Latin American companies to resume IT spend in Q1 2021

Budgets will be mostly focused on technologies such as cloud while organizations are not fully adjusted to the "new normal", according to new research.

Companies in Latin America will be resuming their IT investment programs in the first quarter of next year and in the meantime budgets will be focused on technologies such as cloud, according to a new report.

According to the study released by analyst firm IDC on IT spending in Latin America, 53% of companies in the region will be reducing their spend in the second quarter of 2020. The research noted that organizations are currently tweaking their spending to meet their main needs and this trend should continue for the rest of the year.

"The current crisis should continue for another 3 or 5 months and, by the end of the year, we will have overcome the most serious phase", says Luciano Ramos, research and consultancy manager at the enterprise division of IDC Brazil. The prediction, Ramos said, is that companies will be adjusted to the "new normal" and will resume their spending plans in the first three months of 2021.

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The analyst firm is advising clients in the region to focus on what brings return and resilience to the business and on what engages customers. According to Ramos, most tech companies in Latin America "experienced calm before the storm" in early 2020, with significant revenue increases: an example cited by the analyst is PC shipments, which grew 4% in Latin America and 16% in Brazil in the first three months of the year, compared to the same period in 2019.

According to IDC, 62.8% of companies in Brazil have been employing "dynamic and reconfigurable work arrangements" to deal with the pandemic. The report added that consumers and organizations are prioritizing purchases of notebooks and tablets to enable remote working.

Hybrid cloud as the most important IT trend in Latin America at present, IDC says, as organizations focus on ensuring business continuity in the short term and accelerating digital transformation initiatives in the medium term.

"Cloud providers will become more influential in the data center and companies will increase the use of the public cloud during the pandemic, taking advantage of its flexibility and scalability", Ramos points out.

The analyst also stressed the increasing demand for network security, specifically for solutions that provide secure connections and access during the pandemic. He added that organizations that increase their consumption in the cloud are also likely to require less complex cloud-based security solutions to deploy and integrate.