Weak Economy Forces LatAm IT Services Providers to Slash Prices: Study

“Enterprises are no longer satisfied with service offerings; they are demanding consultations to better plan for their future needs and optimize infrastructure, which is increasing competition and forcing IT service prices to fall sharply."

IT services

Cloud services and data analytics solutions are seeing increased demand across Latin America, but a weak economic climate has forced IT services providers to slash prices in order to attract new customers.

“Enterprises are no longer satisfied with service offerings; they are demanding consultations to better plan for their future needs and optimize infrastructure, which is increasing competition and forcing IT service prices to fall sharply,” said Renato Rosa, Senior Analyst at Frost and Sullivan, in a new report.

Rather than spending on traditional IT infrastructure, Frost has found that entrepreneurs are looking for ‘digital transformation accelerators’ to cut operational cost and increase efficiency. Cloud computing is reportedly their favorite choice.

Service providers, on the other hand, are arming themselves with innovative offerings, but they are not finding many buyers due to a ‘lack of revenue’ and the absence of specialized human resources, according to the study.

In their bid to increase sales, IT services providers are diversifying their portfolios and hunting for new customers in the small- to medium-sized business segment.

Despite these challenges, the study forecasts that the public cloud market revenue in Latin America will reach US$3.9 billion by the end of 2018, predicting a steady rise in the number of managed cloud services and multi-cloud providers.

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Additionally, the LatAm data center market revenue is predicted to reach US$3.3 billion this year, with traditional storage and disaster recovery solutions losing market share to cloud IaaS environments.

As for managed security services, market revenue is expected to reach US$620 million, with machine learning and deep learning becoming more prevalent.

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