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(Last updated: 24 May 2011)
Trends and opportunities
The market
The Mexican IT spending will grow by about 16 per cent in 2011 to US$14.7 billion. Government spending will be an area of opportunity in 2011 with a substantial information society budget and the rollout of national and local projects that had been delayed by an austerity drive. Interest in cloud computing should continue to grow after many of Mexico’s large companies conducted cloud pilots last year.
Mexico’s IT spending is forecast to grow at a compound annual growth rate of 11 per cent over 2011-2015, but with strong variation between sectors and regions. Mexico City and its surrounding area accounts for at least 50 per cent of total IT spending in the country, but Mexico’s underpenetrate south east and Pacific regions are expected to offer growth opportunities over the five-year forecast period.
While Brazil remains in pole position as the largest regional IT market for the moment, Mexico has a special significance due to its proximity to North American markets and status as the country in the region where many foreign vendors first launch brands.
Opportunities
Hardware
Mexico’s computer hardware sales are projected at US$6.8 billion in 2011 and are projected to reach around US$9.9 billion in 2015. Mexico’s computer hardware sales are projected to report solid growth in 2011, although slightly lower than in 2010, when the market made a strong recovery.
PC’s sales were estimated to have achieved double-digit growth in 2010 compared with 2009. According to Mexico’s National Statistics Institute, higher sales of computers was one of the factors which drove an overall modest rise in retail sales in Mexico and in July and August 2010, compared with a year earlier.
Software
The Mexican software market is projected to reach US$2.7 billion in 2011, from US$2.3 billion in 2010, with imported software accounting for at least 80 per cent of the total. In 2010, sales of Windows 7 operating system had a positive impact on sales, as did systems upgrades deferred from 2009.
Software annual growth rate for 2011-15 is put at around 11 per cent outpacing general IT market growth, as the government turns its attention to overcoming Mexico’s long-standing under-investment in this area. Mexico has the second largest software market in Latin America.
In 2011, migrations to the Windows 7 operating system should continue to impact positively on market revenues. Meanwhile with business confidence relatively buoyant heading into 2011, the market should see a boost system upgrades previously deferred because of the global economic situation. Another factor that could boost investment in 2011 is new government regulations requiring companies to integrate with the Servicio de Administracion Tributaria (SAT) for real-time approval of electronic invoices.
Software vendors will see an opportunity to help businesses prepare to meet regulatory compliance for both senders and receivers of invoices.
The most popular applications include:
- basic ERP
- supply chain management solutions
- integral administration and accounting suites
- inventory control hotel administration packages
- point-of-sales applications
- e-business solutions and computer-aided manufacturing applications
Business intelligence software is another strong performer, with sales of databases growing steadily.
Looking forward, systems management and security software should also provide opportunities, with growing demand or more sophisticated security solutions.
In terms of verticals, public and financial sectors, healthcare, the chemical industry and utilities and SMEs are seen as the ones with the most growth potential.
The government will be a key vertical in 2011. Mexican government software investments were expected to increase by a double digit rate in 2010 according to local surveys.
IT services
The IT services market is projected at around US$5.1 billion in 2011.
Despite the near economic exigencies, the market should ultimately grow at an annual growth rate of 11 per cent through 2015 to a value of US$7.8 billion. In 2010, however, much will depend on the speed and sustainability of global economic recovery.
The IT services market has become one of the most dynamic drivers of IT sector spending in Mexico and in Latin American region. Local companies are trying to use computing resources more effectively and integrate investments made in hardware and software. Demand to utilise cloud computing should be a major opportunity going forward, despite Mexico’s relatively high broadband charges.
In the long term, the increasing number of multinational corporations operating in Mexico is an important driver for spending. The global economic slowdown stimulated new demand for outsourcing from US organisations. Outsourcing is also becoming a spurt to growth for the IT services sector, with vendors increasingly adapting their focus to take advantage of this.
Other areas of opportunity
Latin America is still in the adopting stage of eco-friendly IT implementations. Cost reduction is achieved by a series of new capabilities that uses less energy and have greater operational capabilities and are therefore, far more efficient. In Mexico, though these methods are in a nascent stage, the most popular ones include:
- Server virtualisation and consolidation
- Thing provisioning
- Power management
- User mobility
(Source: Business Monitor International, ‘Mexico Information Technology Report - Q2 2011’)
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