TechNavio: Latin America IT services market to grow 10 percent annually

Latin American SMEs increasingly adopting cloud services
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The IT services market in Latin America is predicted to increase at a 10 percent compound annual growth rate (CAGR) through 2015, which offers "huge potential" for IT vendors, according to the latest research by TechNavio.

Government spending to improve the IT infrastructure in the region and increasing adoption of cloud services by Latin American firms are contributing to this growth. Various initiatives taken by the governments include providing policy incentives, establishing high-tech zones and providing development funding.

TechNavio cautions that growth could be slowed by a shortage of talent and an increasing attrition rate.

"Companies such as Microsoft and SAP have been targeting small and medium-sized enterprises (SMEs) and large corporations with Microsoft online services offerings and Business All-in-One Fast-Start, respectively. The increasing adoption of cloud computing services and solutions [in Latin America] is also encouraging more software spending by SMEs," an unidentified TechNavio IT services analyst commented.

The increasing adoption of cloud services by Latin American SMEs was identified in a recent report by Pyramid Research. The report predicted that the Latin America SME cloud services market would reach $1.9 billion in 2012 and would increase at a 38 percent CAGR to reach $12.7 billion by 2017.

When it comes to cloud services, Latin American telcos are in a vulnerable position due to strong competition from well-established IT service providers, over-the-top and independent software vendors, the report judged.

Pyramid Senior Consultant Daniel Ramos said he expects the Latin American SME cloud services market to consolidate and strategic alliances between market players to emerge as telcos spin out their cloud services divisions. SME cloud services will converge and will evolve from a horizontal to a vertical focus, while the cloud aggregator/broker model will become mainstream in Latin America, Ramos predicted.

For more:
- check out TechNavio's data
- see Pyramid Research release

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