IT Outsourcing - LATAM

LATAM

Revenue in the IT Outsourcing market is projected to reach US$15.92bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 12.26%, resulting in a market volume of US$25.28bn by 2028.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$50.34 in 2024.
In global comparison, most revenue will be generated in the United States (US$185.50bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Market

Region

Region comparison

Currency

Analyst Opinion

The IT Outsourcing market in LATAM has witnessed significant growth in recent years, driven by a combination of customer preferences, market trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Companies across the globe are increasingly turning to IT Outsourcing to reduce costs, enhance operational efficiency, and gain access to specialized skills. In LATAM, businesses are attracted to the region due to its proximity to North America and the availability of a large pool of skilled IT professionals. Additionally, many companies in LATAM offer bilingual support, making it easier for businesses from English-speaking countries to communicate and collaborate effectively.

Trends in the market: One of the key trends in the IT Outsourcing market in LATAM is the rise of nearshoring. Companies from the United States and Canada are increasingly outsourcing their IT projects to countries in LATAM, such as Mexico, Brazil, and Argentina, due to their geographical proximity and cultural similarities. Nearshoring allows for easier communication, faster response times, and reduced travel costs compared to offshoring to countries in Asia or Eastern Europe. Another trend in the market is the growing demand for cloud services. As businesses in LATAM embrace digital transformation, there is a need for cloud-based solutions to enable scalability, flexibility, and cost-effectiveness. IT outsourcing providers in the region are expanding their capabilities to offer cloud migration, management, and support services to meet this demand.

Local special circumstances: LATAM countries have made significant investments in developing their IT infrastructure and promoting a favorable business environment. For example, Mexico has implemented various initiatives to attract foreign investment and foster the growth of the IT sector. Brazil has also taken steps to promote IT outsourcing, including tax incentives and the creation of technology parks. Furthermore, the availability of a large pool of skilled IT professionals in LATAM is a key advantage for companies looking to outsource their IT projects. Many universities and technical institutes in the region offer IT programs, producing a steady supply of qualified graduates.

Underlying macroeconomic factors: The IT Outsourcing market in LATAM is also influenced by underlying macroeconomic factors. The region has experienced stable economic growth in recent years, which has increased the demand for IT services. Additionally, the depreciation of local currencies in some LATAM countries has made IT outsourcing services more cost-competitive compared to other regions. In conclusion, the IT Outsourcing market in LATAM is experiencing significant growth due to customer preferences for cost reduction and access to specialized skills. The rise of nearshoring, the demand for cloud services, local special circumstances, and underlying macroeconomic factors are all contributing to the development of the market. As businesses in LATAM continue to invest in their IT infrastructure and promote a favorable business environment, the region is well-positioned to attract more IT outsourcing projects in the future.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.