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A new sort of offshoring

Argentina becomes an attractive destination for those who want to earn in one currency and pay living expenses in another.

Clerks trade dollars at a foreign exchange house in the financial district of Buenos Aires. Modern business facilities allow American businesspeople to work in Argentina to take advantage of the country's low cost of living. (Enrique Marcarian/Reuters)

BUENOS AIRES — Hal Bringman, founder and CEO of a corporate communications firm, came to Buenos Aires for a July 4th vacation in 2007. He never left. 

But Bringman didn't bother to tell his dozen clients that he wasn't where they thought he was — namely, in the U.S. He didn't need to: He did much of his business over the internet anyway, had calls forwarded from his Los Angeles office and flew to meet his far-flung clients as necessary.

Setups such as Bringman's — earning money in hard currencies like the U.S. dollar or euro while paying operating and living expenses in a weaker economy — make increasing economic sense. 

On the face of it, the business model resembles the old-style offshoring of labor to cheap markets in the developing world. But there's a major difference: Rather than outsourcing jobs to locals who charge less, white-collar workers and senior managers are relocating to a handful of developing countries where their own costs of living and working are lower.

Argentina — and especially Buenos Aires — is one of the most attractive places for this proposition, with its high level of development and low cost of living. Buenos Aires was one of the world's most expensive cities a decade ago, before the Argentine economy crashed and the peso was left badly devalued at the end of 2001. Today, you can eat filet mignon or catch a taxicab across town for about $10.

Statistics on the phenomenon are hard to come by. But Expat-Connection.com's Martin Frankel (also the founder of the Buenos Aires Expat Entrepreneurs group) guesses that between 15,000 and 30,000 foreigners are working in Buenos Aires.

And Thursday Bram, author of a forthcoming book about moving abroad in order to stretch salaries, says that the top five expat destinations that have emerged in her research are China, India, the Philippines, Singapore, and — the only one not in Asia — Argentina. 

Business and life coach Gayle Scroggs — author of the blog "The Positive Expat" — is evidence of the Argentine appeal. For $500, she rents a 1,700-square-foot home (complete with pool) in an exclusive neighborhood in the city of San Nicolas. She also hires a part-time housekeeper and gardener, things she said she never could have afforded in her native California.

Originally, said Scroggs, "I counted on getting a U.S. telephone forwarding number so that I would not have to advertise that I live in Argentina." This is another plus to offshoring: In places like Argentina where the communications infrastructure is well-developed — public WiFi internet is ubiquitous in Buenos Aires and there's approximately one mobile phone for every man, woman, and child in the country — expatriates can live and work without detection.

It wasn't until three months after Bringman — whose PR firm launched MP3.com and Napster, among others — arrived in Buenos Aires that a client from Madrid figured out his setup. The giveaway: Bringman's Facebook profile. His client was positively tickled. 

"It hasn't really been any different from working in LA," Bringman says. "When you have a solid track record and you deliver results, your client doesn't care where you are working from, they just care that you succeed."

Some working in the new tele-commuting economy, however, aren't so sure about their clients' indifference, and they go to great lengths to hide the fact. One company based in Buenos Aires and conducting all its business remotely maintains a sales team staffed entirely by Americans to interface with its customer base, which is located predominantly in the U.S. The company has U.S. phone numbers and a U.S. mailing address.

According to a salesperson who spoke on condition of anonymity, the CEO's sister visits that address to pick up the mail once a week. "Sometimes a client will want to come to our office. We have a lot of different excuses why they shouldn't come," said the employee, who lists lack of a reception desk and employee unshavenness as some of his favorite excuses.

Then, of course, someone might try to make chit-chat about the weather. The same anonymous employee described once hearing his manager in that tricky position. "He actually had to tell his client that his blinds were down and he hadn't been outside since before the sun was coming up, so he had no idea what the weather was," he said. "But at the end of the day, I think it's very rare that clients even suspect that we're not where we say we are."

Expat-connection.com's Frankel says that he knows of many in Buenos Aires who keep their northern customers in the geographical dark. "It adds a level of security to a traditional-minded American, thinking that you're dealing with someone in your same state or at least your same country," Frankel said.

Some even keep the secret from their employers. Matthew Paulsen is a freelance writer who considered Dublin, Bangkok, and Cape Town before deciding to move to Argentina, partly because its time zone is halfway between the U.S. and Europe, both major markets for his work. He now owns a house in Buenos Aires and says that he can live "very comfortably" on $800 per month. Paulsen holds a copy-writing subcontract with a company that manages events across the U.S., and which doesn't know that many of their event descriptions are being written a hemisphere away. 

"I don't think there would be much of a concern if they found out I was living in Argentina, but until I'm at that point that I've proven myself," says Paulsen, "I think we want to keep that comfort level — that they think they're working with someone in Connecticut."

Thursday Bram thinks that Paulsen and the others are probably safe to keep earning their dollars and quietly spending their pesos — or rupees, or yuan as the case may be. "No matter what country these expats are in today, the reason they don't tell their employers and clients is that it doesn't actually matter," she said. "It rarely comes up in conversation and it is rarely an issue."

http://www.globalpost.com/dispatch/argentina/090121/new-sort-offshoring