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Argentina Information Technology Report Q3 2011
Business Monitor International, July 2011, Pages: 61
Argentina's IT spending is forecast by BMI to grow at a CAGR of 15% over the 2011-2015 period, consolidating the PC market recovery in 2010. The IT market is expected to grow by around 12% in 2011, faster than domestic GDP growth. Government tenders are set to be a major driver of projects this year, ahead of elections in October, after which the spending could dry up.
The Argentine IT market is the second largest in Latin America. Per capita IT spend is seen as rising from US$108 in 2011 to US$189 in 2015. The addressable market is dominated by the capital Buenos Aires, which accounts for 26% of household appliance sales, including computer hardware.
New cloud computing offerings and increased competition in this segment should fuel further demand from end-users to utilise this technology. Educational tenders will be another area of opportunity, with a tender to deliver 3mn PCs to public schools announced in April. Key prospects for enterprise resource planning (ERP) implementations and systems upgrades will include companies focused on regional expansion and export-oriented industries.
Industry Developments
In 2011, the government is introducing new regulatory compliance laws for electronic invoicing. The new requirements, due to take effect for some industries on April 1, follow major changes that took effect in 2010, regulating electronic invoicing for Type E export invoices. The new regulations will now extend the requirement to domestic (Type A and Type B) invoices.
Also in 2011, a number of IT tenders at both federal and provincial level are expected to be bid on ahead of October's presidential elections. Federal government agencies such as the justice ministry are expected to issue tenders, while local governments including Cordoba and Santa Fe are also calling tenders, as they look to update their computing resources.
The 2010 announcement of the government tender for 3mn notebooks computers for schools again raised questions about the domestic computer industry's production capacity. The government has ruled that half of the PCs must be manufactured in Argentina, which over three years would add at least another 500,000 computers to annual production.
Competitive Landscape
2010 saw the emergence in the Argentine market of tablet notebooks, spearheaded by Apple's iPad. Local companies are also planning to enter the tablet market. Fravega has said that it plans to start producing tablet computers at its plant in Rio Grande, Tierra del Fuego, as of Q211. Fravega was targeting sales of around 275,000 nationally this year.
The public sector is a key target for vendors. In April 2011, a consortium formed by Argentine solution developer Unitech and regional IT distributor Aktio, won a US$4mn tender to modernise the management system of the judicial branch of Argentina's Mendoza province. Aktio is also bidding on a number of other government projects this year at federal as well as provincial level.
A major area of opportunity for IT services vendors will be public and private sector organisation demand for help to utilise cloud computing solutions. In November 2010, Telefónica Argentina announced plans to invest ARS50mn in cloud computing services for small and medium-sized enterprises (SMEs) by the end of 2011.
Computer Sales
BMI projects that Argentina's computer and accessories market will have a CAGR of around 13% over 2011-2015, reaching around US$4.1bn by 2015. Argentine sales of computer hardware are projected to grow again in 2011, consolidating a strong bounce-back in 2010. With PC penetration only around 25%, there is still plenty of growth potential and penetration is expected to rise above 30% by 2015. Going forward, drivers include affordable PC programmes for households and schools, as well as growing broadband penetration, retail channel expansion and the popularity of notebooks and netbooks.
Software
Argentina's software market is projected to be worth US$780mn in 2011 and software CAGR for 2011- 2015 is forecast at around 17%. Software piracy is still above 70% and higher than in Brazil and some other Latin American countries, although law enforcement agencies have mounted periodic crackdowns against illegal software.
Demand from SMEs for ERP applications should continue to grow, particularly in relatively untapped provincial areas. The main functional category currently remains ERP solutions, estimated to account for more than 80% of the enterprise software total. However, vendors will increasingly look to applications such as customer relationship management (CRM) and business intelligence, where faster growth is projected.
IT Services
Argentina's IT services market is forecast at around US$1.2bn in 2011, following a return to double-digit growth in 2010. For a developing market, the percentage of Argentine IT market revenues generated by services is fairly typical at around 25%, although lower than some other countries in the region where the services share is already above 30%.
IT services revenues are expected to grow faster than the market as a whole, with organisations looking for help to utilise efficiencies from cloud computing. Led by the financial, telecoms and public sectors, there is a trend towards bigger managed service and outsourcing deals in key sectors of the local market. However, traditional services such as desktop support are still the mainstay.
E-Readiness
Argentina has one of the most dynamic telecoms markets in the region, with a dramatic expansion in the number of mobile subscribers in the past few years. Fixed-line penetration is among the highest in Latin America, providing a good platform for strong growth in broadband services adoption.'
Argentina Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's information technology industry.
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