Venezuela Information Technology Report Q3 2012

BMI View: BMI has left its 2012 IT spending forecast unchanged despite downside risks due to macroeconomic factors. The precarious business environment will inhibit enterprise IT investment while consumers face inflationary pressures and the resulting erosion of real wages. Meanwhile our forecast also takes account of the threat of a further devaluation of the bolívar. Venezuela is one of the smaller markets in its region, but a PC penetration rate of less than 12% indicates the underlying potential for growth. There are still areas of opportunity with continued investment by small and medium-sized enterprises, due in part to a government tax subsidy, and spending by the energy, retail and financial services sectors.
Headline Expenditure Projections Computer hardware sales: US$1.2bn in 2011 to US$1.3bn in 2012, +6.7% in US dollar terms. Forecast in US dollar terms unchanged. Given a difficult trading context, the main long-term sales driver is greater affordability, partly as a result of cheap computer programmes. Software sales: US$316mn in 2011 to US$350mn in 2012, +10.8% in US dollar terms. Forecast in US dollar terms unchanged but the government''s commitment to open source software will constrain opportunities for proprietary software vendors.
IT Services sales: US$275mn in 2011 to US$305mn in 2012, +10.9% in US dollar terms. Forecast in US dollar terms unchanged. About 75% of demand will come from the large company sector, with the oil sector still significant, despite the fall in oil prices.
Risk/Reward Rating Venezuela''s score was 49.2 out of 100.0, with the country''s unchanged last place in our rankings reflecting our judgement that the economic situation and business environment in the country are unfavourable for IT spending growth.
Key Trends & Developments 􀂃 Uncertainty about the outcome of the 2012 general election, and the possibility of a further devaluation of the bolívar after the election, will cloud Venezuela''s IT investment outlook this year.
􀂃 • Venezuelan computer shipments should record positive growth in 2012, due partly to the government''s affordable computer programmes, computers for education and more local production of inexpensive computers. However, this growth is forecast to remain in single digits.
􀂃 • The promotion of open source software is a core Venezuelan government IT policy, although the government admits that open source adoption by public sector organisations has been hindered by ''worker opposition''. In April 2012, the Venezuelan government''s IT centre CNTI signed an agreement with internal auditing watchdog Sunai to monitor the migration to open source software. The agreement will last for two years.
􀂃 • The private business sector will offer opportunities and continued deployment of fixed and mobile broadband will help drive spending across several market segments, Banks and telecoms operators are continuing to spend on IT as they launch service platforms and services. Investment in call centres by many private sector organisations will generate spending on hardware and systems.