Outlook for Latin America in 2005
Latin America has demonstrated continuous ascending productivity rates in the last few years leading to growth, sustained expansion, and development. This region has become a strong market for technology. Mexico and Brazil continue to be the biggest players of the economy in Latin America, but countries such as those representing the CANSAC region (Central America and the Caribbean), have demonstrated a large amount of growth in the area, thus creating opportunities for information technology solution providers. This region includes: Belize, Costa Rica, Panama, El Salvador, Guatemala, Honduras, Nicaragua, Ecuador, Colombia, Venezuela, Puerto Rico, Bahamas, Trinidad and Tobago, and other Caribbean countries.
TUDLA has studied the growth in this market from three different perspectives: manufacturers, distribution channels, and directly from the end user. There are several factors driving this growth:
First, the need to compete better in the worldwide economy coupled with the investments that are being made from the outside either via loans/grants or private industry are driving technology investments across the region.
Second, the IMF is extending loans to various countries in the region with a notation that a certain portion must be used for upgrading technology and infrastructure. Out of the $40 Billion loaned to Brazil alone, $6 Billion was earmarked to go to technology. Also, the availability of pay over time and/or lease arrangements so that the user does not have to come up with all the money upfront means that while money is still an obstacle it is not a show-stopper.
Third, the movement of labor-intensive industries to the region, in an effort to save on labor costs, is driving the need for better systems and network connections to support the labor savings. This, coupled with the fact that the average technology wage earner in the region makes 75% more then their manufacturing counterpart, is driving investments in technology training and developing a talent pool capable of implementing and supporting the new technologies.
A ripple effect is taking place as the very large enterprise affiliated businesses are introducing leading edge applications and require that those they purchase products and services from to have compatible systems. This past year we saw a significant increase in the mention of new applications and branded products from the mid-market companies. This year it is spreading to the smaller companies as well. The information TUDLA is gathering directly from IT Decision makers in Latin America shows that the number of legitimate software installations running on branded PC's and Servers is growing rapidly and so is the service industry to support these applications.
Our research shows that many of those we interview work with indirect channel vendors. They rely on experts in the community, or their corporate parent, to make decisions on how to best use their technology and communications resources. However, in the last couple of years we have started to see a shift in this pattern. Businesses are starting to work directly with primary vendors instead of using third parties. Therefore, it is important for solution providers to establish a working relationship with these companies and even the third parties they seek to better inform them and find creative ways to make this new branded technology a reality for even the small businesses in the region. Latin America/Caribbean market is extremely viable and worthy of investment by Technology and Communications vendors alike. Better solutions with legitimate applications and supported by better software at more affordable prices and with creative financing, make it all work.
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