Mexico Information Technology Report Q3 2012

BMI View: BMI projects that Mexican IT spending will grow by about 8% in US dollar terms in 2012 to US$15.2bn, slower than previously forecast, due to an uncertain economic outlook. Government spending in 2012, an election year, will be one vendor focus, with a substantial information society budget and the roll-out of national and local projects that were previously delayed because of the economic situation. As Mexico's economy expands over the next five years, some fundamental drivers, including rising PC penetration, and US corporate demand for IT outsourcing, should ensure growing IT demand.

Headline Expenditure Projections Computer hardware sales: US$6.5bn in 2011 to US$7.0bn in 2012, +7% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and following stronger than expected retail sales growth in H211.

Software sales: US$2.6mn in 2011 to US$2.8mn in 2012, +9% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and much will depend on the success in bringing down illegal software use, which at 63% is well above OECD levels.

IT services sales: US$4.9bn in 2011 to US$5.3bn in 2012, +8% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors; with sectors such as government, telecoms and financial services providing the greatest opportunities for vendors.

Risk/Rewards Ratings: Mexico's score was 61.8 out of 100.0. Mexico ranked fourth in the Americas region in our latest RRR table, behind the US and Canada. The country ranked third for its Industry Rewards score, behind the US and Brazil, and joint with Canada, but its overall rating was restrained by a relatively low Country Rewards score.

Key Trends & Developments

Mexican PC sales were boosted in 2011 by a 4.1% increase in the minimum wage, the first above-inflation increase for five years. This effect was expected to fade, however, in H211 and consumer credit is forecast to weaken in 2012.

Mexico City and its surrounding area will remain the mainstay of the market. However, Mexico's underpenetrated south east and Pacific regions are expected to offer growth opportunities over BMI's five-year forecast period, particularly in the south-east. IT penetration in the public sector remains relatively low in the region and larger Mexican IT distributors have now taken notice of latent demand in this area.

Interest in cloud computing should continue to grow in 2012. The economic crisis encouraged many organisations to look closer at cloud computing models such as SaaS, and there are estimates that the majority of Mexico's large companies have conducted cloud pilots. Vendors have reported faster-thanexpected growth in demand for cloud services in some IT verticals such as finance.