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Argentina's information technology (IT) market -- including hardware, software, and services -- reached $5.2 billion in revenues in 2010, a 17 percent increase from 2009, and is expected to increase an additional 17 percent in 2011. In 2010, the software and services sectors recorded 13 percent and 15 percent increases, respectively. Hardware sales grew 15 percent in 2009 and approximately 19 percent in 2010. A local consultant, Prince & Cooke, projects that hardware will continue to grow in 2011 by 18 to 20 percent, led by the sales of notebooks, netbooks, tablets and other MIDs (mobile internet devices). The sale of personal computers (PCs) grew 18 percent in 2010, reaching 11.9 million units installed and sales are expected to increase by 17 percent in 2011. The sale of notebooks accounted for 35 percent of total PC sales in 2010, and is expected to increase 50 percent in 2011, including netbooks and similar devices. Printer sales and other peripherals increased 15 percent in 2010, while consumables increased 13 percent. Netbooks, MIDs, and 3G communication devices, such as smart phones (+180% in 2010) and other mobile devices grew an average of 50 percent in total. These products are expected to lead the sales of small personal computers and consumer electronics in 2011/12.

IT Services are growing in Argentina as outsourcing of IT-related solutions continues to be the main practice for companies worldwide. Total revenues of this subsector reached almost $1.5 billion in 2010 (30 percent of total sector revenues) in which the outsourcing of software development, network infrastructure, and management-related services played key roles.

The Argentine telecommunications sector grew 16 percent in 2010, accounting for $10 billion in revenues. The market is expected to grow by 17 percent in 2011. The continuing increase of broadband access (fixed 21%; mobile 150%) combined with the increased sale of notebooks and the record sale of smartphones and USB modems were highlights of 2010. This contributed significantly to the sale of broadband services over cellular and fixed networks and are expected to continue throughout 2011/12. Statistics from December 2010 indicate a penetration rate of 22 percent in telephone lines (9 million telephone lines installed); 50 million cellular phone subscribers (120 percent penetration, of which only 38 million are active) and 30 million Internet users (70 percent penetration). Argentina has the highest cable TV penetration in Latin America -- 70 percent in the Buenos Aires Metropolitan Area and 45 percent nationwide. In 2010, 3G USB modems and smartphones accounted for 1.5 million mobile broadband units.

According to Carrier and Associates, 2010 ended with 6.5 million fixed broadband accounts, with 8 million subscribers projected for 2011. International voice traffic increased by ten percent, while local phone calls increased by five percent. Telecom equipment/infrastructure sales increased 15 percent in 2010 reaching $900 million, and accounted for approximately 10 percent of total sector revenues. An investment increase is expected for 2011/12, mainly in 3G services for the GSM network, IP-based and NGN networks, and IT service outsourcing.

Sub-Sector Best Prospects
In the IT market, high-end branded PCs, notebooks, netbooks and minibooks, printers, servers, and multi-user systems are the major source of hardware imports. In addition, other consumer electronics, such as smart phones, digital cameras, MP3, MP4, other PDAs, digital storage devices, GPS and portable and fixed gaming products are expected to see increased demand for the next two years.

Since locally assembled PCs account for over 70 percent of the market, PC components will continue to be in high demand. Local assembly targets the residential/small and home-office PC segment. In the corporate segment, the cost benefit from local assembly does not outweigh the guarantee offered from an original vendor. The Argentine Government passed a Law in 2009 imposing a 30 percent increase on taxes for electronics imported, manufactured, or assembled outside the Free Trade Zone of Tierra del Fuego. This law is expected to increase the market share of locally assembled products vis-a-vis imported products by at least 10 to 20 percent in the first year.

In hardware, servers and multi-systems present good opportunities. In 2009, the United States was the major exporter of servers with 40 percent of total imports, followed by Brazil (25%) and Mexico (12%). Servers account for 3 percent of total hardware revenues.

The IT Services sub-sector offers major opportunities for U.S. companies in: network implementation, management and maintenance, legacy applications, wireless LANs, RTE (real time infrastructure) implementations, remote operation processing, back-up, critical mission services, disaster recovery systems, internet and network security systems, document digitalization, digital asset management, storage, utility computing, and information systems for rural areas (traceability, RFID, etc). Cloud computing and virtualization-related services will see high demand during 2010/11. The outsourcing of software development and call/contact centers will continue to realize investments, exports, and increased sales in the domestic market. Regarding software, large projects in the areas of security solutions and business intelligence will present opportunities in 2010/11.

In the Telecom sector, best prospects for 2010/11 are broadband Internet access (fixed and mobile); broadband wireless access networks (including point-to-point, point-to-multipoint, Wi-Fi, Wireless LANs, and Wi-Max); data transmission over cellular networks; SMS (short messaging services); broadband and multimedia content; and applications for cellular services, smartphones and 3G USB modems, IP Phones, VoIP networks, VPNs and IP VPNs, NGN and network security products. Blackberry/RIM was by far the best selling smartphone, followed by Iphone, Nokia, Motorola, Samsung and Sony products.

Opportunities
Five main factors will keep demand for IT hardware, software, and services high in 2010/2011:
-new investments in the country in a number of industries (e.g., tourism)
-the majority of the systems installed need upgrading
-the growth of Internet access (fixed and mobile)
-the increasing complexity and convergence of technologies
-highly educated and tech-savvy population
Other market conditions will foster growth in IT services throughout 2010 such as the increased use of e-banking, electronic commerce, and E-Government which have increased the awareness of needs related to information technology security.

In the telecom sector, investments in 2009 will be focused in three areas -- the deployment and enhancement of the cellular GSM network (3G+), the expansion of broadband Internet access (via ADSL, cable modem, Wi-fi, Wi-Max, 3G USB modems and smart phones), the expansion of data transmission/ broadband and content over cellular networks, and the continuing migration to IP networks (NGN) and triple play.

Argentina's adoption of the Japanese standard for digital TV, ISDB-T, in 2009 will present opportunities for set top boxes, converters and other products necessary to implement the transition successfully.


Argentina's IT market including hardware, software and services - reached US$4.5 billion in revenues in 2009, a14% increase from the previous year, and is expected to increase 17% in 2010. The software sector experienced a 12% increase in 2009, and is expected to grow by 10% in 2010. The services sector grew by 14% in 2009. It is expected to grow 15% in 2010 and generate US$1.1 billion in revenues, led by software development, network management, and cloud computing-related services. Hardware sales increased approximately 15% in 2009. Price and Cooke, a local consultant, projects that the hardware sector will continue to grow by 18% in 2010, led by the sales of netbooks and notebooks. However, a probable deterrent to hardware import growth in subsequent years is a law passed by the Argentine Government in 2009, imposing a 30% increase on taxes for electronics imported, manufactured, or assembled outside the Free Trade Zone of Tierra del Fuego. This law is expected to increase the market share of locally assembled products vis-a-vis imported products by at least 10-20% in the first year.

Since 2004, investment in technology has been growing significantly after years of low investment. Argentina is considered an early adopter and has a tech savvy population, which significantly contributes to the constant increase in the demand for IT hardware and software products and new, state-of-the-art technologies. Despite the economic crisis of 2008-2009, BMI predicts that the total value of spending on IT products and services in Argentina will pass US$4.8 billion in 2011 and reach US$5.9 billion by 2014. Per capita IT spending is projected as rising from US$93 in 2010 to US$140 in 2014.

The hardware sector, approximately 45% of the total IT market in Argentina, grew 15% in 2009. The sale of personal computers (PCs) grew by 20%; reaching 9.7 million units installed and is expected to increase by 17% in 2010. The sale of notebooks accounted for 35 % of the total PC sales in 2009, and is expected to grow by 50% in 2010 in response to consumers increased demand for mobility and connectivity. Printer sales and other peripherals increased 15% in 2009, while consumables increased 13%. Sales of netbooks, mini-notebooks, and 3G communication devices grew between 30 and 40% in 2009, and are expected to lead the sales of small personal computers and consumer electronics in 2010/11. According to IDC, the netbook segment will also be the "fastest growing" in 2010, with a projected 43% of the computer market.

In addition, other consumer electronics, such as smart phones, digital cameras, MP3 players, other PDAs, digital storage devices, GPS, and portable and fixed gaming products are expected to see increased demand for the next two years.

Four main factors will keep demand for IT hardware high in 2010/2011:

Investments in the country in a number of industries (e.g. tourism, construction, retail, financial services, etc.)
the majority of the systems installed need upgrading (5 years old)
the growth of internet access
the increasing complexity and convergence of technologies

In addition, IT Services are growing in Argentina as outsourcing of IT-related solutions continues to be the main practice for companies worldwide, in response to market realities which require companies to reduce costs, concentrate on core business, improve quality and productivity, and increase flexibility. Total revenues of this subsector reached almost US$1.3 billion in 2009 (30% of total sector revenues) in which the outsourcing of software development, network infrastructure, and management-related services played key roles. Virtualization is expected to eat up some of the outsourcing market in Argentina in 2010 and 2011.

The highlights of 2009 included the continuing increase of internet users to 23 million (57% penetration), a 15% increase. Broadband access continued to climb (fixed 21% and mobile 135%), combined with the increased sale of notebooks and the record sale of smartphones and USB modems. In total, 3G USB modems and smart phones accounted for 1.5 million mobile broadband units. According to Carrier and Associates, 2009 ended with 4.5 million fixed broadband accounts (from 3.2 million in 2008), and six million subscribers projected for 2010. The increased demand for fixed and mobile devices contributed significantly to the sale of broadband services, and is expected to continue throughout 2010/11.

Market Trends

According to IDC, the IT industry in 2010 to 2012 will be all about services. As previously noted, virtualization is expected to be one of the major areas of development in the Argentine IT Services industry in 2010 and 2011.

Virtualization, cloud computing, and terms such as SaaS, commonly known as Software as a Service, IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) are the new corporate solutions expected to be in demand in 2010/11. These flexible models provide reliability and infrastructure savings. Much of this is also supported by the extensive deployment of IP networks.

The IT Services sector also offers major opportunities for U.S. companies in: network implementation, management and maintenance, legacy applications, wireless LANs, RTE (real time infrastructure) implementations, remote operation processing, back-up, critical mission services, disaster recovery systems, internet and network security systems, document digitalization, digital asset management, storage, utility computing, and information systems for rural areas (traceability, RFID, etc). The outsourcing of software development and call/contact centers will continue to produce investments, exports, and increased sales in the domestic market.

Another growing solution in Argentina is Unified Communications (UC). The increase in IP networks, high speed mobile devices, and netbooks prompts the increase of on-site/off-site work and foster the use of 3G and even 4G - networks. High-speed-mobile-data service is a major highlight in the IT/Telecom services market in Argentina. IDC expects these services to increase a minimum of11% in 2010.

According to IDC, software expenses in 2010-2011 will be focused on both maintenance and new licenses. The trend is moving from solutions to managing information to solutions to manage the business (Business Intelligence, CRM, etc.). Outsourcing of BI platforms, among many others, will continue to increase. More SaaS licenses will find growth potential over the next two years in areas such as virtual training platforms (LMS) and network monitoring, among others.

Outsourcing of marketing online, and in many cases specialized on industry sectors, is soaring as well. Argentina is successfully developing this market to cooperate with - and in many cases, overlap with - advertising firms to meet the demands of a certain industry or niche. Argentina has highly qualified IT human resources for software development, and an extremely creative and talented staff of online designers. Hexacta and Three Melons (recently acquired by U.S. company Playdome) are two excellent examples. On the other hand, U.S. companies like IBM, Accenture, Sabre, and Cognizant, among others, increased their investments in the country to take advantage of these comparative and competitive advantages that Argentina currently presents. Marketing is now Interaction oriented (brand-client), explaining why brand online reputation and presence in social networks is becoming so important and growing so fast. A solid web campaign to secure client loyalty is, or if not should be, the new goal of most corporations. Web interaction is maturing, and companies require updated applications, Web 2.0 tools, and technologies like wikis, blogs, RSS, tagging. Many IT, web, and software services related to online marketing strategies will be in high demand.

Market Access

There are no major barriers to importing IT or telecom equipment. Telecom products must be certified by the Argentine Regulator (CNC National Communications Commission). CNC approvals may take longer than is ideal for optimum time-to-market delivery by equipment providers. Import duties for telecom equipment into Argentina from non-Mercosur countries vary from 2% to 20%. As a result of the law passed by Argentine Government in 2009, a 30% increase on taxes will be imposed on electronics imported, manufactured, or assembled outside the Free Trade Zone of Tierra del Fuego. In addition to the import duty, importers pay a .5% statistical tax and 21% VAT (IVA) or 10.5% VAT depending on the HS. Import duties on products from Brazil, as a member of Mercosur, are 0%. Brazilian-made products are, as a result, very competitive.

As for Electrical security, there are three basic requirements:

Mandatory provisioning of national standard plug (IRAM2073/2063).
Local certification
Market surveillance, applicable to products certified locally.

Imports of some used/refurbished products are permitted; however, they have to comply with several requirements that result in a cumbersome and costly process, making it unprofitable. Not only is the import duty as high as 28%, but also a certificate of refurbishing by the original manufacturer is required and Certification for Electric Security (Resolution 92/98) demands a new test per product.

There is no bilateral or reciprocity agreement on Taxes between Argentina and the United States. Therefore, some software and services imports to Argentina may be subject to a 12-31% withholding tax.

Market Entry

The best way to enter the Argentine market is through a local representative/agent or distributor. For government projects, the tenders usually require companies be incorporated in Argentina, and have a number of years in the market with experience in similar previous projects. It is always advisable to have a local company that can communicate in the same language and that is able to provide technical support in a quick manner and thorough pre and post sales services.


Argentina has the third largest population of Internet users in Latin America, with over 17 million users, and Internet use is growing at a 40% annual rate. Broadband access doubled in 2006, and grew 87% in 2007 in terms of subscribers. Since 2004, investment in technology has been soaring after years of low investment.

Trends
Consulting estimated an average increase of 21% for 2007 for the IT market. In 2007, China led the imports of IT products (35%), followed by the U.S. (14%) and Brazil (12%). Imports from Mexico, Manaus (Brazil Free trade zone) and Japan each account for 5% of the import market. Argentina’s IT market – including hardware, software and services - reached US$ 3.2 billion in revenues, a 25% increase from 2006. In 2008, the market is expected to increase 21%. The software and services sectors accounted for the majority of the growth with a 49.3% increase. Hardware sales increased 34% in 2006 and 42.5% in 2007. Prince & Cooke projects that hardware will grow around 40% in 2008, led by PCs and Notebooks. The sale of desktop computers in increased 28% in 2007, bringing the market to 8.5 million units installed. The number of PC units sold in 2007 reached 1.6 million and is expected to increase by 30% in 2008. Printer sales also increased 20% in 2007 while other peripherals increased 35% and consumables 8.3%. Likewise, the sale of notebooks grew 50% in 2007 and is expected to increase 50% in 2008, outdoing sales of desktop PCs. State-of-the-art small computers and communication devices, such as smart phones and PDAs, followed the same two-digit growth trend. Moreover, a direct relationship exists between the purchases of such items and the exponential increases in demand for broadband/Internet access.
In 2007, the total revenue for the software market increased by 20%, reaching approximately US $480 million. Prince & Cooke projects an increase of 21% in 2008. In addition, IT service revenues reached US$1.1 billion in 2007. The packaged software market grew approximately 40% in 2007 with the U.S. being the largest exporter of packaged software into Argentina.
In reference to IT Services, outsourcing of IT-related solutions continues to be the main practice and a popular option for companies. Current market realities require companies to reduce costs, concentrate on core business, improve quality and productivity, and increase flexibility. This subsector increased 20% in 2007.

Best Prospects/Services
Branded PCs, notebooks, super-notebooks (with 20 hour batteries, folding mice, etc), wireless PCs (with 26 “ monitors), printers, servers and multi-user systems are the major source of foreign hardware imports, and are consequently best prospects. In addition, consumer electronics, such as digital cameras, MP3, MP4, PDAs, CD/CD W, DVD players/creators, digital storage devices and Pen Drives are expected to see increased demand for the next two years.
In reference to IT Services, sub-sectors with major prospects for U.S. companies include network implementation, management and maintenance, legacy applications, wireless LANs, RTE (real time infrastructure) implementations, remote operation processing, back-up, critical mission services, disaster recovery systems, internet and network security systems, document digitalization, digital asset management, storage, utility computing, and information systems for rural areas (traceability, RFID, etc).
Regarding software, large projects in the areas of security solutions or business intelligence will have opportunities in 2008/9.

Opportunities
Five main factors will keep demand for IT hardware, software and services high in 2008/2009:
- new investments in the country in a number of industries (e.g. tourism)
- the majority of the systems installed need upgrading
- the growth of Internet access
- the increasing complexity and convergence of technologies
- highly educated and tech-savvy population

In hardware, servers and multi-systems present good opportunities. The Compaq-HP merger opened some additional market share, which was partly taken over by Intel servers. The sale of servers grew 60 % in 2006 and in 2007 and the trend is expected to continue throughout 2008. In 2007, the United States was the major exporter of servers with 40 percent of total imports, followed by Brazil (25%) and Mexico (12%).
PC components will also be in high demand since locally assembled PCs (clones) account for over 60% of the PC market. Local assembly targets the residential/SOHO clone PC segment, where the cost of lower cost labor (resulting from devaluation) has a major impact on the final price. In the corporate segment, the cost benefit from local assembly does not outweigh the guarantee offered from an original vendor.
The increased demand for broadband access has also driven the demand for notebooks and mobile devices. According to IDC Argentina, the sale of notebooks for homes in the first semester of 2005 was the highest number registered in the history of Argentina.
Other market conditions will foster growth in IT services throughout 2007/2008, including the constant price reduction of IT hardware, local salary increases, and the availability of financing options from retail chains. The increased use of e-banking, electronic commerce and E-Government has increased awareness of Information Technology security needs. Recent investments in software development centers by companies such as Motorola, Intel, EDS and IBM will continue to create good opportunities for U.S. companies. The best clients for U.S. companies will be medium-to-large corporations, manufacturing/industrial companies, as well as exporters.

Internet users 3,880,000
Internet Users Rank 25
Internet Users Date of Information 2001
 Telephones - mobile cellular 3,000,000
Cell Phone Rank 28
Cell Phone Date of Information  December 1999
 Telephones - main lines in use 7,500,000
Telephone Rank 21
Telephones Date of Information 1998
GDP - real growth rate(%) -14.7
Growth Rank 211
Growth Date of Information  2002 est.
GDP - per capita $10,200
GDP/pc Rank 70
GDP/pc Date of Information  2002 est.
GDP $391,000,000,000
GDP Rank 24
GDP Date of Information  2002 est.
Population 38,740,807
Pop Rank 31
Pop Date of Information  July 2003 est.

This site was last updated 4 April, 2011

 

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