LatAm IT investments could shrink in Q2

Latin American companies could decrease investments in IT in the Q2 of 2020, according to IDC.

Latin American companies could decrease investments in IT in the Q2 of 2020, according to IDC. It’s still better than the rest of the world.

According to the International Data Corporation (IDC), a global provider of market intelligence, advisory services, and events for the information technology, it is expected that countries in Latin America will take 6 to 11 months to realign in the face of the effects of COVID-19.

This fact will largely depend on the recovery of each of the industries and segments, establishing a “new normal” in economic terms and IT projects from the first quarter of 2021. This is what Alejandro Floreán, Vice President of Consulting and Strategy of IDC Latin America, a relevant consultancy in the ICT sector in the region.

As a result, 53% of Latin American companies are expected to decrease investments in IT in the Q2 of 2020. While the expectation of decline worldwide is over 55%, which maintains Latin America as the most optimistic compared to other regions.

For IDC, in the Q1 of 2020 most technology categories experienced calm before the storm. “An example is PC shipments, which grew 4% in Latin America and 16% in Brazil, compared to 2019. According to Floreán, many technology companies reported a solid increase in revenues from January to March of this year.

Companies have had to launch different initiatives to maintain their operations during quarantine and to face the challenges that arise with the pandemic. IDC states that 63% of companies are employing a dynamic and reconfigurable work model, 52% are connecting organizations and individuals, regardless of their location, situation or context; while 40% guarantee resilience in the digital infrastructure and 39% build trust in their clients. “Many companies have had to implement different Digital Transformation models in a very fast way, they even had to make hasty decisions that they have been correcting in recent weeks,” says Floreán.

Consumers and businesses are prioritizing devices like laptops and tablets, which allow them to learn, work, and entertain remotely. Businesses are likely to halt the deployment of smartphones due to increased adherence to laptops and tablets. “VDI (Virtual Desktop Infrastructure) solutions and collaborative applications are having significant growth that was not seen until before 2019; despite being available previously, today they play a fundamental role in maintaining the operation of the business ”, explains the expert.

Another segment that has remained resilient is Security, both comprehensive as Hardware and Software, as well as Services. One of the indicators that support growth is the optimization of network infrastructure to guarantee fast, efficient and secure VPNs. IDC has identified that with the realignment that will occur in the coming months, companies will focus on the secure and encrypted management of business collaboration, desktop, and critical systems.

In the telecommunications market in Latin America, the income opportunities are in UCaaS, Multicloud management, Security, SD-WAN, and video content; not only for operators but also for technology providers.

Post-COVID-19 stage

For the post-COVID-19 stage, IDC points to the hybrid cloud as the most important trend in Latin America, especially in critical workloads. Investments will focus on guaranteeing business continuity in the short term and accelerating Digital Transformation initiatives in the medium term.

“Cloud providers will have more influence in the data center and companies will increase the use of public cloud during the pandemic, taking advantage of its flexibility and scalability,” says Alejandro Floreán

The immediate impact is on network security, specifically on solutions that provide secure connections and access. Organizations that are increasing their consumption in the cloud are also likely to require cloud-based security solutions, less complex to implement and integrate, that are in line with the social distance between Cybersecurity professionals and IT staff.

IDC recommends raising awareness of the need to accelerate digital initiatives, especially about business continuity when the pandemic situation diminishes. As well as creating more resilient digital operations and services; rethink the customer experience and what it brings them, in addition to empowering employees to be empathetic and continue to provide customer service.