For over a decade, Spiceworks Ziff Davis has published the State of IT, our in-depth annual report covering future IT budget plans and tech adoption trends. The data in our study has historically represented businesses in North America (NA) and Europe, and starting in 2021, the Asia-Pacific (APAC) region.
In the 2022 State of IT, we’re excited to include data from Latin America (LATAM) to offer tech marketers with even more actionable business insights. Our detailed findings were obtained from a sample of 235 IT buyers in the region: 123 in Mexico and 112 in Brazil.
This article focuses on the notable differences in organizational plans between LATAM and the rest of the world. If you’re looking for in-depth findings on broader trends influencing businesses and the tech vendors that support them, we encourage you to check out the main 2022 State of IT report.
Note: Because 2022 is the first year SWZD is publishing LATAM-specific State of IT data, we can’t trend findings year-over-year. Additionally, survey respondents in LATAM tended to work in larger companies — more than half were employed by companies with 500+ employees — and hold more senior titles (e.g., CEO/CIO) than respondents in other regions, so our sample population might have influenced some findings.
Regional differences among respondents might also account for some differences. For example, a Gallup study suggested that in Latin America, B2B respondents are slightly more likely to agree with survey questions, influenced by a relative tendency in the region to focus on the positive aspects of life.
Key findings from the 2022 State of IT in LATAM
- The vast majority of companies in LATAM are optimistic about growth in 2022: 85% of businesses expect their revenues to increase year-over-year (YoY)
- 70% of companies in LATAM plan to increase IT budgets in 2022, the greatest proportion out of any region covered in our research
- The average YoY budget increase in LATAM is expected to be 39% vs. an average of 25% in the rest of the world (ROW), including NA, Europe, and APAC.
- Companies in LATAM allocate significantly more of their IT budgets to managed services than in other regions (22% vs. 14% in NA)
- Organizations in LATAM plan to adopt emerging technologies at a faster rate than in other regions, and they have less of a need to update end-of-life technology
- Currency fluctuations will play more of a role in LATAM than any other region, especially in Brazil, where they will influence one-quarter of all budget increases
- The global pandemic will continue to drive tech spending in LATAM: 49% of IT budget increases in 2022 will be influenced by changes to business operations during COVID-19
Strong LATAM recovery expected in 2022
Compared to other regions evaluated in the 2022 State of IT, organizations in LATAM are most optimistic about their business prospects in 2022. An amazing 85% of companies in LATAM expect corporate revenues to increase YoY, compared to an average of 58% across other regions.
However, we should caveat the expectation of strong economic growth among our sample with third-party data that illustrates how severely the pandemic disrupted economies in the region. According to the International Monetary Fund (IMF) World Economic Outlook report, real GDP in LATAM contracted by 7% in 2020, more than double the 3% decrease seen globally.
Looking at countries individually, the IMF estimated that in 2020, real GDP in Brazil contracted 4% compared to 8% in Mexico. Going forward, our 2022 State of IT data indicates the pace of recovery could be uneven between these two countries: 95% of companies in Brazil anticipate YoY revenue increases vs. 77% in Mexico.
2022 IT investment growth in LATAM
Over the next 12 months we anticipate tech spending to accelerate faster in LATAM than in other regions: 70% of companies in the region (66% in Mexico and 74% in Brazil) plan to increase IT budgets in 2022, compared to an average of 50% the ROW.
More good news for tech vendors: Within a given company in LATAM, average corporate budget increases are expected to be significantly larger than in other regions: 39% in LATAM vs. 25% in the ROW.
Factors driving business tech investment in LATAM
Data from the 2022 State of IT reveals that an increased priority on IT projects will be the top factor driving IT spending increases over the next 12 months globally; more so in LATAM than in other regions. Among companies increasing their tech budgets in 2022, 66% in LATAM indicated an increased priority on IT projects influenced budget growth, compared to 48% in the ROW.
Additionally, we’ll continue to see the pandemic influencing tech spending in LATAM in the future. Of note: Respondents in LATAM estimate that 58% of their workforce worked remotely long-term after the emergence of COVID-19, compared to an average of 40% across other regions.
It’s no surprise then, that respondents in LATAM are significantly more likely than those in other regions to cite the following as drivers of budget increases:
- Supporting remote workers during the pandemic (55% in LATAM vs. 36% in ROW)
- Changes to business operations due to COVID-19 (49% in LATAM vs. 36% in ROW)
Another factor influencing IT budgets in LATAM will be the need to update legacy infrastructure. This has been the number one driver of budgets for years in other regions, but in LATAM, it is the third most important factor.
Within LATAM, security is more top-of-mind in Brazil. Among businesses increasing IT budgets, 47% in Brazil cited increased security concerns as a driving factor, compared to only 25% in Mexico.
Findings also revealed that businesses in LATAM are much more likely to report currency fluctuations influenced IT budget growth (23%) than companies in other regions (9%). Notably, 26% of budget increases in Brazil will be influenced by currency fluctuations, compared to 18% in Mexico.
2022 IT budget allocations in LATAM
How businesses in LATAM divide their budgets across hardware, software, cloud, and managed services, differs slightly from the ROW. For example, unlike in other regions, hardware spending is slightly lower than software spending in LATAM.
The likely explanation is revealed in our data, which shows that LATAM-based workers are significantly more likely to use less expensive mobile devices as their primary computing device. According to our study, 20% of employees in LATAM use a smartphone as their main work device, compared to only 4% in NA. Chromebook and tablet usage are also relatively high in LATAM (7% and 10%, respectively), compared to other regions.
Laptops will be the largest spending area within the hardware category globally, but due to lower usage rates in the region, businesses in LATAM spend significantly less on laptops — 13% of hardware budgets vs. 19% in other regions.
Companies in LATAM also spend proportionally more of their IT budgets on managed services — which can be used to help support remote workers — than in other regions (22% vs. 16%, respectively), remarkably making spending in the category comparable with spending on cloud.
In line with higher mobile usage, businesses in LATAM spend proportionally more on managed wireless and mobile computing services than in other regions — 8% of managed services budgets vs. 5% across Europe and NA.
IT purchase triggers in LATAM
In the 2022 State of IT, respondents in LATAM shared which factors typically prompt their organization to buy new hardware, software, and services. And similar to IT budget allocations, purchase drivers are quite different in LATAM than in the ROW.
Organizations in the region are much more likely to cite the need for better customer support and better tech expertise as purchase drivers — both primary reasons to enlist help from a managed services provider, explaining elevated spending in the category — than in other parts of the world.
Across North America and Europe, end-of-life events and refresh cycles are the top two reasons organizations make IT purchases, but this is not the case in LATAM. Our data suggests that companies in LATAM are more concerned with investing for the future than updating the legacy systems of the past. Perhaps most telling; most companies in LATAM (51%) said that new technology features are purchase triggers vs. only 31% in other regions.
Third-party research corroborates our findings. When speaking about his research on Digital Transformation in Latin America, Felipe Monteiro suggests that companies in the region have the opportunity to leapfrog, or bypass certain steps in the modernization of infrastructure, because companies in countries like Mexico and Brazil “don’t have these legacy systems (seen in other nations) and can instead adopt the most developed ones.”
Building upon the idea of “leapfrogging,” our data suggests that companies in LATAM are looking to future-proof their infrastructure as they invest in new technologies. LATAM businesses are significantly more likely than companies in other regions to cite software and hardware compatibility as reasons to make new IT purchases.
Not everything about spending in LATAM is different, though. Given the very optimistic 2022 revenue outlook in the region, growth/additional need is the primary driver of new IT spending, cited by 56% of businesses that will grow IT budgets YoY — in line with the ROW (51%).
LATAM is the most cloud-forward region
In line with the hypothesis that many businesses in LATAM are leapfrogging to the latest-and-greatest tech instead of being held back by legacy systems, our data reveals that companies in LATAM are currently ahead in the push to the cloud.
When we asked IT buyers if their company had integrated on-premises infrastructure with a public cloud (also known as hybrid cloud), most in LATAM said their company already had this capability (58%), outpacing implementation levels in all other regions: NA (35%), Europe (37%), and APAC (45%).
Looking ahead over the next two years, an additional 23% of companies in LATAM plan to implement hybrid cloud.
Emerging technology adoption in LATAM
Our State of IT data also suggests this leapfrogging extends past legacy and current systems into the realm of emerging technologies. Likely influenced by the relative popularity of highly-portable smartphones and tablets (which often have data plans, mobile payment, augmented reality platforms, and facial recognition built-in) as primary corporate devices, current usage and planned adoption of emerging technologies in LATAM significantly outpaces adoption levels in other regions.
For example, planned adoption rates of blockchain technology in LATAM are more than 4x higher than those in North America, and plans for virtual reality are more than 3x higher.
Additionally, emerging technology adoption rates in LATAM are more than double the rates planned in NA for the following: 5G technology, containers, serverless computing, edge computing, artificial intelligence, and 3D printing.
Securing the remote workforce in LATAM
As more employees worked remotely during the pandemic, businesses and IT departments have been focused on safeguarding corporate devices and data. And with higher levels of long-term remote work expected in LATAM compared to in other regions, demand for many emerging security solutions will be very strong in Mexico and Brazil.
Companies in LATAM plan to adopt biometrics, — such as facial recognition or fingerprint readers — at a significantly higher rate (86%) than in other regions (57% in Europe and 39% in NA), likely because of the increased prevalence of corporate mobile devices with integrated biometrics technologies.
In line with the increased likelihood for companies in LATAM to adopt cloud technologies, businesses in the region are most likely to plan to use cloud workload protection solutions (86% in LATAM vs. 56% in Europe and 37% in NA).
Additionally, businesses in LATAM are much more likely to adopt a wide range of security technologies than companies in other regions. For example, LATAM-based businesses are twice as likely to plan to adopt IoT security solutions and nearly three times as likely to adopt security solutions powered by AI/machine learning, compared to companies in NA.
IT staff hiring in LATAM
Our June 2021 study on the Future of Remote Work revealed 72% of IT pros said the shift to remote created additional work for IT. But at the time, only 11% of companies supporting remote workers had hired additional IT staff during the pandemic.
The good news is that, globally in 2022, 40% of organizations plan to grow the ranks of their IT departments. Businesses in LATAM are even more likely to hire: 68% of businesses in the region plan to hire additional IT staff over the next 12 months.
Much of this hiring will help support remote workers. When asked what challenges their businesses expect to face over the next 12 months, companies in LATAM expected the most problems supporting remote workers in:
- Provisioning hardware to remote employees (43% in LATAM vs. 23% ROW)
- Tracking inventory and licenses for remote employees (37% in LATAM vs. 21% ROW)
Many more tech and budget insights await
This article covered many of the key findings on the LATAM region, which is very optimistic about revenue growth, increasing IT budgets in 2022, and the adoption of many emerging technologies.
With the wealth of data SWZD has access to, we can provide you with even more details on IT budgeting plans across the world, including spending patterns at companies of different sizes, and in different regions and industries. If you would like to schedule time with one of our experts for a deeper dive into the 2022 State of IT, let us know!