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ECONOMY | 10-08-2023 15:15

Software firm Globant to invest US$1 billion on AI expansion in Latin America

Software company Globant SA plans to invest US$1 billion in building out its artificial intelligence operations in Latin America.

Software company Globant SA plans to invest US$1 billion in building out its artificial intelligence operations in Latin America, nearly doubling the company’s workforce over the next five to six years. 

Chief Executive Officer Martin Migoya said in an interview that a new hub in São Paulo focused on AI and quantum computing will be at the center of the expansion, and will be financed by Globant’s own revenues.

The company also plans to expand its employee headcount by as many as 20,000 in Latin America over the next five to six years, nearly doubling the company’s existing global workforce of around 27,000 people.

“Our plan for Latin America is to expand and continue our leadership in the region,” Migoya said. “Not only in the technology sector, but in research and development as well.”

The company is also working to improve its AI-based software development products that Migoya says will provide higher quality data. He also aims to integrate AI into its existing partnerships with sports franchises including with Spain’s LaLiga soccer league and the Los Angeles Clippers basketball team, before expanding into other sports.

Last year, Globant reached an agreement with LaLiga to create a tech-based joint venture aimed at providing “fan engagement solutions,” such as ordering food and drinks at a stadium through an app or finding parking space before the game. Globant also announced a partnership in October with the Clippers to integrate some of these technologies at the basketball team’s new arena under construction.

“We are going to continue getting into other sports, because sports and technology are two things that go hand in hand,” Migoya said. 

Globant’s US-listed shares have been a favoured name in recent weeks among equities investors eyeing Argentine companies that stand to benefit from more market-friendly policies after the nation’s elections in October, but aren’t fully exposed to Argentina’s risks. The economy is expected to enter recession this year with inflation over 115 percent.

So far this year, Globant’s share price remains relatively flat compared to a significant rally in US tech stocks as investors anticipate the Federal Reserve’s rate hike cycle to peak soon. 

While Migoya said the company isn’t exposed to election risk in Argentina, the nation’s economic troubles contribute to brain drain in the South American country, driving skilled workers to seek higher paying jobs in the United States or Europe. That’s challenging tech companies like Globant to retain top talent as employees increasingly prefer to work off the books in an effort to skirt the country’s draconian capital controls.

“The truth is people in Argentina can’t save, they can’t buy a house or a car with their jobs. So obviously they’re going to look for progress elsewhere,” outside Argentina, Migoya said. “It’s the government’s job to provide people with expectations, and provide them with a stable system with clear rules of the game so that they can get ahead.”

by Scott Squires, Bloomberg

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