According to the Telecommunications Chamber of Uruguay, an estimated 20 contact center
companies were in operation as of May 2008, employing nearly 4,000 people in downtown
Montevideo and 2,000 in Zonamérica. In 2008, approximately 12,000 people worked in the
information technology industry and about 4,000 worked in the audiovisual industry.
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8. 2.7 Advanced communications in a stage of rapid growth
In Latin America, Uruguay currently ranks the highest
in terms of the use of modern communication
technology. The following data supports this claim.
According to the World Economic Forum’s 2009/2010
Global Competitiveness Report, Uruguay holds the
following positions:
Broadband subscribers: 1st in Latin America per
capita, 2008.
Mobile telephone subscribers: 2nd in Latin America per capita, 2008.
Fixed telephony: 2nd in Latin America per capita, 2008.
Internet users: 1st in Latin America per capita, 2008.
School internet access: 2nd in Latin America per capita (2008/09 average).
Broadband subscribers Mobile telephone Fixed telephone Internet users School internet
subscribers lines access
Uruguay 46 Argentina 31 Costa Rica 37 Uruguay 44 Chile 38
Chile 47 Uruguay 48 Uruguay 47 Colombia 46 Uruguay 43
Argentina 48 Colombia 66 Argentina 52 Brazil 47 Costa Rica 62
Mexico 50 Chile 67 Brazil 61 Costa Rica 48 Brazil 64
Brazil 54 Brazil 81 Chile 62 Chile 53 Mexico 77
Colombia 61 Mexico 89 Mexico 65 Argentina 60 Colombia 81
Costa Rica 63 Costa Rica 107 Colombia 76 Mexico 73 Argentina 89
Source: World Economic Forum’s Global Competitiveness Report 2009/2010.
2.8 Reasonable wage costs
Wage costs are reasonable in Uruguay and, in general, are lower than in the region.
The following chart shows total costs for the company and what employees receive for two
cases: a call center employee working 36 hours per week and a full-time computer
programmer (48 hours per week).
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9. Annual wage costs (2009) expressed in USD for a call center employee in Montevideo (1) (6 hours per
day) and a software programmer (8 hours per day)
Call Center Programmer (4)
Total cost for the company 5,828 111.6% 12,421 111.6%
- Company social security
(606) (11.6%) (1,291) (11.6%)
contributions (2)
Annual nominal wages (includes
mandatory bonus and vacation 5,222 100% 11,130 100%
wages)
- Social security contributions and
(955) (18.3%) (2,037) (18.3%)
taxes paid by employee (3)
Employee take home pay 4,267 81.7% 9,093 81.7%
(1) Estimated monthly wages in Uruguayan pesos: 8,000. Exchange rate: UYP 21 to the dollar (November 2009).
(2) Employer contributions on wages and mandatory bonuses: 7.5% pension, 5% health insurance, 0.0125% labor conversion fund.
(3) Employee contributions on wages and mandatory bonuses: 15% pension, 4.5% health insurance, 0.0125% labor conversion fund. In
these cases due to the relatively low salary amounts, the IRPF personal income tax is not applicable. Tax deductions for staff depend on
several factors.
(4) The nominal salary for programmers corresponds to the average wage on the next chart.
The following chart lists remuneration levels for various positions in the software industry
according to the annual member survey of the industry’s business association.
Monthly nominal wages in the Uruguayan IT services industry (in USD)
CATEGORY MINIMUM AVERAGE MAXIMUM
Top level manager 2,000 2,738 4,000
Leader/Coordinator/Manager 1,300 2,000 2,493
Technical leader 1,128 1,590 2,130
Senior analyst 1,150 1,500 2,000
Functional analyst 900 1,235 1,500
Junior analyst 618 800 1,100
Database administrator 715 1,200 1,350
Programmer 552 795 1,026
Sales representative 500 800 1,650
Support (networks, PCs, mainframes, Unix) 485 680 800
Web designer 500 600 800
Administrative assistant 430 525 720
Administrative staff 500 605 1,075
Source: CUTI 2009 annual survey of member companies.
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10. Lastly, the following chart shows monthly pay levels for management positions in various
countries in Latin America, including Uruguay.
Monthly net wages (in USD)
Date CEO CFO / Sales Production HR
finance manager manager manager
director
Brazil 21 May 2009 30,062 13,068 14,614 12,323 13,551
Costa Rica 26 May 2009 12,464 5,630 5,530 5,593 4,815
Chile 31 Dec 2008 13,801 5,842 5,871 4,661 5,191
Argentina 28 Dec 2009 12,526 4,623 5,124 4,621 3,929
Uruguay 30 Sep 2008 8,280 4,353 4,652 4,047 3,525
Management pay is lower (sometimes much lower) in Uruguay than in many Latin American
countries. According to the data presented and depending on the position, remuneration is between
300 and 400% higher in Brazil than in Uruguay, between 30 and 70% higher in Chile and between 10
and 60% higher in Argentina.
2.9 Foreign worker immigration facilitation
The procedure to apply for legal residence in Uruguay is fast and
simple. National identification cards can be obtained when the
process is started. Applicants must present a request to the
National Migration Bureau stating the reasons for residing in the
country. Upon approval, the legal residency process starts.
To start the legal residency process, applicants must present
proof of means (work contract or job offer signed by a
company), health card issued by the Public Health Ministry or a
private medical institution, certificate of good conduct (legalized
and translated) from countries that maintain an agreement with Interpol, and the document
that was used to enter the country.
Once the legal residency process is started, a provisional Uruguayan identification card may
be obtained.
3. Offshore services offered in Uruguay
Offshoring refers to services performed outside the national sphere. For the country that
renders offshore services, said services are considered exports. Offshore services may be
performed by the company itself, using its resources and capabilities in another country (in-
house supply) or may be performed by third parties hired by the company (outsourced
services).
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11. The following table shows various situations with respect to offshoring and outsourcing and
their possible changes over time, indicated by arrows.
Country where services are performed
In the country Abroad (offshoring)
Internal departments
in the country Affiliated companies in
In-house
(captive)
Company
3 other countries
that (in-house/offshoring)
1 2
performs
Outsourcing
services Third parties in other
Third parties in the country countries
(outsourcing) (outsourcing/offshoring)
Source: Center on Globalization, Governance & Competitiveness, Duke University (November 2009), The Offshore Services Industry: A
New Opportunity for Latin America.
Arrow 1 indicates the change to hiring outsourcers within the country of services performed
previously by a department in the company.
Arrow 2 shows the same outsourcing but to companies located outside the country of the
company (outsourcing/offshoring).
Arrow 3 shows the transfer of tasks from headquarters to affiliated companies abroad (in-
house/offshoring).
Currently, major outsourced offshore services in Uruguay include: information technology
outsourcing (ITO), business process outsourcing (BPO), knowledge process outsourcing
(KPO) and the audiovisual industry.
3.1 Information technology outsourcing (ITO)
In a manner of speaking, all software-related services can be considered outsourced to the
extent that they are performed by specialized companies outside of the company that uses
them. In Uruguay, the software industry began to develop in the 1980s and enjoyed
explosive export growth in the following decade. In 2008 and prior years, 40% of total
industry sales was exported (totaling USD 220 million in 2008). Direct employment in
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12. information technology was 11,725 people in 2008, 75% of
whom were highly qualified (engineers, analysts,
programmers, IT technicians, and other professionals).
Harvard University recently researched the Uruguayan
software industry for a case study in their MBA program.
Uruguay was chosen as the most advanced country in Latin
America with regard to information technology and software
(Tholons, June 2009, Uruguay Outsourcing: Creating a
Roadmap to Success).
Of all activities performed in Uruguay in the information technology industry, the following
two segments are noted for outsourcing and exporting:
a) Application development
These companies are mainly Uruguayan and create off the shelf and customized software
(De Larrobla, Top Systems, Solur, Memory, etc.) Also, two companies produce new
development tools (industry leader Artech has offices in the U.S., Mexico and Brazil and
exports to more than 30 countries; and Ideasoft, which has its own business intelligence
technology platform). An estimated 40% of current
software exports consist of products in this segment
(including licenses).
In Uruguay, U.S. company VeriFone has one of its five
global development and support centers for its software
products (together with centers in India, Ireland, Israel and
the United States). 46 people work at the Uruguayan
center. The company has 62 branches in the world and
specializes in software for credit and gift cards, as well as
hardware terminals for use in stores.
b) Software consulting
Consulting includes services associated to the implementation of software performed by the
same development company or by consulting firms, as well as other services.
Both domestic and international companies are included in this segment. Domestic
companies include Grupo Quanam (associated with Oracle, implementing software from
large companies) and Infocorp (associated with Microsoft) and Conex (consulting unit of
state electric company UTE).
International companies include Tata Consultancy Services (TCS), which has in Uruguay a
Global Development Center for Latin America, Spain and Portugal. IT and consulting services
are provided from Montevideo to more than 30 clients, with the company operating as an
offshore base for some clients in the United States and Europe. Application development
and maintenance services are provided through multiple technological platforms, as are
business solutions including Oracle applications.
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13. Other international companies in Uruguay include IBM (staff of 450 as of 2008, 120 in a new
BPO undertaking starting in that year as detailed below), Microsoft, Bull, Sonda (Chile) and
Indra (Spain).
As a whole, these international companies represent about 50% of the sales of the software
consulting segment.
3.2 Business process outsourcing (BPO)
Companies are increasingly focusing on
their core business and depend on third
parties to provide integral solutions to
their support processes.
Here, outsourcing services include
customer services, administration and
consulting. Major local companies that
perform services abroad are linked to
global consulting firms.
a) Customer service: contact centers,
marketing and sales.
As noted in our December 2009 report on contact centers, offshore services are performed
in Uruguay for foreign headquarters (in-house) as well as for third parties (outsourcers).
In the first case (in-house), Tata Consultancy Services (TCS), Sabre Holdings and RCI Global
Vacation Network are noteworthy. All three operate from the Zonamérica Free Zone (TCS
also has another location in Montevideo). A total of about 1,600 people were employed by
these companies in 2009.
In the case of outsourcers, Spanish companies Atento and Avanza are noteworthy. In
addition, several domestic companies operate in downtown Montevideo and employ about
4,000 people in total.
b) Company administration: accounting, finance,
logistics, purchasing.
Several companies serve foreign clients, offering a range
of services:
* IBM Uruguay provides accounting and finance
business process outsourcing (BPO) to the headquarters
of a European bank, with 120 professionals working on
this project since 2008. The company seeks to expand
this type of business in Uruguay.
* Several consulting companies provide outsourcing
services to multinationals (in addition to local
companies) to meet regional administration needs
(accounting, financial statement preparation and
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14. adaptation to international standards, creation of management reports, purchasing,
collections, payments, etc.) as well as management, audit, tax, operations, logistics,
economic and financial consulting. These companies include: DCA, CPA Ferrere, Guyer,
KPMG, PwC and Deloitte, among others.
* Several companies, including Sabre Holdings, centralize accounting functions of South
American subsidiaries in Uruguay.
c) Human resource administration: selection, training and payroll.
* The aforementioned consulting firms also offer services in the area of human resource
administration, which includes payroll, labor documentation, labor regulation and social
security reviews, management reports, absentee and leave administration, and training and
support for seasonal staff needs.
3.3 Knowledge process outsourcing (KPO)
a) Innovation, design & testing.
Several companies perform design and innovation processes for foreign clients, from
Uruguay.
One of these is CCC Medical Devices, which began to
manufacture and export pacemakers in 1970. By the end of
the 1990s, the company began to offer implantable medical
device design services. Foreign companies request design
services, including Impulse Dynamics, Meta Cure, Biocontrol
Medical, American Medical Systems, Victhom and BioHeart.
These companies develop ideas and concepts for devices to treat specific medical
problems. In turn, CCC develops specific devices using the requirements of the client,
building prototypes, manufacturing the final products in small quantities and
transferring the production technology if necessary. Devices have been designed to
treat various illnesses, such as heart failure, obesity, diabetes, high blood pressure,
sleep apnea, chronic pain, etc.
CCC currently has a world market share of between 70 and 80% in its niche market
and exports its services to the United States, Europe, Israel and other countries. The
company has a staff of 140. Of these, 50 are electronics and software engineers and
to a lesser extent include mechanical and chemical engineers.
Chipmate, a recently created company, specializes
in microelectronics, designing products for an
Indian pacemaker manufacturer. The company
consists of engineers specializing in
microelectronics.
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15. b) Business consulting (re-engineering, benchmarking, process design, etc.), legal
consulting (intellectual property, legal support, etc.) and financial consulting (financial
market advice, risk analysis, etc.)
The following are examples of companies that perform these services in Uruguay:
Towers Watson, a consulting firm specializing
in human capital and financial and risk management
with 14,000 employees worldwide (headquartered
in the United States). The company set up in Montevideo (Zonamérica) in 2005 with
a financial research center to support its own offices throughout the world. This
center, which is one of a kind in Latin America, is part of the company’s global
research structure and currently employs around 50 people in the country.
Global Supply Chain Finance (GSCF) set up in
Zonamérica in January 2009 and provides financial
services in the area of international trade. Utilizing
financing from affiliated banks and coverage from
credit insurance companies, GSCF designs and manages programs for its corporate
clients, both in portfolio management of debtors as well as creditors. Headquartered
in Switzerland and with offices in Uruguay and Malaysia, GSCF can cover markets in
Asia, the Americas and around the globe.
Consulting firms mentioned in point 3.2 b) offer business, legal and financial
consulting services to a diverse portfolio of foreign clients.
c) Advanced vertical activities (services to specific industries): pharmaceutical companies,
health services, logistics and transportation, education and training, product
development.
The Montevideo branch of the Institut
Pasteur of France works on biotechnology
projects related to human and animal
health, among other areas. Biotechnology
services are performed for domestic and
foreign companies. Biopolis S.L. (Spain)
hired the institute in 2009 to optimize an
animal model outsourcing system (mice) for the pre-clinical study and analysis of
biotechnological molecules and/or ingredients requested by its European clients.
Since 2008, French company Danone, through its own research and development
center, has collaborated to jointly develop, at the Institut Pasteur of Montevideo, a
platform of highly predictive biotechnology models for the study of dairy food
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16. prototypes with beneficial effects on human health. Models developed in Uruguay
are complementary to those developed in France, the U.S., China and Holland.
The Pando Technology Pole at the School of Chemistry (University of the Republic)
works in the areas of chemistry, biotechnology and nanotechnology for the food,
pharmaceutical and environmental segments. It operates as a large R&D and
innovation center and technology service provider (high technology analysis, industry
services for environmental projects and center for competitive intelligence). Work is
performed under various methods: specific demand, shared risk/benefit projects
(consortiums) and as an incubator.
Foreign clients receiving technology transfer services include Wama Diagnóstica
(Brazil), Wiener Lab (Argentina) and Omya (Switzerland).
3.4 Audiovisual industry
The audiovisual industry is emerging in Uruguay and includes several sub-sectors that can
perform outsourced services for foreign clients. The following are the most significant
activities:
a) Production of advertising audiovisual material performed by several local companies that
export their services, such as Metrópolis Films, Salado Media, Taxi Films, París Texas Casa
Productora, Milagrito Films, Mojo, Kafka Films and others. Some have affiliates in other
Latin American countries. Approximately 90% of work is done for foreign clients. In total,
there are between 40 and 50 companies, which also produce for
the domestic market.
b) Animation film producers, consisting of 15 small firms that
focus on the export market, but also have local sales. For
example, Tournier Animation has performed work for the
Discovery Kids channel and others using stop motion techniques.
Also noteworthy are Animática Producciones, Animation Campus,
MTW, La Mano Estudio and Animalada 3D.
c) Approximately 15 video game producers, including Powerful
Robot Games, which has exported to the Cartoon Network, Batoví Games, Soho, Ludo
Contenidos and others.
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17. d) Production of fiction and documentary films by independent producers.
e) Production of television programs, although with only
slight international market penetration. Companies include
Diezcatorce Compañía Productora, OZ Media, Guazú Media
and Contenidos TV.
f) Another group of companies in Uruguay renders services
related to audiovisual production, including preproduction
(casting), filming (equipment rental, interpretation,
technical and support staff) as well as post-production
(editing, dubbing, audio, soundtracks and jingles).
Uruguay has several advantages in the audiovisual industry:
Excellent price-quality ratio given the high production quality as evidenced by
numerous international awards garnered and the advantages the country offers in
terms of technical ability, proximity to various filming locations and rapid completion
times through the Montevideo municipal government’s Location Office.
Flexibility of companies as a result of their small size, expansion capability (with the
availability of a large number of freelancers) and the number of diverse projects
completed.
The country is attractive given its safety and architectural diversity that enables
multiple sets, proximity to locations both within Montevideo (1.5 million inhabitants)
and other parts of the country (a wide variety of locations at 50, 100 or 150 km. from
Montevideo) and an ethnic diversity that allows the recreation of many places
around the world.
Broad tax exemptions for audiovisual activities.
Examples of Hollywood productions shot in the country include Miami Vice (2006, directed
by Michael Mann and starring Colin Farrell and Jaime Foxx) and Blindness (2008, directed by
Fernando Meirelles and starring Julianne Moore, Mark Ruffalo and Danny Glover). Both
were filmed partially in Uruguay.
Several global ad campaigns were entirely produced in Uruguay (e.g., Absolut Vodka, TNT,
Mattel).
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18. 4. Recent investments in the industry
* Since their arrival, nearly all transnational companies have continued to expand activities
in Uruguay. Most began at the start of the decade with less than half of the employees they
currently have.
TCS not only expanded its site at Zonamérica, but established another one in
downtown Montevideo.
IBM began a significant contract for a foreign-based bank in 2008.
Towers Watson continued to grow in the 2007-2009 period by adding staff and
enlarging its Zonamérica infrastructure.
Global Supply Chain Finance set up in Zonamérica in January 2009.
* In the audiovisual industry, a lab to develop,
transfer and manipulate digital images was set up in
Zonamérica in 2009.
* Two significant infrastructure initiatives are
underway: Aguada Park and WTC Free Zone, both
under the Free Zone system.
1) The Aguada Park technology and service
park is located near downtown Montevideo, the
Port of Montevideo and most universities and
includes two state-of-the-art 19-story towers (56,000 square meters) and a total investment
of USD 42 million (building and equipment). The undertaking seeks to house companies
involved in software development, call centers, BPO, shared services, design and other
professional for export services.
The first tower opened in March 2010 with 22,000 m 2 of total available space (offices
available between 10 and 1,400 m2 of space). With the second tower, available space will
increase to 3,000 m2.
2) WTC Free Zone is building an office tower next to World Trade Center Montevideo
and the Montevideo Shopping Center in an area full of banks, hotels and restaurants.
Flexible office space may be leased ranging from 40 m2 offices to entire floors, all with the
latest telecommunications technology. The opening is scheduled for 2011.
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19. 5. Prospects for further investments in the industry
In the framework of the global offshoring trend, Uruguay is in an unmatched position to
receive investment in this industry.
The country’s geographic, political, economic and cultural characteristics and its suitable
communications infrastructure and high-quality workforce ensure solid financial prospects
and low risk for companies considering investments.
The nearly continual expansion of foreign companies backs this perspective and new
building projects are on the horizon that will offer new office space for those who decide to
build on these opportunities.
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20. APPENDICES
Domestic and foreign investment promotion
Foreign investors in Uruguay enjoy the same benefits as domestic investors and do not need
prior authorization to set up in the country.
Law 16,906 (dated 7 January 1998) declares the promotion and protection of domestic and
foreign investment of national interest. Decree 455/007 updated the regulations of this law.
Investment projects in any industry that are submitted and promoted by the Executive
Branch may use between 50% and 100% the amount invested as partial payment of IRAE
corporate income tax, according to project classification.
The normal IRAE tax rate is 25%.
In addition, moveable fixed assets and civil works are exempt from IP equity tax and VAT can
be recovered for purchases of materials and services for the latter.
Trade agreements and investment protection
1. General trade agreements
Uruguay has been part of the World Trade Organization (WTO) since its
creation in 1995 and is part of the Latin American Integration Association
(ALADI, 1980) along with ten South American countries plus Cuba and Mexico.
In the framework of ALADI, the Southern Common Market (Mercosur) was
formed in 1991 with Argentina, Brazil and Paraguay. Mercosur became a
customs union in 1995, with the free movement of goods, the elimination
of customs duties and non-tariff barriers between countries, and a common
external tariff for countries outside the bloc. Venezuela is currently in the process of joining
Mercosur.
Within the framework of ALADI, Mercosur has signed trade agreements with
other countries in South America: Chile (1996), Bolivia (1996), Colombia,
Ecuador and Venezuela (2004) and Peru (2005), and an agreement with Israel
(2007), all of which form respective Free Trade Areas, with tariff reduction
schedules that should be completed no later than 2014/2019, according to the country.
Uruguay also signed a bilateral free trade agreement with Mexico (2003),
which allows for the free movement of goods and services between both
countries (zero tariffs) since June 2004, with certain exceptions that end in
2014.
2. Investment protection agreements
Uruguay has signed investment security, protection and promotion agreements with 26
countries, including Spain, the U.S., Finland, France and the U.K., among others.
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21. General government export incentives
1. Refund of VAT paid on supply purchases
Refunds of VAT on purchases are made generally by discounting VAT charged on sales made
within the national territory and paying the difference to the government. Since this tax is
not charged on exports (of goods and services), VAT included in purchases of inputs is
refunded at the request of the company. The DGI tax bureau extends credit certificates that
can be used in paying other taxes.
Decree 220/998 lists the operations included in the concept of services exports. The
following are some examples: foreign transmission of television material produced in
Uruguay; logistical support services for foreign cinematographic and television productions;
consulting services provided to foreign persons; services provided to foreign persons for the
design, development and implementation of specific logistical support; services performed
by international call centers as long as the main activity is for foreign clients; data
processing; services performed for the design, development and implementation of digital
content; market and social research services; and advertising services provided by
advertising agencies for foreign clients.
2. Free Zones
There are the 10 Free Zones or customs enclaves for manufacturing activities or services to
third countries where customs duties and taxes are not paid on entry and exit of goods and
services and where VAT is not paid in advance. Furthermore, broad exemptions from
national taxes include the IRAE corporate income tax, but not social security payments for
domestic personnel.
A minimum of 75% of Uruguayan citizens on total staff is the only requirement, although this
percentage may be reduced with prior approval by the Executive Branch.
Specific government incentives for various sub-sectors mentioned in this
report
1 Contact centers. Decree 207/2008 dated 14 August 2008. IRAE corporate income tax exemption.
This decree incorporates contact centers in the Investment Promotion Law (Law 16,906
dated 7 January 1998) as long as the company has a minimum of 150 direct employees and
the services are consumed abroad by non-residents.
Those awarded incentives will be exempt from the Economic Activities Income Tax (IRAE) for
10 years.
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22. 2 Contact centers. Personal Information Protection and Habeas Data Action (Law 18,331 dated 11
August 2008 and regulatory decree 414/09 dated 31 August 2009).
According to this regulation, all physical and legal
persons have the right to have their personal
information protected. This covers collection,
recording and treatment under any method in
the public and private spheres. The database
manager must obtain and safeguard proof of
consent of the owner of the information and
must inform the owner of the use of said
information, as well as use techniques to ensure
its integrity, confidentiality and availability.
The decree establishes operations of the
Personal Information Control Regulatory Unit.
This law adapts current regulations to those of the European Union, thus enabling European
clients to contact companies located in Uruguay.
3 Software industry. IRAE corporate income tax exemption for software and related services
exports.
Title 4 of Amended Text 1996 covers income exempt from the IRAE corporate income tax. It
includes income obtained from logistical support production activities and related services
(determined by the Executive Branch), as long as they are consumed entirely abroad.
Decree 150/2007 dated 26 April 2007 (IRAE regulations, article 163 bis) includes the services
linked to hosting, call center, business process outsourcing, sales and other services. In all
cases they must have logistical support as the objective, even when said logistical support
has not been carried out by the services provider.
With regard to logistical support, said article includes development, implementation,
update, version correction, personalization (GAPs), testing, quality control, logistical support
maintenance, training and consulting.
4 Cinematographic and audiovisual industry. Law 17,930 of December 2005 (Patronage) and law
18,284 of May 2008 (Film Law)
Law 17,930 created a system of incentives for artistic and cultural activities (sponsorship),
providing tax incentives (income and capital taxes) for those who make donations towards
projects of this type and to their promoters, including film and audiovisual production.
The Film Law created the Film and Audiovisual Institute of Uruguay in the framework of the
Ministry of Education and Culture with the objectives of promoting, providing incentives and
stimulating the creation, production, co-production, distribution and exhibition of
Uruguayan cinematographic and audiovisual works in the country and abroad. In addition,
the Cinematographic and Audiovisual Fund was created to support the development and
production of projects of this type, and empowers the Executive Branch to exempt customs
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23. duties and import and export taxes and to grant temporary admission for movies and
audiovisual material of national production or those co-produced in other countries.
Institutions
* One industry institution of note is the Uruguayan Chamber of
Information Technology (CUTI). Headquartered in Montevideo and with
more than 20 years of existence, CUTI’s objective is to “drive the
sustainable development of the information and communication
technology industry, expanding markets, facilitating growth and globalization of its members
and emphasizing the development of people and social responsibility.”
CUTI has approximately 300 members (December 2009) and provides statistical information
on the industry collected in annual company surveys, business opportunities, support for
international positioning, training and promotion of member products.
Website: www.cuti.org.uy
* The Telecommunications Chamber of Uruguay includes many
industry companies and has formed commissions according to
area of activity. One of these is for call centers, where the
largest companies of the industry participate.
Website: www.telecomunicaciones.org.uy
* The Audiovisual Chamber of Uruguay includes major
companies in the industry and works in three central areas:
institutional relations, professional formation and market
expansion.
Website: www.audiovisual.com.uy
* The Uruguay Film Commission & Promotion Office (UFC&PO) works with the
Audiovisual Chamber of Uruguay, the Film and Audiovisual Institute of Uruguay
and the Montevideo Locations Office. It provides a collective platform to attract
audiovisual activities to the country, connecting Uruguayan companies and
professionals, while offering a structure to jointly promote Uruguayan
audiovisual projects.
Website: www.uruguayfilmcomission.com.uy
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24. Uruguay in a nutshell (2009)3
Location South America, bordering Argentina and Brazil
Capital Montevideo
176,215 km2. 95% of the territory has soil suitable for agriculture
Surface area
and livestock activities.
Population 3.3 million
Population growth 0.3% (annual)
GDP per capita USD 9,458
GDP per capita (PPP) USD 13,019
Currency Uruguayan peso ($)
Literacy rate 98%
Life expectancy at birth 76 years
Form of government Democratic republic with presidential system
Political divisions 19 departments
Time zone GMT - 03:00
Official language: Spanish
Location South America, bordering Argentina and Brazil
Main Economic Indicators 2005-2009
2005 2006 2007 2008 2009
Annual GDP growth rate 7.5% 4.3% 7.5% 8.5% 2.9%
GDP (PPP), USD millions 32,048 34,602 38,235 42,543 43,551
GDP, USD millions (current) 17,367 20,035 24,262 32,207 31,606
Exports (USD millions), goods and services 5,085 5,787 6,933 9,292 8,551
Imports (USD millions), goods and services 4,693 5,877 6,775 10,218 7,755
Trade Balance (USD millions) 393 -90 158 -926 796
Trade Balance (% of GDP) 2.3% -0.4% 0.7% -2.9% 2.5%
Current Account Surplus / Deficit (USD millions) 42 -392 -220 -1,503 259
Current Account Surplus / Deficit (% of GDP) 0.2% -2.0% -0.9% -4.7% -0,8%
Overall fiscal balance (% of GDP) -0.4% -0.5% 0.0% -1.4% -2.2%
Gross capital formation (% of GDP at current prices) 16.5% 18.6% 18.6% 20.2% 19.1%
Gross national savings (% of GDP) 17.6% 16.9% 19.0% 17.9% 17.1%
Foreign direct investment (USD millions) 847 1,493 1,329 1,840 1,139
Foreign direct investment (% of GDP) 4.8% 7.5% 5.4% 5.7% 3.6%
Exchange rate peso / USD 24.5 24.1 23.5 20.9 22.5
Reserve assets (USD millions) 3,071 3,097 4,121 6,329 8,373
Unemployment rate (% of EAP) 12.2% 11.4% 9.7% 7.9% 7.7%
Annual inflation rate 4.9% 6.4% 8.5% 9.2% 7.5%
Net foreign debt (USD millions) 8,938 9,157 9,662 8,254 11,123
3
GDP (PPP) data was taken from the IMF; data on GDP (current), foreign trade, FDI, exchange rate, international reserves and foreign debt
was provided by the Central Bank of Uruguay (BCU); population growth, literacy, unemployment and inflation data comes from the
National Statistics Institute (INE).
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25. Investor Services
About Us
Uruguay XXI is the country’s investment and export promotion agency. Among other functions,
Uruguay XXI provides no cost support to foreign investors, both those who are evaluating where to
make investments as well as those currently operating in Uruguay.
Our Investor Services
Uruguay XXI is the first point of contact for foreign investors. Services we provide include:
Macroeconomic and industry information. Uruguay XXI regularly prepares reports on
Uruguay and the various sectors of the economy.
Tailored information. We prepare customized information to answer specific
questions, such as macroeconomic data, labor market information, tax and legal
aspects, incentive programs for investments, location and costs.
Contact with key players. We provide contacts with government agencies, industry
players, financial institutions, R&D centers and potential partners, among others.
Promotion. We promote investment opportunities at strategic events, business
missions and round tables.
Facilitation of foreign investor visits, including organization of meetings with public
authorities, suppliers, potential partners and business chambers.
Publication of investment opportunities. On our website, we periodically publish
information on investment projects by public entities and private companies.
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