A recent IDC whitepaper sponsored by Microsoft found that demand for cloud-ready IT workers will grow by 26 percent annually through 2015. Worldwide, that is supposed to add up to 7 million cloud-related jobs. Regarding Latin America, experts say growth will initially lack industry specificity, as early adopters move to gather the low-hanging fruit.
“In Latin America, cloud offerings tend to be horizontal for things like storage, hosting, backup, email, CRM, ERP and training,” says Carlos Media, Cisco System’s business development manager, Architecture, Mexico. “As cloud offerings and adoption mature in Latin America, it will become more vertical per industry.”
Some sectors within the small to medium size enterprise (SME) space may then become more interested in a public cloud vs. private cloud discussion to address security and regulatory concerns – a common reality worldwide.
Who Is Cloud Ready?
“In general, cloud readiness is tied to the level of technical maturity,” says Media. “In Latin America, countries like Chile, Brazil and Mexico are the most ‘cloud ready’. And industries such as professional services and finance are better-prepared than manufacturing and the government sector – especially local governments.”
The push to the cloud could be a boost to economic activity in Latin America. However, a possible barrier to cloud adoption, as outlined in the IDC report, could be that “job seekers lack the training and certification needed to work in a cloud-enabled world.” Another challenge is that a shift to the cloud can disrupt the way people do business.
“There are roadblocks, because cloud is a concept that changes companies’ revenue models,” says Media. “The big players in hardware, software and services are moving their technology in a progressive way into the cloud.”
That leaves non-tech companies to figure things out with the help of their providers. One important factor for the success of cloud for them will be improved broadband penetration in Latin America.
“This is accelerating, especially in Mexico,” says Media, “but we will need to see much higher broadband adoption for cloud to really penetrate the market.”
Cloud’s Leap-frog Effect
The IDC report found that emerging markets – which it defined as Latin America, Central and Eastern Europe, the Middle East and Asia Pacific – will represent more than 40 percent of new cloud-related jobs. With annual growth predicted at 34 percent for the next two years, that will bring big changes.
The cloud could help smaller Latin American companies compete on a more even footing with larger enterprises – and maybe even overtake the bigger businesses in some respects.
“The ‘leap frog’ effect is very possible in the SME sectors,” says Media. “Large corporations in Latin America have many of the same challenges with embedded processes, legacy systems and cultural issues that must be overcome, whereas SMEs have more flexibility to abandon old processes and adopt new ones quickly.”
The cloud is not only a potential leveler in terms of the competitive capabilities of SMEs versus larger enterprises, it can also bring into play jurisdictional competencies. Thus, Central American or smaller South American countries like Uruguay may be able to better compete against giants like Mexico and Brazil.
“We have examples of service providers that are building data centers in bigger countries and then connecting services to smaller countries, such as, for example, to Central America for services built in Mexico,” says Media.
As more and more tools become available in a pay-as-you-go model, the cloud will allow Latin American SMEs to have access to the same technologies as bigger players. Other factors beyond IT will then become more important to ensure company growth.
In addition, cloud enablement could help level the playing field globally, by giving companies in emerging economies like Latin America access to the same kinds of technologies as their counterparts in more developed areas of the world.
Nonetheless, there are hurdles.
“Latin America has the most promising economies, but there are regulatory and security concerns with regard to widespread cloud adoption,” says Media. “There is also a lack of understanding of the overall concept of the cloud, of its benefits and, perhaps most importantly, its limitations under certain scenarios.”
To overcome these challenges, Media has some advice: Cloud providers should work to gain their customers’ confidence, with SLAs designed to build trust. Kenneth Adler, an attorney with the Loeb & Loeb LLC law firm, offers some good advice for outsourcing clients interested in adding cloud to their existing agreements. In particular, Adler notes, the demarcations of responsibility and measurement methodologies may differ for SLAs involving cloud.
Also, Media says, providers need a variety of services in their portfolio, preferably supported by a regional reach. Many large outsourcing providers, such as the Indian companies that are members of that’s country IT industry trade association Nasscom, believe they are best equipped to provide the types of cloud services mentioned by Media.
Timothy Wilson is a Canadian journalist based in Guadalajara, Mexico. He covers business and technology, as well as cultural and political news. Aside from Global Delivery Report, he freelances for the Canadian Broadcasting Corporation and the Globe & Mail, among other outlets. His blog, “La politica es la politica” covers breaking stories from Mexico and Central America. Follow him on Twitter @TimothyEWilson.