Argentine deregulation offers upside for Globant in a tough year

Argentina is becoming a bright spot in what has been a rough period for software company Globant SA, with the deregulation of the local financial industry prompting companies to step up investment in technology systems.

US-traded shares in the Argentine-based company have slumped 55 percent this year as clients delay projects amid uncertainty triggered by US President Donald Trump’s tariff plans. Within Latin America, Mexico and Brazil have been particularly hard hit, while Argentina has outperformed, company CEO Martin Migoya said in an interview.

“Deregulation leads to growth and unleashes a virtuous cycle in which companies are being forced to invest and renew their technologies," he said. All this in a "market that has had below-standard investment levels for a long time."

Argentina's President Javier Milei has removed capital controls and eased regulations since coming to power in December 2023, policies that are beginning to revive growth in an economy marked by years of instability and repeated defaults. Latin America accounts for 20 percent of Globant's total revenue and Argentina is the country with the greatest weight within the region, according to the company.

Last month, the company lowered its revenue growth forecast for this year from 10 percent to two percent. This triggered a record intraday drop in its shares of more than 33 percent. Globant's slump comes after a decade of rapid growth in its operations in 36 countries on five continents, during which time its total workforce increased tenfold to over 31,000 employees.

Looking ahead, Migoya expects Globant's AI Pods project, a new subscription model for Artificial Intelligence-based services launched recently, to have a significant impact on its business, as it has been "tremendously well received by customers," he said.

Migoya believes that the current complex situation is "transitory."

"It is a period of adjustment, and we are already seeing some signs of recovery," said the CEO.