IBI Consulting
Opportunities in Emerging Markets & Strategies for
Growth: Exploring Latin American Countries
Latin America and the
Caribbean (LAC) Region:
At-a-glance
Economy:
 The LAC region
consists of 20
countries with
population exceeding
550 million and a
combined GDP of
$4.4 trillion.
 The region recorded
total trade of $1.4
trillion in 2009 of
which exports were
$750 billion and
imports $650 billion
Major Economies:
Brazil, Mexico,
Argentina
Indian IT Companies
with presence in LAC
region:
Mahindra Satyam, Patni
Computers, Tata
Consultancy Services,
Infosys, HCL, Polaris,
Sasken, Wipro, Aptech
Map image courtesy: Information
Services Latin America (isla.igc.org)
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Summary:
 Latin America weathered the recent global economic
crisis better than most other regions largely due to
strong policies in place and healthier economies in
the region.
 As trade between India and the LAC region increases,
Indian IT companies are moving into this region as
part of their strategy to establish themselves in
emerging markets.
 Partnerships with local companies could facilitate
entry and overcome challenges in the LAC region.
Latin America emerged from the global economic crisis in relatively
good shape, and will be an important player to help rebuild the
world economy.
According to the Development Centre of the Organization for
Economic Co-operation and Development (OECD), Latin America is
rebounding from the recession more rapidly than the majority of
developed economies. According to them, the rate of recovery is
expected to be substantial in 2010, though short of typical growth
rates of 5 percent during 2004-08.
Indian companies in the pharmaceutical, energy and IT sectors
have successfully established a base in this region. India´s trade
with the LAC region in 2009, increased in absolute numbers even
though the growth was lower than growth in the previous year.
Business between India and the LAC region is expected to be
strengthened further with Indian IT companies moving into the
untapped markets in the region.
A BusinessWeek report rates Mexico, Brazil, and Chile as the main
countries to watch for offshoring in the LAC region. Mexico and
Brazil have acquired critical mass with big company clients and also
have sufficient number of students graduating every year. Indian
companies could counter this challenge by forging alliances with
some local players and target the U.S. and European markets.
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Opportunities

Business Process Outsourcing / Knowledge Process Outsourcing

Indian IT companies could make best use of available outsourcing infrastructure in the region and
provide 12/12 joint support to client in the U.S. by establishing near-shore presence. The option of
providing 24 hour support with centres in both India and the LAC region working during the day
offers an attractive proposition for U.S. clients. Companies could either partner with local players or
set up a unit individually.

Cloud Computing

According to Rodolfo Garcia, president of Terremark Worldwide, an IT infrastructure services

provider, companies in Latin America are using cloud computing as a way of catching up instead of
trying to fix legacy systems. He says that the most attractive markets for service providers are Brazil,
Colombia, and Mexico. Telecommunications, financial services, and health care are the sectors
driving the adoption of cloud computing.

Managed Security Services

Managed security services presents itself as a major opportunity area for Indian IT companies in the
LAC region. Frost & Sullivan projects the Latin American managed security services market to grow
at a CAGR of 40.4 percent from 2005 until 2011, reaching a total value of $270 million. The main
drivers of growth in the region are the diversification of attacks against corporate networks and the
bad publicity generated by cases related to security leakages. Brazil and Mexico continue to be the
largest markets for managed security services in the region.

Challenges
The LAC region presents some unique challenges to companies seeking to establish a presence
there. These include:

 The LAC region IT market is fragmented and Indian IT companies could find it challenging to
establish differentiators and gain an advantage.
 Sales cycles are projected to be long leading to concerns about return on investment in the
region.
 While there is extensive talk to advanced technologies and cloud computing in the LAC
region, the BPO and IT services segment is projected to be the core of growth matrix. Both
of these segments are fragmented in the LAC region.
 Partnerships with local companies are expected to be essential for small and medium size
Indian IT companies to establish a presence in the LAC region.
 Companies are prone to market fluctuations sometimes due to political and security
concerns in certain countries in the region.

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Strategies
Indian IT companies looking at investing in the LAC region could consider a mix of delivery models.
These include:

Partnership Model

 Identify strategic partners with focus on mutually supporting the expansion of bandwidth of
offerings.
 Support partners in delivering solutions of domestic needs while jointly collaborating to bid
for more international opportunities.

Dual Delivery Model

 Maintain delivery centres both in India and the LAC region.

 Opening a centre in the LAC region would help Indian companies establish capabilities in the
central time zone and better serve North American clients and their operations in the LAC
region.
 The LAC region centre could also be used to explore non English speaking geographies with
the availability of resources with multi-linguistic skills.

Hybrid Model

 The hybrid model is a combination of partnership and dual delivery model.

 This model will ideally suit companies that do not totally partner with a company while going
to the market but take the support of domestic players while executing a project.

For further information on the LAC region and market entry strategies, please contact Namrata
Sundaresan at namrata.sundaresan@ibipartners.com or +91-9840184541. IBI Consulting is the
advisory arm of international research and consulting group IBI Partners.

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