Peru: Will Its Economic Boom Extend To The Technology Sector?
I recently returned from attending the opening of Belatrix Software’s new office in Lima, Peru, where I was also able to meet with representatives of the Peruvian Association Of Software Producers (APESOFT), which aims to promote the software industry in Peru.
I was keen to travel to Peru to gain a better understanding of one of the fastest-growing Latin American economies, as well as to put this growth into the context of its technology industry. Peru was recently ranked fourth in Bloomberg’s list of the top 20 emerging markets, just behind China, South Korea, and Thailand but ahead of other prominent Latin American destinations such as Mexico and Brazil. It is rated as one of the most attractive Latin American markets for doing business.
Peru has one of the fastest-growing economies in Latin America, and although GDP growth has recently slowed slightly, its forecast for the medium to long term is positive. Although by total size, it is dwarfed by Brazil (whose GDP is approximately 14 times larger than Peru’s), the IMF is expecting continued growth at approximately 6% in 2013 and 2014.
However, despite its fast-growing economy, Peru’s IT market is one of the smaller and more nascent Latin American markets. Forrester estimates that total Peruvian IT purchases in 2012 were $2.5 billion — compared with $23.4 billion in Mexico and $46.5 billion in Brazil.
Some key observations:
• Given the youthfulness of the technology sector in Peru, government support will be crucial, and it appears that the Peruvian government recognizes the opportunity and is making the right investments. For example, in late 2012, it was reported that the government would invest $400 million in science and technology in 2013, and it has also sought to invigorate tech startups in the country.
• APESOFT has focused on encouraging the development of quality certifications, such as ISO 9000 and CMMI, among local technology companies.
• While the local service provider landscape is relatively limited (as is the export services focus), a number of service providers, including Stefanini (out of Brazil) and Spanish provider Indra, have a presence in Peru.
• Clients will benefit from slightly lower costs than in some of the more typical Latin American destinations, such as Argentina and Mexico.
• Belatrix Software stated that its (local) clients in Peru are extremely keen to understand Agile approaches. Its work involves coaching organizations in Agile methodologies.
While some of the weaknesses of Peru can clearly be identified — such as its limited export services focus and lack of proficiency in English — the clients I spoke with at the event were positive about their experiences so far, stressing in particular the cultural similarity of working in the region as well as Peru's highly open and collaborative culture. This will be particularly important as clients from North America increasingly look to Latin America for service delivery. It will be an interesting to see how the technology market in Peru develops in the coming years.