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Technology: a new opportunity for the Algarve

fibreopticThe recent announcement of a Brazilian startup that chose Faro to set up a Research Center and the Production Unit for Europe, already counting on the support of the University and the Municipality, is a sign that the Algarve has the necessary conditions to position itself and captivate technology-based companies.
 
For those who did not follow the news, you can read everything here https://goo.gl/ba6PmL or here https://goo.gl/HBi2kG and in English, at:
 
 
This (good) news is a sign that it is necessary to resume the project of creating a Technological Hub that has been safely stored in a drawer for more than 15 years. Although feasibility studies and installation projects have been done, in reality it has never progressed beyond an idea on paper.
 
This idea, which seems to me will add a structural dimension to the Region, has been gaining new momentum in recent times, with the emergence of a group of companies from the region linked to the area of new technologies.
 
In view of its scale, the region today presents a group of companies that have been able to place the technology "made in Algarve" at an international level and in truly diverse areas, from alarm systems, home audio systems, automation, real estate, reservation systems applied to hotels, golf, spa and rent-a-car, among others. Today we have companies from the Algarve that lead segments in the markets in which they are based, and that have on their list multinational clients in the area of Tourism, Banking, the Automobile sector and in several industrial areas. We can find technology developed in the Algarve installed in locations as diverse as Madrid, Berlin, London, New York, Las Vegas, Miami or Sao Paulo, just to name a few more symbolic cases. I will leave the specific analysis of the cases of internationalization success for another opportunity.
 
As companies in the region start looking for opportunities in the international market, the first cases of international companies that locate part of their services in the Algarve are beginning to be registered. In addition to the most recent, originating in Brazil, companies from Germany and the United Kingdom that have set up development units in the Region, have also been recorded.
 
The natural conditions of the region, the ease of air communication networks with direct links to around a hundred cities in Europe, the good (private) health system, the relatively good quality of life, the low cost of living compared to what is happening in Europe, are surely some of the elements that are motivating this still tenuous dynamic of establishing qualified professionals linked to technological development and creative industries, in the Algarve Region.
 
In addition to the cases of companies that are being established directly in the Region, there is the natural movement of top executives from multinationals who have their second home or holiday home in the Algarve.
 
All this has happened, based on what is known, without any kind of coordination or official strategy. To the best of our knowledge, no official plan or announcement from any type of regional entity that has undertaken this strategy is known to the public.
 
Contrary to what we can see in other cities, such as Lisbon, Porto, Coimbra, Braga or Aveiro, where the local authorities have adopted a strategy to boost the technological areas, no strategy is known in the Algarve Region in this area.
 
And it is in this context, that the private sector begins to have critical mass and evidence, that the creation of ALGARVE TECH HUB arises, an idea launched about five years ago by Miguel Fernandes, founder of Dengun, whose vision is to create a structure that promotes and stimulates the Information Technology sector in a structured and systematized way.
 
The challenges are great and there is a lot to do, especially in areas such as technical training, internationalization, attracting investment, research and financing:
 
1. Technical and professional training: in this field it is necessary to adjust the training offered by the University and the Professional and Specialized Education to the existing demand and the needs of the market. On the other hand, it also makes sense to develop team and project management skills, training human resources for leadership roles.
 
2. Internationalization: it is necessary to capitalize on the effort to capture new markets that has been developed by some of the region's leading technology companies, while motivating other companies to risk approaching foreign markets.
 
3. Attracting investment: The Algarve has the natural conditions and infrastructure that can facilitate the creation of new companies, the capture of service centers from foreign companies, or the development of new projects. It is important to develop a strategy focused on the direct capture of new investment that contributes to the creation of the technological ecosystem of the region.
 
4. Research: via the links to the academic environment, it is possible and desirable to deepen the development of research projects in co-promotion, involving one or several companies linked to university researchers.
 
5. Financing: In this area it is necessary to re-build existing support and incentive mechanisms and create new typologies of investment vehicles. The way the incentive systems financed by the European Union are set up is not conducive to a supportive environment for innovation and research, where project analysis takes at least 6-9 months. In an area where time to market is critical, experience shows that bureaucracy is not compatible with a dynamic of support for innovation. In order to energize the sector, it will be necessary to develop new financing mechanisms that respond to the investment needs in a timely manner.
 
The development of these and other topics can contribute to the creation of a positive dynamic in the companies from the technological sector in the Region.
 
The opportunity has been created. It is up to the companies in the industry to concretize the project, and the State to realize that it is necessary to change to accelerate this process.
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Indicators: employment rose 71% in 5 years
Job creation in the area of technology in the Algarve Region rose 71% between 2012 and 2016, from 616 to 1058 employees (+442), according to data reported by companies in the sector (*).
A data query to the SABI database identifies the existence of 229 active companies at the end of 2016, which totaled 68 million euros (up 67% over five years).
(*) Companies were considered in the following areas of activity (CAE), which presented HEIs in 2016: 26 -Fabrication of equipment; 465 and 474 - trade; 582 - software publishing and 62 - consulting and 63 - information services.
 
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© Paulo Pereira
Economist (OE)
PG in Business Finance (FE UAlg)
Director at Neomarca - Inovação e Desenvolvimento, Lda