Why Indian IT companies are betting big on Latin America [Strategy] [Times of India]
(Times of India Via Acquire Media NewsEdge) BANGALORE: Presenting an opportunity to counter the over dependence on the US and European IT markets, Latin America is emerging as a fast growing market estimated to be worth $124 billion in 2012 and forecasted to grow to $166b by 2016, according to IDC.
The IT spending in the market has outgrown the global average by at least two times, every year for the last ten years (2002-2011), and is transforming with greater spending on emerging technology areas such as cloud computing, social web, mobility and big data. IDC estimates IT services spending in Latin America to grow at a compound rate of 10.8% between 2011 and 2016.
"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 here, " said Jaideep Mehta, vice-president and country general manager at IDC India.
It will still have around $40 billion untapped market opportunity by 2016.
A few larger deals in the market were $100 million, 5-year infrastructure outsourcing contracts that Banco de Credito del Peru awarded to IBM and Caixa Economica Federal in Brasil's 4-year outsourcing deal worth EUR 25.9 million with Indra Sistemas to develop and manage its financing and loans application.
"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.
The Indian IT services firms have been largely dependent on the mature markets of US and Europe, which account for more than 80% market for their revenues. Markets researchers believe these markets are expected to grow less than five per cent.
(c) 2012 Bennett, Coleman & Company Limited
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