IT Services Market Overview: Latin America
By Kevin Postigo | June 25, 2021
Over the course of the last decade, the emergence of the Latin American technology market has been a driver for economic growth in the region. The technology sector was further bolstered by the challenges COVID-19 created for businesses including remote work, communication, cash management, digital marketplaces, and cybersecurity solutions. Within the IT Services ecosystem, the LATAM region has risen to the forefront as a leading outsourced services provider of digital transformation capabilities. As business and technology strategies become even more intertwined, many business leaders are finding that the technology choices of the past are now limiting the business strategies of the future.
IT service companies in Latin America have been a stand-out choice for any company looking to outsource and grow their software development platforms. The advantages Latin American firms enjoy are their geographic location, highly skilled engineers, inexpensive labor force relative to their developed-economy counterparts, and agile delivery methodologies.
IT Services – LATAM Positioning
Top IT Outsourcing Countries in LATAM
- In the late 1990s and early 2000, Buenos Aires established itself as a leading technology hub in Latin America with a wave of successful technology companies, including MercadoLibre, Globant, OLX, and Despegar.
- The business chamber of Argentina’s IT sector estimates that the information services sector in the country accounts for 14% of the whole Information and Communication Technologies market, which also includes the Hardware and Inputs sector (20%), Telecommunications (66%).
- Colombia has been accelerating digital government initiatives and support to the Tech/Creative industries or “Orange Economy” sector, including efforts to position the city of Medellín as an innovation and technology hub.
- In 2019, Medellín was inaugurated as the first Latin American Centre for the Fourth Industrial Revolution – hubs for research and development on issues such as artificial intelligence, blockchain, the Internet of things, machine learning, big data, and nanotechnology.
- Costa Rica has established itself as the leading nation in Latin America in terms of digital readiness and the adoption of new technologies.
- Information and communications technology services accounted for US$4.7bn in 2019, representing 49% of the country’s exports, this was far and away the highest levels regionally. The country’s digital technologies labor force has a CAGR of 17% and grew by 23,900 workers in 2019.
- Mexico is an attractive market for technology products from the United States related to the IT services industry and a strong global player in the Business Process Outsourcing (BPO) market. Research and advisory firm Gartner ranks Mexico third globally for nearshoring and offshoring services.
- The country is following the global trend towards a service-centric IT industry, where most technologies are offered under a service contract or lease. There is a growing interest in Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platforms as a Service (PaaS).
7MA At A Glance
7 Mile Advisors
7 Mile Advisors provides Investment Banking & Advisory Services to the Business Services & Technology industries globally. 7 Mile Advisors advises on M&A and private capital transactions, and provides market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, 7 Mile Advisors helps its clients sell companies, raise capital, grow through acquisitions, and evaluate new markets. For more information, including research on the M&A markets, visit www.7mileadvisors.com.
M&A Advisory Focused on Technology
- Founded in 2008 with a mission to provide deeply verticalized transaction advisory to middle-market technology companies globally.
- Defined sub-markets include Cloud Services, Management Consulting, Risk and Security, Software, Systems Integration, IT Consulting, Analytics, Managed IT Services, and Cloud Consulting.
Recent Deals in LATAM
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