Latin American Companies to Reduce Investments in IT

Although for many companies the crisis generated by COVID-19 meant a turning point to modify their strategy and embrace digitalization, for other companies it will mean a reduction in investment in technology. According to an IDC analysis, during 2Q20, about 53 percent of companies will reduce their investment in IT due to the COVID-19 pandemic. Likewise, the study revealed it will take six to 11 months for companies operating in Latin America to realign their business plans.

"This will largely depend on the recovery of each of the industries and segments establishing a 'new normal' in terms of economics and IT projects starting in 1Q21," said Alejandro Floreán, Vice President of Consulting and Strategy from IDC Latinoamerica.

Globally, drops in IT investment exceed 55 percent, which keeps Latin America as the most optimistic region compared to others. For IDC, in 1Q20, most technology segments experienced 'calm before the storm'. An example is PC shipments, which grew 4 percent in Latin America and 16 percent in Brazil compared to 2019, while many tech companies reported a solid increase in revenue in 1Q20.

According to IDC, companies had to implement different initiatives to maintain their operations during quarantine and face the challenges that arose with the health emergency. The company says that 63 percent of those surveyed use a dynamic and reconfigurable work model, while 52 percent maintain a constant connection between organizations and individuals, regardless of their location, situation or context. Meanwhile, 40 percent of companies guarantee resilience in digital infrastructure and 39 percent are focusing on building trust among customers.

According to IDC, another segment that has remained resilient is security regarding both 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.

Consumers and businesses are prioritizing devices like laptops and tablets, which allow them to learn, work and entertain remotely, says IDC. The consultancy believes that companies are likely to halt the deployment of smartphones due to increased preference toward laptops and tablets.

In Mexico, the National Survey on Availability and Use of Information Technologies in Households 2019 revealed that there are around 80.6 million internet users in the country, 86.5 million cell phone users and at least 20.1 million households with internet, either through a fixed or mobile connection.