As Ecuador enters 2021 seeking to overcome the social and economic crisis caused by the COVID-19 pandemic, the South American country’s growing technology sector can be expected to offer a major boost towards recovery. While many businesses in Ecuador have endured severe hardship, others have managed to overcome the challenges imposed by the ‘new normal’ in doing business. That has been particularly true among technology firms. Here, three Ecuador tech companies that will emerge stronger from the pandemic are highlighted.
With a gross domestic product (GDP-PPP) of $202 million (all figures in USD) and foreign direct investment (FDI) inflows of $937 million in 2019, the country is a smaller but growing economy in South America. Ecuador’s people have enjoyed improving conditions in recent years, with Gross National Income (GNI) — a general indicator of overall prosperity — reaching $11,500 per capita in 2019.
Bordered by Colombia to the north and Peru to the south, the Andean nation has abundant petroleum reserves, with oil drilling accounting for 40% of the country’s export income and a quarter of public revenues in recent years. Meanwhile, Quito, Ecuador’s capital city, has been recognized as a regional software development hub, with a high concentration of skilled human capital available at competitive rates.
The services sector is central to Ecuador’s economy, however agriculture is also important, and the country is the main exporter of cacao in the Americas. Other Ecuadorian export commodities include fish, timber, hydropower, textiles, coffee, cocoa, rice, and potatoes.
If you are considering doing business in Ecuador, understanding how these three Ecuador tech companies that will emerge stronger after the COVID-19 pandemic might provide you with valuable insights into how to maximize the chances of success when establishing your business in the country.
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The impact of the pandemic on Ecuadorian business
As in other countries in Latin America and the world, small and medium-sized enterprises (SMEs) in Ecuador were seriously affected by lockdowns and other restrictions imposed by local health authorities to avoid the spread of COVID-19. Due to the crisis, 70% of economic activities in the country were paralyzed. One of the sectors most affected by the pandemic in Ecuador was tourism, which reached monthly losses of $400 million during the first half of 2020, as stated by Ecuador’s Rosi Prado de Holguín, Ecuador’s tourism minister, in an interview with Ecuadorian news outlet El Comercio.
Between March, April, and May 2020, the losses of the productive sector in the country reached $14.1 billion. Meanwhile, the commerce sector reported losses in excess of $7.6 billion. Other industries affected by the pandemic were the service, agriculture, livestock, and fishing sectors, which reported losses of approximately $136 million.
Those losses were included in a report published by the Internal Revenue Service on domestic sales within the private sector in Ecuador, which highlighted manufacturing, transportation, and construction as other sectors severely affected by the pandemic. According to the United Nations Development Program, Ecuador could experience a drop in its GDP of 11% due to the social and economic ravages caused by COVID-19.
Ecuadorian Industries that saw growth during the pandemic
Despite the crisis, the e-commerce, food and beverage, pharmaceutical, and medical supplies sectors reported an increase in their sales during the hardest months of the pandemic. According to Leonardo Otatti, president of the Ecuadorian Chamber of Electronic Commerce (CECE), purchases through digital channels or e-commerce platforms experienced great growth during the pandemic. The number of orders placed through websites or delivery mobile applications increased at least 15 times, according to figures from the organization.
As a result of the obligation to stay at home to avoid the spread of the virus in the country, all working members of families were forced to telecommute, producing a greater need to purchase food from supermarkets. According to SRI figures, sales in the food and beverage sector grew 6% in March and April, compared to the same months of 2019.
Some of the food products most in-demand during the pandemic in Ecuador were milk, oil, margarine, and canned goods. In addition, the pharmaceutical sector registered an increase in its sales of 20% during March and April, compared to 2019. Due to high domestic demand, the consumption of antiviral and anti-inflammatory drugs shot up to 500%. Furthermore, as happened in other countries in the region, the sale of medical supplies such and personal protective equipment increased considerably, especially through the internet.
3 Ecuador tech companies that will emerge stronger after the pandemic
The following Ecuador tech companies have grown during the pandemic and should be expected to continue on their upward trajectories in 2021:
Broadnet is the first independent service network in Ecuador dedicated to the development and commercialization of digital products. Founded in 2005, the company is recognized as a pioneer and leader in the commercialization of mobile data recharges and mobile transaction processing for SMEs and the unbanked population of Ecuador.
Broadnet has more than 8,500 points of sale located in small establishments and large supermarket chains throughout the country. Furthermore, it offers its users a prepaid network, known as “Ponle +,” now classified as the largest electronic services and mobile benefits network in Ecuador.
Dos is an Ecuadorian company with three decades of presence in the Ecuadorian market and extensive experience in planning, managing, and executing IT Services Integration Projects. With offices in some of the main cities of the country, including Quito, Guayaquil, Cuenca, and Ambato, Dos offers cloud computing and perimeter protection services, creation of data centers and WAN networks, and IT infrastructure management.
In addition, Dos offers consulting services in technology and good business practices, as well as a preventive maintenance service that seeks to guarantee the longevity of the technological equipment of companies doing business in Ecuador.
TecnoMega is an e-commerce platform dedicated to the commercialization of technology products since 1999. With six offices throughout the country and more than 170 employees, TecnoMega offers its users audio and sound equipment, cell phones, tablets, computers, printers, and televisions. With the increase in the sale of products through the internet during the pandemic, the demand for technology products for home and work is expected to increase in Ecuador.
Biz Latin Hub can support you in doing business in Ecuador
At Biz Latin Hub, our team of experienced back office specialists is equipped to help you enter the Ecuadorian market and take advantage of the country’s promising tech scene. With our full suite of corporate legal, accounting, and back-office services, we are your single point of contact to successfully incorporate your tech company in Latin America and the Caribbean.
Get in touch with us today today to discuss the assistance that you need.
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