Could Puerto Rico Become the Next Big Tech Haven?
During the 2006 economic downturn in Puerto Rico, many jobs were lost and people left the island. Fast forward to 2017 when Hurricane Maria made the problem even worse. People left the island in masses; and many didn’t come back. It’s often said that every Puerto Rican knows someone who died and someone who left as a result of the devastation.
It was a dire few decades for the U.S. territory, but the rebuilding is well underway (with funds arriving from the U.S. federal government of fall 2020). Hope and optimism are returning at last. One shining star that is leading the way to economic recovery is the tech industry, but it’s imperative that we shore up our tech talent and bring professionals back to the island.
What’s encouraging is that it’s already happening. Puerto Rican native, Orlando Bravo, a billionaire running a global private equity investment firm along with many tech ventures, has given $100 million to support tech innovation and start-ups on the western part of the island. In addition, another Puerto Rican native, Ric Elias, CEO of Red Venture, has invested heavily in nurturing tech talent on the island. And many global technology companies have offices in Puerto Rico, such as Infosys, Honeywell, GE and Microsoft.
The Benefits of Returning
Whether new to the island or returning to grow their businesses, there are huge opportunities for start-ups and established firms, as well as technology professionals across all areas of expertise.
It was recently announced that Puerto Rico will be home to one of the leading labs for 5G testing this year. The 5G Zone will enable tech firms, telecom companies and other businesses to test applications and build new use cases for 5G networks. The initiative promises to help the island better leverage our human capital and become a hub for tech in Latin America.
Businesses find that there are many economic incentives to set up shop in Puerto Rico. There are many tax breaks offered to specific industries, public buildings can be leased at attractive rates, and there are varied wage incentives and access to financing through tax-free industrial bonds and direct loans.
In addition, Act 60 is a new incentive code designed to accelerate economic growth. Under the program, individuals receive a 4% flat income tax rate, 75% property tax exemption along with other financial benefits.
Aside from the financial benefits, tech professionals are finding good paying jobs. When combined with the lower cost of living and quality of life, they offer an appealing proposition.
The Nearshore Model is the Best of Both Worlds
The pandemic also has shifted national attention back to the issue of bringing more tech services and manufacturing back to the U.S. from far-flung offshore regions, and this opens up widespread opportunities for Puerto Rico-based nearshorers, which can offer lower costs and equal quality than mainland providers.
Already, Puerto Rico is home to 11 of the top 20 global pharma companies, such as Amgen, Eli Lilly, Pfizer and Bristol-Myers Squibb. For software, AI and other technology providers, this target customer base opens up great opportunities for business growth and partnerships.
The Challenges Being Overcome
Despite the enormous opportunities that are making tech a hotbed for technology leadership, there are challenges that must be overcome. Electric and cable infrastructure, a lifeline for most businesses, is often unsteady, and buildings and other infrastructure damaged by the hurricanes continues to be rebuilt. Here at Wovenware, we overcome these issues with back-up generators and redundancy in internet providers in case of outages.
But the real challenge comes in having enough qualified tech talent to keep pace. Despite the fact that the island graduates 10,000 scientists, engineers and IT professionals each year (according to the Puerto Rico Information Technology Cluster), there continues to be a shortage due to young professionals leaving the island for the mainland; or pursuing other careers.
Organizations, such as Invest PR, ConPRmetidos and others are doing their part to welcome tech talent on the island, through training programs, marketing campaigns and networking events that work to bring more businesses to Puerto Rico. Parallel18, a program from the Puerto Rico Science, Technology & Research Trust, promotes entrepreneurship in Puerto Rico, and serves as an incubator for start-ups.
We’ve all heard of the recent “exodus” of tech firms to Texas, Florida and other regions, which proves that tech innovation is alive and well beyond Silicon Valley. Puerto Rico is fast becoming one of these new destinations for technology innovation. We have the expertise and innovation, the backing of industry powerhouses, along with government support, and most importantly – the resilience and drive to make it happen.