IT impact on the Business

Analysis: Impacts on the Business

IT considerations for setting up a non-IT business in Venezuela would differ from those considerations if setting up a business in a developed country, such as the United States. Some important considerations are addressed below:

Would you set up a sales office in the country? Would you expand it?

Yes. Through setting up a sales office in the country you would have a better response to the products that one would be manufacturing. The Venezuelan culture love to window shop, or come in to see your product. Expansion of such an office would be very careful, as most of the rural sections are not categorized as major buyers.

Would you set up a regional distribution center?

Many IT as well as It firms have set up regional distribution facilities in Venezuela. New technologies are flowing into the country's existing distribution facilities, especially in its food processing, cement and oil sectors.

Would you set up a manufacturing center?

We would recommend performing more research before setting up a manufacturing center in Venezuela as the labor force is heavily unionized and expensive compared to other developing countries. One interesting factor in this decision is that foreign direct investment in the manufacturing industry in Venezuela is experiencing a recent drop. It stood at $180,553,857.93 between January and November of this year, and during the first 11 months of 1999, the FDI in this sector totaled $232,838,204.28 (1).

Support for network infrastructure

With the recent privatization and deregulation Venezuela has experienced in its telecommunications industry as well as others, the country has laid the foundation to further support a network infrastructure. Network infrastructure is available and the offerings can be very technologically advanced--from fiber-optic to broadband to next generation IP. The costs for such services are very high while quality remains questionable.

IS Professionals

Venezuela's labor market is composed of approximately 443,520 employees in IT related fields, which represents 4.5% of the total labor force, therefore availability of such employees is scarce. Although free quality education exists in Venezuela, there still are issues with retaining the professional workforce in Venezuela. The IT workforce is being paid a third of what the professional guild is deeming as reasonable. Consequently, the Venezuelan IT labor force is migrating to the US, Canada, and Spain where they can earn a better salary. Therefore, we would recommend paying a higher salary to retain the IS professionals as well as implementing training programs to keep them abreast of what is happening in the IT fields.