Courtesy of Rest of World, an interesting report on how – escaping crisis – Argentine tech workers want to recreate their home startup scene just across the river

Across the world, the arrival of digital nomads is a sign of issues to come — with “gentrification” being the watchword for a myriad of tensions between locals and new arrivals. But, Uruguay is trying to do tech migration differently: not by opening its doors to temporary remote workers but, rather, by rolling out the red carpet for tech workers to settle down permanently.

It helps that the vast majority come from neighboring Argentina, which is just a small geographic and cultural leap away. “[Argentines] are culturally very easy to integrate, at least work-wise,” Juan Ignacio Batto Dupré, a software engineer at Oort, an international digital security startup, told Rest of World. “I’ve never felt a cultural difference between Uruguayans and Argentines. … We have a shared language, traditions, and customs.” But it’s what makes Uruguay and Argentina different in terms of economic and social stability, which is driving tech employers and employees to move their operations across the River Plate.

As the infrastructure of cities from Bali to Mexico City creaks under the strain of new digital-nomad arrivals, Uruguay’s luring of Argentines is different. Uruguay, whose population hasn’t grown significantly in 30 years, has opted to leverage its own labor shortage — which, for years, has contributed to holding back its burgeoning tech scene — with the economic upheavals of neighboring Argentina. Between 2020 and 2021, more than 21,415 Argentines applied for permanent or temporary residency in Uruguay, six times more than the requests accumulated in the previous two years combined. Starting in mid-2020, Uruguay’s center-right government extended tax breaks for foreign earners living in the country, and lowered residency requirements. Software companies pay no income taxes. 

While there isn’t a breakdown of how many of these migrants are connected to the technology sector, it is clear that local Uruguayan and relocating Argentine companies see the migration as a unique opportunity for them. Small companies, like the Uruguayan software development startup Lagarsoft, has one Argentine on its team of 12. One employee at an Argentine tech company, who spoke on condition of anonymity because they were not allowed to speak to the media by their employers, told Rest of World that they were offering their Argentina-based employees perks for relocating to Uruguay.

Many of those who spoke to Rest of World agreed that technological employment was a key driver motivating Argentines’ migration to Uruguay. This was particularly the case given the high wages needed by migrants to thrive under Uruguay’s expensive cost of living, wages which are more common in technological professions than in others.

To Argentine companies, executives, and tech workers Rest of World spoke to, Uruguay is a relative oasis of calm. Many of the tech migrants said that Uruguay offers tech professionals and companies the means to set up shop, while its economy provides long-term stability and a strong currency. “I can save more money, I can afford better housing, and I feel more relaxed,” Rosario Albisu, a designer from a gaming company that relocated to Montevideo recently, told Rest of World.

Rest of World spoke to two dozen tech workers, employees, investors, policymakers, and experts from Uruguay and Argentina about the tech migrants who are moving to Uruguayan shores and transforming the local landscape — from the impact on local wages and on Uruguay’s labor force to the creation of digital nomad-targeted initiatives like +Colonia (pronounced más Colonia), a smart-city project specifically catering to young tech workers — most of whom will likely be from Argentina — and which is aiming to become the next Silicon Valley in Latin America. It is being built from scratch on the empty fields in the Uruguayan region of Colonia, 180 kilometers away from Montevideo, but right across the estuary from Buenos Aires.

The chain of coastal cities — stretching from Colonia in the west, passing through Montevideo and Punta del Este in the east — makes up most Argentines’ settlements of choice when migrating to Uruguay. Colonia del Sacramento, the city closest to Buenos Aires, has over 20,000 inhabitants; Argentine investors behind the +Colonia project have promised to double that number in the years to come.

Argentina’s relatively well-paid tech migrants, however, are not representative of broader Uruguayan society. For a few years now, and despite labor shortages, Uruguayan workers have experienced stagnating purchasing power while, according to one study, Montevideo has become the most expensive city in South America. Critics, including the country’s left-wing opposition, worry that this will mostly benefit the already rich and will turn Uruguay into another offshore haven.

“To receive Argentine workers is one thing, but to receive whole companies is another,” Martín Daguerre, co-founder of Uruguayan software development startup Lagarsoft, told Rest of World. “Big companies hire local talent and small startups can’t compete.”

The migration of Argentine tech workers to Uruguay might seem comparable to the rise of digital nomads across the globe, like those from the U.S. descending on Latin American and Southeast Asian destinations. However, the Argentine tech migration still seems to be a welcome phenomenon — Uruguayans are more concerned with growing their country’s population and economy rather than about gentrification. Moreover, this particular migration feels more permanent, as thousands of Argentines see no end in sight to their country’s decades-long economic and political crises.

Beyond cultural similarities, the absence of tension between the new migrants and local Uruguayans could be understood in the migration’s origins. Victoria Prieto, a sociologist specialized in demography at Uruguay’s Universidad de la República, told Rest of World that “the flow of Argentinians came between 2020 and 2021 thanks to the pandemic, during which mobility restrictions limited movement to the upper-classes,” allowing them to reach Uruguay and inhabit upper-middle class neighborhoods without much competition, rather than gentrifying working class ones. Prieto did warn that it was still early to truly determine what effects this movement of people will have.

The migration of some of Argentina’s highest-profile tech entrepreneurs helped drive thousands to take the ferry ride to Montevideo or Colonia from Buenos Aires. In late 2019, Marcos Galperín, CEO of e-commerce tech giant MercadoLibre, moved to Punta del Este, an upscale coastal city 152 kilometers east of Uruguay’s capital — he has since moved to Montevideo. He was followed by others, according to his LinkedIn Hernán Kazah from Kaszek Ventures — one of Latin America’s most important venture capital firms — now lives in Uruguay along with dozens of other Argentine billion-dollar tech startup founders and investors.

It hasn’t been only individuals. Massive companies, either previously from or headquartered in Argentina,  such as MercadoLibre, have moved the bulk of their operations across the River Plate. And some Argentine businesspeople have spotted an opportunity to harness the organic flow of migrants into a $500-million real estate project in Uruguay. +Colonia, Argentina’s smart city in Uruguay, so far has an investor list that includes Argentine startups including Auth0, Ripio, Agrotoken, and Turismocity.

Francisco Tezanos Pinto, communications director for +Colonia, told Rest of World “it’s a private project that’s aligned with Uruguayan policy. Both parties are looking for the same thing: to offer a place where the tech ecosystem can establish itself.” The more than 1000 acres of land are owned by nonagenarian Carlos Bastita, an Argentine businessman. Its developers promise to attract over 30,000 tech workers in 20 years with housing loans that will allow Argentines to invest in +Colonia’s real estate. The community will be run by a decentralized autonomous organization (DAO), a blockchain-powered form of collective governance. The residents have been styled +Colonos, literally translating to “more settlers.”

José Manuel Arenas, a Colonia city councilman, and Nicolás Viera, a congressman in Uruguay’s national parliament also representing Colonia, agreed that promoting the arrival of younger people would benefit the local economy and revitalize their country’s aging community. But they also expressed concern over how mass migration could clash with local culture. 

“In Colonia, we don’t talk about IT, bitcoin, direct democracy, or blockchain,” Arenas told Rest of World, highlighting how far the tech discourse is from the community’s lifestyle, where many shops don’t even accept debit cards, let alone other digital payments. 

As developers await local environmental permits, Rest of World visited the area where +Colonia will be built. The landscape currently is still just made up of pine trees and sand dunes. There are no signs of construction in the vicinity, although its founders guarantee that the first residents will be able to move in by 2024.

But, for most people on the streets of Colonia that Rest of World spoke to, the focus is set on economic and demographic growth. “Our economy is so small that the coming of Argentine tech employees is great,” said Daguerre, the Uruguayan co-founder of Lagarsoft. “The local market lacks a workforce, and hiring new people is key for the growth of a company. Uruguay really needs them.” 

Hernán Haro, an Argentine VC investor, has even loftier ideas. He highlighted the aim of the Uruguayan government to decentralize the power of Silicon Valley. “A hub for calm; for people escaping uncertainty, war, and resource scarcity,” he told Rest of World.