Cloud Computing in Latin America - Digitalizing the Future (Sponsored)

By Huawei Team

Digitalization has been recognized as a key driver for the modernization of Latin America and enhancing the economic prosperity of the region. To achieve this, the World Bank has set out a Digital Economy Framework (DE4LAC) with six core pillars including building digital infrastructure (affordable, high-speed internet); establishing digital platforms (access to public and private services online); digital financial services (creating financial inclusion by removing geographic and market barriers); digital businesses (to drive employment and innovation); a digitally-savvy workforce; and a trust environment of governance.

Underpinning all digitalization is the importance of cloud computing. Studies suggest that the availability of cloud computing can add 5.7% GDP during the next decade and that investment in related technologies such as cloud, networks, storage and professional services will increase by around 12% during 2023 which is significantly higher than GDP growth of around 2.1%. In 2022, spending on cloud computing in the LatAm region was approximately US$13 billion with Argentina, Brazil, Chile, Colombia, and Mexico accounting for 84% of spending.

Country Strategies for Digitalization

In addition to the Digital Economy Framework for the Latin America region, countries have developed their own specific strategies and incorporated the benefits and impact of digitalization in their planning. For example, Chile's Digital 2035, sets out ambitious targets for digitalization of government and businesses to reach 95% by 2025 and 100% by 2035. Consequently, there is a shift toward the cloud to bring together cutting-edge technologies, such as AI, big data, and media, as well as developers. Brazil's digital economy already accounts for a significant 25% of its GDP and the country's strategy for digital transformation includes greater investment and adoption of cloud and AI technologies to achieve digital transformation during the next decade. Already recognizing the benefits of increased connectivity, Mexico’s digital economy has changed Mexico’s consumption habits. Data from the Mexican Association of Online Sales (Asociación Mexicana de Venta Online or AMVO) show that Mexico’s eCommerce grew by 23% in 2022. For the past four years, Mexico has ranked in the top five countries with the biggest eCommerce growth in the world (Mexico’s internet and digital economy). Peru is one of the main e-commerce markets in Latin America and the Caribbean with potential to grow and mature. According to estimates by the Peruvian Chamber of Electronic Commerce (CAPECE), e-commerce sales surpassed US$ 9 billion in 2021 and reached US$ 12 billion in 2022. These involved more than 300,000 companies and 15 million consumers, making Peru the sixth largest market in the region after Argentina, Brazil, Chile, Colombia, and Mexico (UNCTAD).

Opening Up New Market Opportunities

The average per capita income in Latin America is now over US$10,000 creating a strong foundation for the digital economy in one of the most dynamic regions in the world, both culturally and economically. This creates new consumers and opportunities for new sectors such as e-commerce. According to the Statista Digital Market Outlook, e-commerce users in Latin America reached approximately 317.5 million in 2022. By 2027, this figure will grow by 22%, resulting in some 387.7 million users across the region (Statista). The number of transactions has in the region increased by three-fold between 2019 – 2023, from $117 million to $364 million with COVID-19 accounting for the acceleration. Many Latin Americans tried e-commerce for the first time during this period resulting in e-commerce market growth of 37% from 2020-2021. It is projected that the B2C e-commerce market in the region will surpass $7.5 trillion by 2030 offering a major opportunity for merchants to reach new audiences by offering their products and services in new markets. The facilitation of online and mobile payments was a major contributor to e-commerce growth and enabled including of populations that had been traditionally excluded. Reliance on cash payments has therefore decreased.

Building the Infrastructure

There are many similarities between Latin America and China in terms of the economic and infrastructure challenges as potential barriers to development. Some of China’s own learnings about digitalization are therefore relevant to the region, customized to suit the region’s individual needs and those of each country. These are themes that have been echoed throughout Huawei Cloud’s four summits in Latin America in November and December. Held in Brazil, Chile, Peru and Mexico, the events emphasize Huawei Cloud’s “In LatAm, for LatAm” ethos and corresponding country strategies.

Supporting transformation of the region, in 2019, Huawei Cloud announced its service launch in Chile, the first public cloud Region in Latin America. In 2021, Huawei Cloud launched its second availability zone (AZ) in Chile, becoming the only dual-AZ cloud service provider in the country with a latency circle as low as 50 ms to improve access experience. Huawei Cloud has established core regions in Brazil and Mexico, and country regions in Argentina and Peru. Like many other operators in the region Huawei is seeing growth and expects its cloud revenue to grow by 8-10% in 2023. Plans are underway for more availability zones in the region.

How the Cloud Supports Business Growth

In e-commerce, Huawei Cloud's solutions enhance consumer analysis and search precision. For example, the Chilean food retail giant SMU built their own e-commerce platform leveraging Huawei's cloud native technologies. In the media industry, Huawei Cloud has helped to improve content productivity, enhancing user experience, and fostering innovation. And during the livestreaming of the 2022 World Cup Huawei Cloud supported and reduced live latency from 3 seconds to 800 milliseconds, resulting in more real-time and seamless live streams. For carriers, Huawei Cloud's solutions drive digital transformation, improve efficiency, accelerate innovation, and increase revenue. Teleperformance, the world's second largest provider of outsourcing customer relationship management and call center service, adopted Huawei Cloud Workspace to elevate their call center service quality and bolster information security in Chile. Services include digital CX, AI, video CX, metaverse, analytics and CX management including sales and finance. The tool has allowed Teleperformance to maintain the stability of several operations and campaigns. Today, there are more than 600 agents connected through this platform.

The Future

With new services such as livestreaming becoming available in Latin America for the first time this year, cloud computing is set to drive economic prosperity in the region. E-commerce growth is expected to maintain growth of over 10% until at least 2027. Overall global trade with the region will continue to grow with China accounting for 22% while foreign direct investment (FDI) is continuing led by Brazil the followed by Mexico, Child, Colombia, Argentina and Peru (World Bank) signifying that the next decade will be one of digital transformation.