Technology continues to be the best ally of companies to overcome the crisis and maintain a sustained growth of their businesses. During these last two years of the pandemic, information technology (IT) has proven to be a powerful weapon to digitize companies from various industries that had not yet jumped on the digital wave or were in the process. Therefore, Latin American companies will consolidate their investment commitment to IT solutions. Randall Castillo Ortega, an entrepreneur and trade specialist, explains how this will take place.
According to IDC, an ICT industry analysis firm, in 2022, Latin American companies will increase their investments in the IT sector by 9.4%. Meanwhile, in 2021 the IT market in Latin America registered a growth of 8.5%. This reflects the importance of the sector in the economic development of the countries of the region, especially in times of pandemic. In 2020, the increase was 14%.
This development occurred because the IT industry continues to be an economic engine for various vertical market sectors, where it has successfully modified and driven business processes. Proof of this is eCommerce, which increased its penetration between 10-15% in all categories of commerce.
“The investment in IT resulted in mobile payment methods reaching more than 50% of the population in Latin America,” asserts Randall Castillo Ortega. “Another example of the impact of IT on various industries in the last two years is the post-pandemic work model that has been permanently remote in at least 40% of companies and that apparently will continue that way in the coming months.”
The IDC report projects that by 2023, 40% of the top 5,000 companies in Latin America will have a data governance architecture to enable DataOps (data operations, agile and process-oriented methodology to develop and deliver analytics), promote data engineering based on machine learning, reduce data risks and drive innovation.
On the other hand, this greater demand for IT solutions implies a greater expense in this area. In that sense, IDC estimates that Latin American spending on data management software, which includes data integration and intelligence, administration and development of databases and management systems, will grow at a compound rate of more than 16% in the next five years.
COVID-19 demonstrated that digital businesses that are well on their way to becoming digital businesses are faring much better and even thrive under pressure. The key to success is not in imagining the future or trying to adapt to any immediate disruptions. It’s about continuous innovation that responds to every challenge and opportunity. Managers have come to realize that innovation does not just happen internally; they must also extend it to their partners and ecosystems.
Latin American companies will take advantage of IT in the coming years. For example, it is estimated that by 2024 digital enterprises will enable empathetic customer experiences and resilient operating models by shifting 70% of all technology and services spending to as-a-service, results-focused models.
By 2024 the company also estimates that 40% of the IT budgets of Latin America’s top 5,000 companies will be redistributed due to the adoption of integrated “as-a-service” solution packages in areas of security, cloud platforms, virtual workspace and connectivity.
Also, in this period, 50% of these 5,000 companies will earn twice as much, in terms of significant returns, in technology investments that increase the activities of employees or customers compared to those that automate individual processes.
Data privacy and security issues will force 90% of Latin American companies to restructure their data governance processes focused on an autonomous basis. Sustainability will also impact technological management.
Therefore, by 2025, 40% of the companies already referred to in the region will have digital sustainability teams that will evaluate, certify and coordinate the use of business and IT sustainability data and analytical platforms offered by ICT providers.
All of these actions will also have an impact on the market capitalization of companies. Thus, by 2025, the valuations of public companies will be based both on trust in data controls for the proper and effective use of data, and on financial controls focusing on increased spending on data-driven solutions.