IDC research report on Latin America ICT and IT Services Market

New Delhi: International Data Corporation (IDC) has released a research report, Latin America ICT and IT Services Market, which presents a detailed view of the Latin America IT Market, the IT Services Market, size and growth rates as well as the opportunity which Indian companies can leverage.

According to a press release on the research report, the Latin American region has experienced reduction in poverty and is currently a region with middle class majority.

A decade of prosperity has occurred in Latin America. During the past decade, 15% of the population has moved out of poverty and into the middle class, now a majority. In technology, IT spending has outgrown the global average by 2X or more every year for the last ten years (2002-2011). The IT Market in Latin America is at $124b in 2012 and forecast to grow to $166b by 2016, according to IDC BlackBook, Q1 2012.

Latin America is also amidst a transformation where cloud, mobility, big data and social web are intersecting with economic prosperity and creating a new intelligent economy, in turn, driving the regional ICT ecosystem. As global players turn their eyes to emerging markets for growth opportunities, Latin America is now the center stage of geographical expansion.

An integral part of this report is a survey of 480 companies which revealed that more than 80% intend to use technology to drive short and long term business growth. While this signals strong technology adoption, CIOs are simultaneously looking at technologies such as virtualization and unified communications to drive effectiveness and efficiency in the IT landscape.

In the IT services arena, sustained double-digit growth rates from 2009 are representative of not just economic forces, but technology adoption trends where an increasing number of end-users are reaching out to third-party providers for support, advisory, education, management and even total outsourcing of their IT implementations. IDC estimated the IT Services Market to be at $23.97b in 2011 and expects IT services spending in Latin America to grow at a compound rate of 10.8% between 2011 and 2016.

The report presents a detailed analysis of the market by each major country and identifies Brazil, Mexico and Colombia as key countries for companies to target, among others in the region. It also discusses the impact of the 4 Pillars of what IDC has dubbed the Third Platform on the IT Services Market and the fundamental way these forces are reshaping it. The 4 Pillars are Cloud, Mobility, Big Data, and Social Web.

“With markets stagnant in mature countries, Indian IT companies are looking at Latin America as the next frontier of growth. Big banks, telecommunication companies and large manufacturers have already started to outsource large chunks of their IT operations and its incumbent upon the industry to take advantage of this. For instance, earlier this year Banco de Credito del Peru has awarded IBM an infrastructure outsourcing contract worth US$100 million over 5 years and Caixa Economica Federal in Brasil has awarded Indra Sistemas a 4 year outsourcing deal worth EUR 25.9 million to develop and manage its financing and loans application.”, said Jaideep Mehta, VP and Country General Manager at IDC India. Citing findings of the report, he went on to say that, “With a $40b largely untapped market by 2016, cultural similarities and language barriers, Latin America presents a unique set of challenges to the industry, promising rich rewards to those who can overcome them.”

“For companies to win here, they need to be seen as serious players. This means establishing a local presence, investing for the long term and patiently developing the market. Strong local relationships and the right alliances are key to success”, said Ricardo Villate, Vice President, Research and Consulting, IDC Latin America and the co-author of this report.