Monday, 20 April 2020 22:13

IT Vendors on a Covid-19 affected LATAM

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We think it would be useful to share some insights and thoughts about how IT vendors could monitor LATAM as it goes through the Covid-19 pandemic.

Based on the analyst house “Americas Market Intelligence there are few forces that will determine Covid-19’s full impact for each country in the region 

  • The percentage of the population over 65 years old in most LATAM countries does not exceed 10%.  
  • The medical infrastructure is stronger in Argentina and Chile while weaker in Mexico and Peru.  
  • The fiscal and monetary strength leads in Chile, Colombia, and Peru, while Argentina, who recently delayed international payments, comes behind.  
  • The capacity for an economic rebound will benefit countries with strong agriculture and commodities while more difficult for assemblers due to disruption of supply chains. 

Let’s also look at the speed and forcefulness by country in tackling this health emergency. Argentina, Chile, Colombia and Peru acted fast and decisively while Brazil and Mexico responded slow with mixed messages. 

From a purely medical view, Argentina, Chile and Colombia should be able to start the difficult, and most likely slow, process of re-opening its economies faster than any other country in LATAM. 

Like in other geographies, there will be industries that will fair relatively well during these times like health care, communications, mining, staple foods, and some financial institutions. These industries will experience less cut in their IT budgets and maintain projects geared towards digital transformation, the mobile channel, and security. IT vendors will benefit from targeting these industries in all regions of the world. 

Some industries that will be heavily impacted like tourism, auto assemblers and distributors, and shopping malls will make major cuts to their IT projects. Developing business prospects in the right industries across the globe will be a determining factor for how well IT vendors will navigate today’s environment. Even the most affected companies will keep alive some critical projects. For example, LATAM airlines announced the reduction of its 43,000 employees’ salaries by 50%, recommended to defer dividends payments, and eliminated all short-and-medium term investment except for the ones related to its digital transformation project. 

Like in every market Covid-19 brings more complexity in doing business in LATAM. The elements required to successfully develop a business in the region, found in a thread in this blog site, become more important than ever before. We finish this blog by restating a couple of them: 

  • Companies can successfully enter a country even in weak economic years if they have the right business contacts and a solution that delivers value. 
  • Companies should explore go-to-market strategies that allow for canvasing opportunities across countries and adopt risk sharing strategies to achieve positive ROI from year one.A strong sales channel execution is a component of this strategy
  • Companies should assess the deployment of in-country resources after gaining a full understanding of market demand by country and have enough data to prepare reliable P&L estimate.

Read 5408 times Last modified on Wednesday, 22 April 2020 20:05
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