1. October
2011
Offshoring & Outsourcing
Investment Opportunities in Uruguay

2. 1. Why Invest in the Service Export Industry in Uruguay?
1. Uruguay has several features that make it attractive for companies offering export services by
means of internal (captive) or external (outsourcing) delivery models:
Suitable 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.
Facilitation of foreign worker immigration.
Uruguay is an ideal country to accommodate managers and work groups focused on the region. It
has a low cost of living; it is relatively safe and has a high standard of living.
2. Uruguay treats foreign and domestic investments equally and has in force Investment Promotion
and Protection Agreements with 26 countries, including Spain, the U.S., Finland, France and the U.K.,
among others. There are no restrictions to capital repatriation, profits transfer, dividends or
interests.
3. The country already has vast experience in the offshoring service sector, including substantial
foreign and domestic investments that have been increasing over the past few years. An estimated
20,000 people work in the industry. Among the first companies that have invested in the industry are
Tata Consultancy Services, Sabre Holdings, Atento and Avanza.
In 2010 and 2011 two major ventures (Aguada Park and WTC Free Zone) are joining the country’s
main technology park, Zonamérica, all of them as Free Zone regimes, thus increasing capacity for
operations and international services under the offshoring model.
4. Several regimes, such as free zones and the Investment Promotion Law, favor investment by
reducing and eliminating the corporate income tax (IRAE). In the case of contact centers, a 2008
decree (Decree.207/2008, see appendix, page 22) provides corporate income tax exemptions under
certain circumstances. In addition, the 2008 Information Protection Law (Law No. 18.331 and Decree.
414/2009, see appendix, page 22) 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.
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.)
2

3. 2. Characteristics that make Uruguay a suitable location for offshore
services
Uruguay offers economic, cultural, educational and industry-specific advantages that make it a very
attractive location to establish outsourcing and captive delivery models. Some of these features are
described above.
2.1 Suitable geographic, economic, political and business environment
characteristics
Uruguay has a geographical environment free of natural disasters. It is politically stable with a
representative democracy and rotation of the three main political parties.
Uruguay’s US$ 12,000 annual GDP per capita in 2010 (based on dollar currency) positioned the
country first in Latin America2. The country’s GDP has increased significantly since 2004 and
registered an average annual growth of 7.8% between 2005 and 2010. This Growth in GDP is
expected to continue in the following years. Since 2004, macroeconomic indicators have remained
satisfactory and inflation has been under control remaining at single digit levels (see main
macroeconomic Indicators at the end of this document).
Uruguay offers the most open business environment in the region (Tholons, Report on Outsourcing
in Uruguay, June 2009, still standing in August, 2011):
There are no restrictions on the repatriation of capital,
profits transfer, dividends or interest.
No permits or prior authorization are required to make
foreign investments. Local companies can 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 personnel (except
for companies located in Free Zones where 75% of the
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.
2
Source: World Bank, http://datos.bancomundial.org/indicator/NY.GDP.PCAP.CD.
3

4. 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 2010/2011 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 business regarding terrorism. Uruguay earned the best scores in all three areas and ranked
first in the world for costs for business regarding terrorism (lower global cost).
Uruguay leads in Latin America with respect to property rights, intellectual property rights,
judicial independence and regulatory framework efficiency regarding settlement of disputes. The
abovementioned GCR report (2010/2011) evaluates these four variables, and in Latin America, only
Chile and Costa Rica were relatively comparable to Uruguay.
According to the Corruption Perceptions Index 2010, developed by Transparency International,
Uruguay ranks as the country with the lowest corruption rates in Latin America (24th place among
178 countries), ranking slightly below Chile.
According to the Global Peace Index 2011, developed by the Institute for Economics and Peace,
Uruguay ranks first in Latin America regarding conflict and security issues (21st place among 153
countries). The GPI report takes into account 23 separate indicators relative to domestic and
international peacefulness.
Uruguay also offers insurance against political risk to investors through a bilateral agreement
between the Uruguayan government and the U.S. Overseas Private Investment Corporation (OPIC).
The insurance covers all risks except credit risk with claims subject to international arbitration. This
agreement was signed in 1982.
Figure No. 1: Corruption Perceptions Index 2010
4

5. 2.2 Cultural and Educational Features
Education
Uruguayans are mainly descendents of European immigrants (mostly Spanish and Italian) and there
are no conflicts among minority groups. The country’s literacy rate is very high (98% in 2010).
Regarding tertiary education enrollment Uruguay ranked 24th among 139 countries, only one place
below Argentina, as seen in the following chart from the World Economic Forum’s Global
Competitiveness Report (2010/2011):
Chart No. 1. Tertiary Education Enrollment. Relative position of each country among 139
countries
Country Position
Argentina 19
Uruguay 24
Chile 43
Colombia 63
Brazil 65
Mexico 80
Costa Rica 83
Source: World Economic Forum’s Global Competitiveness Report 2010/2011.
Plan Ceibal3
In 2009, the first stage of a social-educational government initiative to
provide children and teachers from public elementary schools with laptop
computers and with internet connectivity was successfully completed (Plan
Ceibal, One Laptop per Child in 2,068 schools). 380,000 computers were
delivered by the end of 2009.
In addition to the distribution of laptops to all children from public elementary schools, in 2011 the
initiative has extended to private elementary schools, secondary institutions (High schools) and
intermediate education from the Uruguayan University of Work (UTU). The total number of
distributed laptops has increased up to 462,700 by the end of June 2011. Coverage of wireless
networks in intermediate education centers was of 96%.
According to the report prepared by the Ceibal Center, this initiative has significantly increased the
number of people who have access to a microcomputer (66% in 2010), specifically people who live in
towns with less than 5,000 inhabitants and rural areas (58%). It has also reduced the digital gap
between the extremes of income distribution, taking into account the poorest and richest deciles of
the population (Internet connection and possession of microcomputers).
3
Source: Reports published in the Ceibal Center website (year 2011) http://www.ceibal.org.uy/docs/IMPACTO-PLAN-
CEIBAL-EN-USO-Y-ACCESO-A-LAS-TIC-2010.pdf and CPA-Ferrere (November 2010), Plan Ceibal, Main Strategic Guidelines.
5

6. Another far less known but still important objective of the Ceibal initiative is to support and advise
other countries in the design, implementation and evaluation of similar projects to those of Uruguay,
transferring skills and technologies. Uruguay is already in contact with over ten countries that are
developing four similar projects.
The initiative is currently run by the Ceibal Center, a non-state public institute for the Support of
Childhood and Adolescence. These efforts are already perceived by global statistics published by the
World Economic Forum (Chart 2.2).
Chart No. 2 Internet Connectivity in Schools.
Country Position
Uruguay 26
Chile 42
Costa Rica 64
Brazil 72
Colombia 88
Mexico 89
Argentina 111
Source: World Economic Forum’s Global Competitiveness Report 2010/2011, page 423.
Quality and Cost of Life in Montevideo
Uruguay and Montevideo specifically, are noted for its high quality of life at a low cost:
Quality of Life (Montevideo): Ranking first in South America (Mercer, 2009).
Cost of living, including housing (Montevideo): ranked in the 127th place in 214 surveyed cities.
From South America the list included, among other cities, San Pablo (10), Rio de Janeiro (12),
Santiago de Chile (75) and Buenos Aires (159). A lower number indicates a higher cost of living
(Mercer, Worldwide Cost of Living Survey 2011 – city ranking).
2.3 Multilingual Population
* English
English is widely spoken by young people in Uruguay (41% of the active population
between 19 and 24 years of age speak the language, and 31% between the ages of
25 and 34). Estimates provided by the National Statistics Institute (INE) show that
26.5% of the entire active population speaks English, while in Montevideo this
percentage increases to 37%4. Among those who have tertiary studies (either completed or not)
nearly 70% manage the English language (40% for those who have completed secondary studies).
The state-run University (UDELAR), 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).
4
National Statistics Institute (INE). Expanded Household Survey (2006).
6

7. * 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 State University 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
contact with clients in 15 languages, including Spanish, English, Portuguese, Italian, French, German,
Swedish and Turkish.
In these cases, human resources can appeal not only to residents who are
descendents of immigrants who speak these languages (e.g. descendents who may
have attended many of the existing bilingual schools in Uruguay), but also to
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 with
India is between 7.5 and 8.5 hours.
This location enables complementary tasks to be
performed during normal workday hours from an
office in Montevideo with those in other regions. For
example, TCS Uruguay combines its customer service
center in Montevideo with another located in India,
enabling round-the-clock worldwide services.
2.5 Uruguay has begun to appear in reports developed by international
consultants regarding worldwide outsourcing locations
A.T.Kearney, Global Services Location Index
Since 2006, Uruguay appears among the 50 most attractive countries for global
services locations. According to the 2011 report it ranks in the 41st place, sixth
position in Latin America. The Global Location Index assesses multiple factors
such as; wage levels, infrastructure costs, tax burden, corruption levels,
availability and skills of labor force accessible in the sector and domestic
business environment.
7

8. Tholons, Top 50 Emerging Global Outsourcing Cities
Montevideo figured in the 2009 report among the top 50 emerging cities for
global services location (40th place in the 2010 report), and Uruguay among
the top 20 emerging countries for services location.
2.6 Concentration in Montevideo
Nowadays, nearly all companies that provide outsourcing services (either to their own companies or
for third parties) are located in Montevideo. In many cases these companies establish in Free Zone
areas (Zonamérica, Aguada Park and WTC Free Zone), and in other cases outside them.
According to the Telecommunications Chamber of Uruguay, an estimated 20 contact center
companies were in operation by the end of 2010, employing nearly 2,500 people in Montevideo and
2,000 in Zonamérica. In 20105, approximately 11,500 people worked in the information technology
industry and about 5,000 are working in the audiovisual industry (up to September 2011)6.
2.7 Advanced Level for Outsourcing Business Infrastructure
In Latin America, Uruguay currently ranks the highest in terms of modern communication
technologies. In order to support what is mentioned above, some of the most relevant international
indicators are analyzed.
According to the World Economic Forum’s 2010/2011 Global Competitiveness Report, Uruguay holds
the following position among 139 surveyed countries:
Quality of electricity supply (Average 2009/10): 2nd in Latin America, 37th position, page 394.
Mobile telephone subscribers per 100 inhabitants (2009): 2nd in Latin America, 44th position, page
396.
Fixed telephony per 100 inhabitants (2009): 2nd in Latin America, 48th position, page 395.
Internet users per 100 inhabitants (2009): 1st in Latin America, 41st position, page 467.
Broadband subscribers per 100 inhabitants (2009): 4th in Latin America, with the exception that
for Uruguay data refers to the preceding year in contrast to other countries, page 468.
5
Source: CUTI.
6
Source: Cluster Audiovisual.
8

9. Chart No. 3 Outsourcing Business Infrastructure. 2009 Data Summary
Electricity Mobile Phone Fixed Telephone Internet Broadband
Lines
Chile 30 Argentina 25 Costa Rica 38 Uruguay 41 Chile 48
Uruguay 37 Uruguay 44 Uruguay 48 Colombia 47 Mexico 51
Costa Rica 43 Chile 64 Argentina 53 Brazil 57 Argentina 52
Colombia 57 Colombia 74 Brazil 62 Costa 66 Brazil 58
Rica
Brazil 63 Brazil 76 Chile 63 Chile 68 Uruguay(2008) 59
Mexico 91 Mexico 93 Mexico 72 Argentina 74 Costa Rica 63
Argentina 93 Costa Rica 119 Colombia 77 Mexico 85 Colombia 70
The Broadband column refers to 2008 for Uruguay and 2009 for other countries. Source: World Economic
Forum’s Global Competitiveness Report 2010/2011.
2.8 Reasonable Wage Costs
Wage costs are reasonable in Uruguay and, in general, are lower than in the region. The first chart
shows monthly costs for the company and what employees receive in terms of real wages, without
the IRAE because it varies according to the income.
Chart No. 4. Monthly Wage Costs for the Company7
Nominal Wage 100.00%
th
Mandatory Bonus (13 wage) 8.33%
Vacation Wages (Real 4.47%
wages/30*vacation days).
presumably 20 days
Pension Contribution 7.50%
Health Insurance 5.00%
Workers Retraining Fund 0.125%
Compensation for Work Injuries (1) 0.98%
Monthly wage costs 126.41%
7
NOTE. (1) A 22% VAT (recoverable) and a 2% of Health Service, in non-free zone territories, should be added to this
insurance; both percentages should be added over the insurance premium-The percentage corresponds to administrative
work and may increase depending on the type of work: In a factory it could increase up to 6%. Source: Uruguay XXI.
9

10. Chart No.5 Monthly Net Wage for Workers8
Monthly net wage for workers
Nominal Wage 100.00%
Pension Contribution 15.00%
Health Insurance(2) 4.50%
Workers Retraining Fund 0.125%
Net Wage 80.38%
Finally, monthly salaries of managerial positions are compared to various countries in Latin America,
including Uruguay.
Chart No. 6 Net or Gross Monetary Salaries in US$9
Update Exchange General Administration Production Human Business System
rate Manager and Finance Manager Resource Manager Manager
Manager Manager
Argentina 02/28/2011 4.03 15,679 5,980 5,554 5,039 6,573 5,313
Brazil 05/21/2009 30,062 13,068 13,323 13,551 14,614
Chile 03/31/2011 18,505 6,690 6,498 7,122 7,292 6,654
Costa 11/25/2010 516.00 15,218 7,560 7,291 5,916 6,266 5,995
Rica
Colombia 05/30/2011 1,829.75 17,870 6,821 7,035 5,347 6,430 5,218
Paraguay 05/06/2011 4,574.00 6,465 3,860 2,722 3,117 4,082 2,947
Peru 04/30/2011 2,825.00 19,435 6,250 6,000 5,312 6,828 5,140
Uruguay 09/30/2010 20.00 8,833 4,874 4,741 6,957 5,173 3,844
Managerial salaries in several Latin America countries are higher than those in Uruguay; in some
cases this is significantly noticeable. According to the submitted data and depending on the position,
remunerations in Brazil are 95% to 240% superior, In Chile 2% to 109% superior, in Argentina 17% to
78% superior than in Uruguay (except in HHRR).
8 (2)
NOTE: This percentage can increase up to 6% if the worker has family in charge without health insurance.
Source: Uruguay XXI.
9
Source: PwC, 2010-2011 Remuneration Survey. Note: Numbers are subject to changes due to variations in the exchange
rate. Brazil: refers to the year 2009.
10

11. 2.9 Foreign Worker Immigration Facilitations10
Procedures to apply for legal residence in Uruguay are fast and
simple. The National Identity Document (temporary ID) can be
obtained as soon as the application procedures start before the
National Migration Bureau, enabling the applicant to start work
immediately.
To start the procedures before the National Migration Bureau,
several documents obtained in the country of origin must be
presented and legalized before the Uruguayan consulate (birth
certificate, ID photocopy, marriage certificate, certificate of
good conduct issued by police institutions that have
agreements with Interpol), as well as other documents obtained in Uruguay (work contract or
job offer signed by a company, personal health record, 2 photographs for the ID). The National
Migration Bureau issues a temporary residence certificate along with the birth certificate issued by
the Civil Registry and grants a temporary Identity Document (valid for 1 year). The whole process
takes up to 15 working days approximately. Between 8 and 10 months later, the National Migration
Bureau grants the permanent residency and the permanent Identity Document (valid for three
years).
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). The following chart
summarizes situations regarding the aforementioned services.
Chart No.7 Type of services according to the company that provides them
Country where services are provided
In the Country Abroad
In house o Internal departments Affiliated companies (in
Company that
captive of the company house)
provides
Outsource Third parties to the Third parties to the
services
company (outsourcing) company (outsourcing)
Source: Uruguay XXI.
It usually happens that changes occur overtime. An initial service provided by a company department
may eventually be provided by a third party within the same country (outsourcing) or in another
country (outsourcing but offshore), in this case it will be considered an export. It can also happen
that an affiliate company that provides services to the group abroad (in house) may transfer these
services to a third party that has no relation with the company. Both cases refer to the country´s
export services where the work is carried out.
10
Details of residence procedures may be found at www.uruguayxxi.gub.uy/Inversiones/Oportunidades of
investments/other reports/Procedures to apply for legal residence in Uruguay.
11

12. Listed below and classified into four main categories are some of the outsourcing/offshoring services
which are currently offered in Uruguay: Information Technologies (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 had
an explosive export growth in the following decade.
In 2010 37% of total industry sales were intended for export (225
million of dollars, United States being the main destination country
with 27%). Direct employment in information technology was of
11,500 people in 2010, 80% of whom were highly qualified (engineers,
analysts, programmers, IT technicians, and other professionals)11.
Graphic No. 1 Uruguay: Information Technology Exports. Millions of
US$
250 219 225
207
188
200
151
150
105
89
100 75
50
0
1 2 3 4 5 6 7 8
Source: CUTI.
Harvard University recently carried out a research regarding 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:
11
Information provided by CUTI, which consists of almost 300 members and carries out annual surveys between them.
12

13. a) Application Development
1) These companies are mainly Uruguayan and create off the shelf and customized software (De
Larrobla, Top Systems, Solur, Memory, etc.);
2) Two companies produce new development tools: Artech, industry leader, has offices in the U.S.,
Japan, Mexico and Brazil and exports to more than 36 countries (September 2011), 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).
3) VeriFone, a U.S based company which designs software for payments management, has in
Uruguay one of its five global development and support centers for its software products (together
with centers in India, Ireland, Israel and the United States). 70 technicians work at the Uruguayan
center. The company has 62 branches in the world and specializes in software for credit, debit,
prepaid and gift cards, as well as hardware terminals for use in stores. The company recently
expanded its offices in Zonamérica and plans to increase developers and analyst personnel from 70
to 120 during the following six months12.
b) Software Consulting
Consulting includes services associated to the implementation of software performed by the same
development companies or by consulting firms, as well as other services. Both domestic and
international companies are included in this segment.
1) Domestic companies include Quanam Group (associated with Oracle, implementing software
from large companies) and Infocorp (associated with Microsoft) and Conex (consulting unit of the
state electric company).
2) 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 well as business solutions including
Oracle applications.
Other international companies in Uruguay include IBM (whose
personnel increased nearly 10% between 2008 and early 2011,
Microsoft, Bull, Sonda from Chile, and Indra from Spain
(formally known as Soluziona). As a whole, these international
companies represent about 50% of the sales of the software
consulting segment13.
12
Business Journal: El Observador, Café y Negocios, September 7th, 2011.
13
Source: CUTI.
13

14. 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. Outsourcing services include
customer services, administration (in many aspects) and
consulting. Major local companies that perform services
abroad are linked to global companies or 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).
The first case (in-house) includes, Tata Consultancy Services (TCS), Sabre Holdings and RCI Global
Vacation Network, all three of them operate in Zonamérica (TCS also has another location in
Montevideo). Up to September 2011 a total of approximately 2,300 people were employed by all
three companies together.
In the case of outsourcers, Spanish companies Atento and Avanza are noteworthy. In addition,
several domestic companies operate in downtown Montevideo and employ approximately 2,500
people in total (plus 2,000 in Zonamérica).
b) Business Administration: Accounting and Finance, Logistics, Purchasing.
Several companies serve foreign clients, offering a broader or narrower range of services:
* IBM Uruguay provides accounting and finance business process outsourcing (BPO) to the
headquarters of BBVA bank (Spain), with 120 professionals working
on this project. 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
management needs (accounting, preparation of financial statements
and adapting them to international standards, development of
management reports, purchasing, collections and payments, etc.), as
well as management consulting, audit, tax, operation and logistics,
and economic and financial consulting: CPA Ferrere, Guyer & Regules,
KPMG, PwC y Deloitte, among others.
* Several companies, including Sabre Holdings, centralize in Uruguay
the accounting functions of their subsidiaries in South America.
14

15. c) Human Resource Management: selection, training and payroll.
The aforementioned consulting firms also offer services in the area of human resource management,
which include payroll, labor documentation, labor regulation and social security reviews,
management reports, absentee and leave management, and training and support for seasonal
personnel needs.
3.3 Knowledge Process Outsourcing (KPO)
a) Innovation, Design & Testing.
Several companies perform design and innovation processes from Uruguay to clients abroad.
* One of these companies is CCC Medical Devices, which began to
manufacture and export pacemakers in 1970. By the end of the
1990s, the company began to offer design services for
implantable medical devices. Foreign companies request design
services, including Impulse Dynamics, Meta Cure, Biocontrol
Medical, American Medical System, 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 70 or 80% in its niche market and exports its services to
the United States, Europe, Israel and other countries. There are 140 people working for this
company, 50 of them are electronics and software engineers and to a lesser extent mechanical and
chemical engineers.
* Chipmate, a recently created national company, specializes in
microelectronics, designing products for an Indian pacemaker
manufacturer. The company consists of engineers specializing in
microelectronics.
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). In 2005 the company established a financial research center in Montevideo (Zonamérica) 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 approximately 50 people in
the country.
15

16. * Global Supply Chain Finance (GSCF) established in
Zonamérica in January 2009 and provides management
services in the area of financial international trade. Using its
advanced technological platform, financing from affiliated
banks and coverage from credit insurance companies, GSCF designs and manages programs for
major 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 also 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,
as well as in other areas. Biotechnology services are performed
for domestic and foreign companies. Such is the case of the
Spanish company Biopolis S.L. who 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 (Danone
Research), has collaborated to jointly develop, at the Institut Pasteur of Montevideo, a
platform of highly predictive biotechnology models for the study of dairy food 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 (UDELAR) works in the areas of
chemistry, biotechnology and nanotechnology for the food, pharmaceutical and
environmental industries. 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).
16

17. 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 Audiovisual Cluster (AUDIOVISUAL UY – www.audiovisual.com.uy) is a productive complex
composed of cinematographic and audiovisual production companies. The Audiovisual Industry in
Uruguay had a significant growth over the last fifteen years. The results of the production of quality
contents is based on talent, education levels, accumulated development of cinematographic culture,
search for new markets, the certainty and security provided by technical resources and services,
among other aspects.
In this context, the Uruguayan Film Commission & Promotion
Office (http://uruguayfilmcommission.com.uy) was created,
with the main goal of positioning the audiovisual industry and
Uruguayan scenarios on international markets.
Companies are clustered in different associations and are
represented by the Uruguayan Audiovisual Chamber
(www.cadu.org.uy).
The following are the most significant sub-sectors:
a) Production Services of FILM and ADVERTISING: Performed by several local companies who
have a strong export profile, all of them listed at: http://uruguayfilmcommission.com.uy
(Businesses Guide). Some of them have affiliates in other Latin American countries.
Approximately 90% of all shootings are for foreign clients.
b) Production of Animation Films and Videogames: Companies that focus on national and
foreign markets. Listed at http://www.proanima.org.uy/ (members). Two strong examples
worth of mentioning are TOURNIER Animation who has worked for Discovery Kids channel
and Powerful Robot Games, who has exported their services to Cartoon Network.
c) Production of Fiction and Documentary Films: Performed by internationally known
independent producers, mentioning examples such as: WHISKY recognized in the GOYA
awards and at CANNES Film Festival, among others; GIGANTE recognized at the BERLIN Film
Festival, among others.
d) Production of Television Programs: With an increasing FICTION production and development
of new formats, with an active presence in international markets.
e) Services Related to Audiovisual Productions, including pre-production (casting), shootings
(equipment rental and interpretation services, technical and auxiliary staff) as well as
post-production (editing, dubbing, audio, soundtracks and jingles).
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18. Uruguay has several advantages in the audiovisual industry:
Quality/Price Excellent price-quality relation given the high production quality as evidenced
by many acquired international awards and the advantages the country offers in terms of
technical ability, proximity to various filming locations and fast completion times through the
Montevideo Municipal Government’s Location Office.
Flexibility of Companies as a result of their reduced size, expansion capability (with the
availability of a large number of freelancers) and the number of diverse projects completed.
Attractive country due to its public safety and architectural diversity that enables multiple
sets, proximity to locations 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. (VAT) 0 to Co –productions and production
services abroad.
Recent examples of Uruguayan products:
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 advertising campaigns were entirely produced in Uruguay.
4. Recent Investments in the Industry
Since their arrival, nearly all transnational companies have continued to expand activities in Uruguay.
Most of them began at the start of the decade with less than half of the employees they currently
have.
TCS not only expanded its offices in Zonamérica, but established another one in downtown
Montevideo.
Sabre Holdings is expanding its presence in
Uruguay, specifically in Aguada Park.
APAC Custemor Services Inc., contact center from
U.S.A decided to start in Uruguay its first
operation in Latin America, also in Aguada Park.
Globant, leading company in software
development also decided for Uruguay,
establishing in Aguada Park.
IBM began a significant contract for a foreign-
based bank in 2008.
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19. Towers Watson continued to grow in 2007/09 since its establishment in 2005 by adding staff
and expanding its infrastructure in Zonamérica.
Global Supply Chain Finance (Switzerland) established in Zonamérica in January 2009, has
duplicated its personnel in 2011 and opened a consultancy firm related to its business area
(Cuway).
An important travel agency established in Zonamérica an Administrative Center (in house or
captive) for the region in 2011, initially with 50 employees.
In the audiovisual industry, a laboratory to develop, transfer and manipulate digital images
was established in Zonamérica in 2009, exporting to the United States among other
destinations.
Several multinational companies have increased their payroll, centralizing the accounting for
the region in Zonamérica.
Two significant infrastructure initiatives have been completed in 2010 and 2011: Aguada Park and
WTC Free Zone, both under the Free Zone regime.
1) The Global Service Platform Aguada Park is located near downtown Montevideo and the
Port of Montevideo, and it is also proximate to most of the universities center. It includes
two state-of-the-art 19-story towers (56,000 square meters) and a total investment of USD
50 million (land, building and equipment). The undertaking seeks to house companies
involved in software development, call centers, BPO, shared services, financial services and
professional and trading services (agribusiness, clothing, energy, shipping) focused on export
services.
The first tower opened in March 2010 with 22,000 m2 in which offices will be available for
lease (between 10 and 1,400 m2 of space). When the second tower is finally complete,
available space may increase up to 2,800 m2 per floor (in the first three floors).
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.
According to the administrators, WTC Free Zone “has a particular appeal for the financial
industry and regional centers of administration, shared services, managements and vice-
chairman”.
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 ongoing expansion of foreign companies gives credit to this perspective, while new building
projects are arising that will offer new office space for those who decide to build considering these
opportunities.
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20. According to the report released by Tholons Advisory Firm (Creating a Roadmap to Success, June
2009), there were five areas or segments in which Uruguay might offer (and capture) global export
services (outsourcing), most of them already at an early development stage:
1. Pharmaceutical R+D: Research contracts, clinical trials and research. Mentioned example:
Institut Pasteur.
2. Health14: Medical tourism, diagnosis, medical coding. Mentioned example: UruHealth,
medical travel service (SEMM).
3. Logistics: Inventory distribution and management, purchasing management and processing,
supply chain management, storage. Mentioned example: Costa Oriental.
4. Education and Training: Distance learning, content development, testing design.
5. Product Development: Software applications, system software infraestructure. Mentioned
examples: TCS and IBM, Memory, Artech, Quanam, Sonda and Concepto.
The same report indicated the possibility of achieving incomes of US$ 2 billion in the next 4 years
(2013) from a potential buyers market estimated at US$ 140 billion. It also specified the necessary
requirements to achieve them in terms of human resources, infrastructure and coordination of
efforts to attract investors.
Tucci (2010), in “Prioritization of sectors with the greatest potential in the global export services
industry (offshoring) in Uruguay” (IDB), added two more areas from the ones mentioned above:
1. Back office and Processes Outsourcing: Accounting and finance, human resources, sales and
marketing, contact centers for back office, business consulting, business and investments
analysis, market intelligence for KPO; and
2. Travelling: Customers loyalty program, income management, marketing, Contact Centers.
The potential buyers market would then be of US$ 201 billion. Both studies are based on the current
capabilities of Uruguay, the existence of growth potential in world markets and a strategy-country
coordination that would make the insertion in the sector feasible an advantageous.
14
This sector has in Uruguay a broad health coverage (41 doctors per 10,000 inhabitants, while U.S.A has 23, Argentina 32,
Brazil 16 and Chile 9) and nurses (17 per 10,000 inhabitants, U.S.A 78, Argentina 4, Brazil 6, Chile 4). Tholons (2009),
quoted work.
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21. APPENDICES
Domestic and Foreign Investment Promotion
Foreign investors in Uruguay enjoy the same benefits as domestic investors and do not need prior
authorization to establish in the country.
Law No. 16,906 (dated January 7th, 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 corporate income tax (IRAE),
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 and Investment Protection Agreements
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 together with Argentina, Brazil and Paraguay. MERCOSUR became
a customs union in 1995, with free movement of goods, elimination of customs
duties and non-tariff barriers between countries, and a common external tariff for
countries outside the union. Venezuela is currently in the process of joining.
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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22. 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
foreigners; services provided to foreigners 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 13 Free Zones (11 are private FZ and two are state FZ), or customs exclaves for
manufacturing activities or services to third countries, in which 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 Corporate Income Tax (IRAE), but not social security
payments for domestic personnel.
A minimum of 75% of Uruguayan citizens of the total personnel is the only requirement, although
this percentage may be reduced with prior authorization of the Executive Branch.
Specific government incentives for various sub-sectors mentioned in this
report
1. Contact Centers. Decree 207/2008 dated August 14th, 2008. Corporate Income Tax exemption
(IRAE).
This decree incorporates contact centers in the Investment Promotion Law (Law No. 16,906 dated
January 7th, 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.
2. Contact Centers. Personal Information Protection and Habeas
Data Action (Law No. 18,331 dated August 11th, 2008 and
regulatory decree 414/09 dated August 31st, 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 support and
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 the use of techniques to ensure its
integrity, confidentiality and availability.
The decree establishes the operation of the Regulatory and Control Unit of Personal Data. This law
adapts current regulations to those of the European Union, thus enabling European clients to
contract with companies located in Uruguay.
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23. 3. Software Industry. Corporate Income Tax Exemption (IRAE) for Software and Related Services
Exports.
Title 4 of Amended Text 1996 covers income exempt from the corporate income tax (IRAE). 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 April 26th, 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
intend to have logistical support, 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 No. 17,930 of December, 2005 (Patronage) and
law No. 18,284 of May, 2008 (Film Law)
Law No. 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 duties and import and export taxes and to grant temporary
admission for movies and audiovisual material of national production or those co-produced with
other countries.
Institutions
* One business association worth noticing 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 (September 2011) 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
companies from the sector and has formed commissions according
to the area of activity. One of these is for call centers, where the
largest companies of the industry participate.
Website: www.telecomunicaciones.org.uy
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24. * 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.uruguayfilmcommission.com.uy
* Audiovisual and Cinematographic Institute of Uruguay (ICAU), http://icau.mec.gub.uy
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25. Uruguay in Synthesis (2010)15
Official Name República Oriental del Uruguay
Geographical Location South America, bordering Argentina and Brazil
Capital Montevideo
2
176,215 km . 95% of the territory has soil suitable for agriculture and
Surface Area
livestock activities.
Population (2010) 3.3 millions
Population Growth (2010) 0.35% (annual)
GDP per capita (2010) USD 11,996
Currency Uruguayan Peso ($)
Literacy Rate 98%
Life Expectancy at Birth 77 years
Form of Government Democratic republic with presidential system
Political Divisions 19 departments
Time Zone GMT - 03:00
Official Language Spanish
Main Economic Indicators 2005-2010
Indicadores 2005 2006 2007 2008 2009 2010
Annual GDP growth rate 7.5% 4.3% 7.3% 8.6% 2.6% 8.5%
GDP, USD millions 17,398 19,823 23,902 31,177 31,322 40,265
Population (Millions) 3.31 3.31 3.32 3.33 3.34 3.36
GDP per Cápita (USD) 5,263 5,981 7,191 9,351 9,364 11,996
Unemployment rate (% of EAP) 12.20% 10.90% 9.20% 7.70% 7.30% 6.80%
Exchange rate peso / USD, Annual 24.4 24.0 23.4 20.9 22.6 20.06
Average
Exchange Rate (Annual Average Variation) -1.56% -2.50% -10.65% 7.73% -11.12%
Consumer prices (Accumulated Annual 4.90% 6.38% 8.50% 9.19% 5.90% 6.93%
Variation in % )
Exports (USD millions), goods and services 5,085 5,787 6,933 9,372 8,647 10,666
Imports (USD millions), goods and services 4,693 5,877 6,775 10,333 7,957 9,875
Current Account Surplus / Deficit (USD 393 -90 158 -961 690 791
millions)
Current Account Surplus / Deficit (% of 2.3% -0.5% 0.7% -3.1% 2.2% 2.0%
GDP)
Overall fiscal balance (% of GDP) -0.4% -0.5% 0.0% -1.5% -1.7% -1.1%
Gross capital formation (% of GDP) 17.7% 19.4% 19.6% 22.3% 17.2% 17.9%
Gross foreign debt (% of GDP) 80.2% 69.2% 68.3% 53.0% 69.9% 57.2%
Foreign direct investment (USD millions) 847.4 1,494 1,330 2,106 1,593 2,358
Foreign direct investment (% of GDP) 4.9% 7.5% 5.6% 6.8% 5.1% 5.9%
15
Sources: Data referred to GDP were taken from IMF, Foreign Trade data, FDI, Exchange Rate, International Reserves and
Foreign Debt were taken from Central Bank of Uruguay (BCU); population growth rates, literacy, unemployment and
consumer prices were provided by the National Institute of Stadistics.
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26. Investor Services
About Us
Uruguay XXI is the country’s investment and export promotion agency. Among other functions,
Uruguay XXI provides free of charge support to foreign investors, either for 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:
Macro and Sectorial Information. Uruguay XXI periodically conducts studies on Uruguay and
the various sectors of the economy.
Tailor-made 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 contact 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.
www.uruguayxxi.gub.uy
inversiones@uruguayxxi.gub.uy
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