Information and communications technology to Peru

(Last updated: 4 May 2009)

Trends and opportunities

The market

Peru has one of the smaller IT markets in the Latin America region, but, despite a gradual easing, the market is projected to grow at a compound annual growth rate (CAGR) of 9.6 per cent over the 2008-2013 forecast period. A major driver will be the free trade agreement (FTA) between Peru and the US, which will reduce tariffs by up to 80 per cent and drive IT investments. Economic growth is lifting millions of Peruvians into a middle class for whom computers are no longer beyond reach.

The total value of spending on IT products and services should pass US$1.5 billion by 2013. Despite strong growth in recent years, a PC penetration rate of around 16 per cent indicates that there is plenty of potential for further development. The market has a significant geographic digital divide, with the capital Lima accounting for at least 80 per cent of all PC sales.

Government spending is traditionally around 10 per cent of total IT spending, but this may increase over the next few years as the government implements a number of programs to tackle the digital divide and increase PC penetration among lower-income demographics. The largest potential source of demand, however, will be the small- and medium-sized enterprise (SME) sector, which comprises around 7,000 companies with a potential demand for enterprise solutions.

Industry developments

In 2009, the government recently confirmed that it had a budget to purchase another 152,000 PCs for schools. The purchases, from the 'One Laptop Per Child' program, are to follow the 140,000 computers purchased in 2008. The education ministry has budgeted US$38.4 million for the purchase of the laptops, together with accessories. Regional governments will also contribute.

Peru's government continues to focus on ICT for development. In 2008, the government re-launched a tender to roll out broadband to more than 1,000 rural communities. The tender was originally awarded to Telefónica, but was then cancelled amid concerns about procedural irregularities. The contract is expected to initially connect 1,050 rural communities in Peru at a cost of around US$11.5 million.

Another major focus of the government is to strengthen the domestic software sector. Peruvian software promotion agency Apesoft expected domestic sector output to reach around US$150 million in 2008, up from US$130 million in 2007. The government sees the software sector as having important export potential. In 2007, according to Apesoft, the value of Peruvian software exports was around US$158 million, and this was expected to increase to about US$163 million in 2008.

Computer sales

According to Business Monitor International (BMI), Peru's computer and accessories market will grow at a CAGR of 9.1 per cent over the 2008-2013 period. In 2008, Peru computer sales were estimated at US$438 million, and are forecast to pass the US$500 million mark by 2010. Annual PC sales including notebooks are currently above 700,000 units a year, and increasing at around 20 per cent a year. Growing affordability has much to do with this. Laptop prices have virtually halved since 2006, when the average price was around US$1,200, compared with around US$650 in 2008. Some vendors expected laptop prices to fall as much as another 20 per cent in 2008. However, desktops still accounted for more than 70 per cent of sales in 2007. Government programs and demand outside the capital Lima is likely to fuel growth over the next few years.

Software

Peru's software market is estimated to have been worth US$67.3 million in 2008. Software spending compound annual growth rate for 2008-2013 is projected at 9.1 per cent. Peru is one of the Latin America region countries with a relatively strong record on software piracy, with the use of pirated software in the public sector dropping significantly. A number of other segments are expected to drive demand, including health, mining and education. Faced with more, and often larger, competitors, even smaller Peruvian exporters will want to reduce costs and gain competitiveness. There should be a demand to improve processes such as finance, accounting, sales and inventory. The majority of current demand, in functional terms, is for enterprise resource planning (ERP) and supply chain management (SCM). There is a small but growing market for custom solutions.

IT services

Peru's IT services market is estimated to have grown by around 15 per cent in 2008 to reach a value of US$336.6 million. An 11.5 per cent CAGR is projected by BMI for 2008-2013. For a developing market, the percentage of IT market revenues generated by services is high, at around 32 per cent, although this is in line with the region and lower than for Brazil. The IT services market is becoming one of the most dynamic drivers of IT-sector spending in Peru and the Latin America region. In Peru, the growing level of investment in recent years in corporate management solutions is translating into demand for support and maintenance as well as more sophisticated IT services.

E-readiness

According to BMI estimates, the number of Peruvian Internet users reached nearly 6.9 million in 2008, representing 23.6 per cent of the population. The percentage of broadband subscribers in the general population, however, was only 2.4 per cent. Recent data from Peru's national statistics institute, INEI, suggests that nearly 75 per cent of Internet users use a public access point, compared with just 18.8 per cent of users who use the Internet at home, and 12.1 per cent at work. Mobile telephony penetration is continuing to increase significantly, and was up to 45.02 per cent in Q307, up 31.3 per cent year-on-year.

The World Economic Forum ranked Peru 78th in the world in its most recent survey of 'e-readiness', but cited improvements in some institutions including those within the judicial, police and education spheres. 

Opportunities

A main source of opportunity for Australian companies is the optimisation of investment on data centres. There is an increasing need to consolidate hardware at a lower scale and with higher processing capacity.

Solutions tending to save space, maintenance and energy are highly valuable for Peruvian companies.

As there is a boom on investment in construction of new malls both in Lima and in other cities in Peru and therefore an increase of sales on the retail sector, solutions related to traffic counting systems, queue management are on demand for the following two years.

Companies will spend on new server platforms and hardware as well as software systems.

The largest potential source of demand, however, will be the SME sector, which comprises around 7,000 companies with a potential demand for enterprise solutions. The FTA signed with the US should also provide an incentive for these companies to invest in new technologies. Demand will be strongest for hardware and ERP and supply chain software.

Banks are investing in regulatory compliance, e-banking and customer services infrastructure.
The government is reportedly looking at allowing any company with the appropriate infrastructure to provide telecom services.

New fixed-wireless access operators bringing services to underserved rural areas.

Increase on sales for chip manufacturers, market focused on SME, large retailer sectors and local assemblers. 

Tariffs, regulations and customs

All imports are treated equally with the exception of imports from the Andean Community (ie. Colombia, Ecuador, Bolivia) from which virtually no IT products are sourced.

Australian IT equipment exporters face no discriminatory barriers to export to Peru.

Most imports into Peru are subject to 12 per cent duty. After duty the 18 per cent value added tax (VAT) is also applied. 

A 30 per cent duty is charged software imports. The value is indicated in a withholding tax certificate, which can be used against taxes payable in some countries – notably the USA, but not as yet in Australia. 

Software modified for Peruvian clients and provided as part of a consulting service delivered outside of Peru is charged a reduced rate of 10 per cent duty.

Industry standards

There are no industry standards for the IT sector in Peru. Foreign certifications from Australia, the European Union and the USA are looked upon very favourably, but now particularly standards are required for import or sale in Peru.

Equipment usually run on 220V, 60 Hz power systems, but use of transformers is also common for smaller equipment. Measurements are in metric.

Marketing your products and services

Market entry

Australian IT firms have made inroads with innovative solutions, often at prices more competitive than those offered by the multinationals that dominate the region, and demonstrating short-term cost savings for their cost-conscious customers.

Peru is often a good first market in South America to launch your sales program for the region. Decision makers are easy to identify and are almost all found within a few kilometre radius in Lima. They usually provide a quick initial expression of interest in a new product.

Some factors to consider when entering the ICT market in Peru:

• Partnership with one of the few Peruvian IT system providers and integrators is often the best market strategy.
• Personal relationships between end-users and systems providers are key to early identification of opportunities and needs.
• Almost all contracts are awarded on technical merit and cost. 
• Foreign certifications and approvals are largely accepted at face value in Peru – seldom is any Peruvian approval required. Australian, European Union or American certifications are readily accepted.
• Price is key as Peruvian IT systems integrators and end-users are very price sensitive.
• Spanish language corporate overviews and business plans are useful, but English is widely read, if perhaps, sometimes not well spoken.
• Distribution of marketing and technical presentations to managers of the regional or head office of a multinational can help sell a new product as purchasing decisions for systems and equipment are increasingly taken in a regional context to streamline operations.
• Even if presenting technical materials in English, a Spanish language PowerPoint presentation is often an effective marketing tool to capture the interest of managers across operational divisions.

Distribution channels

Virtually all purchases of network equipment and software by the four leading telecommunications operators in Peru are contracted to multinationals, either the Lima or regional office, or to one of the Lima-based systems integrators GMD and COSPISOFT (both websites are in Spanish).

Links and industry contacts

ICT–related resources

Lima Chamber of Commerce: Information Technology Committee – www.camaralima.org.pe
National Council of Science, Technology and Technological Innovation – www.concytec.gob.pe
Peru Promotion Commission for Export and Tourism: Promperu/Services Export Department – www.promperu.gob.pe
Peruvian Association of Software Producers – www.apesoft.org

Media

Business News Americas – www.bnamericas.com

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au