How Startups Are Driving Productivity In Latin America Amidst The Global Crisis

Nathan Lustig is an entrepreneur and managing partner at Magma Partners, a seed-stage investment fund with offices in the U.S., Latin America, and China. Follow him on Twitter @nathanlustig.

In Latin America, growing regional connectivity is leading to an increasing digitalization of work and commerce. Entrepreneurs are taking advantage of this increased connectivity by upgrading outdated systems with new business models. As everyday tasks shift online, remote work is also growing in popularity.

According to Owl Labs’ Global State of Remote Work, South America had 81 percent more fully remote companies than the global average in 2018. In the U.S., the option to work remotely is also growing, with many U.S. tech giants maintaining distributed teams for the long term in the wake of COVID-19. Latin America’s talent pool, already versed in remote work, offers an attractive opportunity for U.S. tech companies exploring remote workforces.

While there is already a heavy presence of U.S. tech companies in the region, Latin American tech companies are also flourishing. Venture investment in Latin America is more than doubling every year, and now the region is turning to innovative startups to help overcome the unprecedented effects of COVID-19.

There is no avoiding the hard truth: Many people and companies are struggling. But startups are offering some bright spots of positivity, and there is progress shining through this challenging time. Here’s a look at how startups are helping companies shift their operations online and maintain productivity.

Connecting local talent with international opportunities

In the past, Latin American tech talent looked to the U.S. for higher-paying opportunities. The average wage for a software developer in the U.S. could be 4-10 times higher than taking the same job in Latin America, enticing local tech experts away from their home countries.

However, tech companies around the world are now reorganizing their workforces to continue working remotely, even after distancing requirements are lifted. U.S. tech giants like Facebook, Apple, Microsoft and Amazon were some of the first companies to tell their employees to work from home, and most companies are delaying reopening their offices while they explore the possibility of a more remote structure. In what is likely the first of many cases, Twitter announced that their employees can continue to work remotely forever.

This shift toward remote work for U.S. tech companies represents a great opportunity for Latin American tech talent. Platforms like Platzi and Crehana already help Latin American workers improve and expand their skills to compete for top-tier tech jobs. Now, instead of moving in search of higher-paying tech jobs, we may see more opportunities for Latin American tech talent to work remotely for internationally competitive salaries. These remote opportunities with international tech companies will benefit the region by expanding new tech developments throughout Latin America, decreasing regional brain drain, and cultivating the Latin American tech ecosystem.

Stepping up online education

Latin America-based edtech platforms Platzi and Crehana are showing 40 percent growth in users over the last few months in response to COVID-19. Many people are turning to online platforms to level up their tech skills, increase their employability, or simply kill time, and each startup is taking its own approach to expanding its impact.

For instance, in April, Crehana offered free courses every day to encourage people to stay home and learn new skills while stuck inside. Meanwhile, Platzi is planning to share its tools and materials with educational institutions to help them continue educating students remotely.

Colombia-based edtech Ubits is also surging in popularity. Unlike Platzi and Crehana, Ubits caters to companies and helps train employees. Ubits decided to make its platform free from April 1 to July 30. Company representatives can sign their teams up to access more than 350 courses in soft and technical skills. The company has already tripled its number of active users, and interest from companies requesting a demo has increased tenfold.

Adjusting to remote work

Throughout Latin America, countries have implemented shelter-at-home and social distancing policies, forcing offices and businesses to close. The country’s unemployment numbers are high as businesses are forced to cut costs. Some startups, such as Apli, are stepping up to help reduce unemployment. The AI-powered recruitment platform automatically matches people with job opportunities according to their skills and experience.

According to CEO Vera Makarov, the majority of Apli’s current users are those who recently lost their jobs due to COVID-19. With many people facing reduced hours and pay or unemployment, the short- and medium-term opportunities on the platform could help them make ends meet, and help companies with open positions cut down on the time spent on recruitment.

For people fortunate enough to continue their work at home, there are other challenges. Companies are plunging headfirst into a remote work structure to continue operations, and many people are working from home for the first time. According to a report by the IADB, one of the biggest challenges for people adjusting to working from home during COVID-19 is the lack of human resources designed for remote work.

Latin America’s largest freelancer marketplace, Workana, has partnered with Argentine consultancy firm Gestal to produce an online course to help smooth that transition. The course provides guidance and tools for businesses to help improve communication, increase productivity, and work-life balance while their teams are working remotely. The course is free to ensure that everyone who needs these resources can access them.

While layoffs are affecting people across industries and regions, not everyone is equally affected. At the best of times, women are 30 percent less likely to be hired than men, and hold only about one-third of leadership roles. The pandemic and resulting global recession are likely to exacerbate that inequality, leaving women in increasingly vulnerable financial positions.

To mitigate the impact of the crisis on female workers, regional consulting firm Aequales, co-founded by entrepreneurs Mia Perdomo and Andrea de la Piedra, provides resources to understand the unequal impact that COVID-19 can have on women. Aequales is the creator of the PAR platform, the first corporate Gender Equality Ranking and the community of companies that advocate for gender equity. This important tool can help mitigate the impact of the current crisis on female workers.

Generating jobs and growth

With so many people stuck in their homes, the demand for delivery services is also surging. Rappi, one of the largest delivery apps in Latin America, reports that its delivery staff’s earnings have increased by about 15 percent in the last few months. The company said it also has a waiting list of 45,000 people hoping to work for the app. However, rather than embracing the chance for massive expansion at the expense of quality control, Rappi is taking measured steps and enforcing strict health and safety measures among its workers. The company is providing hand sanitizer, gloves and face masks to thousands of its workers, and set up disinfection stations.

Rappi is adjusting its business model to comply with new regulations and consumer demands.

In Colombia, the company is trying out new delivery robots from Kiwibot to increase deliveries while reducing the risk of infection. It is also testing a partnership with money transfer startup Valiu, a Colombia-Venezuelan fintech that allows people without bank accounts to send and receive money across borders. A majority of Rappi’s workers are Venezuelans, and this partnership will help them better support their families.

In Argentina, the fast-growing neobank Ualá is expanding its team. The company recently opened 50 new posts, with plans to continue hiring to reach a total of 600 staff by the end of the year. The neobank allows users to manage their finances, make secure payments, and perform instant person-to-person transfers. Ten months ago, the company proudly announced it reached a milestone of 1 million cards in less than two years. In recent weeks, the demand for digital money services skyrocketed in response to COVID-19 and Ualá doubled its user base to 2 million distributed cards.

Another industry experiencing a hiring boom is call centers. In Colombia, call centers and business process outsourcing companies are opening up more than 15,000 jobs in response to COVID-19. Hiring software startup TalentU worked with the Colombian Business Process Outsourcing Association (BPO) and the foreign investment promotion agency, Invest, to create a list of nearly 40 companies committed to hiring over the next six months.

Another moment for resilience

The way that people work and do business is changing rapidly in a short time. However, the hardships that come along with these changes are leading to innovative solutions and new coping strategies. Businesses across Latin America are finding creative ways to adjust to the new reality by connecting people, companies and opportunities. It is yet another moment for the region’s startups to showcase their resilience and ability to adapt quickly to any situation.

Illustration: Li-Anne Dias.