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IT vendors slash prices in LatAm as users seek savings

Companies are shifting to the SME segment and focusing on cloud to respond to the recession, says Frost & Sullivan.

Technology companies are drastically reducing prices of products and services and diversifying their portfolios as a way to respond to recessionary spending patterns of user organizations in Latin America, according to a recent study.

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Latin American decision makers are shifting from technology spending to employing digital tools to accelerate and enhance their business, according to the study Latin America Outlook of the Information Technology Services Market by consulting firm Frost & Sullivan.

This new environment is creating opportunities for IT and cloud sourcing, and service providers are responding with an expansion of their portfolio of cloud services, according to the study.

Additionally, vendors are targeting market segments and industry sectors where they had no historical presence, moving from the enterprise to small and medium enterprise segments and diversifying their portfolio as a way to increase their revenue, according to Renato Rosa, Digital Transformation Program Manager at Frost & Sullivan.

"This movement is increasing the competition and forcing IT service prices to fall sharply," Rosa points out.

"Latin American enterprises are no longer satisfied with service offerings; they are demanding consultations to better plan for their future needs and optimize infrastructure," he adds.

The strategy adopted by companies in Latin countries like Brazil illustrate that trend, Oracle being among the companies chasing the SME segment with cloud products, as well as SAP.

However, the study highlights that the uptake of offerings like cloud is still timid across the region. This is because businesses lack the revenue to make the shift to the cloud or do not have sufficiently skilled people to use them.

Despite these challenges, the study forecasts that the public cloud market revenue in Latin America will reach $3,957.4 million by the end of 2018, the study says. The number of managed cloud services and multi-cloud providers is also predicted to increase.

Additionally, the Latin America data center market revenue is predicted to reach $3,073.8 million by the end of 2018, with traditional storage and disaster recovery solutions losing market share to cloud IaaS environments.

When it comes to managed security services, market revenue will reach $620.9 million by the end of 2018, according to the report, with machine learning and deep learning becoming more prevalent.

The F&S report predicts that market revenue for Big Data services in Latin America will reach $785.5 million by the end of 2018, creating new demands for data analysis solutions that can integrate with artificial intelligence and machine learning technologies.

Decision makers in Argentina, Brazil, Chile, Colombia, Mexico and Peru took part in the research.