Malaga, Spain's third-largest technology hub, is making its mark

Malaga, Spain's third-largest technology hub, is making its mark

While still behind Madrid and Barcelona in size and economic and political power, the Andalusian city is gradually attracting new technological giants thanks to its location, climate, communication infrastructure, cultural, and gastronomic offers. We have identified seven areas for improvement for the city to climb in influence and impact. 

A little over a year ago to the sound track of Where It All Begins by US singer Summer Kennedy while images of Malaga appeared in the background, Google's President of Global Affairs, Kent Walker, announced on X that this Andalusian city was the one chosen to "change the rules of the game" by becoming the technology giant's third Security Engineering Centre in Europe, after Dublin and Munich. 

This centre has just opened in a historic building in the capital that once housed the military and could mark a before and after in a city seeking its place as a leading technological hub in Spain. Currently, Madrid and Barcelona are far ahead in terms of size and economic and political power. 

Before Google arrived, the domino effect was already in place as other large multinationals such as Telefónica, Vodafone, Oracle, Huawei, Accenture, PwC were already concentrating in the city and weaving themselves into the local business fabric. 

Malaga's ICT tradition goes back a long way. It has been three decades since the gem of the Andalusia Technology Park (known as PTA) was born, renamed in the pandemic with a name more in keeping with these digital times, Malaga TechPark. It has an area equivalent to about 60 football pitches (only metres built) occupied by more than 650 companies and 24,300 workers. Expansion plans envision doubling the number of employees. 

Tailwinds

But… what does Malaga have to attract the giants of the sector?

The strength of this technological base is one of its assets. Its coastal location with a good climate, good international connectivity, hospital and educational infrastructures, together with an attractive cultural and gastronomic scene offer a vibrant and dynamic life. Quality of life comes at a good price, together with qualified talent, results in a "diamond in the rough", in the words of the general director of the PTA, Felipe Romera.

"We don't intend to compare ourselves with the two big centres in Spain, we don't have the same size," he says, highlighting its "important relative advantages" such as the "structuring of companies, which means that companies communicate with each other and collaborate even though they are competitors". The active participation of the University of Malaga in entrepreneurship and training talent is "not very expensive", and offers even "greater capacity for growth" for businesses and their talent, with the "icing on the cake, being its high quality of life". All this makes the city "a product that everyone wants", he asserts.

For Jesús Amores, director of the Vodafone Innovation Hub in Malaga, in addition to "a strategic location", it has "good and renewed infrastructure with a first-class innovative business fabric coupled with a very interesting educational ecosystem". The operators of European R&D Centre, which already has 430 employees of 33 nationalities, is an example of the park's structured model. "It is an open centre, a collaborative space for the development of innovative solutions together with our partners, customers and employees," explains Amores. 

"Being close to technology companies helps us work in an environment of continuous competition, bringing customers and helping create synergies and opportunities," says Mario García, Chief Operating Officer (COO) of Tupl. This small startup dedicated to Big Data and Artificial Intelligence is an example of this cooperation between the educational world and the technology park. Founded by people from Malaga in Seattle, it has its operations centre in the Green Ray, a joint building of the University of Malaga and the PTA. 

AG Photonics, a spin-off of the Malaga faculty focused on nanotechnology, shares the same location. Its co-founder, Alejandro Maese, points out that "being in these offices makes it much easier to walk apart from the academic world and gives us visibility, which is very important in this first phase". 

In parallel to the development of the Malaga TechPark, three decades ago a successful technological entrepreneurial current emerged in the city. Some, such as VirusTotal, were acquired by Google and others are on their way to becoming unicorns. This is the case of the graphic resource platform Freepik. Founded in 2010 with four employees, it now has 520 employees in six countries. It is in the hands of the Swedish fund EQT, which bought it during the pandemic for €200 million and is now negotiating its sale for more than €700 million, according to the press. "Although we work 100% remote and there is no obligation to live in Malaga when we hire people from abroad, they decide to move on their own accord because the city is very attractive," acknowledges its COO, Javier González. 

Aspects for improvement

Until Covid-19, thanks to the granaries of professionals, the University and the Medac Vocational Training Institute, talent was a success factor, but since then there has been "fierce competition" and "demand exceeds supply", says González. In his opinion, one of the "unresolved issues is how to make it grow at a local level", although this deficit does not occur in all profiles, he clarifies. 

"The fight for personnel is great" and "Malaga can die of success if we don't get more local talent", adds García, highlighting that there are university scholarships that remain un-awarded. 

As in large cities, "there is a serious problem in access to housing," says Freepik's COO. A report by the consultancy firm Savills concludes that the city needs more than twice as many new properties as are offered annually and that, compared to last year, prices have increased by 18% for purchases and 16% for rentals. 

In the opinion of Juan Venegas, Managing Director of the technology area of Arcano Partners, "the great challenge lies in attracting founders and innovative ideas to be born in Malaga so that it does not settle for being just a technology outsourcing hub". For his part, Álvaro Lamo de Espinosa, also Managing Director of the firm, indicates that for it to reach the level of other hubs, two situations must occur: "that the local population and entrepreneurs perceive the city as a place that does not have an opportunity cost, and that it can attract international talent to soak up ideas. And statistically, in terms of population, this is more likely to happen in Madrid and Barcelona".

Christopher Martínez, also Managing Director in technology, adds another aspect to strengthen its positioning: specialisation in areas such as education or tourism, "where there are already excellent success stories in the region and where the lessons learned can help to create a leadership position in specific niches".

Finally, attracting more funding is, according to Romera, another weak point, although thanks to the PERTE (Strategic Projects for Economic Recovery and Transformation) approved to channel the EU's Next Generation funds, the Malaga TechPark aims to obtain capital through the automotive and chip industry. 

Time will tell if the arrival of Google can mark a turning point in the flow of investment and turn the Andalusian city into a technological hub on par with Spain's two great success stories.