IT Services Outlook Rosy Despite Economic Pressure


Argentina's Chamber of Commerce for IT Services and Software (Cessi) says the industry will generate re venues of US$7.3bn between 2013 and 2020. The forecasts are part of the 2020 Strategic Plan which lists objectives that will grow Argentina's IT services and software market. Goals include building IT exports to reach US$2.96bn over the same time period and create jobs that will see an 80% increase in the number of Argentineans employed in the sector. As BMI forecasts show, services and software will increasingly drive Argentina's IT market growth with services rapidly growing over our forecast period .

Cessi says the IT industry adds around 8,000-10,000 new employees each year, which should see the sector easily reach its goal of 134,000 employees by 2020. IT has rapidly grown as an important sector in Argentina, employing almost six times as many people as it did in 2003. The IT services and software segments of the industry generated US$2.56bn in revenues in 2012, reports BNAmericas, a figure slightly higher than BMI 's US$2.52bn for IT services and Software. Our data show that hardware still accounts for over half of the IT market, and will only fall below 50% in 2014.

Services Overtake
IT Market Growth By Segment (%)

IT services offer the greatest potential for growth, with a CAGR of 13.7% over 2013-2017, compared to the total market CAGR of 10.5%. As IT markets mature, IT services form an increasingly important impetus to market value, as the groundwork laid by strong hardware sales in previous years encourages users to look to IT for a wider range of applications. Local consultancy Claves Información Competitiva highlights that 54% of Argentina's 3,600 IT companies produce hardware, while 25% produce IT services. BMI believes the trend is towards IT services growing rapidly, while hardware producers remain stagnant.

While BMI sees the strongest growth for IT services in Argentina, much of this will depend on the economic outlook for the country. There are considerable downside risks such as an expected currency devaluation and muted growth to continue at less than 2% annually. That said, the Argentine IT market is supported by well established and competitive communications infrastructure, which should help encourage businesses to make greater use of IT services to encourage more efficiency and cost savings. BMI's outlook for the IT services and software segments is positive, despite the downside pressures and we the move away from hardware may be accelerated by a concerted push by Cessi and the government.

This article is tagged to:
Geography: Argentina

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