Argentina: ICT Market Overview

The Argentina ICT market is the second largest in the Latin America region and is projected to grow at a compound annual growth rate (CAGR) of 9 per cent over the 2007-2012 periods. The total value of IT spending on IT products and services should pass US$3bn in 2009 and be approaching US$4bn by 2012. Despite double-digit growth in the PC sector in 2007, a PC penetration rate of around 22 per cent currently indicates plenty of room for growth. The overall economic outlook is constructive for growth in IT spending with the consumption-led economic expansion exceeding expectations in 2007 when GDP growth was around 8 per cent.

The consumer segment should also continue to register strong growth due to rising incomes, and more flexible terms from retailers. Government spending will remain a key support to the market. The market is characterized by significant income and geographical disparities, and the financial turmoil surrounding the US credit woes could have a negative impact on Argentina's economic growth outlook.

Industry Developments
2008 saw the continuation of government efforts to expand computer penetration to under-served segments of the population. In July 2007 the government launched a new government initiative PC Abuela, or 'Grandmother PC'. As the name suggests, the programme is aimed to overcoming a particular digital access gap, that of low PC penetration among pensioners. With 10 per cent of the population over 65, this group has been identified by the government as a key demographic for its campaign to reduce the digital divide.

Meanwhile, in 2007 Telefónica Negocios, a unit of regional telecoms giant Telefónica that offers services to SMEs and professionals, launched a programme aimed at encouraging computer use by SMEs. Under a special promotion called 'Puesto de Trabajo', customers signing up to an internet and voice package with Telefónica will receive a free computer together with maintenance and support, and software licenses.

Competitive Landscape
Argentina's booming PC market is providing an opportunity for local brands such as Air Computers, Ceven, PC Arts and Sicsa to grow. Leading local vendor Sicsa plans to strengthen its market position strong in the laptop segment where Dell, HP, Lenovo, Toshiba, and Apple are among the market leaders.

SAP is the market leader in the growing enterprise applications segment, which is also attracting new invest from vendors. In 2007 SAP set up a US$2.5mn shared services centre in downtown Buenos Aires which will have fifty employees. In the IT services segment there has been a growing number of large deals with international vendors such as IBM among those benefiting. In 2007 Argentina's fourth largest financial institution signed an agreement with IBM for servers and applications migration.

Computer Sales
Argentina's computer and accessories market will have a CAGR of at least 8 per cent over the 2007-2012 periods. For 2007, market revenues were put at US$1.29bn, and should be approaching the US$1.8bn mark by 2012. Annual computer sales, currently around 1.5mn units a year, are increasing at a rate of around 20 per cent a year. Affordability has also been boosted by a greater availability of financing options from retailers and vendors with government encouragement.

Software
Argentina's software market had been worth US$422mn in 2007, and the figure for 2008 is expected to come out at a little more than US$464bn. Software CAGR for 2007-2012 is projected at around 10%, despite high annual software piracy losses. Demand will remain strong in the near-term due to the large potential market represented by SMEs in many parts of the country.

IT Services
Argentina's IT services market has grown around 11 per cent in 2007 to a value of just short of US$700mn, with similar growth expected in 2008. For a developing market, the percentage of IT market revenues generated by services is fairly typical at around 25 per cent, but lower than some other countries in the region where the services share is already above 30 per cent.

Argentina's software and IT services sector ought to specialize in four strategic areas, namely agribusiness, digital content and internet-related solutions, healthcare, and value added IT services. The country has a lot of potential for developing video gaming, e-learning, digital content and dynamic web pages. Argentina is currently exporting products like this. Within the health sector, the country could specialize in biotechnology while there are opportunities to develop solutions for the agricultural industry, due to the strong contribution this segment makes to the country's economy.

E-Readiness
Argentina possesses one of the most dynamic telecoms markets in the region, with a dramatic expansion in the number of mobile subscribers over the past years. Fixed line penetration is also among the highest in the region, providing a good platform for strong growth in broadband services adoption. The number of Argentine internet users reached 12.2mn in 2007, representing 31 per cent of the population. The percentage of broadband subscribers in the general population was 5.6 per cent.

IT Industry - Opportunities
• Software for education
• Complete solutions for Public Administration ( e government and Public Sector)
• IT Security tools
• Software for agribusiness
• Industry solutions for environmental protection
• Health care and medical services

Key contacts

Secretariat of Communications
National Secretary of Communication
www.secom.gov.ar

National Communications Committee
www.cnc.gov.ar
 
CESSI – Association of Software and IT Services
www.cessi.org.ar

CASEL- Argentine Trade Association of Electronic Security
www.casel.org.ar

CICOMRA- Argentine Association of IT and Communications
www.cicomra.org.ar

CACE- Argentine Association of Electronic Commerce
www.cace.org.ar

Austrade office in Argentina
Villanueva 1400 Buenos Aires – Argentina
Contact: Norma Ramiro
Tel +5411 4779 3575 fax: +5411 4779 3583
Email: norma.ramiro@austrade.gov.au