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Latin American IT Market Recovering Faster Than U.S. Counterpart

Latin American solution providers are posting strong sales growth in the midst of the worldwide economic crisis.

That was one of the big takeaways this week at Everything Channel's Latin America XChange conference in Miami.

Professor Terry McCoy, the director of the Latin American Business Environment Program for the Center for International Business Education Research at the University of Florida, told about 100 solution providers from Latin America that he sees the "region recovering sooner than the United States and other developing economies."

"Historically, Latin America has lagged these economies," Professor McCoy said. "It is recovering more quickly and more robustly than it has in the past. The recovery is stronger than people would have expected a year ago."

The Economic Commission for Latin America is predicting economic growth of 3.1 percent next year and 4.3 percent five years down the road, McCoy said.

"The economy is going to grow faster and be more dynamic than people expected a year ago," predicted Professor McCoy. "It is going to be a V-shaped recovery, not a U-shaped recovery."

The strong recovery is remarkable given Latin America's past track record as a boom and bust economy that lagged the U.S.

Professor McCoy said one reason for the strong recovery is Latin America's ability to bring down its gross disbursed debt dramatically since 2000. That is in sharp contrast to the rising federal budget deficits in the United States.

Even in the midst of the worldwide economic crisis, many Latin American solution providers are posting big sales gains.

Horacio Bustillos, director general of ACTECH, a Mexico-based solution provider, said his sales will be up 18 percent this year.

One of the biggest deals that contributed to ACTECH's success this year was a complete networking infrastructure, including IP telephony, for the Hotel Grand Velas Riviera Maya, Bustillos said. The IP infrastructure made it the first hotel in Mexico to provide online checkout and reservations for spas or restaurants, Bustillos said.

The differentiator for ACTECH on the project was a Unix-based multilingual IP telephony application from a Turkish software company, Bustillos said.

Bustillos is predicting next year his sales will be up even more than this year, growing 20 percent.

Claudio Stifel, director of Intercitynetworks, a Chile-based services provider, said his sales are up 19 percent this year.

Stifel attributed his success this year to his company's hosted Microsoft ERP offering, which is being embraced by customers because of its per-user pricing model. That has allowed customers, in many cases, to reduce their IT costs, Stifel said.

Stifel also expects strong sales growth in 2010. He sees sales to again grow more than 18 percent.

Martin Hoz, a Latin America manager for Fortinet, said the security software maker has thrived in Latin America because of its innovative virtualization and consolidation capabilities, which give it a leg up against security rivals. In many cases, he said, customers are integrating multiple security systems into a centralized Fortinet system.

Hoz said Fortinet provides Extreme Teams training to its Latin American partners that focuses on selling business enablement rather than the technical capabilities. That training has resulted in dramatic sales gains for partners, he said.

Patrick McNicholas, president of Maverick Software, which provides a margin-rich alternative to Microsoft Office, said his company is being embraced by Latin American solution providers because it provides the same functionality as Microsoft Office at half the price. He said one system builder that was making $3 per copy or $15,000 per month selling Microsoft Office switched to Maverick and is now making $250,000 per month on the productivity suite.

McNicholas said that he views Latin America as a huge opportunity for Maverick Software. Maverick already has a Spanish-language version and will deliver a Portuguese language version later this year.

The Latin America XChange conference runs through Friday, concluding with an awards ceremony honoring vendor excellence.

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