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(Last updated: 17 Apr 2009)
| Read the ICT to Chile market profile prepared for CEBIT 2009 (PDF 72KB) |
Video
Sylvia Palma from Austrade Santiago talks about opportunities and tips for Australian companies in Chile (click image to play).
Trends and opportunities
The market
Chile will be one of the region’s high growth IT markets during 2008-2012, according to Business Monitor International (BMI), thanks to a combination of rising incomes, growing PC affordability, an a favourable demographics. While only around one-tenth the size of Brazil’s IT market, the total value of Chilean domestic spending on IT products and services should pass US$3 billion by 2012.
Chile is one of the most IT literate countries in the region. Despite regional ranking in many ICT infrastructure indicators, however a PC penetration rate of around 18 per cent indicates plenty of room for organic growth. Government programs will also shape market development in the next few years. IT services are set to be the fastest growing segment of the market, while new money to support informatisation for SMEs highlights another key opportunity.
Chile is Australia’s third most significant merchandise trading partner in Latin America. Already more than 60 Australian companies have offices in the market. Many companies select Chile as the entry point to Latin America since it is considered the best country in Latin America to do business, measuring indicators such as political and institutional environment, macroeconomic stability, policy towards private enterprise, foreign investment policy, financing and infrastructure.
Industry developments
The Chilean Government is focused on establishing Chile as an offshoring services location. In support of this objective Chile is likely to see changes to its intellectual property framwework currently considered insufficient; there is general agreement on the need for further reform. Corfo, the State Development Agency has launched a programme to provide funding for projects that implement ICT for local SMEs; this appears to be a particular focus for the entity today.
Software
Software has opportunities for growth over the next years, despite a relatively high software piracy. Growth will be driven by a number of particular factors, however sources of opportunity in the near term are likely to be the introduction of International Financial Standards (IFRS) in Chile as of January 1, 2009 and potential new anti-piracy laws.
IT services
For a developing market, the percentage of IT market revenews generated by services is currently around 37 per cent, high considering emerging market standards, but similar to other countries in the region such as Brazil. The mayority of demand, around 75 per cent still comes from the large company sector, but smaller companies are also now becoming more sophisticated in their demand. Led by the financial, telecoms and retail sectors in particular, there is a trend towards bigger managed service and outsourcing deals in the local market.
E-readiness
Chile enjoys one the best telecommunications infrastructure in South America and rates highly in many regional e-readiness indicators. According to BMI estimates, Internet penetration reached 34 per cent in 2007 and is expected to pass 41 per cent by 2012.
Opportunities
As a whole, due to its high rate of Internet penetration and its competitive Internet service provider market; the country has the ability to rapidly absorb technologies. Below are some of the areas that represent opportunities for Australian suppliers.
Investment
The Chilean Government encourages technology-intensive foreign investments. The government investment program offers a range of services to help companies set up successful ventures in Chile and supports companies that decide to establish permanent operations in Chile. These companies range from businesses offering international services such as contact centres and shared service centres to enterprises that work on the development of state-of-the-art technology.
Projects typically support aggressive development and/or use of new technologies in the fields of computer science and communications, biotechnology, new materials and electronics, such as: shared service centres for financial, accounting and human resources, call centres and technical support centres, IT and back offices, software development, electronic integration and assembly operations.
Security
Major organisations in Chile are expected to take a strategic change of directions in terms of a new security paradigm: less technical issues and more business activities. They will likely focus on services that support safe application development with application security testing and development processes.
Among large and mid-size companies throughout the country and the region the managed security services model will increasingly become the preferred option, given shortage of certified advanced skills in networking professionals. Identity and access management deployment tied to employee and partner authentication, beyond the already existing implementations tied to employee security and compliance.
Mobile privacy and personal data protection – focus on identity will impact personal use of the Internet. Many organisations will begin serving home and private users with secure authentication solutions.
Health
Chile is improving its public health electronic recording systems, however, not only at administration level, they key aspect is to find solutions that will allow inclusions of clinical data supplied by medical doctors. The Health Ministry plans to have an annual budget for network and IT systems of US$9.5 million starting in 2009.
Telecommunications
Telecommunications trend is moving toward adding value services to IP nets, ie. the market is looking into mobile and localisation services, information, image (video) and voice integration services, VOIP.
Digital agenda
Chilean Digital Agenda is a public-private initiative that sets out a national strategy that looks forward to 2012. The Agenda sets goals in six areas: Internet Access, Education and Training, e-Government, Business Digital Development, ICT industry Development, and Legal and Regulatory Readiness.
Natural resources
IT products and services linked to the vertical sectors in which Chile has comparative advantages. In a very near future, biotechnology and ICT will be significant competitive advantage sources for natural resources industries, such as mining and agribusiness.
Requirements for companies to switch to International Financial Reporting Standards by January 2009 will translate into significant IT investment.
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