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The M&A Watch: Latin America – July 2021

By Emily Halstenberg | July 26, 2021

M&A WATCH: LATIN AMERICA – July 2021

Our monthly M&A Watch spotlights deals in the Information Technology industry throughout Latin America.

As we see the world adjust to the advanced shift to online engagement, work, and communication, we have witnessed digital transformations pick up across the globe. The LATAM region is no exception in this regard. We have seen a massive increase in demand for software development and other IT services across the Latin American region. A 2019 study done by Coursera, an online education platform, showed that there was a shortage of over 450,000 IT Professionals in Latin America. This is a massive gap in talent needs and it has only expanded in recent years as digital transformation picks up in the area. During the same time period, US offshoring has been increasingly shifting to Latin America due to the decreased time zone differences versus legacy Indian and other Asian offshoring options.

Source: Google Images

Additionally, another reason for outsourcing to LATAM Countries is for the ease of communication it provides to their English-speaking counterparts. The rate of English literacy in China is approximately 1%. In a country like Mexico this rate is around 4%. This can be a significant advantage for communication and ease of collaboration when describing application specifications. Finally, Mexican and some other Latin American universities are almost producing as many computer science graduates as American schools. Beyond education, Mexico and Brazil have a combined workforce of just under three-quarters of a million technology specialists. These are all workers that are highly qualified and are also very experienced. When companies are looking to expand and set up Latin American development teams or to outsource for remote software engineering, the highly qualified talent pools differentiates the Latin American market.

Even with this large pool of talent, it is not enough to meet demand. One trend we have started to note is the emergence of “Developer Academies” that help train college students or anyone looking to pivot their career into software development or IT services. One particular academy that has stood out in the region is Digital House. Digital House is a recent startup that is funded by the preeminent leaders in the regional market, Globant and Mercado Libre. These Tech giants also partner with the training aspect and use it as a human resource pipeline to help drive talent towards their respective organizations. There are other EdTechs in the region starting to emerge and this could be a solution to help increase the pool of talent to meet the ever-increasing needs in Latin America.

DTI Digital, a Brazil-based provider of digital innovation and software engineering, was acquired by WPP for an undisclosed amount. DTI’s digital solutions help clients become more efficient, digitalized, and fully connected to their customers. Their solutions range from the development of back-office support systems such as supply automation and data collection software to consumer-facing applications and platforms including e-commerce marketplaces and customer service interfaces. DTI has over 600 engineers, which allows them to provide extraordinarily strong and agile solutions for their clients. The acquisition will help WPP’s meet its objectives outlined in its 2020 Capital Markets Day to grow its presence in the faster-growing areas of experience, commerce, and technology. It also will strengthen WPP’s capabilities in supporting its clients’ end-to-end digital transformation objectives in Brazil and beyond. It does this by complementing and expanding WPP’s existing AdTech and systems integration capabilities.

Pixan Apps, a provider of software development services based in Zapopan, Mexico, was acquired by Zigatta for an undisclosed amount. Pixan Apps provides a range of services such as app development, web development, fast app prototyping, and lot development. They make all projects and operations based on agile methodologies, which enables client businesses to improve technology integration and have a stronger online presence. Some key industries they serve include E-commerce, Retail, and other Service industries. The acquisition will allow Zigatta to expand its footprint internationally and complement its growing experience and digital studio capabilities.

About 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.

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