Welcome to another article in our series of articles on key industries in Latin America (“LatAm”) that are particularly alluring and promising for foreign investment. In our past articles, we have discussed the agricultural sector, natural resources sector, services sector, manufacturing sector, and energy sector. Today, we will delve into the technology sector in LatAm and the vast opportunities it represents for foreign investors.
The technology sector (also known as the “tech sector”) is a swiftly growing sector in the region of LatAm, with countries such as Argentina, Brazil, Chile, Colombia and Mexico emerging as leaders. The mentioned countries are investing greatly in initiatives to increase the performance and competitiveness of the respective sector.
One of the most appealing fields for investing in the LatAm technology sector is software development. According to Tecla, the LatAm software industry is booming and is foreseen to experience significant growth in the upcoming years, after generating a revenue worth $22.1 billion in 2021. For instance, according to Statista, the software market revenue in Brazil is projected to reach $8.43 billion in 2023. Countries such as Argentina, Brazil, Colombia and Mexico are home to some of the best companies in the region, surpassing the performance of numerous leading North American software companies. The latter presents amazing opportunities for foreign investors to make the investment in the development of software solutions that can be used both regionally or exported to other countries.
The next area with important potential for foreign investment in the LatAm technology sector is IT services. The latter includes services such as cloud computing, cybersecurity, data analysis, etc. The mentioned services are in high demand in the region and it is expected that they will continue to grow. According to TechNavio, the LatAm IT services market is estimated to grow at a CAGR of 8.7% between 2022 and 2027. These trends clearly indicate an alluring investment opportunity.
The artificial intelligence sector is foreseen to grow rapidly in the LatAm region, with several countries investing heavily in research and development to further improve the technology. For instance, according to the Impact Economist (“Seizing the opportunity: the future of AI in Latin America” report), the market for artificial intelligence in health applications is foreseen to grow by nearly 38% between 2019 and 2027, and the region already provides a number of healthtech success stories. These trends present a great opportunity for foreign investors to participate in the development of cutting-edge artificial intelligence solutions in LatAm.
Furthermore, the LatAm technology sector offers opportunities for investment in other areas, such as fintech, e-commerce and telecommunications. These sectors are experiencing swift growth in the region and represent attractive opportunities for foreign investors.
Nevertheless, investing in the technology sector in LatAm also entails certain challenges for foreign investors, such as political and economic instability, a lack of infrastructure, to name just a few. Many of these challenges have already been described and discussed in our previous articles, thus we invite readers to take a look at them to learn more about the possible challenges they may encounter. As already highlighted in our previous publications, it is crucial for foreign investors to perform due diligence and collaborate with partners who possess the relevant knowledge and experience to navigate these challenges and obstacles and thus make the most of the exciting opportunities the LatAm technology sector presents.
As always, we kindly invite you stay tuned for our future articles on key industries in LatAm that are particularly attractive and promising for foreign investment.
